CasinoCityTimes.com

Gurus
News
Newsletter
Search News Subscribe
Stay informed with the
NEW Casino City Times newsletter!
Newsletter Signup
Stay informed with the
NEW Casino City Times newsletter!

Gaming News

 

Accident Impacts Aztar Results

21 October 2004

PHOENIX, Arizona – (PRESS RELEASE) -- Aztar Corporation (NYSE: AZR) today reported its third-quarter 2004 financial results. Consolidated EBITDA for the quarter was $46.4 million, which includes $2.0 million of insurance recovery related to the delay in the opening of the expansion of Tropicana Atlantic City; third-quarter EBITDA is after $3.2 million of expenses related to the construction accident in Atlantic City that may not be reimbursed by insurance and also after $1.1 million of preopening costs.

In the third quarter of 2003, EBITDA was $48.6 million. Diluted earnings per share in the 2004 third quarter were 36 cents, which is after 3 cents associated with a loss on early retirement of debt and also after 3 cents attributable to construction-accident-related expenses and preopening costs, net of construction-accident-related insurance recoveries. Diluted earnings per share in the 2003 third quarter were 46 cents.

Our company's reported financial results in the third quarter were impacted by a variety of issues related to the Tropicana Atlantic City construction accident. Nonetheless, companywide operations have been strong. Our Nevada, Missouri and Indiana properties each had higher revenues, EBITDA, and EBITDA margins; in the aggregate, they produced a 16 per cent increase in EBITDA from the year-earlier quarter. At Tropicana Atlantic City, all major profit centers had revenue growth, providing momentum as we prepare for the opening of the expansion. Although EBITDA margins were lower at Tropicana Atlantic City, this was primarily due to increased spending associated with investing in one-time database customer marketing programs to build loyalty just prior to the opening.

"We are fast approaching the opening of our new facilities at Tropicana Atlantic City," said Paul E. Rubeli, Aztar chairman of the board and chief executive officer. "Our tenants in The Quarter are readying their restaurants, shops and entertainment venues, and Tropicana employees are in the process of outfitting the new hotel tower for occupancy. Anticipation and excitement is growing. This new expansion at the Tropicana is going to be stunning and will far surpass anything Atlantic City has ever seen."

Disruption to Operations from Construction Accident

Operating results in the third quarter of 2004 continued to be impacted by the disruption that followed the construction accident that occurred on October 30, 2003, at the site of the expansion of Tropicana Atlantic City. Insurance claims for business interruption that occurred in the 2004 third quarter have been filed with the company's insurers in the amount of $5.8 million. Profit recovery from business interruption insurance is recorded when the amount of recovery, which may be different from the amount claimed, is agreed to by the insurers. If the insurers had agreed to the amount of the claims filed by the company on account of business interruption during the 2004 third quarter, that recovery would have contributed approximately 9 cents to diluted earnings per share for the quarter.

Construction Status

Construction continues on the Tropicana Atlantic City expansion, which contains a new 502-room hotel tower, a 200,000-square-foot dining, entertainment and retail complex to be known as The Quarter at Tropicana, and a 2,400-space parking garage. All 502 rooms in the new tower are completed and are being cleaned and outfitted. Tenants of The Quarter, as their spaces are completed and approved, will be stocking and conducting training in their stores, restaurants and entertainment venues. Most of the tenant spaces are completed and are going through the approval process.

The most recent schedule calls for completion of the garage structure by November 9, with only finishing work continuing on the upper floors. Following the completion of the garage structure and required inspections by various state and local authorities, Aztar plans to open the garage, the new hotel tower and The Quarter to the public. Achieving this goal will require successfully implementing the construction project schedule on a week-to-week basis, and not being adversely affected by unusually bad weather, materials shortages, labor strife or other factors.

Capital Expenditures

In the third quarter of 2004, purchases of property and equipment totaled $51 million. Approximately $15 million of the total was spent on routine expenditures, and $36 million (including $4.0 million of capitalized interest) went for development.

Year-to-date Results

For the first three quarters of 2004, the company reported consolidated EBITDA of $139.8 million, which includes $10.5 million of insurance recoveries related to business interruption and the delay in the opening of the expansion of Tropicana Atlantic City; year-to-date EBITDA is after $5.5 million of expenses related to the construction accident that may not be reimbursed by insurance and also after $1.1 million of preopening costs. In the first three quarters of 2003, EBITDA was $145.8 million. Diluted earnings per share through three quarters of 2004 were 71 cents, which is after 18 cents associated with a loss on early retirement of debt and after 31 cents associated with an adverse state tax court ruling recorded in the first quarter of 2004; year-to-date diluted earnings per share include 7 cents attributable to construction-accident-related insurance recoveries, net of construction-accident-related expenses and preopening costs. The company reported net income equivalent to $1.33 per diluted share in the first three quarters of 2003.

< Gaming News