Ameristar Casinos Reports 1Q 2013 Results

Ameristar Casinos Reports 1Q 2013 Results 
LAS VEGAS, NV -- (Marketwired) -- 05/03/13 --  Ameristar Casinos,
Inc. (NASDAQ: ASCA) 


 
--  Net Revenues declined YOY by $17.1 million (5.5%) to $295.1 million
    
    
--  Adjusted EBITDA decreased YOY by $12.3 million (12.1%) to $89.7
    million
    
    
--  Strong Adjusted EBITDA Margin (30.4%) and Adjusted EPS ($0.56)
    
    
--  Continued progress on pending merger with Pinnacle Entertainment,
    Inc.
    
    
--  Construction of Lake Charles property proceeding on schedule and
    within budget

  
Ameristar Casinos, Inc. (NASDAQ: ASCA) today announced financial
results for the first quarter of 2013. 
As anticipated, the first quarter of 2012 proved to be a difficult
comparable for the 2013 first quarter as the 2012 quarter benefited
from an extremely mild winter and the leap year. In addition, the
2013 first quarter presented its own challenges as a combination of
various adverse economic conditions and weather and calendar factors
contributed to a weak revenue quarter in all our regional markets.
Consolidated net revenues for the first quarter decreased year over
year by $17.1 million (5.5%), to $295.1 million. Year-over-year
declines in our other three key financial metrics -- Adjusted EBITDA,
Adjusted EBITDA margin and Adjusted EPS -- resulted primarily from
the top line revenue decline. Despite less than robust revenues year
over year, our business model continued to produce strong margins and
Adjusted EPS. 
The relatively adverse weather during the first quarter of 2013
tended to occur during weekends when we expect to generate peak
revenues. In addition, we believe that the various economic factors,
including higher payroll tax withholding and the rise in fuel and
utility costs, as well as the delayed processing of income tax
refunds, contributed to the year-over-year decline in net revenues.
At a property level, net revenues were negatively affected by a full
quarter of new competition in Kansas City and road construction near
our St. Charles and Black Hawk properties. However, in March and
April 2013, the year-over-year variance in our net revenues has
narrowed relative to the first two months of 2013. 
For the first quarter of 2013, consolidated Adjusted EBITDA decreased
from the prior-year first quarter by $12.3 million (12.1%), to $89.7
million. New competition that entered the Kansas City market in early
February 2012 adversely impacted our Kansas City property's Adjusted
EBITDA for a full quarter this year, resulting in a year-over-year
decrease of $2.7 million (12.4%). Adjusted EBITDA for St. Charles
decreased from the prior-year first quarter by $2.4 million (9.4%).
We believe maintenance on the I-70 bridge near our St. Charles
property negatively impacted first quarter results and will likely
continue to affect the property's performance until completion of the
project in late 2013. Additionally, we believe occasional lane
closures from bridge construction and a road widening project just
south of Black Hawk contributed to the year-over-year decline in
Adjusted EBITDA at Ameristar Black Hawk of $1.1 million (7.2%). First
quarter 2013 Adjusted EBITDA includes $0.4 million in holding costs
related to land acquired in our efforts to pursue a gaming license in
western Massachusetts, which were terminated in late 2012. 
Consolidated Adjusted EBITDA margin decreased from a record 32.7% in
the first quarter of 2012 to 30.4% in the current-year first quarter.
We believe the application of our efficient operating model mitigated
the impact of our net revenue declines on our profitability; despite
the weak revenue performance, our Adjusted EBITDA margin for the 2013
first quarter was only 0.3 percentage point below the average margin
for the last three first quarters. We generated operating income of
$58.1 million in the first quarter of 2013, compared to $69.3 million
in the same period of 2012. Current-year operating income was
adversely impacted by $2.2 million of expenses associated with the
pending merger and $0.5 million of Lake Charles pre-opening costs. 
For the quarter ended March 31, 2013, we reported net income of $18.0
million, compared to net income of $41.4 million for the same period
in 2012. The year-over-year decline in net income was mostly
attributable to the decrease in net revenues, a prior-year reduction
in the income tax provision due to certain income tax elections and
the incurrence of merger-related costs in the current period. Diluted
earnings per share were $0.51 for the first quarter of 2013, compared
to $1.21 in the prior-year first quarter. Adjusted EPS of $0.56 for
the quarter ended March 31, 2013 represents a decrease of $0.19 from
Adjusted EPS of $0.75 for the 2012 first quarter. 
Ameristar Casino Resort Spa Lake Charles  
Construction of Ameristar Casino Resort Spa Lake Charles began on
July 20, 2012 and the property is expected to open in the third
quarter of 2014. The cost of the project (including the purchase
price) is expected to be between $560 million and $580 million,
excluding capitalized interest and pre-opening expenses. Through
March 31, 2013, total invested capital in the Lake Charles project
was $144.5 million, including purchase price, capital expenditures
and escrow deposits. 
Pending Merger 
 As previously announced, on Dec. 20, 2012, Ameristar
Casinos, Inc. entered into an agreement and plan of merger with
Pinnacle Entertainment, Inc. pursuant to which Pinnacle will acquire
all of the outstanding common shares of Ameristar for $26.50 per
share in cash. On April 25, 2013, Ameristar's stockholders approved
the merger agreement by a vote of approximately 81.6% of the
outstanding shares. 
Ameristar and Pinnacle filed the required Hart-Scott-Rodino ("HSR")
premerger notification and report forms on Jan. 11, 2013. On Feb. 11,
2013, Ameristar and Pinnacle received a request for additional
information and documentary materials from the Federal Trade
Commission ("FTC") regarding the proposed acquisition. Completion of
the merger remains subject to customary closing conditions and
required antitrust and gaming regulatory approvals. The transaction
is expected to close in the second or third quarter of 2013. No
assurance can be given that the merger will be completed. 
On April 2, 2013, we completed the solicitation of consents from
holders of the $1.04 billion outstanding principal amount of our
7.50% Senior Notes due 2021 (the "Notes") for waivers of and
amendments to certain provisions of the indenture governing the Notes
and entered into a supplemental indenture to reflect these waivers
and amendments. We made the consent solicitation at the request and
expense of Pinnacle in connection with the proposed merger. The
waivers and amendments do not affect the terms of the Notes prior to
the completion of the merger.  
Additional Financial Information
 Cash and Cash Equivalents. At March
31, 2013, total cash was $124.8 million, representing an increase of
$35.4 million from total cash as of Dec. 31, 2012. In April 2013, we
made a $39.0 million interest payment on the Notes and a combined
$14.6 million required principal payment on our term loans in our
senior secured credit facility.  
Debt. At March 31, 2013, the face amount of our outstanding debt was
$1.92 billion. Net repayments in the first quarter of 2013 totaled
$2.8 million. As of March 31, 2013, we had $498.6 million available
for borrowing under the revolving credit facility. At March 31, 2013,
our Total Net Leverage Ratio (as defined in the senior credit
facility) was required to be no more than 6.00:1. As of that date,
our Total Net Leverage Ratio was 5.21:1. 
Capital Expenditures. For the quarters ended March 31, 2013 and 2012,
capital expenditures totaled $46.8 million and $31.0 million,
respectively. First quarter 2013 capital expenditures included $37.0
million associated with the Lake Charles construction project. The
first quarter 2012 capital expenditures included $16.9 million
(including fees and commissions) to purchase approximately 40 acres
of land in Springfield, Massachusetts as the site for a possible
future casino resort. As previously indicated, we have discontinued
our pursuit of a Massachusetts gaming license. 
Dividends. During the first quarter of 2013, our Board of Directors
declared a cash dividend of $0.125 per share, which we paid on March
15, 2013. On May 1, 2013, the Board declared a cash dividend of
$0.125 per share, payable on June 14, 2013 to stockholders of record
on May 31, 2013. 
Outlook 
In the second quarter of 2013, we currently expect: 


 
--  Depreciation to range from $25.0 million to $26.0 million.
    
    
--  Interest expense, net of capitalized interest, to be between $28.0
    million and $29.0 million, including non-cash interest expense of
    approximately $1.3 million.
    
    
--  The combined state and federal income tax rate to be in the range of
    40% to 42%.
    
    
--  Capital spending of $96.0 million to $101.0 million, including
    approximately $15.0 million for maintenance capital expenditures and
    $84.0 million related to Lake Charles design and construction costs.
    
    
--  Non-cash stock-based compensation expense of $3.6 million to $4.1
    million.
    
    
--  Corporate expense, including merger costs and excluding corporate's
    portion of non-cash stock-based compensation expense, to be between
    $13.2 million and $13.7 million.

  
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," "could," "would," "will" 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, 2012. 
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 is an innovative casino gaming
company featuring the newest and most popular slot machines. Our
7,100 dedicated team members pride themselves on delivering
consistently friendly and appreciative service to our guests. We
continuously strive to increase the loyalty of our guests through the
quality of our slot machines, table games, hotel, dining and other
leisure offerings. Our eight casino hotel properties primarily serve
guests from Colorado, Idaho, Illinois, Indiana, Iowa, Kansas,
Louisiana, Mississippi, Missouri, Nebraska and Nevada. We began
construction on our ninth property, a casino resort in Lake Charles,
La., in July 2012, which we expect will open in the third quarter of
2014. We have been a public company since 1993, and our stock is
traded on the Nasdaq Global Select Market. We generate more than $1
billion in net revenues annually. 
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 at 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 INCOME                 
               (Amounts in Thousands, Except Per Share Data)                
                                (Unaudited)                                 
                                                                            
                                                     Three Months Ended     
                                                          March 31,         
                                                     2013          2012     
                                                 ------------  ------------ 
REVENUES:                                                                   
  Casino                                         $    303,978  $    319,707 
  Food and beverage                                    34,536        34,691 
  Rooms                                                18,774        19,273 
  Other                                                 6,806         6,906 
                                                 ------------  ------------ 
                                                      364,094       380,577 
  Less: promotional allowances                        (69,014)      (68,443)
                                                 ------------  ------------ 
    Net revenues                                      295,080       312,134 
                                                                            
OPERATING EXPENSES:                                                         
  Casino                                              132,225       137,102 
  Food and beverage                                    13,702        14,131 
  Rooms                                                 1,743         2,045 
  Other                                                 2,246         2,351 
  Selling, general and administrative                  61,953        61,048 
  Depreciation and amortization                        25,147        26,521 
  Impairment of fixed assets                               23             - 
  Net gain on disposition of assets                        (9)         (322)
                                                 ------------  ------------ 
    Total operating expenses                          237,030       242,876 
                                                                            
      Income from operations                           58,050        69,258 
                                                                            
OTHER INCOME (EXPENSE):                                                     
  Interest income                                           3            20 
  Interest expense, net of capitalized interest       (28,634)      (26,885)
  Other                                                     -           947 
                                                 ------------  ------------ 
                                                                            
INCOME BEFORE INCOME TAX PROVISION                     29,419        43,340 
    Income tax provision                               11,441         1,974 
                                                 ------------  ------------ 
      NET INCOME                                 $     17,978  $     41,366 
                                                 ============  ============ 
                                                                            
EARNINGS PER SHARE:                                                         
  Basic                                          $       0.55  $       1.26 
                                                 ============  ============ 
  Diluted                                        $       0.51  $       1.21 
                                                 ============  ============ 
                                                                            
CASH DIVIDENDS DECLARED PER SHARE                $      0.125  $      0.125 
                                                 ============  ============ 
                                                                            
WEIGHTED-AVERAGE SHARES OUTSTANDING:                                        
  Basic                                                32,970        32,858 
                                                 ============  ============ 
  Diluted                                              35,027        34,225 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                  AMERISTAR CASINOS, INC. AND SUBSIDIARIES                  
                    SUMMARY CONSOLIDATED FINANCIAL DATA                     
                           (Dollars in Thousands)                           
                                (Unaudited)                                 
                                                                            
                                                   March 31,   December 31, 
                                                     2013          2012     
                                                 ------------  ------------ 
Balance sheet data                                                          
  Cash and cash equivalents                      $    124,774  $     89,392 
  Total assets                                   $  2,125,589  $  2,074,274 
  Total debt, net of discount of $953 and $926   $  1,915,147  $  1,917,979 
  Stockholders' deficit                          $     (2,575) $    (22,259)
                                                                            
                                                                            
                                                  Three Months Ended March  
                                                             31,            
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
Consolidated cash flow information                                          
  Net cash provided by operating activities      $     75,620  $     71,971 
  Net cash used in investing activities          $    (35,367) $    (33,220)
  Net cash used in financing activities          $     (4,871) $    (31,741)
                                                                            
Net revenues                                                                
  Ameristar St. Charles                          $     65,690  $     68,209 
  Ameristar Kansas City                                51,918        56,349 
  Ameristar Council Bluffs                             42,024        43,708 
  Ameristar Black Hawk                                 38,331        39,322 
  Ameristar Vicksburg                                  30,271        32,276 
  Ameristar East Chicago                               53,861        57,519 
  Jackpot Properties                                   12,985        14,751 
                                                 ------------  ------------ 
    Consolidated net revenues                    $    295,080  $    312,134 
                                                 ============  ============ 
                                                                            
Operating income (loss)                                                     
  Ameristar St. Charles                          $     16,093  $     19,063 
  Ameristar Kansas City                                15,155        17,920 
  Ameristar Council Bluffs                             15,890        16,880 
  Ameristar Black Hawk                                  9,020        10,124 
  Ameristar Vicksburg                                  10,670        11,907 
  Ameristar East Chicago                                7,865         8,488 
  Jackpot Properties                                    2,274         3,323 
  Corporate and other                                 (18,917)      (18,447)
                                                 ------------  ------------ 
    Consolidated operating income                $     58,050  $     69,258 
                                                 ============  ============ 
                                                                            
Adjusted EBITDA                                                             
  Ameristar St. Charles                          $     23,299  $     25,720 
  Ameristar Kansas City                                18,801        21,463 
  Ameristar Council Bluffs                             17,943        19,041 
  Ameristar Black Hawk                                 13,485        14,536 
  Ameristar Vicksburg                                  14,321        15,621 
  Ameristar East Chicago                               11,120        12,992 
  Jackpot Properties                                    3,626         4,709 
  Corporate and other                                 (12,945)      (12,107)
                                                 ------------  ------------ 
    Consolidated Adjusted EBITDA                 $     89,650  $    101,975 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                  AMERISTAR CASINOS, INC. AND SUBSIDIARIES                  
              SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED               
                           (Dollars in Thousands)                           
                                (Unaudited)                                 
                                                                            
                                                     Three Months Ended     
                                                          March 31,         
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
Operating income margins (1)                                                
  Ameristar St. Charles                                  24.5%         27.9%
  Ameristar Kansas City                                  29.2%         31.8%
  Ameristar Council Bluffs                               37.8%         38.6%
  Ameristar Black Hawk                                   23.5%         25.7%
  Ameristar Vicksburg                                    35.2%         36.9%
  Ameristar East Chicago                                 14.6%         14.8%
  Jackpot Properties                                     17.5%         22.5%
    Consolidated operating income margin                 19.7%         22.2%
                                                                            
Adjusted EBITDA margins (2)                                                 
  Ameristar St. Charles                                  35.5%         37.7%
  Ameristar Kansas City                                  36.2%         38.1%
  Ameristar Council Bluffs                               42.7%         43.6%
  Ameristar Black Hawk                                   35.2%         37.0%
  Ameristar Vicksburg                                    47.3%         48.4%
  Ameristar East Chicago                                 20.6%         22.6%
  Jackpot Properties                                     27.9%         31.9%
    Consolidated Adjusted EBITDA margin                  30.4%         32.7%

 
(1) Operating income margin is operating income 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 March 31, 2013        
                          --------------------------------------------------
                                                                            
                                                    Impairment              
                                                     Loss and               
                           Operating  Depreciation   Gain on                
                             Income        and     Disposition   Stock-Based
                             (Loss)   Amortization  of Assets   Compensation
                           ---------  ------------ -----------  ------------
Ameristar St. Charles      $  16,093  $      7,042 $         -  $        164
Ameristar Kansas City         15,155         3,521          22           103
Ameristar Council Bluffs      15,890         1,898           5           150
Ameristar Black Hawk           9,020         4,348          12           105
Ameristar Vicksburg           10,670         3,544         (25)          132
Ameristar East Chicago         7,865         3,142           -           113
Jackpot Properties             2,274         1,228           -           124
Corporate and other          (18,917)          424           -         2,861
                           ---------  ------------ -----------  ------------
  Consolidated             $  58,050  $     25,147 $        14  $      3,752
                           =========  ============ ===========  ============
                                                                            
 
                                                               
                                                               
                            Three Months Ended March 31, 2013  
                          -------------------------------------
                                                               
                                           Non-                
                                      Capitalizable            
                            Merger-    Lake Charles            
                            Related    Development   Adjusted  
                             Costs        Costs       EBITDA   
                          ----------- ------------- ---------- 
Ameristar St. Charles     $         - $           - $   23,299 
Ameristar Kansas City               -             -     18,801 
Ameristar Council Bluffs            -             -     17,943 
Ameristar Black Hawk                -             -     13,485 
Ameristar Vicksburg                 -             -     14,321 
Ameristar East Chicago              -             -     11,120 
Jackpot Properties                  -             -      3,626 
Corporate and other             2,175           512    (12,945)
                          ----------- ------------- ---------- 
  Consolidated            $     2,175 $         512 $   89,650 
                          =========== ============= ========== 
                                                               
                                                                            
                                                                            
                                   Three Months Ended March 31, 2012        
                           -------------------------------------------------
                                                                            
                           Operating  Depreciation   Gain on                
                             Income        and     Disposition   Stock-Based
                             (Loss)   Amortization  of Assets   Compensation
                           ---------  ------------ -----------  ------------
Ameristar St. Charles      $  19,063  $      6,659 $      (150) $        148
Ameristar Kansas City         17,920         3,550         (95)           88
Ameristar Council Bluffs      16,880         1,991           -           114
Ameristar Black Hawk          10,124         4,378         (76)          110
Ameristar Vicksburg           11,907         3,584           -           130
Ameristar East Chicago         8,488         4,395          (1)          110
Jackpot Properties             3,323         1,273           -           113
Corporate and other          (18,447)          691           -         4,546
                           ---------  ------------ -----------  ------------
  Consolidated             $  69,258  $     26,521 $      (322) $      5,359
                           =========  ============ ===========  ============
                                                                            
 
                                                               
                                                               
                            Three Months Ended March 31, 2012  
                          ------------------------------------ 
                                                               
                            Deferred                           
                          Compensation     River               
                          Plan Expense   Flooding    Adjusted  
                               (1)       Expenses     EBITDA   
                          ------------ ------------ ---------- 
Ameristar St. Charles     $          - $          - $   25,720 
Ameristar Kansas City                -            -     21,463 
Ameristar Council Bluffs             -           56     19,041 
Ameristar Black Hawk                 -            -     14,536 
Ameristar Vicksburg                  -            -     15,621 
Ameristar East Chicago               -            -     12,992 
Jackpot Properties                   -            -      4,709 
Corporate and other              1,103            -    (12,107)
                          ------------ ------------ ---------- 
  Consolidated            $      1,103 $         56 $  101,975 
                          ============ ============ ========== 

 
(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 Company's consolidated statements of
operations. 


 
                                                                 
        RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA          
               (Dollars in Thousands) (Unaudited)                

 
The following table sets forth a reconciliation of consolidated net
income, a GAAP financial measure, to consolidated Adjusted EBITDA, a
non-GAAP financial measure. 


 
                                                                            
                                               Three Months Ended March 31, 
                                                    2013           2012     
                                               -------------  ------------- 
Net income                                     $      17,978  $      41,366 
  Income tax provision                                11,441          1,974 
  Interest expense, net of capitalized                                      
   interest                                           28,634         26,885 
  Interest income                                         (3)           (20)
  Other                                                    -           (947)
  Net gain on disposition of assets                       (9)          (322)
  Impairment of fixed assets                              23              - 
  Depreciation and amortization                       25,147         26,521 
  Stock-based compensation                             3,752          5,359 
  Merger-related costs                                 2,175              - 
  Non-capitalizable Lake Charles development                                
   costs                                                 512              - 
  Deferred compensation plan expense                       -          1,103 
  River flooding expenses                                  -             56 
                                               -------------  ------------- 
Adjusted EBITDA                                $      89,650  $     101,975 
                                               =============  ============= 
                                                                            
                                                                            
           RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS            
                                (Unaudited)                                 

 
The following table sets forth a reconciliation of diluted earnings
per share (EPS), a GAAP financial measure, to adjusted diluted
earnings per share (Adjusted EPS), a non-GAAP financial measure. 


 
                                                                            
                                               Three Months Ended March 31, 
                                                    2013           2012     
                                               -------------  ------------- 
Diluted earnings per share (EPS)               $        0.51  $        1.21 
  Merger-related costs                                  0.04              - 
  Non-capitalizable Lake Charles development                                
   costs                                                0.01              - 
  Cumulative effect from income tax elections              -          (0.46)
                                               -------------  ------------- 
Adjusted diluted earnings per share (Adjusted                               
 EPS)                                          $        0.56  $        0.75 
                                               =============  ============= 
                                                                            
Weighted-average diluted shares outstanding                                 
 used in calculating Adjusted EPS                     35,027         34,225 
                                               =============  ============= 

 
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, merger-related costs, non-capitalizable development
costs and net river flooding expenses. In future periods, the
calculation of Adjusted EBITDA may be different than in this release.
The foregoing tables reconcile Adjusted EBITDA to operating income
and net income, based upon GAAP. 
Adjusted EPS, as used in this press release, is diluted earnings per
share, excluding the cumulative effect from tax elections,
merger-related costs and non-capitalizable development costs.
Management adjusts EPS, when deemed appropriate, for the evaluation
of operating performance because we believe that the exclusion of
certain 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. 
CONTACT:
Tom Steinbauer
Senior Vice President, Chief Financial Officer
Ameristar Casinos, Inc.
702-567-7000 
 
 
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