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Howard Stutz

Ameristar Casinos suffers fourth-quarter loss

4 February 2010

LAS VEGAS, Nevada -- Ameristar Casinos recorded a $63.3 million loss in the fourth quarter after customers had trouble reaching its Indiana casino because of a closed bridge.

The Las Vegas-based company, which operates predominantly in regional markets, also said Wednesday it took a noncash impairment charge of $111.7 million on the Ameristar East Chicago, which it acquired in 2007.

The loss translated into a net loss per share of $1.10 in the quarter ended Dec. 31. The figures compared with a net loss in the same quarter a year ago of $101 million, or $1.77 per share.

Ameristar Chief Executive Officer Gordon Kanofsky said the permanent closure of a bridge near the Ameristar East Chicago by the Indiana Department of Transportation on Nov. 13 due to safety concerns caused the casino to report a 12 percent decline in revenues.

"Closure of the bridge has significantly impacted the property's operating results, and we expect this to continue unless and until improved access to Ameristar East Chicago is developed," Kanofsky said in a statement. "We are working closely with government officials to attempt to mitigate the traffic impact. Additionally, we will continue to evaluate the property's cost structure relative to business levels."

The problems in Indiana offset Ameristar's success at its newly expanded resort in Colorado. Ameristar Black Hawk, which added a hotel tower in September, had a 17.8 percent increase in fourth quarter revenues.

The company said Ameristar Black Hawk, which is about 40 miles outside of Denver, collects more than 27 percent of the gambling revenues in the community.

"Ameristar Black Hawk is head and shoulders above its competition in every facet," MorganJoseph gaming analyst Justin Sebastiano told investors. "As such, we expect the property to continue to grow the market and take the lion's share of said growth."

However, net revenues at Ameristar Council Bluffs in Iowa decreased 11.6 percent in the fourth quarter.

Ameristar reported fourth-quarter revenues of $291.3 million, down 0.8 percent from $293.6 million a year earlier.

"We think investors could be concerned as revenues remain depressed, incremental cost cuts seem less likely, and the East Chicago property will continue at a lower run-rate due to the permanent bridge closure," Goldman Sachs gaming analyst Steven Kent wrote in a research note.

Kanofsky told analysts the company said corporate restructuring efforts last year created a foundation for this year, so Ameristar will have the cash available to retire debt and maintain quarterly dividend payments.

"Over the past year, we substantially reduced operating costs, completed our last significant construction project and strengthened our balance sheet through a multi-phase debt restructuring," Kanofsky said. "We also believe we are well positioned to withstand continuing difficult economic conditions and drive significant growth when the economy improves."