SOURCE: Ameristar Casinos, Inc.

Ameristar Casinos, Inc.

August 01, 2012 09:00 ET

Ameristar Casinos Reports 2Q 2012 Results

LAS VEGAS, NV--(Marketwire - Aug 1, 2012) - Ameristar Casinos, Inc. (NASDAQ: ASCA)

  • 2Q Net Revenues decreased $8.8 million (2.9%) YOY to $296.3 million

  • 2Q Adjusted EBITDA declined $4.1 million (4.3%) YOY to $90.2 million

  • Strong 2Q Adjusted EBITDA margin of 30.4%

  • 2Q Adjusted EPS improved by $0.01 (2.0%) YOY to $0.51

  • Construction of Ameristar Lake Charles commenced on July 20, 2012

Ameristar Casinos, Inc. (NASDAQ: ASCA) today announced financial results for the second quarter of 2012.

"After an extremely strong first quarter, when we established several all-time financial performance records, the second quarter of 2012 proved to be a bit softer," said Gordon Kanofsky, Ameristar's Chief Executive Officer. "The combination of new competition, construction disruption and a pull-back in consumer discretionary spending impacted the quarter. As a result, we were unable to continue our lengthy year-over-year quarterly increases in net revenues, Adjusted EBITDA and Adjusted EBITDA margin. Nonetheless, our Adjusted EPS grew on a year-over-year basis for the seventh consecutive quarter and we continued to operate with a strong consolidated Adjusted EBITDA margin above 30%. Our Black Hawk property was a notable contributor to the consolidated margin as it produced the best quarterly financial performance in its history. Looking beyond the quarterly performance measures, we achieved the best first-half financial performance in Ameristar's history.

"Additionally, we are pleased with the progress made on our casino hotel spa development in Lake Charles, La. Within the last two months, we received the necessary regulatory approvals, completed the acquisition and commenced construction. We look forward to further growing our company and diversifying our operations by adding a luxury casino resort that will cater to patrons from southwest Louisiana and east Texas, including the Houston metropolitan area."

Consolidated net revenues for the second quarter decreased year over year by $8.8 million, to $296.3 million. We believe the slower growth in consumer discretionary spending adversely impacted our top-line results. Additionally, new competition continued to adversely impact our Kansas City and East Chicago properties, with year-over-year declines of $5.0 million (8.8%) and $3.6 million (6.4%), respectively. Net revenues at our Jackpot properties decreased by $1.6 million (10.2%), due mostly to the combined effect of road repaving on Highway 93 between Twin Falls, Idaho and Jackpot and a hotel renovation that was completed in late July 2012. As a result, Jackpot had a disproportionately large impact on the year-over-year changes in our key financial metrics for the second quarter. Our Black Hawk and Vicksburg properties improved year-over-year net revenues by $1.8 million (4.6%) and $1.5 million (5.2%), respectively, as Black Hawk set a second quarter record and Vicksburg rebounded from the prior-year flooding. Consolidated second quarter promotional allowances decreased $1.9 million (2.8%) from the prior-year second quarter, although promotional costs as a percentage of gross gaming revenues experienced a slight year-over-year increase.

For the second quarter of 2012, consolidated Adjusted EBITDA decreased from the prior-year second quarter by $4.1 million (4.3%) to $90.2 million. Five of our properties had lower Adjusted EBITDA on a year-over-year basis, with Kansas City down $2.8 million (12.8%) and Jackpot down $1.4 million (25.8%). Black Hawk established its all-time quarterly Adjusted EBITDA record at $15.0 million, an increase of $1.5 million (11.3%) over the prior-year second quarter.

Consolidated Adjusted EBITDA margin decreased from 30.9% in the second quarter of 2011 to 30.4% in the current-year second quarter. Nonetheless, the second quarter of 2011 and 2012 are the only quarters in which we have generated a consolidated Adjusted EBITDA margin in excess of 30% during the second, third or fourth quarters, reflecting the strength of the operational improvements we have put in place during the current economic downturn. We generated operating income of $59.0 million in the second quarter of 2012, compared to $59.4 million in the same period in 2011. Prior-year operating income was adversely impacted by $3.4 million in non-operational professional fees.

For the quarter ended June 30, 2012, we reported net income of $17.6 million, compared to a net loss of $41.3 million for the same period in 2011. The year-over-year improvement in net income was mostly attributable to a pre-tax loss on early retirement of debt of $85.3 million ($54.7 million on an after-tax basis) recognized in the prior-year second quarter and the absence of non-operational professional fees in the current period. Diluted earnings per share was $0.51 for the second quarter of 2012, compared to a loss per share of $1.10 in the prior-year second quarter. Adjusted EPS of $0.51 for the quarter ended June 30, 2012 represents an increase of $0.01 over Adjusted EPS for the 2011 second quarter. Second quarter 2012 EPS calculations were favorably impacted by the reduction from the prior-year second quarter of approximately 3.3 million weighted-average number of diluted shares as a result of the April 2011 share repurchase from our then majority shareholder.

Ameristar Lake Charles Construction Begins
On March 14, 2012, we entered into a definitive agreement to acquire all of the equity interests of Creative Casinos of Louisiana, L.L.C. (''Creative'') for $32.5 million. The transaction closed on July 16, 2012, and construction began on July 20, 2012.

Ameristar Casino Resort Spa Lake Charles is being developed on a 243-acre leased site and will include a casino with approximately 1,600 slot machines and 60 table games, a hotel with approximately 700 guest rooms (including 70 suites), a variety of food and beverage outlets, an 18-hole golf course, a tennis club, swimming pools, a spa and other resort amenities, and approximately 3,000 parking spaces, 1,000 of which will be in a garage. The cost of the project (including the purchase price) is expected to be between $560 million to $580 million, excluding capitalized interest and pre-opening expenses. We anticipate funding the project through a combination of cash from operations and borrowings under our revolving credit facility. We expect to open the resort in the third quarter of 2014.

Additional Financial Information
Cash and Cash Equivalents. At June 30, 2012, total cash was $135.5 million, which represented an increase of $49.8 million from total cash as of December 31, 2011 and was approximately $60 million more than required for daily operations. The increase is attributable to accumulated cash flows from operations and no outstanding indebtedness subject to voluntary repayment under our revolving credit facility (as described below). A portion of the excess cash was utilized to cover the Creative purchase price in July and the balance will be used primarily to fund the development of Ameristar Lake Charles.

Debt. At June 30, 2012, the face amount of our outstanding debt was $1.9 billion. Net borrowings for the second quarter of 2012 totaled $19.8 million. At June 30, 2012, our Total Net Leverage Ratio (as defined in the senior credit facility) was required to be no more than 6.50:1. As of that date, our Total Net Leverage Ratio was 4.99:1.

On April 26, 2012, we issued $240.0 million principal amount of 7.50% Senior Notes due 2021. These notes were issued under the same indenture as the $800.0 million principal amount of 7.50% Senior Notes due 2021 that we issued in April 2011. The new notes were sold at a premium to the principal amount, resulting in a yield to maturity of 6.88%. The net proceeds from this offering were $244.0 million, of which $236.0 million was used to repay all the outstanding indebtedness under our revolving credit facility, which we may re-borrow from time to time. The balance of the net proceeds will be used for general corporate purposes. After applying the proceeds to the outstanding revolving credit facility and with no subsequent borrowings, we had $496.0 million available for borrowing under the revolving credit facility as of June 30, 2012.

Capital Expenditures. For the quarters ended June 30, 2012 and 2011, capital expenditures totaled $20.3 million and $16.1 million, respectively.

Dividend. During the second quarter of 2012, our Board of Directors declared a cash dividend of $0.125 per share, which we paid on June 15, 2012. On July 25, 2012, the Board declared a cash dividend of $0.125 per share, payable on September 14, 2012.

Outlook

In the third quarter of 2012, we currently expect:

  • depreciation to range from $26.5 million to $27.5 million.
  • interest expense, net of capitalized interest, to be between $29.0 million and $30.0 million, including non-cash interest expense of approximately $1.4 million.
  • the combined state and federal income tax rate to be in the range of 40.5% to 41.5%.
  • capital spending of $75.0 million to $80.0 million, including $31.5 million for the balance due in the purchase of the equity interests in Creative and approximately $30.0 million in design and construction costs for the Lake Charles project.
  • non-cash stock-based compensation expense of $3.5 million to $4.0 million.
  • corporate expense, excluding non-cash stock-based compensation expense, to be between $13.0 million and $14.0 million.

Conference Call Information
We will hold a conference call to discuss our second quarter results on Wednesday, August 1, 2012 at 11 a.m. EDT. The call may be accessed live by dialing toll-free 866-400-0018 domestically, or 913-981-5521, and referencing pass code number 4022778. 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 1, 2012 until 11:59 p.m. EDT August 14, 2012. To listen to the replay, call toll-free 888-203-1112 domestically, or 719-457-0820, and reference the pass code 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," "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, 2011, 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, 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 7,500 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 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 June 30,     Six Months Ended June 30,  
    2012     2011     2012     2011  
REVENUES:                                
  Casino   $ 303,356     $ 313,860     $ 623,063     $ 630,981  
  Food and beverage     33,250       33,151       67,940       68,320  
  Rooms     19,485       19,715       38,758       38,918  
  Other     7,060       7,191       13,967       14,413  
      363,151       373,917       743,728       752,632  
  Less: promotional allowances     (66,897 )     (68,823 )     (135,341 )     (138,795 )
    Net revenues     296,254       305,094       608,387       613,837  
                                 
OPERATING EXPENSES:                                
  Casino     132,254       136,595       269,356       275,402  
  Food and beverage     13,050       12,947       27,181       26,457  
  Rooms     1,853       1,959       3,898       3,780  
  Other     2,531       2,599       4,883       5,239  
  Selling, general and administrative     59,994       65,511       121,040       128,548  
  Depreciation and amortization     26,999       26,102       53,520       52,546  
  Net loss (gain) on disposition of assets     550       10       228       (119 )
    Total operating expenses     237,231       245,723       480,106       491,853  
                                 
      Income from operations     59,023       59,371       128,281       121,984  
                                 
OTHER INCOME (EXPENSE):                                
  Interest income     12       1       33       3  
  Interest expense, net of capitalized interest     (28,821 )     (27,164 )     (55,706 )     (52,219 )
  Loss on early retirement of debt     -       (85,296 )     -       (85,296 )
  Other     (112 )     (150 )     834       304  
                                 
INCOME (LOSS) BEFORE INCOME TAX PROVISION                                
  (BENEFIT)     30,102       (53,238 )     73,442       (15,224 )
    Income tax provision (benefit)     12,480       (11,925 )     14,454       4,243  
      NET INCOME (LOSS)   $ 17,622     $ (41,313 )   $ 58,988     $ (19,467 )
                                 
EARNINGS (LOSS) PER SHARE:                                
  Basic   $ 0.53     $ (1.10 )   $ 1.79     $ (0.41 )
  Diluted   $ 0.51     $ (1.10 )   $ 1.73     $ (0.41 )
                                 
CASH DIVIDENDS DECLARED PER SHARE   $ 0.125     $ 0.105     $ 0.250     $ 0.210  
                                 
WEIGHTED-AVERAGE SHARES OUTSTANDING:                                
  Basic     33,020       37,512       32,939       47,860  
  Diluted     34,255       37,512       34,138       47,860  
                                   
                                   
   
   
AMERISTAR CASINOS, INC. AND SUBSIDIARIES  
SUMMARY CONSOLIDATED FINANCIAL DATA  
(Dollars in Thousands)  
(Unaudited)  
                         
    June 30, 2012     December 31, 2011  
Balance sheet data                                
  Cash and cash equivalents   $ 135,527     $ 85,719  
  Total assets   $ 2,058,481     $ 2,012,039  
  Total debt, including net discount of $861 and $8,258   $
 1,923,515
    $
1,926,064
 
  Stockholders' deficit   $ (28,008 )   $ (90,578 )
                                 
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2012     2011     2012     2011  
Consolidated cash flow information                                
  Net cash provided by operating activities   $ 43,846     $ 61,342     $ 115,817     $ 142,968  
  Net cash used in investing activities   $ (19,891 )   $ (17,806 )   $ (53,111 )   $ (29,879 )
  Net cash provided by (used in) financing activities   $ 18,843     $ (48,737 )   $ (12,898 )   $ (100,721 )
                                 
Net revenues                                
  Ameristar St. Charles   $ 66,135     $ 67,494     $ 134,344     $ 135,594  
  Ameristar Kansas City     52,048       57,091       108,396       114,195  
  Ameristar Council Bluffs     41,132       41,633       84,839       83,194  
  Ameristar Black Hawk     39,839       38,074       79,161       74,955  
  Ameristar Vicksburg     30,545       29,041       62,822       60,375  
  Ameristar East Chicago     52,357       55,950       109,876       114,714  
  Jackpot Properties     14,198       15,811       28,949       30,810  
    Consolidated net revenues   $ 296,254     $ 305,094     $ 608,387     $ 613,837  
                                 
Operating income (loss)                                
  Ameristar St. Charles   $ 16,953     $ 18,560     $ 36,016     $ 37,204  
  Ameristar Kansas City     14,988       17,681       32,907       34,621  
  Ameristar Council Bluffs     14,749       15,071       31,629       29,845  
  Ameristar Black Hawk     10,435       9,046       20,560       17,474  
  Ameristar Vicksburg     10,300       9,486       22,208       20,967  
  Ameristar East Chicago     5,089       6,228       13,577       13,820  
  Jackpot Properties     2,700       4,060       6,023       7,714  
  Corporate and other     (16,191 )     (20,761 )     (34,639 )     (39,661 )
    Consolidated operating income   $ 59,023     $ 59,371     $ 128,281     $ 121,984  
                                 
Adjusted EBITDA                                
  Ameristar St. Charles   $ 23,891     $ 25,233     $ 49,612     $ 50,532  
  Ameristar Kansas City     18,826       21,583       40,289       42,251  
  Ameristar Council Bluffs     16,696       17,210       35,736       33,872  
  Ameristar Black Hawk     14,988       13,471       29,524       26,768  
  Ameristar Vicksburg     14,000       13,343       29,622       28,447  
  Ameristar East Chicago     10,217       10,485       23,209       22,374  
  Jackpot Properties     4,042       5,450       8,751       10,490  
  Corporate and other     (12,503 )     (12,527 )     (24,610 )     (24,126 )
    Consolidated Adjusted EBITDA   $ 90,157     $ 94,248     $ 192,133     $ 190,608  
                                     
                                     
   
   
AMERISTAR CASINOS, INC. AND SUBSIDIARIES  
SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED  
(Dollars in Thousands)  
(Unaudited)  
                 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
 
  2012   2011   2012   2011  
                 
Operating income margins 1                
  Ameristar St. Charles 25.6 % 27.5 % 26.8 % 27.4 %
  Ameristar Kansas City 28.8 % 31.0 % 30.4 % 30.3 %
  Ameristar Council Bluffs 35.9 % 36.2 % 37.3 % 35.9 %
  Ameristar Black Hawk 26.2 % 23.8 % 26.0 % 23.3 %
  Ameristar Vicksburg 33.7 % 32.7 % 35.4 % 34.7 %
  Ameristar East Chicago 9.7 % 11.1 % 12.4 % 12.0 %
  Jackpot Properties 19.0 % 25.7 % 20.8 % 25.0 %
    Consolidated operating income margin 19.9 % 19.5 % 21.1 % 19.9 %
                 
Adjusted EBITDA margins 2                
  Ameristar St. Charles 36.1 % 37.4 % 36.9 % 37.3 %
  Ameristar Kansas City 36.2 % 37.8 % 37.2 % 37.0 %
  Ameristar Council Bluffs 40.6 % 41.3 % 42.1 % 40.7 %
  Ameristar Black Hawk 37.6 % 35.4 % 37.3 % 35.7 %
  Ameristar Vicksburg 45.8 % 45.9 % 47.2 % 47.1 %
  Ameristar East Chicago 19.5 % 18.7 % 21.1 % 19.5 %
  Jackpot Properties 28.5 % 34.5 % 30.2 % 34.0 %
    Consolidated Adjusted EBITDA margin 30.4 % 30.9 % 31.6 % 31.1 %
                     

(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 June 30, 2012
                             
    Operating Income (Loss)   Depreciation and Amortization   Loss (Gain) on Disposition of Assets   Stock-Based Compensation   Deferred Compensation Plan Expense (1)   Net River Flooding Reimbursements (2)   Adjusted EBITDA
Ameristar St. Charles   $ 16,953     $ 6,789   $ -     $ 149   $ -   $ -     $ 23,891  
Ameristar Kansas City     14,988       3,748     1       89     -     -       18,826  
Ameristar Council Bluffs     14,749       2,022     -       114     -     (189 )     16,696  
Ameristar Black Hawk     10,435       4,453     -       100     -     -       14,988  
Ameristar Vicksburg     10,300       3,575     (1 )     126     -     -       14,000  
Ameristar East Chicago     5,089       4,411     609       108     -     -       10,217  
Jackpot Properties     2,700       1,289     (59 )     112     -     -       4,042  
Corporate and other     (16,191 )     712     -       2,852     124     -       (12,503 )
  Consolidated   $ 59,023     $ 26,999   $ 550     $ 3,650   $ 124   $ (189 )   $ 90,157  
                                                   
                                 
Three Months Ended June 30, 2011
                                 
    Operating Income (Loss)   Depreciation and Amortization   Loss (Gain) on Disposition of Assets   Stock-Based Compensation   Deferred Compensation Plan Expense (1)   Non-Operational Professional Fees   River Flooding Expenses (2)   Adjusted EBITDA
Ameristar St. Charles   $ 18,560     $ 6,506   $ -     $ 167   $ -   $ -   $ -   $ 25,233  
Ameristar Kansas City     17,681       3,824     (36 )     114     -     -     -     21,583  
Ameristar Council Bluffs     15,071       1,853     21       116     -     -     149     17,210  
Ameristar Black Hawk     9,046       4,293     8       124     -     -     -     13,471  
Ameristar Vicksburg     9,486       3,470     1       144     -     -     242     13,343  
Ameristar East Chicago     6,228       4,148     5       104     -     -     -     10,485  
Jackpot Properties     4,060       1,262     11       117     -     -     -     5,450  
Corporate and other     (20,761 )     746     -       3,991     99     3,398     -     (12,527 )
  Consolidated   $ 59,371     $ 26,102   $ 10     $ 4,877   $ 99   $ 3,398   $ 391   $ 94,248  
   
   

(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.
(2) Amounts are net of insurance reimbursements and represent non-capitalizable costs incurred to reduce exposure to significant property damage from extraordinary flood levels, as well as required flood cleanup costs.

 
 
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA - CONTINUED 
(Dollars in Thousands) (Unaudited)  
 
                             
Six Months Ended June 30, 2012
                             
    Operating Income (Loss)   Depreciation and Amortization   Loss (Gain) on Disposition of Assets   Stock-Based Compensation   Deferred Compensation Plan Expense (1)   Net River Flooding Reimbursements (2)   Adjusted EBITDA
Ameristar St. Charles   $ 36,016     $ 13,448   $ (150 )   $ 298   $ -   $ -     $ 49,612  
Ameristar Kansas City     32,907       7,298     (94 )     178     -     -       40,289  
Ameristar Council Bluffs     31,629       4,013     -       227     -     (133 )     35,736  
Ameristar Black Hawk     20,560       8,831     (76 )     209     -     -       29,524  
Ameristar Vicksburg     22,208       7,159     (1 )     256     -     -       29,622  
Ameristar East Chicago     13,577       8,806     608       218     -     -       23,209  
Jackpot Properties     6,023       2,562     (59 )     225     -     -       8,751  
Corporate and other     (34,639 )     1,403     -       7,399     1,227     -       (24,610 )
  Consolidated   $ 128,281     $ 53,520   $ 228     $ 9,010   $ 1,227   $ (133 )   $ 192,133  
                                                   
                                 
Six Months Ended June 30, 2011
                                 
    Operating Income (Loss)   Depreciation and Amortization   (Gain) Loss on Disposition of Assets   Stock-Based Compensation   Deferred Compensation Plan Expense (1)   Non-Operational Professional Fees   River Flooding Expenses (2)   Adjusted EBITDA
Ameristar St. Charles   $ 37,204     $ 12,992   $ 4     $ 332   $ -   $ -   $ -   $ 50,532  
Ameristar Kansas City     34,621       7,481     (77 )     226     -     -     -     42,251  
Ameristar Council Bluffs     29,845       3,761     (113 )     230     -     -     149     33,872  
Ameristar Black Hawk     17,474       9,065     (21 )     250     -     -     -     26,768  
Ameristar Vicksburg     20,967       6,951     (1 )     288     -     -     242     28,447  
Ameristar East Chicago     13,820       8,270     76       208     -     -     -     22,374  
Jackpot Properties     7,714       2,532     13       231     -     -     -     10,490  
Corporate and other     (39,661 )     1,494     -       6,382     698     6,961     -     (24,126 )
  Consolidated   $ 121,984     $ 52,546   $ (119 )   $ 8,147   $ 698   $ 6,961   $ 391   $ 190,608  
   
 

(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.
(2) Amounts are net of insurance reimbursements and represent non-capitalizable costs incurred to reduce exposure to significant property damage from extraordinary flood levels, as well as required flood cleanup costs.

   
   
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA  
(Dollars in Thousands) (Unaudited)  
                         
                         
The following table sets forth a reconciliation of consolidated net income (loss), a GAAP financial measure, to consolidated Adjusted EBITDA, a non-GAAP financial measure.  
                         
                         
    Three Months Ended June 30,    Six Months Ended June 30,  
    2012     2011     2012     2011  
Net income (loss)   $ 17,622     $ (41,313 )   $ 58,988     $ (19,467 )
  Income tax provision (benefit)     12,480       (11,925 )     14,454       4,243  
  Interest expense, net of capitalized interest     28,821       27,164       55,706       52,219  
  Interest income     (12 )     (1 )     (33 )     (3 )
  Other     112       150       (834 )     (304 )
  Net loss (gain) on disposition of assets     550       10       228       (119 )
  Depreciation and amortization     26,999       26,102       53,520       52,546  
  Stock-based compensation     3,650       4,877       9,010       8,147  
  Deferred compensation plan expense     124       99       1,227       698  
  Loss on early retirement of debt     -       85,296       -       85,296  
  Non-operational professional fees     -       3,398       -       6,961  
  Net river flooding (reimbursements) expenses     (189 )     391       (133 )     391  
Adjusted EBITDA   $ 90,157     $ 94,248     $ 192,133     $ 190,608  
                                 
                       
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS  
(Shares in Thousands) (Unaudited)  
                       
                       
The following table sets forth a reconciliation of diluted earnings (loss) per share (EPS), a GAAP financial measure, to adjusted diluted earnings per share (Adjusted EPS), a non-GAAP financial measure.       
                       
    Three Months Ended June 30,     Six Months Ended June 30,  
    2012   2011     2012     2011  
Diluted income (loss) per share (EPS)   $ 0.51   $ (1.10 )   $ 1.73     $ (0.41 )
  Cumulative effect from tax elections     -     -       (0.46 )     -  
  Loss on early retirement of debt     -     1.41       -       1.11  
  Non-operational professional fees     -     0.09       -       0.12  
  Non-cash tax provision impact from change in Indiana state tax rate                              
  -     0.09       -       0.07  
  River flooding expenses     -     0.01       -       0.01  
Adjusted diluted earnings per share (Adjusted EPS)   $ 0.51   $ 0.50     $ 1.27     $ 0.90  
                               
Weighted-average diluted shares outstanding used in calculating Adjusted EPS    
34,255
   
38,888
     
34,138
     
49,174
 
                               
                               

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, non-operational professional fees and river flooding expenses and reimbursements. 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 income, based upon GAAP.

Adjusted EPS, as used in this press release, is diluted earnings per share, excluding the after-tax per-share impact of loss on early retirement of debt, the cumulative effect from tax elections, non-operational professional fees, non-cash tax provision impact from state tax rate change and river flooding expenses and reimbursements. 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 Information

  • CONTACT:
    Tom Steinbauer
    Senior Vice President, Chief Financial Officer
    Ameristar Casinos, Inc.
    702-567-7000