Ameristar Casinos Reports 4Q and Full-Year 2010 Results
2011-02-09
Fourth Quarter Consolidated Net Revenues Increased $2.8 Million Year Over Year to $294.1 Million
Fourth Quarter Consolidated Net Revenues Increased $2.8 Million Year Over Year to $294.1 Million; Fourth Quarter Consolidated Adjusted EBITDA Improved $0.1 Million Year Over Year to $77.5 Million; Fourth Quarter Adjusted EPS Improved by $0.08 Year Over Year to $0.19; Continued Strengthening of Balance Sheet With $26 Million in Fourth Quarter Debt Repayments for a Total of $150 Million in 2010 Repayments
Ameristar Casinos, Inc. (NASDAQ: ASCA) today announced financial results for the fourth quarter and year ended December 31, 2010.
"During the fourth quarter, we achieved year-over-year growth in net revenues, Adjusted EBITDA and Adjusted EPS, while maintaining a strong Adjusted EBITDA margin," said Gordon Kanofsky, Ameristar's Chief Executive Officer. "Our solid fourth quarter performance in those key financial metrics continued to build on a positive trend that has developed over the course of 2010. Throughout the year, the quarterly year-over-year variances in our financial metrics have steadily improved. This is our second consecutive quarter with year-over-year net revenue growth. We believe the improvement in our key financial metrics is mostly due to the effectiveness and efficiency of our marketing and operations, including the quality of our product and service offerings and cost controls. In addition, we believe the fourth quarter reflected signs of market stabilization in many of our markets that, together with the strength of our operating strategies, lays the foundation for our return to growth."
Please refer to the tables at the bottom 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.
Fourth Quarter 2010 Results
Consolidated net revenues for the fourth quarter improved year over year by $2.8 million, to $294.1 million. For the quarter ended December 31, 2010, promotional allowances decreased $2.3 million (3.1%) from the prior-year fourth quarter. The decrease in promotional allowances was mostly due to more efficient promotional strategies overall, and in particular, promotional spending relating to the November 13, 2009 bridge closure near our East Chicago property. We generated operating income of $44.6 million in the fourth quarter of 2010, compared to an operating loss of $72.0 million in the same period in 2009. The prior-year quarter was adversely impacted by a non-cash impairment charge of $111.7 million for the goodwill related to the acquisition of our East Chicago property. Consolidated Adjusted EBITDA margin held relatively steady, decreasing from 26.6% in the fourth quarter of 2009 to 26.4% in the fourth quarter of 2010.
For the quarter ended December 31, 2010, we had net income of $10.9 million, compared to a net loss in the prior-year fourth quarter of $63.3 million that was attributable to the East Chicago non-cash impairment charge. Adjusted EPS was $0.19 for the quarter ended December 31, 2010, compared to $0.11 for the 2009 fourth quarter. The increase in Adjusted EPS from the prior-year fourth quarter was primarily attributable to lower borrowing costs and depreciation expense.
"We are extremely pleased with the fourth quarter financial results, especially considering that the bridge closure near our East Chicago property adversely affected the full 2010 fourth quarter but only about half of the 2009 fourth quarter, Ameristar St. Charles faced new competition beginning in March 2010 and we had already reached the anniversaries of our new hotel and favorable regulatory changes in Black Hawk prior to this most recent fourth quarter," said Kanofsky.
The following provides a brief summary of the fourth quarter financial performance of several of our properties on a year-over-year basis (unless otherwise stated):
- Ameristar St. Charles. Our St. Charles property's net revenues declined $1.6 million (2.3%) to $66.6 million while Adjusted EBITDA improved $0.1 million (0.5%) to $21.6 million. The effective management of costs and the recapturing of market share during the fourth quarter of 2010 resulted in Adjusted EBITDA growth for the first time since the new competitor entered the St. Louis gaming market in the first quarter of 2010. Additionally, the fourth quarter represented the second consecutive quarter with sequential improvement in net revenues and Adjusted EBITDA. Adjusted EBITDA margin improved 0.9 percentage point to 32.4%.
- Ameristar East Chicago. The closure of the Cline Avenue bridge in the middle of the 2009 fourth quarter has made access to Ameristar East Chicago less convenient for many of our property's guests and has significantly impacted results. Nonetheless, in the 2010 fourth quarter, Ameristar East Chicago managed to improve Adjusted EBITDA by $0.9 million (11.8%) to $8.5 million, and Adjusted EBITDA margin by 2.0 percentage points to 15.7%, as compared to the prior-year quarter that was impacted by the bridge closure for only half that period.
- Ameristar Black Hawk. The fourth quarter of 2010 represented the first period in which each quarter in the year-over-year comparison includes the favorable regulatory changes and the new hotel for the entire quarterly periods. Despite the anniversary of the hotel opening in late September, Ameristar Black Hawk increased net revenues by $2.4 million (6.7%) to $38.3 million. Adjusted EBITDA remained unchanged at $12.5 million. Our quarterly market share surpassed 28% for the first time in the fourth quarter of 2010.
- Ameristar Council Bluffs and Ameristar Kansas City. Our Council Bluffs and Kansas City properties improved net revenues by $2.6 million (7.3%) and $2.4 million (4.5%), respectively. Adjusted EBITDA increased $0.4 million (2.8%) at our Council Bluffs property and $0.7 million (3.7%) at our Kansas City property. Both properties achieved higher market share in stable markets that produced gross gaming revenue growth during the fourth quarter.
- Ameristar Vicksburg. Our Vicksburg property declined in all key metrics, mostly due to an unusually low table games hold percentage in the 2010 fourth quarter that adversely impacted Adjusted EBITDA by approximately $1.1 million.
Full Year 2010 Results
Consolidated net revenues for fiscal years 2010 and 2009 were $1.19 billion and $1.22 billion, respectively. Adjusted EBITDA for 2010 was $323.5 million, representing a decrease of $23.0 million (6.6%) from 2009. Adjusted EBITDA margin decreased 1.3 percentage points, from 28.5% in 2009 to 27.2% in 2010. The growth at our Black Hawk property nearly offset the adverse impact of the East Chicago bridge closure, while new competition in the St. Louis market and a generally sluggish 2010 first quarter negatively affected consolidated 2010 results. As 2010 progressed, the quarterly year-over-year variances for net revenues, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EPS steadily improved. Our lean operating structure, productive marketing strategies, meeting guest expectations for quality of product and service and our ability to successfully respond to the new competitive challenges in various markets contributed to the sequential improvement in the year-over-year comparisons.
For the full year, consolidated net income improved from a loss of $4.7 million in 2009 to net income of $8.6 million in 2010. Adjusted EPS for 2010 was $0.73 per diluted share, compared to $1.22 per diluted share in 2009. Adjusted EPS decreased from the prior year mostly as a result of lower net revenues, a decline in capitalized interest and higher borrowing costs in the first half of 2010. The decrease in 2010 business levels at Ameristar East Chicago, substantially all of which we believe was attributable to the bridge closure, adversely affected Adjusted EPS by $0.18. The increase in net interest expense negatively impacted 2010 Adjusted EPS by $0.16.
Additional Financial Information
Debt. At December 31, 2010, our outstanding debt was $1.54 billion. Net repayments in the fourth quarter of 2010 totaled $26.4 million, including a $25.0 million repayment of a portion of the principal balance outstanding under the revolving credit facility. On November 10, 2010, we retired the $107.0 million outstanding under the non-extended portion of its revolving credit facility by borrowing $87.0 million under the extended revolving credit facility due in August 2012 and utilizing $20.0 million of cash from operations. For the full year 2010, net debt repayments totaled $149.8 million. At December 31, 2010, our total leverage and senior leverage ratios (each as defined in the senior credit facility) were required to be no more than 5.75:1 and 5.25:1, respectively. As of that date, our total leverage and senior leverage ratios were each 4.76:1.
Interest Expense. For the fourth quarter of 2010, net interest expense was $24.7 million, compared to $34.2 million in the prior-year fourth quarter. The decrease is due mostly to the July 2010 expiration of our two interest rate swap agreements and a lower overall debt balance.
Capital Expenditures. For the fourth quarters of 2010 and 2009, capital expenditures were $19.8 million and $25.8 million, respectively. For the years ended December 31, 2010 and 2009, capital expenditures were $58.4 and $136.6 million, respectively.
Dividends. During the fourth quarter of 2010, our Board of Directors declared a cash dividend of $0.105 per share, which we paid on December 30, 2010.
Outlook
"We believe the year-over-year growth in our net revenues is evidence that we are efficiently building on our appeal in our markets through the quality of our overall guest experience," said Kanofsky. "With the continuation of our key strategies and our ability to maximize revenue flow-through with our dynamic operating model, we are optimistic that 2011 should produce additional top-line and bottom-line growth."
In the first quarter of 2011, we currently expect:
- depreciation to range from $26.5 million to $27.5 million.
- interest expense, net of capitalized interest, to be between $24.5 million and $25.5 million, including non-cash interest expense of approximately $2.3 million.
- the combined state and federal income tax rate to be in the range of 42% to 43%.
- capital spending of $10 million to $15 million.
- non-cash stock-based compensation expense of $3.0 million to $3.5 million.
For the full year 2011, we currently expect:
- depreciation to range from $105 million to $110 million.
- interest expense, net of capitalized interest, to be between $98 million and $103 million, including non-cash interest expense of approximately $9 million.
- the combined state and federal income tax rate to be in the range of 42% to 43%.
- capital spending of $65 million to $70 million.
- non-cash stock-based compensation expense of $13.8 million to $14.8 million.
About Ameristar
Ameristar Casinos, Inc. is a leading Las Vegas-based gaming and entertainment company known for its premier properties characterized by state-of-the-art casino floors and superior dining, lodging and entertainment offerings. Ameristar's focus on the highest quality gaming experience and exceptional guest service has earned it leading positions in the markets in which it operates. Founded in 1954 in Jackpot, Nev., Ameristar has been a public company since November 1993. The Company has a portfolio of eight casinos in seven markets: Ameristar Casino Resort Spa St. Charles (greater St. Louis); Ameristar Casino Hotel East Chicago (Chicagoland area); Ameristar Casino Hotel Kansas City; Ameristar Casino Hotel Council Bluffs (Omaha, Neb., and southwestern Iowa); Ameristar Casino Hotel Vicksburg (Jackson, Miss., and Monroe, La.); Ameristar Casino Resort Spa Black Hawk (Denver metropolitan area); and Cactus Petes Resort Casino and The Horseshu Hotel and Casino in Jackpot, Nev. (Idaho and the Pacific Northwest).
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
-- -- -- --
REVENUES:
Casino $ 305,061 $ 305,044 $1,247,034 $1,254,590
Food and beverage 33,475 31,971 134,854 135,941
Rooms 19,168 19,327 79,403 66,411
Other 6,878 7,680 30,559 32,692
-- -- -- --
364,582 364,022 1,491,850 1,489,634
Less: promotional
allowances (70,489) (72,746) (302,568) (274,189)
-- -- -- --
Net revenues 294,093 291,276 1,189,282 1,215,445
OPERATING EXPENSES:
Casino 136,762 134,787 544,001 556,684
Food and beverage 16,648 16,363 64,451 65,633
Rooms 3,808 3,970 17,591 10,466
Other 2,739 2,900 12,419 14,240
Selling, general and
administrative 61,705 61,274 244,964 241,853
Depreciation and
amortization 27,249 28,197 109,070 107,005
Impairment of goodwill - 111,700 21,438 111,700
Impairment of other
intangible assets - - 34,791 -
Impairment of fixed
assets 220 3,822 224 3,929
Net loss on disposition
of assets 350 312 255 411
-- -- -- --
Total operating
expenses 249,481 363,325 1,049,204 1,111,921
Income (loss) from
operations 44,612 (72,049) 140,078 103,524
OTHER INCOME (EXPENSE):
Interest income 114 125 452 515
Interest expense, net of
capitalized interest (24,668) (34,232) (121,233) (106,849)
Loss on early retirement
of debt - - - (5,365)
Other 808 331 1,463 2,006
-- -- -- --
INCOME (LOSS) BEFORE INCOME
TAX PROVISION (BENEFIT) 20,866 (105,825) 20,760 (6,169)
Income tax provision
(benefit) 9,945 (42,515) 12,130 (1,502)
-- -- -- --
NET INCOME (LOSS) $ 10,921 $ (63,310) $ 8,630 $ (4,667)
========== ========== ========== ==========
EARNINGS (LOSS) PER SHARE:
Basic $ 0.19 $ (1.10) $ 0.15 $ (0.08)
========== ========== ========== ==========
Diluted $ 0.18 $ (1.10) $ 0.15 $ (0.08)
========== ========== ========== ==========
CASH DIVIDENDS DECLARED PER
SHARE $ 0.11 $ 0.11 $ 0.42 $ 0.42
========== ========== ========== ==========
WEIGHTED-AVERAGE SHARES
OUTSTANDING:
Basic 58,253 57,697 58,025 57,543
========== ========== ========== ==========
Diluted 59,458 57,697 58,818 57,543
========== ========== ========== ==========
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
December 31, 2010 December 31, 2009
-- --
Balance sheet data
Cash and cash equivalents $ 71,186 $ 96,493
Total assets $ 2,061,542 $ 2,214,628
Total debt, net of
discount of $10,315 and
$12,779 $ 1,529,798 $ 1,677,128
Stockholders' equity $ 351,020 $ 335,993
Three Months Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
-- -- -- --
Consolidated cash flow
information
Net cash provided by
operating activities $ 41,750 $ 7,938 $ 218,827 $ 220,182
Net cash used in
investing activities $ (24,898) $ (36,372) $ (70,006) $ (172,941)
Net cash used in
financing activities $ (32,935) $ (7,197) $ (174,128) $ (24,474)
Net revenues
Ameristar St. Charles $ 66,560 $ 68,127 $ 267,139 $ 290,675
Ameristar East Chicago 54,156 55,607 216,514 251,695
Ameristar Kansas City 56,430 54,016 223,404 230,370
Ameristar Council Bluffs 38,328 35,731 154,468 156,421
Ameristar Vicksburg 27,028 28,089 114,516 120,152
Ameristar Black Hawk 38,291 35,876 152,254 103,168
Jackpot Properties 13,300 13,830 60,987 62,964
-- -- -- --
Consolidated net
revenues $ 294,093 $ 291,276 $1,189,282 $1,215,445
========== ========== ========== ==========
Operating income (loss)
Ameristar St. Charles $ 14,660 $ 14,841 $ 59,658 $ 71,231
Ameristar East Chicago 4,366 (107,989) (41,874) (78,077)
Ameristar Kansas City 14,855 13,987 59,134 61,601
Ameristar Council Bluffs 10,883 10,449 47,027 46,887
Ameristar Vicksburg 7,071 7,529 33,528 32,902
Ameristar Black Hawk 7,598 5,564 33,060 16,003
Jackpot Properties 1,238 1,865 11,526 13,338
Corporate and other (16,059) (18,295) (61,981) (60,361)
-- -- -- --
Consolidated operating
income (loss) $ 44,612 $ (72,049) $ 140,078 $ 103,524
========== ========== ========== ==========
Adjusted EBITDA
Ameristar St. Charles $ 21,566 $ 21,450 $ 86,561 $ 98,564
Ameristar East Chicago 8,527 7,630 30,405 48,886
Ameristar Kansas City 18,712 18,049 74,209 77,982
Ameristar Council Bluffs 13,670 13,293 58,012 58,517
Ameristar Vicksburg 10,787 11,629 48,709 49,761
Ameristar Black Hawk 12,548 12,554 53,018 35,475
Jackpot Properties 2,696 3,552 17,343 19,844
Corporate and other (10,976) (10,735) (44,764) (42,494)
-- -- -- --
Consolidated Adjusted
EBITDA $ 77,530 $ 77,422 $ 323,493 $ 346,535
========== ========== ========== ==========
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED
(Dollars in Thousands)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
-- -- -- --
Operating income (loss)
margins (1)
Ameristar St. Charles 22.0% 21.8% 22.3% 24.5%
Ameristar East Chicago 8.1% -194.2% -19.3% -31.0%
Ameristar Kansas City 26.3% 25.9% 26.5% 26.7%
Ameristar Council Bluffs 28.4% 29.2% 30.4% 30.0%
Ameristar Vicksburg 26.2% 26.8% 29.3% 27.4%
Ameristar Black Hawk 19.8% 15.5% 21.7% 15.5%
Jackpot Properties 9.3% 13.5% 18.9% 21.2%
Consolidated operating
income (loss) margin 15.2% -24.7% 11.8% 8.5%
Adjusted EBITDA margins (2)
Ameristar St. Charles 32.4% 31.5% 32.4% 33.9%
Ameristar East Chicago 15.7% 13.7% 14.0% 19.4%
Ameristar Kansas City 33.2% 33.4% 33.2% 33.9%
Ameristar Council Bluffs 35.7% 37.2% 37.6% 37.4%
Ameristar Vicksburg 39.9% 41.4% 42.5% 41.4%
Ameristar Black Hawk 32.8% 35.0% 34.8% 34.4%
Jackpot Properties 20.3% 25.7% 28.4% 31.5%
Consolidated Adjusted
EBITDA margin 26.4% 26.6% 27.2% 28.5%
___________________________
(1) Operating income (loss) margin is operating income (loss) as a percentage of net revenues.
(2) Adjusted EBITDA margin is Adjusted EBITDA as a percentage of net revenues.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA
(Dollars in Thousands) (Unaudited)
The following tables set forth reconciliations of operating income
(loss), a GAAP financial measure, to Adjusted EBITDA, a non-GAAP
financial measure.
Three Months Ended December 31, 2010
Impairment
Loss and
Operating Depreciation Loss on
Income and Disposition Stock-Based
(Loss) Amortization of Assets Compensation
---
Ameristar St. Charles $ 14,660 $ 6,516 $ 229 $ 161
Ameristar East Chicago 4,366 4,033 1 127
Ameristar Kansas City 14,855 3,704 41 112
Ameristar Council
Bluffs 10,883 2,663 10 114
Ameristar Vicksburg 7,071 3,522 2 192
Ameristar Black Hawk 7,598 4,826 - 124
Jackpot Properties 1,238 1,260 75 123
Corporate and other (16,059) 725 212 2,776
---
Consolidated $ 44,612 $ 27,249 $ 570 $ 3,729
=========== ============ ============ ============
Deferred Non-
Compensation Operational
Plan Expense Professional Adjusted
(1) Fees EBITDA
---
Ameristar St. Charles $ - $ - $ 21,566
Ameristar East Chicago - - 8,527
Ameristar Kansas City - - 18,712
Ameristar Council
Bluffs - - 13,670
Ameristar Vicksburg - - 10,787
Ameristar Black Hawk - - 12,548
Jackpot Properties - - 2,696
Corporate and other 884 486 (10,976)
---
Consolidated $ 884 $ 486 $ 77,530
============ ============ ===========
Three Months Ended December 31, 2009
Impairment
Loss and
(Gain) Loss
Operating Depreciation on
Income and Disposition Stock-Based
(Loss) Amortization of Assets Compensation
--- ---
Ameristar St. Charles $ 14,841 $ 6,448 $ (45) $ 206
Ameristar East Chicago (107,989) 3,817 111,719 83
Ameristar Kansas City 13,987 3,881 14 167
Ameristar Council
Bluffs 10,449 2,705 4 135
Ameristar Vicksburg 7,529 3,909 19 172
Ameristar Black Hawk 5,564 5,126 286 138
Jackpot Properties 1,865 1,515 37 135
Corporate and other (18,295) 796 3,800 2,555
--- ---
Consolidated $ (72,049) $ 28,197 $ 115,834 $ 3,591
=========== ============ =========== ============
Deferred
Compensation
Plan Expense Pre-Opening Adjusted
(1) Costs EBITDA
---
Ameristar St. Charles $ - $ - $ 21,450
Ameristar East Chicago - - 7,630
Ameristar Kansas City - - 18,049
Ameristar Council
Bluffs - - 13,293
Ameristar Vicksburg - - 11,629
Ameristar Black Hawk - 1,440 12,554
Jackpot Properties - - 3,552
Corporate and other 409 - (10,735)
---
Consolidated $ 409 $ 1,440 $ 77,422
============ ============ ===========
(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 OPERATING INCOME (LOSS) TO ADJUSTED EBITDA - CONTINUED
(Dollars in Thousands) (Unaudited)
For the Year Ended December 31, 2010
Impairment
Loss and
(Gain) Loss
Operating Depreciation on
Income and Disposition Stock-Based
(Loss) Amortization of Assets Compensation
--- ---
Ameristar St. Charles $ 59,658 $ 25,902 $ 319 $ 682
Ameristar East Chicago (41,874) 15,880 56,035 364
Ameristar Kansas City 59,134 14,548 (7) 534
Ameristar Council
Bluffs 47,027 10,513 9 463
Ameristar Vicksburg 33,528 14,545 15 621
Ameristar Black Hawk 33,060 19,478 (31) 511
Jackpot Properties 11,526 5,185 154 478
Corporate and other (61,981) 3,019 214 10,672
--- ---
Consolidated $ 140,078 $ 109,070 $ 56,708 $ 14,325
=========== ============ =========== ============
Deferred Non-
Compensation Operational
Plan Expense Professional Adjusted
(1) Fees EBITDA
---
Ameristar St. Charles $ - $ - $ 86,561
Ameristar East Chicago - - 30,405
Ameristar Kansas City - - 74,209
Ameristar Council
Bluffs - - 58,012
Ameristar Vicksburg - - 48,709
Ameristar Black Hawk - - 53,018
Jackpot Properties - - 17,343
Corporate and other 1,779 1,533 (44,764)
---
Consolidated $ 1,779 $ 1,533 $ 323,493
============ ============ ===========
For the Year Ended December 31, 2009
Impairment
Loss and
(Gain) Loss
Operating Depreciation on
Income and Disposition Stock-Based
(Loss) Amortization of Assets Compensation
--- ---
Ameristar St. Charles $ 71,231 $ 26,550 $ (3) $ 786
Ameristar East Chicago (78,077) 14,894 111,800 269
Ameristar Kansas City 61,601 15,653 45 683
Ameristar Council
Bluffs 46,887 11,108 2 520
Ameristar Vicksburg 32,902 16,121 75 663
Ameristar Black Hawk 16,003 13,558 286 489
Jackpot Properties 13,338 5,964 35 507
Corporate and other (60,361) 3,157 3,800 8,958
--- ---
Consolidated $ 103,524 $ 107,005 $ 116,040 $ 12,875
=========== ============ =========== ============
Deferred
Compensation One-Time
Plan Expense Pre-Opening Property Tax Adjusted
(1) Costs Adjustment EBITDA
---
Ameristar St. Charles $ - $ - $ - $ 98,564
Ameristar East Chicago - - - 48,886
Ameristar Kansas City - - - 77,982
Ameristar Council
Bluffs - - - 58,517
Ameristar Vicksburg - - - 49,761
Ameristar Black Hawk - 3,863 1,276 35,475
Jackpot Properties - - - 19,844
Corporate and other 1,952 - - (42,494)
---
Consolidated $ 1,952 $ 3,863 $ 1,276 $ 346,535
============ ============ ============ ===========
(1) Deferred compensation plan expense represents the change in the Company's non-cash liability based on plan participant investment results. This expense is included in selling, general and administrative expenses in the accompanying consolidated statements of operations.
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 Year Ended
December 31, December 31,
2010 2009 2010 2009
- - - -
Net income (loss) $ 10,921 $ (63,310) $ 8,630 $ (4,667)
Income tax provision
(benefit) 9,945 (42,515) 12,130 (1,502)
Interest expense, net of
capitalized interest 24,668 34,232 121,233 106,849
Interest income (114) (125) (452) (515)
Other (808) (331) (1,463) (2,006)
Net loss on disposition of
assets 350 312 255 411
Impairment of goodwill - 111,700 21,438 111,700
Impairment of other
intangible assets - - 34,791 -
Impairment of fixed assets 220 3,822 224 3,929
Depreciation and amortization 27,249 28,197 109,070 107,005
Stock-based compensation 3,729 3,591 14,325 12,875
Deferred compensation plan
expense 884 409 1,779 1,952
Non-operational professional
fees 486 - 1,533 -
Loss on early retirement of
debt - - - 5,365
Black Hawk hotel pre-opening
costs - 1,440 - 3,863
One-time non-cash adjustment
to Black Hawk property taxes - - - 1,276
- - - -
Adjusted EBITDA $ 77,530 $ 77,422 $ 323,493 $ 346,535
========= ========= ========= =========
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED 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 Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
- -
Diluted earnings (loss) per share
(EPS) $ 0.18 $ (1.10) $ 0.15 $ (0.08)
Non-operational professional fees 0.01 - 0.02 -
Impairment loss on East Chicago
intangible assets - 1.15 0.56 1.15
Impairment loss on discontinued
expansion projects 0.04 0.04
Black Hawk hotel pre-opening
expenses - 0.02 - 0.04
Loss on early retirement of debt - - - 0.06
One-time non-cash adjustment to
Black Hawk property taxes - - - 0.01
- -
Adjusted diluted earnings per
share (Adjusted EPS) $ 0.19 $ 0.11 $ 0.73 $ 1.22
========= ======== ========= ========
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, impairment charges related to fixed and intangible assets, loss on early retirement of debt, pre-opening costs and a one-time Black Hawk property tax adjustment. In future periods, the calculation of Adjusted EBITDA may be different than in this release. The foregoing tables reconcile Adjusted EBITDA to operating income (loss) and net income (loss), based upon GAAP.
Adjusted EPS, as used in this press release, is diluted earnings (loss) per share, excluding the after-tax per-share impacts of non-operational professional fees, impairment charges related to intangible assets and discontinued expansion projects, pre-opening expenses, the one-time Black Hawk property tax adjustment and the loss on early debt retirement. Management adjusts EPS, when deemed appropriate, for the evaluation of operating performance because we believe that the exclusion of certain 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.
