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Arnold M. Knightly

Stratosphere owner cuts losses by 30 percent

23 March 2010

LAS VEGAS, Nevada -- The casino company that owns the Stratosphere and three other area casinos trimmed its losses in 2009 despite posting its worst revenue numbers since 2005.

American Casino & Entertainment Properties cut its loss by 30.5 percent, posting a $21.8 million loss for the year due to a debt restructuring, according to a morning filing with the Securities and Exchange Commission.

The debt reduction cut interest expenses on the company's long-term debt from $1.11 billion to $377.5 million

American Casino, which also owns both Arizona Charlie's and the Aquarius in Laughlin, restructured its debt load in the second quarter.

The company cut expenses by 12.5 percent and reduced employees levels by nearly 600 workers to approximately 4,400 employees as of Dec. 31.

Net revenue declined 16.1 percent to $356 million from $424.4 million in 2008 as casino companies continued to struggle with declining visitor numbers and spending last year.

However, cost cutting enabled American Casino to suffer only a 2.6 percent drop in cash flow to $59.1 million. Cash flow is defined as earnings before interest, taxes, depreciation and amortization.

Company Chief Financial Officer Ned Martin said the company is seeing improving numbers at its locals casinos and in Laughlin.

"Business is still difficult in Southern Nevada, particularly on the Strip," Martin said in a statement.

Casino revenues, which account for nearly 56 percent of the company's revenues, dropped 16.1 percent to $215.2 million in 2009 from $256.5 million in 2008.

Hotel revenues declined 27 percent as room occupancy declined to 66.9 percent.

The Stratosphere, which has nearly 2,400 rooms, maintained occupancy rates of 89.3 percent in 2009.