Aztar Reports Record Operating Results for 1998 4th Quarter and Year
* Record consolidated operating cash flow for quarter and year
* All 5 properties report operating cash flow increases in quarter
* EPS 3-cent income vs. 11-cent loss for the quarter
* EPS before extraordinary items 23 cents vs. 8 cents for the year
PHOENIX, Feb. 3 /PRNewswire/ -- Aztar Corporation (NYSE: AZR) today
reported record high fourth-quarter operating cash flow and operating income
levels for the company for the fourth quarter of 1998.
Revenues for the quarter ended December 31, 1998, were $196.1 million, up
three percent from $190.3 million in the quarter ended January 1, 1998.
Consolidated operating cash flow, as defined by earnings before interest,
taxes, depreciation, amortization and rent (EBITDAR), was $35.6 million, up
35 percent from $26.3 million a year earlier. Operating income was
$17.8 million, up 144 percent from $7.3 million in the year-earlier quarter.
Net income was $1.5 million, up from a loss of $4.9 million a year earlier.
On a diluted per-share basis, net income was three cents in the 1998 quarter,
compared with a loss of 11 cents a year earlier.
"The fourth quarter provided a solid ending to a year that produced
steadily improving operating results throughout, creating strong momentum for
us going into 1999," said Paul E. Rubeli, chairman, president and chief
executive officer. "Of particular note, all five of Aztar's properties
recorded year-over-year increases in operating cash flow and cash flow margins
for the quarter. Consolidated operating cash flow increased 10 percent for
the full year 1998 to $154.5 million, a new record for the third year in a
row.
"We are continuing to pay down our bank debt and are planning to refinance
part or all of our public debt later this year. In particular, the
refinancing of our 13 3/4 percent bonds will be a high priority. Depending on
capital market conditions, this refinancing should reduce interest expense by
approximately $10 million a year commencing in October 1999, which would
substantially increase free cash flow and earnings."
Tropicana Atlantic City
The company's Tropicana Casino and Resort in Atlantic City, New Jersey,
achieved fourth-quarter revenues of $101.0 million, up five percent from a
year earlier, and record fourth-quarter operating cash flow of $21.4 million,
an increase of 22 percent from a year earlier. This performance continued a
trend of nine consecutive quarters of year-over-year increases in operating
cash flow at the property. Cash flow operating margin was 21.3 percent, an
increase of 3.0 percentage points from a year earlier. Cash room revenues
increased 21 percent, reflecting the continuing success of marketing hotel
rooms to cash-paying customers, rather than those who receive rooms on a
complimentary basis.
The overall Atlantic City market continued its strength in the fourth
quarter by achieving a 5.4 percent growth rate for the quarter, ending the
year with the highest quarterly growth rate of 1998. Industry-wide
fourth-quarter slot revenues grew 5.9 percent. The Tropicana's slot revenues
grew 6.9 percent in the calendar quarter, reflecting increased market share
for the property. These strong growth rates were achieved while casinos in
Connecticut and Delaware continued recording impressive growth rates,
confirming the booming nature of the overall Northeast regional gaming market.
Tropicana Las Vegas
The company's Tropicana Resort and Casino in Las Vegas, Nevada reported
revenues of $38.3 million, up three percent from a year earlier, and operating
cash flow of $2.7 million, up a significant $4.9 million from a loss of
$2.2 million a year earlier. Casino revenue increased six percent and other
revenues remained level with the prior year.
As previously announced, Aztar has signed a renegotiated extension of its
option to purchase its partner's interest in the Tropicana, extending the
purchase option potentially until February 2002. With the opening of
Bellagio, Mandalay Bay, Venetian, Paris and other must-see resorts on the
Strip, we expect a revitalization of the Las Vegas market. As the current
wave of new megaresorts comes on line and the market eventually absorbs this
capacity, we believe the development potential of the Tropicana's site will
become increasingly clear as to timing, size, nature and significant economic
value. In the interim, management continues to implement a plan to exploit
the Tropicana's unique position located at The New Four Corners surrounded by
huge megaresorts containing more than 18,000 hotel rooms. To attract
customers from these surrounding resorts, a new and exciting entertainment
lounge called Celebration Lounge was opened in the fourth quarter, and the
Casino Legends Hall of Fame, a fascinating collection of memorabilia
showcasing the colorful history of Las Vegas, was opened last week.
Additional aspects of this plan will be implemented throughout this year.
Casino Aztar Evansville
Casino Aztar Evansville, the company's riverboat casino in Evansville,
Indiana, generated revenues of $28.7 million, down four percent from a year
earlier, and operating cash flow of $9.2 million, up slightly from the prior
year. Cash flow operating margin improved 1.8 percentage points to a strong
32.0 percent.
During the fourth quarter of 1998, the Caesars riverboat casino opened
near Louisville, Kentucky, more than a two-hour drive from Evansville.
Because of disruptions caused by severe winter weather during the last part of
December and the month of January in Evansville's feeder markets, it has been
difficult to accurately assess the negative impact from this new competitor.
However, based upon the initial two months of data, the negative impact is
believed to be less than the 15 to 20 percent originally anticipated.
Ramada Express, Laughlin
The company's Ramada Express Hotel and Casino in Laughlin, Nevada,
generated $22.5 million of revenues in the 1998 fourth quarter, up six percent
from a year earlier, and operating cash flow of $4.8 million, up a strong
18 percent from the prior year. Cash flow operating margin improved
2.1 percentage points to 21.5 percent.
The Laughlin market continues to show signs of improving growth. The
market generated positive growth rates in both the second and third quarters
as well as in the first two months of the fourth quarter, the latest results
available. These trends suggest that the Laughlin market, which had
experienced more than four years of modestly declining growth rates, may have
bottomed out from the adverse impact of Indian casinos that opened during that
period in Arizona and Southern California.
Casino Aztar Caruthersville
Casino Aztar Caruthersville, the company's riverboat casino in
Caruthersville, Missouri, reported $0.4 million of operating cash flow, up
from $0.1 million a year earlier. Voters in the State of Missouri approved a
constitutional amendment in November that favorably resolved the "boat-in-a-
moat" issue. While Casino Aztar Caruthersville had no direct exposure to this
issue, its resolution is positive for the company in that the casino industry
can now focus its efforts on resolving other issues that continue to constrain
the financial results and potential economic benefits of the Missouri casino
industry.
Consolidated Fiscal Year Results
For the full year, Aztar reported record consolidated revenue of
$806.1 million, compared with $782.4 million a year earlier. Operating cash
flow was a record $154.5 million, up 10 percent from $140.3 million in 1997.
Operating income was a record $81.6 million, up 21 percent from $67.4 million
a year earlier. Income before extraordinary items was $11.5 million,
equivalent to 23 cents per share, diluted, compared with $4.4 million,
equivalent to eight cents per share, diluted, a year earlier. Following an
extraordinary item of $1.3 million related to costs associated with the
refinancing of the company's bank debt in the second quarter, net income was
$10.2 million, or 20 cents per share, diluted, in 1998. The company had
reported 1997 net income of $4.4 million, or eight cents per share, diluted.
The 1997 results include a tax benefit of $2.3 million primarily related to a
settlement between the Internal Revenue Service and Ramada Inc., the
predecessor of Aztar, regarding the income tax returns of Ramada Inc. for the
years 1986 through 1989. Aztar is responsible for certain taxes of Ramada
Inc. through December 20, 1989.
Aztar's total long-term indebtedness, including the current portion, as of
December 31, 1998, was $490 million, down from $519 million at the beginning
of the year. Free cash flow over and above capital spending continues to be
applied to the reduction of the company's debt. The company is working to
prepare for the appropriate refinancing of a portion or all of the company's
outstanding public debt later this year, particularly $180 million of
13.75 percent senior subordinated notes callable in October 1999 at a premium
of 6.875 percent. Depending upon credit market conditions at the time, Aztar
should realize substantial interest expense savings from this effort.
Book value of the company's common stock as of December 31, 1998 was
$10.02 per share. |
