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Gaming Guru

Laura Carroll

Ameristar Casinos reports loss for third quarter

1 November 2012

LAS VEGAS -- Ameristar Casinos, Inc. on Wednesday reported a net income drop of 15 percent for the third quarter.

The Las Vegas-based regional casino operator said its net income for the quarter ended Sept. 30 dropped to $16.13 million from $18.88 million for the same period in 2011. Earnings per share fell to 48 cents compared with 56 cents for the same period in 2011.

The earnings report brought positive comments from analysts.

"[Ameristar] continues to be one of the most efficient operators in the regional gaming space," said analysts with Macquarie Capital (USA) Inc.

Macquarie analysts said the company managed costs effectively while operating in competitive gaming environments.

Net revenues for the company decreased to $298.01 million from $304.51 million last year, while interest expense rose to $29.7 million from $27.3 million. Development expenses increased by $1.1 million because of projects in Louisiana and Massachusetts.

Ameristar's CEO Gordon Kanofsky noted that his company's Kansas City and East Chicago properties faced heightened competition. Ameristar has eight properties throughout Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Nebraska and Nevada. Its Nevada property is in Jackpot near the Idaho border.

Its ninth property, in Lake Charles, La., is expected to open in mid-2014.

"We look forward to further growing our company and diversifying our operations when we complete our luxury casino resort in Lake Charles, La. Additionally, our proposal in Springfield, Mass., to develop a world-class luxury resort in a new geographic region serves as another example of our commitment to pursue growth opportunities," Kanofsky said in a statement.

Construction of the Lake Charles property began July 20 and is on schedule, the company said. The project's cost is expected to be between $560 million to $580 million excluding capitalized interest and preopening expenses. The company expects funding to come from a combination of cash from operations and borrowings under its revolving credit agreement.

Ameristar's Springfield property plans call for a 150,000-square-foot casino featuring about 3,300 slot machines and 110 table games including a poker room. The company estimates the initial development cost to be about $910 million, which includes capitalized interest and preopening expenses and a license fee payment to Massachusetts.

Ameristar shares fell 31 cents, or 1.67 percent, Wednesday to close at $18.25 on the Nasdaq Global Select Market.