ASCA A SPAC I Acquisition Corporation

Ameristar Casinos Reports Record Third Quarter Financial Results LAS VEGAS, Oct. 28 /PRNewswire-FirstCall/ -- Ameristar Casinos, Inc. (NASDAQ:ASCA) today announced record financial results for the third quarter of 2004, reflecting the continued growth of the company. Third Quarter Highlights * Record consolidated net revenues of $215.7 million, representing an increase of $14.1 million, or 7.0%, over the third quarter of 2003. * Record third quarter consolidated EBITDA (a non-GAAP financial measure which is defined and reconciled with operating income below) of $59.2 million, representing an increase of $9.1 million, or 18.2%, over the third quarter of 2003. * Record third quarter consolidated operating income of $40.3 million, an increase of $6.1 million, or 17.9%, from the prior-year third quarter. * Record third quarter net income of $16.6 million, up $4.7 million, or 39.7%, from the third quarter of 2003. * Diluted earnings per share of $0.60 for the third quarter of 2004, compared to $0.44 for the third quarter of 2003. Our previously issued earnings guidance for the third quarter of 2004 indicated a range of $0.50 to $0.53 per share. Analysts' latest consensus estimate for the third quarter of 2004, as reported by Thomson First Call, was $0.52. * On August 17, 2004, our Board of Directors declared a quarterly cash dividend of $0.125 per share, which was paid on September 15, 2004 to our shareholders of record as of August 31, 2004. * During the third quarter of 2004, we prepaid $15.0 million of long-term debt under our senior credit facilities, further improving our total debt leverage ratio (as defined in our senior credit agreement) from 3.49:1 at December 31, 2003 to 2.99:1 at September 30, 2004. * We extended and improved our leadership position in market share (based on gross gaming receipts) in our Kansas City, Council Bluffs and Vicksburg markets during the third quarter of 2004 compared to the same period in 2003. * We are continuing to progress toward the completion of our pending acquisition of Mountain High Casino in Black Hawk, Colorado. Subject to the receipt of regulatory approval, we anticipate the closing to occur in December 2004. Craig H. Neilsen, Chairman and CEO, stated: "We are very pleased with our performance in the third quarter of 2004. We believe our financial results further validate our business model and evidence the continued successful implementation of our operating strategies. In particular, we had significant flow-through during the third quarter of 2004 compared to the same period in 2003, as net revenues increased by 7.0% and EBITDA increased by 18.2%, which demonstrates the effectiveness of our cost-containment strategies. In addition, the major investment in slot technology we have made over the past year, including our accelerated implementation of coinless slot technology and the further introduction of lower denomination slot machines, has significantly contributed to the continued financial success we have achieved in the third quarter of 2004. We are committed to maintaining the most advanced casino floor in each of our markets, which we expect will result in continued financial success for our company." Financial Results Net Revenues Net revenues for the third quarter of 2004 increased to $215.7 million, an increase of 7.0% compared to the third quarter of 2003. All of our properties improved in net revenues, with increases of 11.5% at Ameristar Vicksburg, 9.8% at Ameristar Council Bluffs, 7.3% at Ameristar Kansas City, 4.4% at Ameristar St. Charles and 3.4% at the Jackpot Properties. For the quarter, Ameristar Vicksburg and Ameristar Council Bluffs further improved their long-time market leadership positions to 44.9% and 41.3%, respectively, with increases of 4.9 and 1.9 percentage points, respectively, over the prior-year third quarter. Ameristar Kansas City also maintained its market share leadership, as it increased reported market share to 35.4%, up 0.6 percentage point over the prior-year third quarter. The reported market share for Ameristar St. Charles was 31.1%, which represented a decline of 0.8 percentage point compared to the third quarter of 2003. Led by a $20.1 million (11.9%) increase in slot revenues, consolidated casino revenues for the third quarter of 2004 increased $20.1 million, or 10.3%, from the third quarter of 2003. We believe that the growth in slot revenues has been driven by our continued accelerated implementation of coinless slot technology at our Ameristar-branded properties, which are now nearly 100% coinless. In addition, we believe our continued leadership in the introduction of new-generation, lower denomination slot machines at our Ameristar-branded properties has contributed to the improvement in slot revenues, due to the popularity of this segment of the slot market. We also believe casino revenues increased, in part as a result of our continued successful implementation of our targeted marketing programs, which is evidenced by a 20.5% increase in rated play at our Ameristar-branded properties when compared to the third quarter of 2003. Promotional allowances (which are deducted in arriving at net revenues) increased $9.7 million, or 30.5%, in the third quarter of 2004 compared to the 2003 third quarter, in part due to the increase in rated play. We believe the quality of our food and beverage operations also contributed to our record third quarter financial performance. Food and beverage revenues increased by $2.8 million, or 10.7%, in the third quarter of 2004 compared to the prior-year third quarter. The increase was principally attributable to our new food and beverage venues that opened at Ameristar Kansas City late in the third quarter of 2003 and Ameristar Vicksburg's newly renovated Heritage Buffet, which was completed in the fourth quarter of 2003. In the first quarter of 2005, we expect to complete a major renovation of our buffet at Ameristar Council Bluffs, which we believe will favorably impact future gaming and food and beverage revenues at the property. Operating Income and EBITDA In the third quarter of 2004, consolidated operating income increased $6.1 million, or 17.9%, to $40.3 million and consolidated operating income margin improved 1.7 percentage points from the prior-year third quarter, to 18.7%. Operating income margin increased at Ameristar Kansas City, Ameristar Vicksburg and the Jackpot Properties by 3.4, 2.1 and 5.7 percentage points, respectively, when compared to the same period in 2003. Consolidated EBITDA increased 18.2% to $59.2 million compared to the third quarter of 2003. Additionally, consolidated EBITDA margin in the third quarter of 2004 increased from 24.9% to 27.5%, primarily due to Ameristar Kansas City, Ameristar Vicksburg and the Jackpot Properties, where EBITDA margin improved 5.5, 3.0 and 5.7 percentage points, respectively, from the prior-year third quarter. The growth in EBITDA, operating income and the related margins at these properties was principally driven by both the increase in revenues noted above and the continued implementation of cost-containment initiatives. Additionally, Ameristar Kansas City had $1.3 million of non-recurring expenses in the third quarter of 2003 related to the introduction of the "All New Ameristar Kansas City." At Ameristar St. Charles, operating income for the third quarter decreased $0.3 million and the related margin dropped 1.4 percentage points to 22.3% compared to the 2003 third quarter. Although EBITDA was flat, the property saw a decline in EBITDA margin of 1.2 percentage points during the third quarter. The declines in the margins and operating income were primarily the result of higher marketing costs in a more competitive market environment, due to the expanded facilities and increased marketing and promotional activities of our principal competitor in the St. Louis market. In addition, the margins and operating income were negatively impacted by increased employee benefit costs. Ameristar Council Bluffs increased third quarter operating income by $1.0 million and third quarter EBITDA by $1.4 million when compared to the prior-year period. The improvements in operating income and EBITDA occurred despite a 2% increase in the Iowa tax rate on gaming revenues of riverboat casinos, which became effective July 1, 2004. Operating income margin decreased 0.5 percentage point to 30.1% and EBITDA margin declined 0.1 percentage point to 36.9% due to higher health insurance costs and the aforementioned tax increase. Corporate expense decreased $0.5 million in the third quarter of 2004 compared to the same quarter of 2003. The decrease in corporate expense was primarily the result of $0.9 million in costs incurred in 2003 relating to the unsuccessful pursuit of a corporate acquisition. Year to date, corporate expense increased $3.0 million, or 11.4%, compared to the first nine months of 2003. This increase resulted primarily from the continued growth of the company and increased development activities. We expect this trend to continue through the remainder of 2004 and 2005 as we seek growth through development opportunities, including in the United Kingdom and Pennsylvania, and through acquisition opportunities. Depreciation and amortization expense increased to $18.9 million in the third quarter of 2004 from $15.9 million in the third quarter of 2003, primarily due to the increase in our depreciable assets resulting from the completion of enhancement and renovation projects at Ameristar Kansas City in September 2003 and Ameristar Vicksburg in December 2003, the continued implementation of coinless slot technology and the introduction of lower denomination slot machines at our Ameristar-branded properties. Net Income and Diluted Earnings Per Share For the third quarter of 2004, net income increased 39.7% to $16.6 million, from $11.9 million for the third quarter of 2003. Diluted earnings per share were $0.60 in the quarter ended September 30, 2004, compared to $0.44 in the corresponding prior-year quarter. Interest expense for the 2004 third quarter was $13.8 million, down $1.3 million from the third quarter of 2003. The decline in interest expense was due to a decrease in our long-term debt levels as we continued to prepay senior debt, the termination of our interest rate swap agreement on March 31, 2004, and lower interest rates on our senior credit facilities year-over-year. We incurred non-operating losses on early retirement of debt in the third quarters of 2004 and 2003 in the amounts of $0.2 million and $0.4 million, respectively. Our effective income tax rate for the quarter ended September 30, 2004 increased to 37.2% from 37.0% for the quarter ended September 30, 2003, due primarily to a slight increase in our effective state income tax rate. Liquidity and Capital Resources Our financial position remains strong, with approximately $76.2 million of cash and cash equivalents and $68.9 million of available borrowing capacity under our senior credit facilities as of September 30, 2004. During the third quarter of 2004, we reduced our long-term debt by approximately $15.8 million, including the prepayment of $15.0 million of principal under our senior credit facilities. At September 30, 2004, our total debt was $669.7 million, representing a decrease of $47.2 million (6.6%) from December 31, 2003. In the fourth quarter of 2004, we expect to borrow up to an additional $115.0 million under our senior credit facilities in order to fund our pending acquisition of Mountain High Casino. Capital expenditures for the third quarter of 2004 totaled $20.6 million and included the continued acquisition of coinless slot machines, the implementation of information technology solutions to enhance our operating capabilities and capital projects at all of our properties. For the year, we expect that capital expenditures will be approximately $85 million. Planned Capital Improvement Projects Following the closing of the Mountain High Casino acquisition, we intend to invest approximately $90 million in capital expenditures to improve the competitiveness of the property, as well as make other operational enhancements. The planned capital improvements include reconfiguration and expansion of the gaming area, the introduction of cashless slot technology and other gaming equipment upgrades, construction of a 300-room AAA Four Diamond-quality hotel and additional covered parking, an upgrade of the food and beverage outlets and the addition of a casual dining restaurant. All of these improvements are expected to be completed during 2005, with the exception of the hotel, which we expect will be completed by mid-2007. We are currently planning to expand the number of gaming positions, including the addition of poker rooms, at our Council Bluffs and Vicksburg properties. We anticipate completion of these gaming expansions to occur by the end of 2005. In addition, we are currently planning a complete renovation of the hotel rooms at Ameristar Kansas City and Ameristar Council Bluffs, which are expected to be completed in the fall of 2005. At Ameristar St. Charles, we are currently designing planned capital improvements, which include a 300-room all-suite hotel, 20,000 square feet of meeting facilities, a new entertainment pavilion and an additional parking garage. We expect to begin construction on these improvements in the first half of 2005, and we believe they will further strengthen the competitive position of the property. We expect the return on our investment from these development projects to be similar to that of other projects we have completed in the recent past. Outlook Based on our preliminary results of operations to date in October 2004 and our outlook for the remainder of the quarter, we currently estimate operating income of $33 million to $35 million, EBITDA of $52 million to $54 million (given anticipated depreciation expense of $19 million), interest expense of $14 million and diluted earnings per share of $0.41 to $0.45 for the fourth quarter of 2004. Gaming regulatory authorities in Iowa, Mississippi and Missouri currently publish, on a monthly basis, gross gaming revenue, market share and other financial information with respect to the gaming facilities, including Ameristar's, that operate within their respective jurisdictions. Because various factors in addition to our gross gaming revenue (including changes in operating costs, promotional allowances and other expenses) influence our operating income, EBITDA and diluted earnings per share, such reported information, as it relates to Ameristar, may not be indicative of the results of our operations for such periods or for future periods. Conference Call We will hold a conference call to discuss our third quarter results and guidance for the fourth quarter at 3:00 p.m. Eastern Time on October 28, 2004. The call can be accessed live by calling (800) 967-7185. It can be replayed until November 4, 2004 at 1:00 a.m. Eastern Time by calling (888) 203-1112 and using the access code number 961941. Forward-Looking Information This press release contains certain forward-looking information that generally can be identified by the context of the statement or the use of forward-looking terminology, such as "believes," "estimates," "anticipates," "intends," "expects," "plans," "is confident that" or words of similar meaning, with reference to Ameristar or our management. Similarly, statements that describe our future plans, objectives, strategies, financial results or position, operational expectations or goals are forward-looking statements. It is possible that our expectations may not be met due to various factors, many of which are beyond our control, and we therefore cannot give any assurance that such expectations will prove to be correct. For a discussion of relevant factors, risks and uncertainties that could materially affect our future results, attention is directed to "Item 1. Business - Risk Factors" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2003 and "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004. About Ameristar Ameristar Casinos, Inc. is a leading Las Vegas-based gaming and entertainment company known for its premier properties characterized by innovative architecture, state-of-the-art casino floors and superior dining, lodging and entertainment offerings. Ameristar's focus on the total entertainment experience and the highest quality guest service has earned it a leading market share position in each of the five markets in which it operates. Founded in 1954 in Jackpot, Nevada, Ameristar recently marked its 10th anniversary as a public company. The company has a portfolio of six casinos: Ameristar Kansas City; Ameristar St. Charles (greater St. Louis); Ameristar Council Bluffs (Omaha, Nebraska and southwestern Iowa); Ameristar Vicksburg (Jackson, Mississippi and Monroe, Louisiana); and Cactus Petes and the Horseshu in Jackpot, Nevada (Idaho and the Pacific Northwest). Visit Ameristar Casinos' Web site at http://www.ameristar.com/ (which shall not be deemed to be incorporated in or a part of this news release). AMERISTAR CASINOS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands, Except Per Share Data) (Unaudited) Three Months Nine Months Ended September 30, Ended September 30, 2004 2003 2004 2003 REVENUES: Casino $215,001 $194,865 $642,216 $566,752 Food and beverage 28,828 26,034 86,073 74,109 Rooms 6,959 6,602 20,019 18,123 Other 6,370 5,833 17,785 16,271 257,158 233,334 766,093 675,255 Less: Promotional allowances 41,507 31,806 126,074 90,381 Net revenues 215,651 201,528 640,019 584,874 OPERATING EXPENSES: Casino 94,768 89,382 285,716 260,043 Food and beverage 16,314 15,730 47,342 43,760 Rooms 1,706 1,651 4,912 4,712 Other 4,244 3,307 10,736 9,216 Selling, general and administrative 39,321 41,227 115,555 111,216 Depreciation and amortization 18,888 15,888 54,016 46,666 Impairment loss 100 147 196 687 Total operating expenses 175,341 167,332 518,473 476,300 Income from operations 40,310 34,196 121,546 108,574 OTHER INCOME (EXPENSE): Interest income 69 71 157 282 Interest expense (13,806) (15,115) (43,029) (48,344) Loss on early retirement of debt (202) (415) (673) (415) Other 50 126 (46) 160 INCOME BEFORE INCOME TAX PROVISION 26,421 18,863 77,955 60,257 Income tax provision 9,820 6,979 30,434 22,186 NET INCOME $16,601 $11,884 $47,521 $38,071 EARNINGS PER SHARE: Basic $0.61 $0.45 $1.76 $1.44 Diluted $0.60 $0.44 $1.71 $1.41 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 27,107 26,489 26,986 26,376 Diluted 27,779 27,297 27,744 27,025 AMERISTAR CASINOS, INC. AND SUBSIDIARIES SUMMARY CONSOLIDATED FINANCIAL DATA (Dollars in Thousands) (Unaudited) Three Months Nine Months Ended September 30, Ended September 30, 2004 2003 2004 2003 Consolidated cash flow information Cash flows provided by operations $28,071 $26,110 $124,276 $112,126 Cash flows used in investing $(22,447) $(17,711) $(72,608) $(60,732) Cash flows used in financing $(19,100) $(29,180) $(53,686) $(60,507) Net revenues Ameristar St. Charles $68,883 $66,005 $209,332 $191,842 Ameristar Kansas City 59,520 55,480 174,160 159,832 Ameristar Council Bluffs 44,229 40,285 129,056 116,753 Ameristar Vicksburg 26,364 23,643 81,289 70,924 Jackpot Properties 16,655 16,115 46,182 45,523 Consolidated net revenues $215,651 $201,528 $640,019 $584,874 Operating income (loss) Ameristar St. Charles $15,380 $15,644 $51,147 $46,301 Ameristar Kansas City 12,111 9,365 33,487 31,230 Ameristar Council Bluffs 13,317 12,339 38,388 33,718 Ameristar Vicksburg 6,241 5,109 20,972 16,301 Jackpot Properties 3,501 2,462 7,054 7,516 Corporate and other (10,240) (10,723) (29,502) (26,492) Consolidated operating income $40,310 $34,196 $121,546 $108,574 EBITDA (1) Ameristar St. Charles $21,542 $21,423 $68,825 $63,696 Ameristar Kansas City 17,228 12,977 47,780 41,158 Ameristar Council Bluffs 16,312 14,903 46,883 41,271 Ameristar Vicksburg 9,124 7,471 29,427 23,436 Jackpot Properties 4,476 3,414 9,888 10,436 Corporate and other (9,484) (10,104) (27,241) (24,757) Consolidated EBITDA $59,198 $50,084 $175,562 $155,240 Operating income margins (2) Ameristar St. Charles 22.3% 23.7% 24.4% 24.1% Ameristar Kansas City 20.3% 16.9% 19.2% 19.5% Ameristar Council Bluffs 30.1% 30.6% 29.7% 28.9% Ameristar Vicksburg 23.7% 21.6% 25.8% 23.0% Jackpot Properties 21.0% 15.3% 15.3% 16.5% Consolidated operating income margin 18.7% 17.0% 19.0% 18.6% AMERISTAR CASINOS, INC. AND SUBSIDIARIES SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED (Unaudited) Three Months Nine Months Ended September 30, Ended September 30, 2004 2003 2004 2003 EBITDA margins (1) Ameristar St. Charles 31.3% 32.5% 32.9% 33.2% Ameristar Kansas City 28.9% 23.4% 27.4% 25.8% Ameristar Council Bluffs 36.9% 37.0% 36.3% 35.3% Ameristar Vicksburg 34.6% 31.6% 36.2% 33.0% Jackpot Properties 26.9% 21.2% 21.4% 22.9% Consolidated EBITDA margin 27.5% 24.9% 27.4% 26.5% (1) EBITDA is earnings before interest, taxes, depreciation and amortization. EBITDA is presented solely as a supplemental disclosure because management believes that it is a widely used measure of operating performance in the gaming industry and a principal basis for the valuation of gaming companies. Our credit agreement also requires the use of EBITDA as a measure of compliance with our principal debt covenants. In addition, management uses property-level EBITDA (EBITDA before corporate expense) as the primary measure of our operating properties' performance, including the evaluation of operating personnel. EBITDA margin is EBITDA as a percentage of net revenues. EBITDA should not be construed as an alternative to income from operations (as determined in accordance with GAAP) as an indicator of our operating performance, or as an alternative to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity, or as an alternative to any other measure determined in accordance with GAAP. We have significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in EBITDA. It should also be noted that not all gaming companies that report EBITDA calculate EBITDA in the same manner as we do. (2) Operating income margin is operating income as a percentage of net revenues. RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA (Dollars in Thousands) (Unaudited) The following table sets forth a reconciliation of operating income (loss), a GAAP financial measure, to EBITDA, a non-GAAP financial measure. Three Months Nine Months Ended September 30, Ended September 30, 2004 2003 2004 2003 Ameristar St. Charles: Operating income $15,380 $15,644 $51,147 $46,301 Depreciation and amortization 6,162 5,779 17,678 17,395 EBITDA $21,542 $21,423 $68,825 $63,696 Ameristar Kansas City: Operating income $12,111 $9,365 $33,487 $31,230 Depreciation and amortization 5,117 3,612 14,293 9,928 EBITDA $17,228 $12,977 $47,780 $41,158 Ameristar Council Bluffs: Operating income $13,317 $12,339 $38,388 $33,718 Depreciation and amortization 2,995 2,564 8,495 7,553 EBITDA $16,312 $14,903 $46,883 $41,271 Ameristar Vicksburg: Operating income $6,241 $5,109 $20,972 $16,301 Depreciation and amortization 2,883 2,362 8,455 7,135 EBITDA $9,124 $7,471 $29,427 $23,436 Jackpot Properties: Operating income $3,501 $2,462 $7,054 $7,516 Depreciation and amortization 975 952 2,834 2,920 EBITDA $4,476 $3,414 $9,888 $10,436 Corporate and other: Operating loss $(10,240) $(10,723) $(29,502) $(26,492) Depreciation and amortization 756 619 2,261 1,735 EBITDA $(9,484) $(10,104) $(27,241) $(24,757) Consolidated: Operating income $40,310 $34,196 $121,546 $108,574 Depreciation and amortization 18,888 15,888 54,016 46,666 EBITDA $59,198 $50,084 $175,562 $155,240 http://www.newscom.com/cgi-bin/prnh/20040930/LATH017LOGO http://photoarchive.ap.org/ DATASOURCE: Ameristar Casinos, Inc. CONTACT: Tom Steinbauer, Senior Vice President of Finance, Chief Financial Officer of Ameristar Casinos, Inc., +1-702-567-7000 Web site: http://www.ameristar.com/

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