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Horseshoe Gaming Results Down

14 November 2002

TINLEY PARK, Illinois – (Press Release) -- Horseshoe Gaming Holding Corp. (the "Company") today reported third quarter 2002 net income of $24.8 million versus $174.3 million for the third quarter of 2001 and net revenues of $211.9 million as compared to $219.4 million in 2001. Third quarter 2001 net income includes a gain from the sale of Empress Casino Joliet ("Joliet") which was sold on July 31, 2001, in the amount of $162.5 million and an extraordinary loss due to the early retirement of debt of $6.9 million.

Consolidated operating results for 2001 include the results from Joliet through July 2001. In addition, the quarterly comparisons were impacted by the January 1, 2002 adoption of Financial Accounting Standards Board Statement No. 142, "Goodwill and Other Intangible Assets," which eliminated the amortization of goodwill and most intangible assets. The Company recorded $2.9 million in amortization of goodwill and intangibles in the third quarter of 2001.

Consolidated earnings before interest, taxes, depreciation, amortization and certain other items ("EBITDA") was $52.2 million for the quarter ended September 30, 2002 as compared to $52.6 million in the prior year quarter. EBITDA is calculated by adding depreciation and amortization, deferred compensation, net gain or loss on disposal of assets and other non-recurring items to operating income.

The Company considers EBITDA to be a widely accepted financial indicator of a company's ability to service debt, fund capital expenditures and expand its business. EBITDA, however, is not calculated in the same way by all companies and is neither a measure required, nor does it represent cash flow from operations as defined, by generally accepted accounting principles. EBITDA should not be considered by an investor as an alternative to net income, as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity.

Net revenues and EBITDA before corporate expenses for the Company's three properties, excluding Joliet in the 2001 period, increased 8 percent and 17 percent, respectively, in the third quarter of 2002 as compared to the prior year period. In the third quarter of 2002, Hammond benefited from dockside gaming and the continued improvements associated with the re-branding efforts, generating a 13 percent increase in coin-in as compared to the prior year quarter. Partially offsetting the Hammond improvements was a 4 percent and 8 percent decrease in coin-in in Bossier City and Tunica, respectively, in the third quarter of 2002 as compared to the prior year period.

Net revenues in Bossier City decreased 1 percent in the third quarter of 2002 as compared to the prior year, while EBITDA before corporate expenses decreased 2 percent in the same period. Bossier City's EBITDA margin before corporate expenses was unchanged at 25 percent despite an additional 1 percent increase in gaming taxes that went into effect on April 1, 2002.

Net revenues in Tunica decreased 4 percent in the quarter ended September 30, 2002 as compared to the prior year period, while EBITDA before corporate expenses decreased 5 percent in the same period. Tunica's EBITDA margin before corporate expenses was unchanged at 33 percent for the quarter ended September 30, 2002, as compared the year-earlier period.

Net revenues in Hammond increased 32 percent in the third quarter of 2002 as compared to the prior year period, with EBITDA before corporate expenses increasing 85 percent in the same period. Hammond's EBITDA margin before corporate expenses was 25 percent in the third quarter of 2002 as compared to 18 percent in the comparable year-earlier period.

Revenue increases in Hammond in the third quarter of 2002 were aided by the August 1, 2002 transition to dockside gaming. With the conversion to dockside, Hammond will now be assessed a graduated state gaming tax ranging from 15% to 35%. In addition, the calculation of the admission tax was modified to count patrons on a per entry basis as opposed to a per cruise basis. Beginning August 1, 2002, the Company calculated its effective tax rate based on estimated taxes to be paid by year-end. Beginning January 1, 2003, with a full year on the graduated tax scale, the Company estimates that its gaming tax will increase from current levels by approximately six percentage points.

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