- Completes St. Charles Hotel Expansion; Opens New Garage and Casino Expansion in Vicksburg One Month Early - Rebrands Ameristar East Chicago
LAS VEGAS, Aug. 4 /PRNewswire-FirstCall/ -- Ameristar Casinos, Inc.
(Nasdaq: ASCA) today announced financial results for the second quarter ended
June 30, 2008.
"Economic conditions continued to result in difficult year-over-year
comparisons," said Gordon Kanofsky, Chief Executive Officer and Vice Chairman.
"On a same-store basis, net revenues were flat, while EBITDA declined
5.5 percent when compared to last year. In addition to the weakening economy,
increased promotional spending companywide and the impact from the Colorado
smoking ban contributed to lower margins."
"New amenities that came on line in the second quarter, including
additional hotel rooms at St. Charles and the earlier than anticipated opening
of the parking garage and casino expansion at Vicksburg, helped to drive some
market share growth at those locations. Also, in late June, we completed the
rebranding of our East Chicago property to 'Ameristar.'"
These projects, along with the Black Hawk hotel under construction, are
expected to help set the stage for future growth once the economy recovers.
In the meantime, our new senior management team has implemented a strategic
plan to improve efficiencies and reduce the Company's cost structure as weak
economic conditions continue to adversely impact business volumes.
As a result, we recently terminated 244 team members, or approximately
3 percent of our workforce. We have further reduced our workforce by the
equivalent of an additional 150 full-time positions through changes in
scheduling and staffing practices and attrition. These actions are expected
to produce annualized savings of approximately $20 million, which is 6 percent
of our compensation expense for the twelve months ended June 30, 2008. The
workforce reduction will result in a pre-tax charge to our third quarter 2008
earnings of approximately $2.0 million for severance costs.
"Regrettably, we have reduced our workforce as the economic downturn is
more prolonged than many economists expected," noted Kanofsky. "In response
to the weakness in the economy, we first attempted to drive incremental
profitable revenue through increased promotional activity in the first and
second quarters, which proved unsuccessful. Therefore, in addition to the
staffing adjustments, we began curtailing promotional spending in the third
quarter, and we plan to make more significant reductions beginning in the
fourth quarter compared to second quarter levels. These operating and
marketing initiatives will better align our costs with current consumer
spending trends, which we expect will ultimately improve our margins going
forward. We believe we can successfully manage our cost structure without
compromising on the high quality guest experience for which Ameristar has long
been known."
Second Quarter 2008 Financial Results
For the second quarter of 2008, we had net revenues of $328.1 million
compared to $253.2 million in last year's second quarter. Included in 2008
results were net revenues of $74.5 million from the East Chicago property,
which we acquired on September 18, 2007.
Operating income for the second quarter of 2008 was $48.0 million,
compared to $43.3 million in the same 2007 period. Same-store operating
income in the 2008 second quarter was $40.0 million, a decrease of
$3.3 million, or 7.7 percent, from the 2007 second quarter.
Adjusted EBITDA for the second quarter of 2008 was $77.7 million, compared
to $67.2 million for the 2007 second quarter. Adjusted EBITDA for the 2008
second quarter represents EBITDA of $74.6 million, excluding:
-- transition and rebranding costs of $1.8 million related to the East
Chicago property;
-- pre-opening expenses of $1.1 million related to the St. Charles hotel;
and
-- pre-opening expenses of $0.2 million related to the Vicksburg casino
expansion and new garage.
For the quarter ended June 30, 2007, Adjusted EBITDA excludes $0.2 million
in pre-opening expenses associated with the St. Charles hotel. East Chicago,
which the Company did not own in the 2007 second quarter, accounted for
$13.1 million of Adjusted EBITDA in the 2008 second quarter.
Financial results were adversely impacted by a significant increase in
promotional spending. Same-store promotional allowances increased
29.7 percent over the prior-year second quarter as a result of the aggressive
companywide marketing program designed to capture profitable incremental
revenue and our efforts to introduce gaming customers to the new hotel and spa
in St. Charles.
Adjusted EBITDA margin declined 2.8 percentage points compared to the
second quarter of 2007; on a same-store basis, Adjusted EBITDA margin declined
1.0 percentage point. The inclusion of the East Chicago property negatively
impacts the consolidated margin due to the higher gaming tax rate in Indiana
compared to the other jurisdictions in which we operate. Additionally, lower
margins resulted from the impact of the weakening economy on our gaming
revenue and the increased promotional spending that we are now curtailing.
For the second quarter of 2008, we had net income of $17.0 million, or
$0.29 per share on a diluted basis. In last year's second quarter, we
reported net income of $17.3 million, or $0.30 per diluted share. Adjusted
EPS, representing diluted earnings per share excluding the after-tax impacts
of the transition and rebranding costs and pre-opening expenses, was $0.32 for
the quarter ended June 30, 2008, compared to $0.30 for the 2007 second
quarter.
More information on the non-GAAP financial measures EBITDA, Adjusted
EBITDA and Adjusted EPS can be found under the caption "Use of Non-GAAP
Financial Measures" at the end of this release.
Property Highlights
St. Charles. At St. Charles, net revenues increased $3.6 million or
5.0 percent over the 2007 second quarter, primarily as a result of the
completion of the new 400-suite hotel. However, Adjusted EBITDA decreased
$0.7 million or 3.0 percent year over year due to higher costs associated with
operating the hotel and other recently added amenities. Market share
increased 1.0 percentage point to 29.3 percent from the first quarter of 2008.
Vicksburg. We substantially completed the casino expansion and the new
1,000-space parking garage at our Vicksburg property in late May, one month
ahead of schedule. As a result of this project, we further strengthened our
dominant market share position and achieved 50.6 percent market share in June,
an increase of 2.7 percentage points over our May market share.
A new VIP lounge was completed in July and two additional restaurants are
scheduled to open by this fall. Additionally, we are planning a limited
refurbishment of the existing casino that is expected to be completed later
this year at a cost of approximately $6 million.
Council Bluffs. Ameristar Council Bluffs increased net revenues and
EBITDA by 1.6 percent and 2.6 percent, respectively, over the prior-year
second quarter. The Council Bluffs market appears to be withstanding the
tough economy better than our other markets as evidenced by market growth of
2.4 percent over the 2007 second quarter without any change in the competitive
environment.
East Chicago. We rebranded our East Chicago property to "Ameristar" on
June 24 following the completion of a number of enhancements to the property,
including improved food and beverage offerings in keeping with our commitment
to culinary excellence. The casino floor was remodeled to include a new
design and layout as well as an enhanced mix of games. We also introduced our
Ameristar Star Awards players' program to guests. The total cost of the
rebranding renovations and related promotional and other expenses is
approximately $30 million, of which approximately $2.8 million has been
expensed in 2008. Second quarter 2008 market share increased 1.8 percentage
points on a year-over-year basis and 0.3 percentage point compared to the
first quarter of 2008.
Black Hawk. The entire Colorado market, including Ameristar Black Hawk,
continues to be adversely impacted by the statewide smoking ban that became
effective for casinos on January 1, 2008. The smoking ban, high fuel prices
and the difficult economic conditions resulted in an 11.3 percent contraction
in the Black Hawk gaming market compared to second quarter of 2007.
Additional Second Quarter 2008 Financial Information
-- Corporate expense declined $0.8 million year over year, due mostly to
decreases in employee benefit costs and professional fees, which were
partially offset by a $1.8 million increase in severance pay primarily
associated with the recent senior management changes, as well as
expenses related to ballot initiatives in Missouri and Colorado that,
if successful, are expected to lead to substantial growth in 2009.
-- Stock-based compensation expense was $2.5 million, compared to
$2.9 million in the 2007 second quarter.
-- Net interest expense was $15.8 million compared to $11.1 million in the
second quarter of 2007, and capitalized interest was $4.2 million
compared to $4.6 million in the second quarter of 2007.
-- Capital expenditures for the quarter were $72.2 million, including:
-- Vicksburg expansion: $24.4 million
-- Black Hawk hotel: $24.1 million
-- Slot product: $7.9 million
-- St. Charles hotel and expansion: $5.7 million
-- East Chicago rebranding renovations: $4.4 million.
-- At June 30, 2008, total debt was $1.6 billion, a decrease of
$23.2 million from December 31, 2007. During the second quarter, net
borrowings were $3.0 million; in July, we borrowed an additional
$30.0 million under our revolving loan facility.
-- We entered into a two-year interest rate swap agreement, effective
July 18, 2008, to fix the interest rate on $500.0 million of
LIBOR-based borrowings under our senior revolving loan facility at
3.1975% plus the applicable margin, which is currently 1.75%. We
expect the swap to be "highly effective" (as defined under applicable
accounting literature) as a cash flow hedging instrument and,
therefore, the value of the swap (net of tax) will be primarily
recorded as accumulated other comprehensive income as part of
stockholders' equity.
Outlook
"We expect current difficult business conditions to continue at least
through the second half of 2008, reflecting the impact of the general economic
slowdown and higher fuel prices on the gaming industry," Kanofsky said.
"Ameristar remains focused on delivering the highest quality guest experience
in our markets while diligently seeking to maximize profitability. Our
efforts to adjust our workforce and promotional spending to obtain greater
efficiencies, combined with the capital investments we have made, should
position us well to capture additional growth again once the economy starts to
rebound."
For the full year 2008, we currently expect:
-- depreciation to range from $108 million to $111 million;
-- interest expense to be between $79 million and $84 million;
-- capitalized interest of $13 million to $15 million;
-- the combined federal and state income tax rate, excluding the effect of
the East Chicago impairment loss recorded in the first quarter of 2008,
to be in the range of 45 percent to 46 percent;
-- capital spending of $255 million to $275 million; and
-- non-cash stock-based compensation expense of $10 million to
$11 million.
Conference Call Information
We will hold a conference call to discuss second quarter results on
Monday, Aug. 4, 2008 at 5 p.m. EDT. The call can be accessed live by dialing
(888) 694-4728 and using the conference ID number, which is 57144256.
Conference call participants are requested to dial in to the call at least
five minutes early to ensure a prompt start. Interested parties wanting to
listen to the conference call and view corresponding informative slides on the
Internet may do so live at our web site -- http://www.ameristar.com -- in
"About Ameristar/Investor Relations" under the "Quarterly Results Conference
Calls" section. The conference call will be recorded and can be replayed from
Aug. 4, 2008 at 8 p.m. EDT until Aug. 11, 2008 at midnight EDT. To listen to
the replay, call (800) 642-1687.
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, 2007 and "Item 1A. Risk Factors" in our Quarterly Report on Form
10-Q for the quarter ended March 31, 2008.
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, 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
innovative architecture, state-of-the-art casino floors and superior dining,
lodging and entertainment offerings. Ameristar's focus on the total
entertainment experience and the highest quality guest service has earned it
leading market share 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 in St. Charles (greater St. Louis); Ameristar
Casino Hotel in East Chicago (Chicagoland area); Ameristar Kansas City;
Ameristar Council Bluffs (Omaha, Neb. and southwestern Iowa); Ameristar
Vicksburg (Jackson, Miss. and Monroe, La.); Ameristar Black Hawk (Denver
metropolitan area); and Cactus Petes and The Horseshu in Jackpot, Nev. (Idaho
and the Pacific Northwest).
Visit Ameristar Casinos' web site at http://www.ameristar.com
(which shall not be deemed to be incorporated in or a part of this news
release).
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30,June 30,
2008 (1)20072008 (1)2007
REVENUES:
Casino $338,915 $251,348 $670,672 $510,343
Food and beverage 40,51532,01080,88664,881
Rooms 15,390 7,26026,32913,872
Other 10,109 7,44719,68614,116
404,929 298,065 797,573 603,212
Promotional allowances (76,832) (44,836) (144,708) (90,838)
Net revenues328,097 253,229 652,865 512,374
OPERATING EXPENSES:
Casino157,954 108,212 313,497 218,360
Food and beverage 18,72317,02137,70233,482
Rooms 3,198 2,084 5,728 3,931
Other 5,175 4,89611,250 9,417
Selling, general and
administrative68,15953,984 132,272 106,293
Depreciation and amortization 26,60923,64452,12947,520
Impairment loss on assets 27449 129,339 116
Total operating expenses280,092 209,890 681,917 419,119
Income (loss) from
operations48,00543,339 (29,052) 93,255
OTHER INCOME (EXPENSE):
Interest income 176 465 403 850
Interest expense, net (15,762) (11,122) (37,814) (22,465)
Net loss on disposition of
assets (633) (7) (558) (3)
Other 525 (375) (327) (375)
INCOME (LOSS) BEFORE INCOME TAX
PROVISION (BENEFIT)32,31132,300 (67,348) 71,262
Income tax provision (benefit) 15,28915,030 (23,440) 30,041
NET INCOME (LOSS) $17,022 $17,270 $(43,908) $41,221
EARNINGS (LOSS) PER SHARE:
Basic $0.30 $0.30$(0.77)$0.72
Diluted $0.29 $0.30$(0.77)$0.71
CASH DIVIDENDS DECLARED PER SHARE $0.11 $0.10 $0.21 $0.21
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 57,18257,28157,16656,961
Diluted57,89358,51857,16658,304
(1) The East Chicago property was acquired on September 18, 2007.
Accordingly, operating results are included only for the three months
and six months ended June 30, 2008.
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
June 30, 2008December 31, 2007
Balance sheet data
Cash and cash equivalents$79,201$98,498
Total assets $2,349,985 $2,412,096
Total debt, including
current maturities $1,622,746 $1,645,952
Stockholders' equity$455,616 $503,126
Three Months Ended Six Months Ended
June 30, June 30,
2008 20072008 2007
Consolidated cash flow
information
Net cash provided by
operating activities $70,480 $39,689$142,406$97,382
Net cash used in investing
activities $(73,290) $(97,293) $(133,172) $(162,241)
Net cash provided by (used
in) financing activities $3,112 $43,363$(28,531) $44,473
Net revenues
Ameristar St. Charles $75,332 $71,737$147,015 $145,513
Ameristar Kansas City 61,93563,019 123,863127,590
Ameristar Council Bluffs44,72244,037 90,233 90,054
Ameristar Vicksburg 33,42033,302 67,106 68,625
Ameristar Black Hawk20,40522,761 40,678 44,892
Jackpot Properties 17,81318,373 34,148 35,700
Net revenues from
historical properties 253,627 253,229 503,043512,374
East Chicago (1)74,470 - 149,822-
Consolidated net revenues $328,097 $253,229$652,865 $512,374
Operating income (loss)
Ameristar St. Charles $15,305 $16,630 $30,878$34,835
Ameristar Kansas City 12,68312,610 25,507 26,956
Ameristar Council Bluffs12,74412,098 24,780 24,686
Ameristar Vicksburg 9,60110,902 20,763 23,690
Ameristar Black Hawk 2,783 4,515 5,598 8,856
Jackpot Properties 3,218 3,711 5,716 7,037
Corporate and other(16,339) (17,127)(31,513) (32,805)
Operating income from
historical properties39,99543,339 81,729 93,255
East Chicago (1) 8,010 - (110,781) -
Consolidated operating
income (loss) $48,005 $43,339$(29,052) $93,255
EBITDA
Ameristar St. Charles $21,720 $23,269 $42,548$48,258
Ameristar Kansas City 17,71618,269 35,619 38,320
Ameristar Council Bluffs15,81715,415 31,043 31,357
Ameristar Vicksburg 13,36013,967 27,974 29,837
Ameristar Black Hawk 5,638 7,384 11,318 14,576
Jackpot Properties 4,550 4,896 8,370 9,421
Corporate and other(15,500) (16,217)(29,570) (30,994)
EBITDA from historical
properties 63,30166,983 127,302140,775
East Chicago (1)11,313 - (104,225) -
Consolidated EBITDA $74,614 $66,983 $23,077 $140,775
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED
(Dollars in Thousands)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
200820072008 2007
Operating income (loss) margins (2)
Ameristar St. Charles20.3% 23.2%21.0% 23.9%
Ameristar Kansas City20.5% 20.0%20.6% 21.1%
Ameristar Council Bluffs 28.5% 27.5%27.5% 27.4%
Ameristar Vicksburg 28.7% 32.7%30.9% 34.5%
Ameristar Black Hawk 13.6% 19.8%13.8% 19.7%
Jackpot Properties 18.1% 20.2%16.7% 19.7%
Operating income margin from
historical properties 15.8% 17.1%16.2% 18.2%
East Chicago (1) 10.8% - -73.9% -
Consolidated operating income
(loss) margin 14.6% 17.1%-4.4% 18.2%
EBITDA margins (3)
Ameristar St. Charles28.8% 32.4%28.9% 33.2%
Ameristar Kansas City28.6% 29.0%28.8% 30.0%
Ameristar Council Bluffs 35.4% 35.0%34.4% 34.8%
Ameristar Vicksburg 40.0% 41.9%41.7% 43.5%
Ameristar Black Hawk 27.6% 32.4%27.8% 32.5%
Jackpot Properties 25.5% 26.6%24.5% 26.4%
EBITDA margin from historical
properties25.0% 26.5%25.3% 27.5%
East Chicago (1) 15.2% - -69.6% -
Consolidated EBITDA margin 22.7% 26.5% 3.5% 27.5%
(1) The East Chicago property was acquired on September 18, 2007.
Accordingly, operating results for this property are included only for
the three months and six months ended June 30, 2008.
(2) Operating income (loss) margin is operating income (loss) as a
percentage of net revenues.
(3) EBITDA margin is EBITDA as a percentage of net revenues.
RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA
(Dollars in Thousands)
(Unaudited)
The following table sets forth a reconciliation of operating income
(loss), a GAAP financial measure, to EBITDA, a non-GAAP financial measure.
Three Months Ended Six Months Ended
June 30,June 30,
2008 2007 2008 2007
Ameristar St. Charles:
Operating income $15,305 $16,630$30,878 $34,835
Depreciation and amortization6,415 6,639 11,67013,423
EBITDA $21,720 $23,269$42,548 $48,258
Ameristar Kansas City:
Operating income $12,683 $12,610$25,507 $26,956
Depreciation and amortization5,033 5,659 10,11211,364
EBITDA $17,716 $18,269$35,619 $38,320
Ameristar Council Bluffs:
Operating income $12,744 $12,098$24,780 $24,686
Depreciation and amortization3,073 3,317 6,263 6,671
EBITDA $15,817 $15,415$31,043 $31,357
Ameristar Vicksburg:
Operating income$9,601 $10,902$20,763 $23,690
Depreciation and amortization3,759 3,065 7,211 6,147
EBITDA $13,360 $13,967$27,974 $29,837
Ameristar East Chicago:
Operating income (loss) $8,010 $-$(110,781) $-
Depreciation and amortization3,303 -6,556 -
EBITDA $11,313 $-$(104,225) $-
Ameristar Black Hawk:
Operating income$2,783$4,515 $5,598$8,856
Depreciation and amortization2,855 2,869 5,720 5,720
EBITDA $5,638$7,384$11,318 $14,576
Jackpot Properties:
Operating income$3,218$3,711 $5,716$7,037
Depreciation and amortization1,332 1,185 2,654 2,384
EBITDA $4,550$4,896 $8,370$9,421
Corporate and other:
Operating loss$(16,339) $(17,127) $(31,513) $(32,805)
Depreciation and amortization 839 910 1,943 1,811
EBITDA$(15,500) $(16,217) $(29,570) $(30,994)
Consolidated:
Operating income (loss)$48,005 $43,339 $(29,052) $93,255
Depreciation and amortization 26,60923,644 52,12947,520
EBITDA $74,614 $66,983$23,077 $140,775
RECONCILIATION OF EBITDA TO ADJUSTED EBITDA
(Dollars in Thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
EBITDA $74,614 $66,983 $23,077 $140,775
East Chicago transition and
rebranding costs 1,746 - 2,757 -
St. Charles hotel pre-opening
expenses 1,096 249 1,937 249
Vicksburg expansion pre-opening
expenses225 - 225 -
Impairment loss on East Chicago
intangible assets -- 129,000 -
Adjusted EBITDA $77,681 $67,232 $156,996 $141,024
RECONCILIATION OF EPS TO ADJUSTED EPS
(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 Six Months
Ended June 30, Ended June 30,
200820072008 2007
Diluted earnings (loss) per share
(EPS) $0.29 $0.30 $(0.77) $0.71
East Chicago transition and rebranding
costs 0.02 - 0.03 -
St. Charles hotel pre-opening expenses 0.01 - 0.02 -
Impairment loss on East Chicago
intangible assets- - 1.47 -
Adjusted diluted earnings per share
(Adjusted EPS) $0.32 $0.30$0.75 $0.71
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 presentations of
the following non-GAAP financial measures are important supplemental measures
of operating performance to investors: earnings before interest, taxes,
depreciation and amortization (EBITDA), Adjusted EBITDA and adjusted diluted
earnings per share (Adjusted EPS). The following discussion defines these
terms and explains why we believe they are useful measures of our performance.
EBITDA and Adjusted EBITDA
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 and income taxes and facilitates
comparisons between us and our competitors. Management has adjusted EBITDA,
when deemed appropriate, for the evaluation of operating performance because
we believe 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 core ongoing operations. We do not reflect such items when
calculating EBITDA; however, we adjust for these items and refer to this
measure as Adjusted EBITDA. We have reported this measure to our investors
and believe the inclusion of Adjusted EBITDA will provide consistency in our
financial reporting.
We use Adjusted EBITDA in this press release because we believe it is
useful to investors in allowing greater transparency related to a significant
measure used by management in its financial and operational decision-making.
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 related to property management. Management also uses
Adjusted EBITDA as a measure in determining the value of potential
acquisitions and dispositions it may evaluate. Externally, we believe these
measures are used by investors in their assessment of our operating
performance and the valuation of our Company.
Adjusted EBITDA, as used in this press release, reflects EBITDA adjusted
for impairment losses related to intangible assets, pre-opening expenses and
transition and rebranding costs. In future periods, the adjustments we make
to EBITDA in order to calculate Adjusted EBITDA may be different than or in
addition to those made in this release. The foregoing tables reconcile
Adjusted EBITDA to EBITDA and operating income (loss), based upon GAAP.
Adjusted EPS
Adjusted EPS, as used in this press release, is diluted earnings (loss)
per share, excluding the after-tax per-share impacts of impairment losses
related to intangible assets, pre-opening expenses and transition and
rebranding costs. 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 and incentive compensation related to senior management.
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 EBITDA, Adjusted EBITDA and Adjusted EPS has certain
limitations. Our presentation of EBITDA, 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 EBITDA
or Adjusted EBITDA. Each of these items should also be considered in the
overall evaluation of our results. Additionally, EBITDA and Adjusted EBITDA
do 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.
EBITDA, Adjusted EBITDA and Adjusted EPS should be used in addition to and
in conjunction with results presented in accordance with GAAP. EBITDA,
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. EBITDA, 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.
SOURCE Ameristar Casinos, Inc.
