AZR Aztar

PHOENIX, Oct. 18 /PRNewswire-FirstCall/ -- Aztar Corporation (NYSE:AZR) today reported financial results for its 2006 third quarter, including property EBITDA from continuing operations of $71.0 million, compared with $65.7 million in the year-earlier quarter. Third-quarter 2006 revenue was $234.0 million, compared with $234.3 million in the comparable 2005 quarter. Reported diluted net income per share was 60 cents in the 2006 third quarter, compared with diluted net income per share of 51 cents in the 2005 quarter. Adjusted diluted net income per share was 54 cents in the 2006 third quarter, which is after stock option compensation expense equivalent to one cent per share, compared with 51 cents in the 2005 third quarter. Property EBITDA Property EBITDA in the 2006 third quarter includes construction accident related expenses of $1.0 million and insurance recoveries of $3.9 million, compared with expenses of $1.4 million and no insurance recoveries in the 2005 third quarter. Other income (expense) of $2.7 million consists of insurance recoveries for the rebuilding of the damaged portion of the Tropicana Atlantic City expansion after the construction accident that occurred on October 30, 2003, net of direct costs to obtain the recoveries, compared to $(0.3) million in the comparable 2005 quarter. Discontinued Operations On May 19, 2006, the company announced it had signed a merger agreement with Wimar Tahoe Corporation d/b/a Columbia Entertainment, the gaming affiliate of Columbia Sussex Corporation. Results for Casino Aztar in Caruthersville, Missouri, are reported as discontinued operations, net of income taxes, reflecting our commitment to sell or close that property as part of the merger agreement. Year-to-Date Results Consolidated revenue was $677.2 million in the first three quarters of 2006, compared with $671.6 million in the first three quarters of 2005. Property EBITDA from continuing operations was $191.7 million in the 2006 period, compared with $175.5 million a year earlier. Year-to-date 2006 net loss was $39.6 million, equivalent to $1.14 per diluted share, compared with net income of $44.7 million, equivalent to $1.19 per diluted share, in the first three quarters of 2005. Prior to signing the Columbia Entertainment merger agreement, the company terminated its earlier merger agreement with Pinnacle Entertainment, Inc. and paid to Pinnacle a termination fee of $52.16 million and termination expenses of $25.84 million. The payment is not deductible for tax purposes. The payment to Pinnacle and certain other costs, consisting mainly of professional fees, are reported as merger-related expenses. Adjusted diluted net income per share was $1.26 in the first three quarters of 2006, which is after stock option compensation expense equivalent to five cents per share, compared with $1.18 in the comparable 2005 period. Fiscal Year Change The company changed its fiscal year to the calendar year, effective December 31, 2005. The company previously used a 52/53 week fiscal year ending on the Thursday nearest December 31. The information in this release for the third quarter of 2006 reflects the company's results of operations for a 92-day period beginning July 1, 2006 and ending September 30, 2006. The third quarter of 2005 contained 91 days, beginning on July 1, 2005, and ending on September 29, 2005. Status of Merger with Columbia Entertainment On October 17, 2006, Aztar shareholders approved the merger at a special meeting of Aztar shareholders. Our merger with Columbia Entertainment is subject to the satisfaction of customary closing conditions, including the receipt of necessary gaming approvals. Filings regarding approval of the transaction have been made by Columbia Entertainment in each of New Jersey, Nevada and Indiana. We understand that Columbia Entertainment also filed applications relating to its financing of the transaction in each of Louisiana and Mississippi; Mississippi authorities have approved the financing. The merger is presently expected to close in the fourth quarter of 2006. In our merger agreement with Columbia Entertainment, we agreed to use commercially reasonable efforts to sell our Missouri property, commonly known as Casino Aztar Caruthersville. We signed an agreement with Fortunes Entertainment, LLC on August 17, 2006 under which Fortunes Entertainment will acquire the Caruthersville property. Approval of the sale by Missouri gaming authorities is required. Conference Call Our third-quarter 2006 earnings conference call is scheduled to be broadcast live on the Internet beginning at 4:30 p.m. Eastern Time on Wednesday, October 18, 2006. Individuals may access the live audio webcast through our website at http://www.aztar.com/. The call also will be available on replay through that website following the call. Selected Results ($ in millions, except ADR, which is Average Daily Rate) Third Quarter Year to Date 2006 2005 2006 2005 (unaudited) (unaudited) Tropicana Atlantic City Revenue $135.3 $137.7 $377.0 $372.1 EBITDA $45.8 $41.4 $113.2 $93.4 Depreciation and amortization $12.2 $11.1 $37.2 $32.7 Operating income $33.6 $30.3 $76.0 $60.7 EBITDA margin 33.9% 30.1% 30.0% 25.1% Operating income margin 24.8% 22.0% 20.2% 16.3% Occupancy 94.9% 96.9% 92.9% 90.0% ADR $118.92 $113.33 $107.26 $98.26 Tropicana Las Vegas Revenue $40.8 $40.0 $121.3 $124.0 EBITDA $9.6 $8.5 $27.3 $30.2 Depreciation and amortization $1.3 $1.4 $4.0 $4.3 Operating income $8.3 $7.1 $23.3 $25.9 EBITDA margin 23.5% 21.3% 22.5% 24.4% Operating income margin 20.3% 17.8% 19.2% 20.9% Occupancy 96.6% 98.1% 96.1% 98.5% ADR $75.08 $75.08 $85.05 $88.91 Ramada Express Laughlin Revenue $22.7 $22.6 $74.7 $72.5 EBITDA $5.3 $5.5 $20.3 $20.3 Depreciation and amortization $1.8 $1.8 $5.6 $5.1 Operating income $3.5 $3.7 $14.7 $15.2 EBITDA margin 23.3% 24.3% 27.2% 28.0% Operating income margin 15.4% 16.4% 19.7% 21.0% Occupancy 71.3% 68.9% 73.7% 73.4% ADR $36.74 $35.34 $36.34 $34.55 Casino Aztar Evansville Revenue $35.2 $34.0 $104.2 $103.0 EBITDA $10.3 $10.3 $30.9 $31.6 Depreciation and amortization $1.8 $1.7 $5.5 $5.4 Operating income $8.5 $8.6 $25.4 $26.2 EBITDA margin 29.3% 30.3% 29.7% 30.7% Operating income margin 24.1% 25.3% 24.4% 25.4% Occupancy 94.2% 93.0% 90.9% 90.2% ADR $63.38 $63.29 $63.18 $63.64 Property Revenue $234.0 $234.3 $677.2 $671.6 EBITDA $71.0 $65.7 $191.7 $175.5 Depreciation and amortization $17.1 $16.0 $52.3 $47.5 Operating income $53.9 $49.7 $139.4 $128.0 EBITDA margin 30.3% 28.0% 28.3% 26.1% Operating income margin 23.0% 21.2% 20.6% 19.1% Corporate EBITDA $(5.7) $(3.8) $(97.4) $(17.0) Depreciation and amortization $0.0 $0.0 $0.0 $0.0 Tropicana Las Vegas capitalized development costs write-off $0.0 $0.0 $26.0 $0.0 Operating income (loss) $(5.7) $(3.8) $(123.4) $(17.0) Consolidated Revenue $234.0 $234.3 $677.2 $671.6 EBITDA $65.3 $61.9 $94.3 $158.5 Depreciation and amortization $17.1 $16.0 $52.3 $47.5 Tropicana Las Vegas capitalized development costs write-off $0.0 $0.0 $26.0 $0.0 Operating income $48.2 $45.9 $16.0 $111.0 Income (loss) from continuing operations $21.9 $18.8 $(42.7) $42.8 EBITDA margin 27.9% 26.4% 13.9% 23.6% Operating income margin 20.6% 19.6% 2.4% 16.5% Income (loss) from continuing operations margin 9.4% 8.0% -6.3% 6.4% Margins Margins are calculated as a percentage of revenue. EBITDA Explanation and Reconciliation EBITDA is net income (loss) before discontinued operations, income taxes, interest expense, interest income, other income (expense), Tropicana Las Vegas capitalized development costs write-off and depreciation and amortization. EBITDA should not be construed as a substitute for either operating income or net income (loss) as they are determined in accordance with generally accepted accounting principles (GAAP). Management uses EBITDA as a measure to compare operating results among our properties and between accounting periods. We manage cash and finance our operations at the corporate level. We manage the allocation of capital among properties at the corporate level. We also file a consolidated income tax return. Management accordingly believes EBITDA is useful as a measure of operating results at the property level because it reflects the results of operating decisions at that level separated from the effects of tax and financing decisions that are managed at the corporate level. We also use EBITDA as the primary operating performance measure in our bonus programs for executive officers. Management also believes that EBITDA is a commonly used measure of operating performance in the gaming industry and is an important basis for the valuation of gaming companies. Our calculation of EBITDA may not be comparable to similarly titled measures reported by other companies and, therefore, any such differences must be considered when comparing performance among different companies. While management believes EBITDA provides a useful perspective for some purposes, EBITDA has material limitations as an analytical tool. For example, among other things, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA does not reflect the requirements for such replacements. Tropicana Las Vegas capitalized development costs write-off, other income (expense), interest expense, net of interest income, income taxes and discontinued operations are also not reflected in EBITDA. Therefore, management does not consider EBITDA in isolation, and it should not be considered as a substitute for measures determined in accordance with GAAP. A reconciliation of EBITDA with operating income and net income (loss) as determined in accordance with GAAP is shown below (in millions). Third Quarter Year to Date 2006 2005 2006 2005 (unaudited) (unaudited) EBITDA Tropicana Atlantic City $45.8 $41.4 $113.2 $93.4 Tropicana Las Vegas 9.6 8.5 27.3 30.2 Ramada Express Laughlin 5.3 5.5 20.3 20.3 Casino Aztar Evansville 10.3 10.3 30.9 31.6 Property EBITDA 71.0 65.7 191.7 175.5 Corporate (5.7) (3.8) (123.4) (17.0) Depreciation and amortization (17.1) (16.0) (52.3) (47.5) Operating income 48.2 45.9 16.0 111.0 Other income (expense) 2.7 (0.3) 5.0 4.1 Interest income 0.4 0.5 1.3 1.0 Interest expense (14.1) (14.2) (42.4) (42.3) Income taxes (15.3) (13.1) (22.6) (31.0) Income (loss) from continuing operations 21.9 18.8 (42.7) 42.8 Discontinued operations, net of income taxes 1.4 0.6 3.1 1.9 Net income (loss) $23.3 $19.4 $(39.6) $44.7 Adjusted Diluted Earnings Per Share Third Quarter Year to Date 2006 2005 2006 2005 (unaudited) (unaudited) Net income (loss) per common share assuming dilution: As reported $.60 $.51 $(1.14) $1.19 Adjustments: Construction accident related expenses .01 .03 .07 .04 Construction accident insurance recoveries (.06) -- (.19) (.01) Other income (expense) (.04) -- (.08) (.06) Merger related expenses .03 -- 2.18 -- Tropicana Las Vegas capitalized development costs write-off -- -- .45 -- Nonrecurring income tax benefits -- -- (.09) -- Defined benefit plan settlement loss -- -- -- .05 Guarantee fee -- (.03) -- (.03) Effect of dilution on net loss -- -- .06 -- As adjusted $.54 $.51 $1.26 $1.18 Aztar is a publicly traded company that operates Tropicana Casino and Resort in Atlantic City, New Jersey, Tropicana Resort and Casino in Las Vegas, Nevada, Ramada Express Hotel and Casino in Laughlin, Nevada, Casino Aztar in Caruthersville, Missouri, and Casino Aztar in Evansville, Indiana. Forward-Looking Information This release contains "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. The statements in this release that are not historical facts are forward-looking statements and may involve a number of risks and uncertainties. When used in this release, the terms "anticipate," "believe," "could," "continue," "estimate," "expect," "intend," "may," "objective," "plan," "possible," "potential," "pursue," "project," "will," "would" and similar expressions, or the negative formulation of these expressions, generally identify forward-looking statements. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. Generally, forward-looking statements express expectations for or about the future, rather than historical fact. Forward-looking statements are subject to inherent risks and uncertainties that may cause actual results or events to differ materially from those contemplated by such statements. In addition to the risk factors identified elsewhere, important factors that could cause actual results or events to differ materially from those contemplated by such statements include, without limitation: * the financial performance of each of Aztar and Columbia Entertainment through the completion of the merger with Columbia Entertainment; * the ability of Columbia Entertainment to obtain the acquisition financing pursuant to its financing commitment letter agreement; * the timing (including any possible delays) and receipt of regulatory approvals from various federal and state governmental entities (including any conditions, limitations or restrictions placed on these approvals) and the risk that one or more governmental authorities may deny approval of the merger; * the possibility that the merger agreement is terminated and the merger is not completed, resulting in disruptions to our business and, under certain circumstances, requiring us to pay to Columbia Entertainment a termination fee of $55,228,000 and to reimburse Columbia Entertainment for its fees and expenses incurred in connection with the merger up to a maximum of $27,360,000 and to reimburse Columbia Sussex Corporation the $78,000,000 that was paid to Pinnacle in connection with the termination of the Pinnacle merger agreement; * the potential impact of the announcement of the merger, and the merger, on relations with customers, partners, suppliers, vendors and other third parties; * the potential relative underperformance of the Tropicana Resort and Casino in Las Vegas, Nevada, due to our reduced efforts to engage in marketing of, and accepting reservations at, this property until the date of the merger agreement, in light of our previously contemplated redevelopment of the site; * the potential inability of us or Columbia Entertainment to satisfy the closing conditions in the merger agreement; * legislative and regulatory matters, changes in government regulation, and regulatory action resulting from market conduct activity, including the potential (1) legalization of gaming in additional states, (2) tax increases in our states of operation or (3) proscription or prohibition of smoking in our gaming facilities in our states of operation; * increased competition in our markets, including from the potential legalization of gaming in additional states; * general business conditions, including competitive practices and changes in customer demand, and general economic conditions that impact the performance of our operations; * the cyclical nature of the gaming and hospitality business; * the effects of weather; * those factors relating to terrorism and the uncertainty of war and fuel costs and other factors affecting discretionary consumer spending; * adverse outcomes of legal proceedings and development of and changes in claims or litigation reserves, including those related to the extent and timing of our recoveries from our insurance carriers for our various losses suffered in connection with the accident on October 30, 2003 on the site of the Tropicana Casino and Resort in Atlantic City, New Jersey; * reliance on key personnel; and * other risks and uncertainties that may be referred to in our reports and other documents filed with the SEC from time to time. Forward-looking statements made in this release express expectations only as of the date they are made. We do not undertake any obligation to update or revise such statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, except as required by applicable law. Contact: Joe Cole, Aztar Corporation, 602-381-4111 Aztar Corporation and Subsidiaries Consolidated Statements of Operations (unaudited) For the periods ended September 30, 2006 and September 29, 2005 (in thousands, except per share data) Third Quarter Nine Months 2006 2005 2006 2005 Revenues Casino $175,150 $177,744 $510,268 $508,548 Rooms 28,559 26,997 81,817 80,223 Food and beverage 14,855 14,840 44,670 44,633 Other 15,400 14,673 40,405 38,164 233,964 234,254 677,160 671,568 Costs and expenses Casino 66,111 68,953 199,898 201,348 Rooms 12,752 12,538 37,010 36,232 Food and beverage 14,189 14,061 43,444 42,426 Other 7,456 7,626 22,088 22,535 Marketing 20,760 21,287 61,394 69,102 General and administrative 20,663 20,877 66,459 67,952 Utilities 7,767 7,628 19,617 19,712 Repairs and maintenance 7,026 6,879 20,963 19,887 Provision for doubtful accounts 913 636 1,991 1,343 Property taxes and insurance 10,275 8,506 27,740 24,381 Rent 2,465 1,949 7,203 5,972 Construction accident related 1,019 1,383 4,660 2,652 Construction accident insurance recoveries (3,871) -- (12,229) (526) Merger related 1,176 -- 82,536 -- Depreciation and amortization 17,107 16,028 52,349 47,525 Tropicana Las Vegas capitalized development costs write-off -- -- 26,021 -- 185,808 188,351 661,144 560,541 Operating income 48,156 45,903 16,016 111,027 Other income (expense) 2,712 (267) 4,954 4,161 Interest income 395 465 1,315 1,001 Interest expense (14,106) (14,256) (42,389) (42,324) Income (loss) from continuing operations before income taxes 37,157 31,845 (20,104) 73,865 Income taxes (15,310) (13,075) (22,577) (31,029) Income (loss) from continuing operations 21,847 18,770 (42,681) 42,836 Discontinued operations, net of income taxes 1,416 613 3,051 1,911 Net income (loss) $23,263 $19,383 $(39,630) $44,747 Earnings per common share assuming no dilution: Income (loss) from continuing operations $.58 $.52 $(1.22) $1.20 Discontinued operations, net of income taxes .04 .02 .08 .05 Net income (loss) $.62 $.54 $(1.14) $1.25 Earnings per common share assuming dilution: Income (loss) from continuing operations $.56 $.50 $( 1.22) $1.14 Discontinued operations, net of income taxes .04 .01 .08 .05 Net income (loss) $.60 $.51 $(1.14) $1.19 Weighted-average common shares applicable to: Earnings per common share assuming no dilution 36,483 35,642 36,172 35,190 Earnings per common share assuming dilution 38,084 37,351 36,172 37,065 Aztar Corporation and Subsidiaries Consolidated Balance Sheets (unaudited) (in thousands, except share data) September 30, 2006 December 31, 2005 Assets Current assets: Cash and cash equivalents $76,179 $86,361 Accounts receivable, net 24,761 26,469 Construction accident receivables 9,352 2,949 Refundable income taxes -- 1,288 Inventories 8,105 7,350 Prepaid expenses 19,003 13,394 Deferred income taxes 10,567 11,026 Total current assets 147,967 148,837 Assets held for sale 34,780 33,559 Investments 27,483 25,215 Property and equipment: Buildings, riverboats and equipment, net 964,552 986,025 Land 207,513 207,514 Construction in progress 45,680 18,339 Leased under capital leases, net 86 9 1,217,831 1,211,887 Intangible assets 33,228 33,331 Other assets 85,363 102,505 $1,546,652 $1,555,334 Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accruals $76,252 $91,369 Accrued payroll and employee benefits 25,261 25,765 Accrued interest payable 9,840 7,577 Accrued rent 231 760 Income taxes payable 9,573 -- Current portion of long-term debt 4,230 1,293 Current portion of other long-term liabilities 808 824 Merger termination fee reimbursement 78,000 -- Liabilities related to assets held for sale 1,894 2,495 Total current liabilities 206,089 130,083 Long-term debt 662,614 721,676 Other long-term liabilities 16,840 16,419 Deferred income taxes 42,443 46,006 Contingencies and commitments Series B convertible preferred stock (redemption value $23,580 and $15,107) 4,264 4,620 Shareholders' equity: Common stock, $.01 par value (36,490,231 and 35,778,952 shares outstanding) 554 546 Paid-in capital 501,175 474,637 Retained earnings 332,715 373,897 Accumulated other comprehensive loss (1,899) (1,899) Less: Treasury stock (218,143) (210,651) Total shareholders' equity 614,402 636,530 $1,546,652 $1,555,334 DATASOURCE: Aztar Corporation CONTACT: Joe Cole of Aztar Corporation, +1-602-381-4111 Web site: http://www.aztar.com/

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