SOURCE: Ameristar Casinos, Inc.
LAS VEGAS, NV–(Marketwire – August 4, 2010) – Ameristar Casinos, Inc. (
- Second Quarter Consolidated Net Revenues Decreased $15.9 Million and
Adjusted EBITDA Declined $7.2 Million Year Over Year, Reflecting Greater
than Anticipated Impact from East Chicago Bridge Closure - Strong Consolidated Adjusted EBITDA Margin of 27.2% Despite
Year-Over-Year Net Revenue Decline - Ameristar Black Hawk Adjusted EBITDA Grew 121.5% ($7.7 Million) Year
Over Year, Reflecting Transformation by Regulatory Enhancements and Resort
Hotel Opening - Continued Strengthening of Balance Sheet with $28 Million in Second
Quarter Debt Repayments
Ameristar Casinos, Inc. (
for the second quarter of 2010.
“All of our properties performed quite well during the second quarter, with
the exception of Ameristar East Chicago,” said Gordon Kanofsky, Ameristar’s
Chief Executive Officer. “Although our East Chicago property’s financial
results were adversely affected by a nearby bridge closure to a degree much
greater than originally anticipated, the rest of our property portfolio
produced solid year-over-year results that were consistent with our
expectations going into the second quarter. In fact, if we exclude East
Chicago from our consolidated financial results for both 2010 and 2009, our
Adjusted EBITDA for the second quarter would have increased 2.9% year over
year and our Adjusted EBITDA margin would have increased 0.7 point to
30.6%, illustrating the Company’s efficient revenue flow-through at all its
other properties.
“As was the case in the first quarter, changed conditions for our Black
Hawk and St. Charles properties also significantly influenced our
consolidated second quarter financial performance,” added Kanofsky.
“Ameristar Black Hawk once again posted substantial year-over-year
improvement in all financial metrics thanks to the September 2009 opening
of its luxury hotel and the July 2009 regulatory reform in Colorado. One
of those metrics, Adjusted EBITDA margin, reached 37.6% for the second
quarter of 2010 and set a new quarterly record for the property, far
surpassing its previous record of 34.6% established last quarter. Our St.
Charles property was negatively impacted by new competition that entered
the St. Louis gaming market in early March 2010, although to a lesser
degree than we had anticipated prior to its opening. In addition to
Ameristar Black Hawk, our Council Bluffs and Vicksburg properties were our
most notable positive contributors to this quarter’s operating results, as
demonstrated by their year-over-year growth in Adjusted EBITDA and
margins.”
Second Quarter 2010 Results
The following factors impacted the comparison between the second quarters
of 2010 and 2009:
- East Chicago bridge closure. The permanent closure of the Cline Avenue
bridge in the fourth quarter of 2009 has made access inconvenient for many
of the property’s guests. The closure resulted in decreases of 25.6% and
62.6% in the property’s net revenues and Adjusted EBITDA, respectively, as
compared to the prior-year second quarter. To date, the bridge closure has
had a larger-than-anticipated adverse impact on Ameristar East Chicago’s
financial performance. The Company has significantly reduced forecasted
financial results for the property based on the actual operating results
since the bridge closure. As a result, in the second quarter of 2010 the
Company recorded a non-cash impairment charge of $56.0 million ($33.2
million on an after-tax basis) that completely eliminates the remaining net
book value of goodwill associated with the acquisition of the East Chicago
property and reduces the carrying value of the property’s gaming license to
$12.6 million. - Black Hawk hotel and regulatory changes. The regulatory changes that
became effective early in the third quarter of 2009 and our hotel that
opened in September 2009 contributed to Ameristar Black Hawk’s 81.7% and
121.5% increases in year-over-year net revenues and Adjusted EBITDA,
respectively. - Ameristar St. Charles. During the second quarter of 2010, our St.
Charles property’s net revenues and Adjusted EBITDA declined 11.6% and
14.2%, respectively, from the prior-year second quarter. The decreases
were mostly due to the entry of a new competitor in the St. Louis gaming
market.
Consolidated net revenues for the second quarter decreased 5.1%, from
$308.9 million in the prior year to $293.0 million in the current year.
The year-over-year comparison was mostly impacted by the combined effect of
the East Chicago, Black Hawk and St. Charles factors noted above. For the
quarter ended June 30, 2010, promotional allowances increased $15.6 million
(23.7%) over the prior-year second quarter. The year-over-year rise in
promotional allowances was mostly due to increased promotional spending
related to the new hotel in Black Hawk and our efforts to draw business
following the bridge closure near our East Chicago property. For the
second quarter of 2010, as a result of the East Chicago non-cash impairment
charge, we generated an operating loss of $6.0 million, compared to
operating income of $55.6 million in the same period in 2009. Consolidated
Adjusted EBITDA decreased 8.3%, from $86.8 million in the second quarter of
2009 to $79.6 million in 2010. Consolidated Adjusted EBITDA margin
decreased 0.9 percentage point, from 28.1% in the second quarter of 2009 to
27.2% in the second quarter of 2010.
For the three months ended June 30, 2010, the Company incurred a net loss
of $24.9 million, or $0.43 per diluted share, compared to net income of
$14.3 million, or $0.25 per diluted share, for the quarter ended June 30,
2009. Excluding the impact of the East Chicago impairment charge, net
income would have been $8.3 million for the second quarter of 2010.
Adjusted EPS was $0.13 for the quarter ended June 30, 2010, compared to
$0.32 for the 2009 second quarter. The decrease in Adjusted EPS from the
prior-year second quarter was primarily attributable to higher borrowing
costs resulting from the Company’s 2009 debt restructuring, as well as the
decline in net revenues. Adjusted EPS for the 2010 second quarter reflects
a $0.09 negative impact from increased interest expense.
Additional Financial Information
Debt. At June 30, 2010, the face amount of our outstanding debt was
$1.63 billion. Net repayments in the second quarter of 2010 totaled $28.0
million, including a $27.0 million repayment of a portion of the principal
balance outstanding under the revolving credit facility. After taking into
consideration the $62.0 million in net repayments under the revolving
credit facility for the first six months of 2010, the Company has $118.6
million due in November 2010, with approximately $122 million available for
borrowing under the extended portion of the revolving credit facility. The
Company intends to repay all 2010 debt maturities with cash from operations
and availability under the extended portion of the revolving credit
facility. At June 30, 2010, our total leverage and senior leverage ratios
(each as defined in the senior credit facility) were required to be no more
than 6.00:1 and 5.50:1, respectively. As of that date, our total leverage
and senior leverage ratios were each 4.95:1.
Interest Expense. For the second quarter of 2010, net interest
expense was $34.1 million, compared to $25.6 million in the prior-year
second quarter. The increase is due mostly to the May 2009 issuance of our
9-1/4% senior unsecured notes due in 2014 and the incremental interest
expense incurred on the portion of the revolving credit facility that was
extended in November 2009. Additionally, capitalized interest decreased
from $2.4 million for the second quarter of 2009 to $0.2 million in the
2010 second quarter, due to the completion of the Black Hawk hotel.
Capital Expenditures. For the second quarters of 2010 and 2009,
capital expenditures were $12.2 million and $35.6 million, respectively.
Dividends. During the second quarter of 2010, our Board of Directors
declared a cash dividend of $0.105 per share, which we paid on June 25,
2010.
Outlook
“As we look into the third quarter, we are optimistic regarding the
performance of the properties in our more stable markets, including Kansas
City, Council Bluffs and Vicksburg,” said Kanofsky. “We anticipate Black
Hawk will continue to produce year-over-year growth based on the new hotel
and related amenities despite reaching the July anniversary of the
regulatory changes. We also expect some opportunities for growth in
Missouri, as both of our properties have been permitted to operate 24 hours
daily (except for one hour each Wednesday morning) since July 1, 2010.
Prior to the change in operating hours, our Missouri properties were
required to be closed for three hours per day on non-holiday weekdays.
From an Adjusted EPS standpoint, assuming no significant changes in LIBOR,
we expect to save approximately $6.5 million in interest expense per
quarter from the July 19, 2010 expiration of our interest rate swap
agreements. We also intend to seek Adjusted EPS growth through further
deleveraging with free cash flow.”
In the third quarter of 2010, the Company currently expects:
- depreciation to range from $27 million to $28 million.
- interest expense, net of capitalized interest, to be between $27.5
million and $28.5 million, including non-cash interest expense of
approximately $2.8 million. - the combined state and federal income tax rate to be in the range of
42.5% to 43.5%. - capital spending of $15 million to $20 million.
- capitalized interest of $0.1 million to $0.2 million.
- debt reduction of approximately $25 million.
- non-cash stock-based compensation expense of $3.4 million to $3.9
million.
Conference Call Information
We will hold a conference call to discuss our second quarter results on
Wednesday, August 4, 2010 at 11 a.m. EDT. The call may be accessed live by
dialing toll-free (888) 694-4728 domestically, or (973) 582-2745, and
referencing conference ID number 87046127. Conference call participants
are requested to dial in at least five minutes early to ensure a prompt
start. Interested parties wishing to listen to the conference call and
view corresponding informative slides on the Internet may do so live at our
website — www.ameristar.com — by clicking on “About Us/Investor
Relations” and selecting the “Webcasts and Events” link. A copy of the
slides will be available in the corresponding “Earnings Releases” section
one-half hour before the conference call. In addition, the call will be
recorded and can be replayed from 2 p.m. EDT, August 4, 2010 until 11:59
p.m. EDT, August 18, 2010. To listen to the replay, call toll-free (800)
642-1687 domestically, or (706) 645-9291, and reference the conference ID
number above.
Forward-Looking Information
This 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,” “should”
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 1A. 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, 2009, 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
March 31, 2010.
On a monthly basis, gaming regulatory authorities in certain states in
which we operate publish gross gaming revenue and/or certain other
financial information for the gaming facilities that operate within their
respective jurisdictions. Because various factors in addition to our gross
gaming revenue (including operating costs, promotional allowances and
corporate and other expenses) influence our operating income, Adjusted
EBITDA and diluted earnings per share, such reported information, as it
relates to Ameristar, may not accurately reflect the results of our
operations for such periods or for future periods.
About Ameristar
Ameristar Casinos, Inc. is a leading Las Vegas-based gaming and
entertainment company known for its premier properties characterized by
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 leading
positions in the markets in which it operates. Founded in 1954 in Jackpot,
Nev., Ameristar has been a public company since November 1993. The Company
has a portfolio of eight casinos in seven markets: Ameristar Casino Resort
Spa St. Charles (greater St. Louis); Ameristar Casino Hotel East Chicago
(Chicagoland area); Ameristar Casino Hotel Kansas City; Ameristar Casino
Hotel Council Bluffs (Omaha, Neb., and southwestern Iowa); Ameristar Casino
Hotel Vicksburg (Jackson, Miss., and Monroe, La.); Ameristar Casino Resort
Spa Black Hawk (Denver metropolitan area); and Cactus Petes Resort Casino
and The Horseshu Hotel and Casino in Jackpot, Nev. (Idaho and the Pacific
Northwest).
Visit Ameristar Casinos’ website at www.ameristar.com (which shall not be
deemed to be incorporated in or a part of this news release).
Please refer to the tables near the end of this release for the
reconciliation of the non-GAAP financial measures Adjusted EBITDA and
Adjusted EPS reported throughout this release. Additionally, more
information on these non-GAAP financial measures can be found under the
caption “Use of Non-GAAP Financial Measures” at the end of this release.
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
--------- --------- --------- ---------
REVENUES:
Casino $ 313,120 $ 315,526 $ 627,660 $ 638,404
Food and beverage 32,674 34,808 65,935 72,773
Rooms 20,245 15,810 39,632 30,486
Other 8,453 8,615 16,182 16,814
--------- --------- --------- ---------
374,492 374,759 749,409 758,477
Less: promotional allowances (81,488) (65,857) (153,786) (133,737)
--------- --------- --------- ---------
Net revenues 293,004 308,902 595,623 624,740
OPERATING EXPENSES:
Casino 134,102 142,136 269,642 286,480
Food and beverage 15,618 16,580 32,076 33,084
Rooms 4,576 2,102 9,132 4,334
Other 3,301 4,355 6,550 7,747
Selling, general and
administrative 58,169 62,050 120,570 115,585
Depreciation and amortization 27,193 26,229 54,805 52,701
Impairment of goodwill 21,438 - 21,438 -
Impairment of other
intangible assets 34,600 - 34,600 -
Impairment of fixed assets 4 42 4 95
Net loss (gain) on
disposition of assets 1 (170) 53 (165)
--------- --------- --------- ---------
Total operating expenses 299,002 253,324 548,870 499,861
(Loss) income from
operations (5,998) 55,578 46,753 124,879
OTHER INCOME (EXPENSE):
Interest income 112 125 224 269
Interest expense, net of
capitalized interest (34,059) (25,602) (68,499) (42,517)
Loss on early retirement of
debt - (5,210) - (5,210)
Other (722) 1,028 (301) 583
--------- --------- --------- ---------
(LOSS) INCOME BEFORE INCOME TAX
(BENEFIT) PROVISION (40,667) 25,919 (21,823) 78,004
Income tax (benefit)
provision (15,775) 11,639 (7,609) 33,823
--------- --------- --------- ---------
NET (LOSS) INCOME $ (24,892) $ 14,280 $ (14,214) $ 44,181
========= ========= ========= =========
(LOSS) EARNINGS PER SHARE:
Basic $ (0.43) $ 0.25 $ (0.25) $ 0.77
========= ========= ========= =========
Diluted $ (0.43) $ 0.25 $ (0.25) $ 0.76
========= ========= ========= =========
CASH DIVIDENDS DECLARED PER
SHARE $ 0.11 $ 0.11 $ 0.21 $ 0.11
========= ========= ========= =========
WEIGHTED-AVERAGE SHARES
OUTSTANDING:
Basic 58,005 57,483 57,908 57,411
========= ========= ========= =========
Diluted 58,005 58,237 57,908 57,947
========= ========= ========= =========
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
June 30, 2010 December 31, 2009
-------------------- --------------------
Balance sheet data
Cash and cash equivalents $ 97,906 $ 96,493
Total assets $ 2,131,595 $ 2,214,628
Total debt, net of discount of
$11,344 and $12,779 $ 1,614,369 $ 1,677,128
Stockholders' equity $ 333,457 $ 335,993
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
--------- --------- --------- ---------
Consolidated cash flow
information
Net cash provided by
operating activities $ 37,515 $ 57,165 $ 107,301 $ 126,204
Net cash used in investing
activities $ (14,620) $ (45,920) $ (31,191) $ (96,404)
Net cash used in financing
activities $ (33,290) $ (2,953) $ (74,697) $ (9,496)
Net revenues
Ameristar St. Charles $ 64,791 $ 73,311 $ 135,100 $ 150,483
Ameristar East Chicago 50,959 68,495 106,979 136,122
Ameristar Kansas City 55,421 58,656 110,045 118,826
Ameristar Council Bluffs 38,456 39,989 77,382 82,239
Ameristar Vicksburg 29,503 31,026 60,154 64,145
Ameristar Black Hawk 37,510 20,649 74,464 41,045
Jackpot Properties 16,364 16,776 31,499 31,880
--------- --------- --------- ---------
Consolidated net revenues $ 293,004 $ 308,902 $ 595,623 $ 624,740
========= ========= ========= =========
Operating income (loss)
Ameristar St. Charles $ 13,636 $ 16,523 $ 31,454 $ 38,438
Ameristar East Chicago (54,525) 11,055 (49,926) 23,582
Ameristar Kansas City 14,423 15,951 28,700 32,607
Ameristar Council Bluffs 11,895 11,482 23,824 24,207
Ameristar Vicksburg 8,931 8,493 19,017 19,274
Ameristar Black Hawk 9,155 1,996 16,828 5,871
Jackpot Properties 3,451 4,032 6,437 7,301
Corporate and other (12,964) (13,954) (29,581) (26,401)
--------- --------- --------- ---------
Consolidated operating
(loss) income $ (5,998) $ 55,578 $ 46,753 $ 124,879
========= ========= ========= =========
Adjusted EBITDA
Ameristar St. Charles $ 20,252 $ 23,610 $ 44,662 $ 52,409
Ameristar East Chicago 5,520 14,763 14,062 30,939
Ameristar Kansas City 18,177 19,840 36,187 40,705
Ameristar Council Bluffs 14,629 14,242 29,372 29,970
Ameristar Vicksburg 12,758 12,609 26,860 27,803
Ameristar Black Hawk 14,102 6,366 26,883 13,098
Jackpot Properties 4,863 5,674 9,406 10,479
Corporate and other (10,708) (10,351) (22,686) (20,729)
--------- --------- --------- ---------
Consolidated Adjusted EBITDA $ 79,593 $ 86,753 $ 164,746 $ 184,674
========= ========= ========= =========
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED
(Dollars in Thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
-------- -------- -------- --------
Operating income (loss) margins (1)
Ameristar St. Charles 21.0% 22.5% 23.3% 25.5%
Ameristar East Chicago -107.0% 16.1% -46.7% 17.3%
Ameristar Kansas City 26.0% 27.2% 26.1% 27.4%
Ameristar Council Bluffs 30.9% 28.7% 30.8% 29.4%
Ameristar Vicksburg 30.3% 27.4% 31.6% 30.0%
Ameristar Black Hawk 24.4% 9.7% 22.6% 14.3%
Jackpot Properties 21.1% 24.0% 20.4% 22.9%
Consolidated operating (loss)
income margin -2.0% 18.0% 7.8% 20.0%
Adjusted EBITDA margins (2)
Ameristar St. Charles 31.3% 32.2% 33.1% 34.8%
Ameristar East Chicago 10.8% 21.6% 13.1% 22.7%
Ameristar Kansas City 32.8% 33.8% 32.9% 34.3%
Ameristar Council Bluffs 38.0% 35.6% 38.0% 36.4%
Ameristar Vicksburg 43.2% 40.6% 44.7% 43.3%
Ameristar Black Hawk 37.6% 30.8% 36.1% 31.9%
Jackpot Properties 29.7% 33.8% 29.9% 32.9%
Consolidated Adjusted EBITDA
margin 27.2% 28.1% 27.7% 29.6%
(1) Operating income (loss) margin is operating income (loss) as a
percentage of net revenues.
(2) Adjusted EBITDA margin is Adjusted EBITDA as a percentage of net
revenues.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA
(Dollars in Thousands) (Unaudited)
The following tables set forth reconciliations of operating income (loss),
a GAAP financial measure, to Adjusted EBITDA, a non-GAAP financial measure.
Three Months Ended June 30, 2010
----------------------------------------------------------
Impairment
Loss
and (Gain) Deferred
Depreci- Loss on Stock- Compen-
Operating ation Disposi- Based sation
Income and Amorti- tion Compen- Plan Adjusted
(Loss) zation of Assets sation Expense(1) EBITDA
-------- --------- -------- --------- -------- --------
Ameristar St.
Charles $ 13,636 $ 6,453 $ (2) $ 165 $ - $ 20,252
Ameristar East
Chicago (54,525) 3,925 56,041 79 - 5,520
Ameristar
Kansas City 14,423 3,620 - 134 - 18,177
Ameristar
Council Bluffs 11,895 2,622 - 112 - 14,629
Ameristar
Vicksburg 8,931 3,684 - 143 - 12,758
Ameristar Black
Hawk 9,155 4,827 - 120 - 14,102
Jackpot
Properties 3,451 1,297 - 115 - 4,863
Corporate and
other (12,964) 765 4 2,221 (734) (10,708)
-------- --------- -------- --------- -------- --------
Consolidated $ (5,998) $ 27,193 $ 56,043 $ 3,089 $ (734) $ 79,593
======== ========= ======== ========= ======== ========
Three Months Ended June 30, 2009
---------------------------------------------------
Impairment
Loss and
(Gain) Loss
Operating Depreciation on
Income and Disposition Stock-Based
(Loss) Amortization of Assets Compensation
----------- ------------ ----------- ------------
Ameristar St. Charles $ 16,523 $ 6,929 $ - $ 158
Ameristar East Chicago 11,055 3,640 17 51
Ameristar Kansas City 15,951 3,746 - 143
Ameristar Council
Bluffs 11,482 2,795 (140) 105
Ameristar Vicksburg 8,493 3,992 (3) 127
Ameristar Black Hawk 1,996 2,798 - 99
Jackpot Properties 4,032 1,541 (2) 103
Corporate and other (13,954) 788 - 1,851
----------- ------------ ----------- ------------
Consolidated $ 55,578 $ 26,229 $ (128) $ 2,637
=========== ============ =========== ============
Three Months Ended June 30, 2009
---------------------------------------------------
Deferred
Compensation One-Time
Plan Expense Pre-Opening Property Tax Adjusted
(1) Costs Adjustment EBITDA
------------ ------------ ------------ -----------
Ameristar St. Charles $ - $ - $ - $ 23,610
Ameristar East Chicago - - - 14,763
Ameristar Kansas City - - - 19,840
Ameristar Council
Bluffs - - - 14,242
Ameristar Vicksburg - - - 12,609
Ameristar Black Hawk - 197 1,276 6,366
Jackpot Properties - - - 5,674
Corporate and other 964 - - (10,351)
------------ ------------ ------------ -----------
Consolidated $ 964 $ 197 $ 1,276 $ 86,753
============ ============ ============ ===========
(1) Deferred compensation plan expense represents the change in the
Company’s non-cash liability based on plan participant investment results.
This expense is included in selling, general and administrative expenses in
the accompanying condensed consolidated statements of operations.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA - CONTINUED
(Dollars in Thousands) (Unaudited)
Six Months Ended June 30, 2010
----------------------------------------------------------
Impairment
Loss
and (Gain) Deferred
Depreci- Loss on Stock- Compen-
Operating ation Disposi- Based sation
Income and Amorti- tion Compen- Plan Adjusted
(Loss) zation of Assets sation Expense(1) EBITDA
-------- --------- -------- --------- -------- --------
Ameristar St.
Charles $ 31,454 $ 12,866 $ 14 $ 328 $ - $ 44,662
Ameristar East
Chicago (49,926) 7,801 56,029 158 - 14,062
Ameristar
Kansas City 28,700 7,267 (44) 264 - 36,187
Ameristar
Council Bluffs 23,824 5,325 - 223 - 29,372
Ameristar
Vicksburg 19,017 7,543 14 286 - 26,860
Ameristar Black
Hawk 16,828 9,814 - 241 - 26,883
Jackpot
Properties 6,437 2,662 78 229 - 9,406
Corporate and
other (29,581) 1,527 4 5,550 (186) (22,686)
-------- --------- -------- --------- -------- --------
Consolidated $ 46,753 $ 54,805 $ 56,095 $ 7,279 $ (186) $164,746
======== ========= ======== ========= ======== ========
Six Months Ended June 30, 2009
---------------------------------------------------
Impairment
Loss and
(Gain) Loss
Operating Depreciation on
Income and Disposition Stock-Based
(Loss) Amortization of Assets Compensation
----------- ------------ ----------- ------------
Ameristar St. Charles $ 38,438 $ 13,615 $ 41 $ 315
Ameristar East Chicago 23,582 7,186 69 102
Ameristar Kansas City 32,607 7,863 (49) 284
Ameristar Council
Bluffs 24,207 5,700 (146) 209
Ameristar Vicksburg 19,274 8,259 16 254
Ameristar Black Hawk 5,871 5,545 - 209
Jackpot Properties 7,301 2,974 (1) 205
Corporate and other (26,401) 1,559 - 3,608
----------- ------------ ----------- ------------
Consolidated $ 124,879 $ 52,701 $ (70) $ 5,186
=========== ============ =========== ============
Six Months Ended June 30, 2009
---------------------------------------------------
Deferred
Compensation One-Time
Plan Expense Pre-Opening Property Tax Adjusted
(1) Costs Adjustment EBITDA
------------ ------------ ------------ -----------
Ameristar St. Charles $ - $ - $ - $ 52,409
Ameristar East Chicago - - - 30,939
Ameristar Kansas City - - - 40,705
Ameristar Council
Bluffs - - - 29,970
Ameristar Vicksburg - - - 27,803
Ameristar Black Hawk - 197 1,276 13,098
Jackpot Properties - - - 10,479
Corporate and other 505 - - (20,729)
------------ ------------ ------------ -----------
Consolidated $ 505 $ 197 $ 1,276 $ 184,674
============ ============ ============ ===========
(1) Deferred compensation plan expense represents the change in the
Company’s non-cash liability based on plan participant investment results.
This expense is included in selling, general and administrative expenses in
the accompanying condensed consolidated statements of operations.
RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA
(Dollars in Thousands) (Unaudited)
The following table sets forth a reconciliation of consolidated net (loss)
income, a GAAP financial measure, to consolidated Adjusted EBITDA, a
non-GAAP financial measure.
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
-------- -------- -------- --------
Net (loss) income $(24,892) $ 14,280 $(14,214) $ 44,181
Income tax (benefit) provision (15,775) 11,639 (7,609) 33,823
Interest expense, net of
capitalized interest 34,059 25,602 68,499 42,517
Interest income (112) (125) (224) (269)
Other 722 (1,028) 301 (583)
Net loss (gain) on disposition of
assets 1 (170) 53 (165)
Impairment of goodwill 21,438 - 21,438 -
Impairment of other intangible
assets 34,600 - 34,600 -
Impairment of fixed assets 4 42 4 95
Depreciation and amortization 27,193 26,229 54,805 52,701
Stock-based compensation 3,089 2,637 7,279 5,186
Deferred compensation plan
expense (734) 964 (186) 505
Loss on early retirement of debt - 5,210 - 5,210
Black Hawk hotel pre-opening
costs - 197 - 197
One-time non-cash adjustment to
Black Hawk property taxes - 1,276 - 1,276
-------- -------- -------- --------
Adjusted EBITDA $ 79,593 $ 86,753 $164,746 $184,674
======== ======== ======== ========
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
(Unaudited)
The following table sets forth a reconciliation of diluted (loss) earnings
per share (EPS), a GAAP financial measure, to adjusted diluted earnings per
share (Adjusted EPS), a non-GAAP financial measure.
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
--------- ---------- --------- ----------
Diluted (loss) earnings per
share (EPS) $ (0.43) $ 0.25 $ (0.25) $ 0.76
Impairment loss on East Chicago
intangible assets 0.56 - 0.56 -
Loss on early retirement of
debt - 0.06 - 0.06
One-time non-cash adjustment to
Black Hawk property taxes - 0.01 - 0.01
--------- ---------- --------- ----------
Adjusted diluted earnings
per share (Adjusted EPS) $ 0.13 $ 0.32 $ 0.31 $ 0.83
========= ========== ========= ==========
Use of Non-GAAP Financial Measures
Securities and Exchange Commission Regulation G, “Conditions for Use of
Non-GAAP Financial Measures,” prescribes the conditions for use of non-GAAP
financial information in public disclosures. We believe our presentation
of the non-GAAP financial measures Adjusted EBITDA and Adjusted EPS are
important supplemental measures of operating performance to investors. The
following discussion defines these terms and explains why we believe they
are useful measures of our performance.
Adjusted EBITDA is a commonly used measure of performance in the gaming
industry that we believe, when considered with measures calculated in
accordance with United States generally accepted accounting principles, or
GAAP, gives investors a more complete understanding of operating results
before the impact of investing and financing transactions, income taxes and
certain non-cash and non-recurring items and facilitates comparisons
between us and our competitors.
Adjusted EBITDA is a significant factor in management’s internal evaluation
of total Company and individual property performance and in the evaluation
of incentive compensation for employees. Therefore, we believe Adjusted
EBITDA is useful to investors because it allows greater transparency
related to a significant measure used by management in its financial and
operational decision-making and because it permits investors similarly to
perform more meaningful analyses of past, present and future operating
results and evaluations of the results of core ongoing operations.
Furthermore, we believe investors would, in the absence of the Company’s
disclosure of Adjusted EBITDA, attempt to use equivalent or similar
measures in assessment of our operating performance and the valuation of
our Company. We have reported Adjusted EBITDA to our investors in the past
and believe its inclusion at this time will provide consistency in our
financial reporting.
Adjusted EBITDA, as used in this press release, is earnings before
interest, taxes, depreciation, amortization, other non-operating income and
expenses, stock-based compensation, deferred compensation plan expense,
impairment charges related to intangible assets, pre-opening costs and a
one-time Black Hawk property tax adjustment. In future periods, the
calculation of Adjusted EBITDA may be different than in this release. The
foregoing tables reconcile Adjusted EBITDA to operating income (loss) and
net (loss) income, based upon GAAP.
Adjusted EPS, as used in this press release, is diluted (loss) earnings per
share, excluding the after-tax per-share impacts of impairment charges
related to intangible assets, the one-time Black Hawk property tax
adjustment and the loss on early debt retirement. Management adjusts EPS,
when deemed appropriate, for the evaluation of operating performance
because we believe that the exclusion of certain non-recurring items is
necessary to provide the most accurate measure of our core operating
results and as a means to compare period-to-period results. We have chosen
to provide this information to investors to enable them to perform more
meaningful analysis of past, present and future operating results and as a
means to evaluate the results of our core ongoing operations. Adjusted EPS
is a significant factor in the internal evaluation of total Company
performance. Management believes this measure is used by investors in
their assessment of our operating performance and the valuation of our
Company. In future periods, the adjustments we make to EPS in order to
calculate Adjusted EPS may be different than or in addition to those made
in this release. The foregoing table reconciles EPS to Adjusted EPS.
Limitations on the Use of Non-GAAP Measures
The use of Adjusted EBITDA and Adjusted EPS has certain limitations. Our
presentation of Adjusted EBITDA and Adjusted EPS may be different from the
presentations used by other companies and therefore comparability among
companies may be limited. Depreciation expense for various long-term
assets, interest expense, income taxes and other items have been and will
be incurred and are not reflected in the presentation of Adjusted EBITDA.
Each of these items should also be considered in the overall evaluation of
our results. Additionally, Adjusted EBITDA does not consider capital
expenditures and other investing activities and should not be considered as
a measure of our liquidity. We compensate for these limitations by
providing the relevant disclosure of our depreciation, interest and income
tax expense, capital expenditures and other items both in our
reconciliations to the GAAP financial measures and in our consolidated
financial statements, all of which should be considered when evaluating our
performance.
Adjusted EBITDA and Adjusted EPS should be used in addition to and in
conjunction with results presented in accordance with GAAP. Adjusted
EBITDA and Adjusted EPS should not be considered as an alternative to net
income, operating income or any other operating performance measure
prescribed by GAAP, nor should these measures be relied upon to the
exclusion of GAAP financial measures. Adjusted EBITDA and Adjusted EPS
reflect additional ways of viewing our operations that we believe, when
viewed with our GAAP results and the reconciliations to the corresponding
GAAP financial measures, provide a more complete understanding of factors
and trends affecting our business than could be obtained absent this
disclosure. Management strongly encourages investors to review our
financial information in its entirety and not to rely on a single financial
measure.