UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-22494
AMERISTAR CASINOS, INC.
(Exact name of Registrant as Specified in its Charter)
Nevada 88-0304799
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3773 Howard Hughes Parkway
Suite 490 South
Las Vegas, Nevada 89109
(Address of principal executive offices)
(702) 567-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]
As of August 13, 1998, 20,360,000 shares of Common Stock of the
registrant were issued and outstanding.
<PAGE>
AMERISTAR CASINOS, INC.
FORM 10-Q
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1.Financial Statements:
A. Condensed Consolidated Balance
Sheets at June 30, 1998 (unaudited)
and December 31, 1997 3 - 4
B. Condensed Consolidated Statements
of Operations (unaudited) for the
three months and six months ended
June 30, 1998 and 1997 5
C. Condensed Consolidated Statements
of Cash Flows (unaudited) for the
six months ended June 30, 1998 and
1997 6
D. Notes to Condensed Consolidated
Financial Statements 7 - 9
Item 2.Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10 - 19
Item 3.Quantitative and Qualitative Disclosures
about
Market Risk 19
Part II. OTHER INFORMATION
Item 4.Submission of Matters to a Vote of
Security Holders 20
Item 5.Other Information 20
Item 6.Exhibits and Reports on Form 8-K 20
SIGNATURE 21
<PAGE>PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<S> <C> <C>
June 30, December 31,
1998 1997
________ ________
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 22,289 $ 13,031
Restricted cash 138 153
Accounts receivable, net 1,369 2,051
Income tax refund receivable 279 2,103
Inventories 3,408 2,300
Prepaid expenses 4,841 4,125
Deferred income taxes 4,826 2,724
________ ________
Total current assets 37,150 26,487
PROPERTY AND EQUIPMENT AND
LEASEHOLD INTERESTS, at cost,
less accumulated depreciation and
amortization of $79,861 and
$68,951, respectively 301,219 282,168
PREOPENING COSTS - 6,820
EXCESS OF PURCHASE PRICE OVER FAIR
MARKET VALUE OF NET ASSETS
ACQUIRED 15,243 15,408
DEPOSITS AND OTHER ASSETS 4,264 5,303
________ ________
$357,876 $336,186
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
June 30, December 31,
1998 1997
________ --------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 5,335 $ 4,772
Construction contracts payable 5,606 19,391
Accrued liabilities 27,824 21,549
Current obligations under
capitalized leases 2,316 875
Current maturities of notes
payable and
long-term debt 9,004 5,635
-------- --------
Total current liabilities 50,085 52,222
-------- --------
OBLIGATIONS UNDER CAPITALIZED
LEASES, net of current
maturities 13,955 9,600
-------- --------
NOTES PAYABLE AND LONG-TERM DEBT,
net of current maturities 214,585 183,513
-------- --------
DEFERRED INCOME TAXES 7,731 10,212
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par
value:
Authorized - 30,000,000
shares
Issued - None - -
Common stock, $.01 par value:
Authorized - 30,000,000 shares
Issued and outstanding -
20,360,000 shares 204 204
Additional paid-in capital 43,043 43,043
Retained earnings 28,273 37,392
-------- --------
Total stockholders'
equity 71,520 80,639
-------- --------
$357,876 $336,186
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
-------- -------- -------- --------
REVENUES:
Casino $53,880 $43,456 $105,224 $85,649
Food and beverage 11,981 7,643 22,488 14,850
Rooms 3,757 2,502 6,305 4,666
General store 622 669 1,147 1,220
Other 1,904 1,457 3,455 2,754
-------- -------- -------- --------
72,144 55,727 138,619 109,139
Less: Promotional allowances 5,408 3,757 10,472 7,556
-------- -------- -------- --------
Net Revenues 66,736 51,970 128,147 101,583
-------- -------- -------- --------
OPERATING EXPENSES:
Casino 30,749 19,535 55,340 39,196
Food and beverage 5,057 4,905 12,251 9,485
Rooms 1,029 799 2,092 1,515
General store 518 524 999 1,030
Other 1,600 1,358 3,085 2,604
Selling, general and
administrative 19,056 12,597 36,511 24,586
Depreciation and amortization 6,026 4,151 11,096 8,072
Preopening costs - - 10,611 -
-------- -------- -------- --------
Total operating expenses 64,035 43,869 131,985 86,488
-------- -------- -------- --------
Income (loss) from operations 2,701 8,101 (3,838) 15,095
OTHER INCOME (EXPENSE):
Interest income 132 128 216 167
Interest expense (5,845) (2,731) (10,119) (5,885)
Other (196) (655) 115 (549)
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME
TAX PROVISION (3,208) 4,843 (13,626) 8,828
Income tax provision (710) 1,791 (4,513) 3,266
-------- -------- -------- --------
NET INCOME (LOSS) $(2,498) $ 3,052 $(9,113) $ 5,562
======== ======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING 20,360 20,360 20,360 20,360
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE:
Basic $(0.12) $ 0.15 $(0.45) $ 0.27
======== ======== ======== ========
Diluted $(0.12) $ 0.15 $(0.45) $ 0.27
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Six Months
Ended June 30,
1998 1997
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(9,113) $5,562
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 11,096 8,072
Net (gain) loss on disposition of
assets (14) 471
Change in deferred taxes (4,583) 536
Amortization of debt issue costs 327 116
(Increase) decrease in other current
assets (1,324) 348
Decrease in income tax receivable 2,020 -
Increase in income tax payable - 204
Increase (decrease) in other current
liabilities 6,837 (2,308)
-------- --------
Total adjustments 14,359 7,439
-------- --------
Net cash provided by operating activities 5,246 13,001
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (23,317) (11,736)
Decrease in construction contracts
payabe (13,785) (2,414)
Proceeds from sale of assets 14 175
Increase (decrease) in deposits and
other non-current assets 7,533 (1,356)
-------- --------
Net cash used in investing activities (29,555) (15,331)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable
and long-term debt 35,741 19,908
Principal payments of notes payable, long-
term debt and capitalized leases (2,174) (15,680)
-------- --------
Net cash provided by financing
activities 33,567 4,228
-------- --------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 9,258 1,898
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 13,031 10,724
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $22,289 $12,622
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid during the period for interest
(net of amounts capitalized) $8,834 $4,357
======== ========
Cash paid for income taxes $ 350 $2,510
======== ========
Assets purchased with long-term debt $ - $1,424
======== ========
ASSETS PURCHASED WITH CAPITALIZED LEASES $6,671 $3,212
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>NOTE 1 - PRINCIPLES OF CONSOLIDATION AND BASIS OF
PRESENTATION
The accompanying condensed consolidated financial statements
include the accounts of Ameristar Casinos, Inc. ("Ameristar" or
"ACI") and its wholly owned subsidiaries (collectively, the
"Company"). The Company's principal subsidiaries, all of which are
wholly owned, are Cactus Petes, Inc. ("CPI"), Ameristar Casino
Vicksburg, Inc. ("ACVI"), Ameristar Casino Council Bluffs, Inc.
("ACCBI") and Ameristar Casino Las Vegas, Inc. ("ACLVI"). ACI also
owns A.C. Food Services, Inc., a purchasing subsidiary, and AC
Hotel Corp, a wholly owned subsidiary of ACVI created for the
purpose of constructing and operating a hotel in Vicksburg,
Mississippi. All significant intercompany transactions have been
eliminated.
CPI owns and operates two casino-hotels in Jackpot, Nevada -
Cactus Petes Resort Casino and The Horseshu Hotel and Casino
(collectively, the "Jackpot Properties"). ACVI owns and operates
Ameristar Vicksburg, a riverboat-themed dockside casino and related
hotel and other land-based facilities in Vicksburg, Mississippi.
ACCBI owns and operates Ameristar Council Bluffs, a riverboat
casino and related hotel and other land-based facilities in Council
Bluffs, Iowa. Ameristar Council Bluffs opened its steakhouse on
February 25, 1997 and its indoor swimming pool and spa on March 3,
1997, thereby completing its land-based facilities. ACLVI owns and
operates The Reserve Hotel Casino ("The Reserve") an African safari
and big game reserve themed facility in the Henderson-Green Valley
suburban area of Las Vegas, Nevada that opened on February 10,
1998.
The accompanying condensed consolidated financial statements
have been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission.
Accordingly, the condensed consolidated financial statements do not
include all of the disclosures required by generally accepted
accounting principles. However, the accompanying unaudited
condensed consolidated financial statements do contain all
adjustments that, in the opinion of management, are necessary to
present fairly the financial position and the results of operations
for the interim periods included therein. The interim results
reflected in the condensed consolidated financial statements are
not necessarily indicative of results to be expected for the full
fiscal year.
Certain reclassifications, having no effect on net income,
have been made to the prior period's condensed consolidated
financial statements to conform to the current period's
presentation.
The accompanying condensed consolidated financial statements
should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997.
NOTE 2 - NOTES PAYABLE AND LONG-TERM DEBT
In July 1997, the Company completed a refinancing of its long-
term debt through a new $125 million Revolving Credit Facility (the
"Revolving Credit Facility") and the sale of $100 million aggregate
principal amount of 10-1/2% Senior Subordinated Notes due 2004 (the
"Senior Subordinated Notes"). The Revolving Credit Facility was
entered into on July 8, 1997, pursuant to a Credit Agreement among
Ameristar, CPI, ACVI, ACCBI and ACLVI, a syndicate of banks and
Wells Fargo Bank, National Association as Agent Bank, Arranger and
Swingline Lender. The Company's prior bank credit facility (with a
$94.5 million outstanding principal balance) was terminated and
repaid upon the funding of the initial draw under the Revolving
Credit Facility. The Senior Subordinated Notes were issued by
Ameristar at par in a private placement. The net proceeds from the
sale of the Senior Subordinated Notes were used to repay
$82.4 million in borrowings and interest under the Revolving Credit
Facility, $13.1 million in other indebtedness and $800,000 in loan
fees for the Revolving Credit Facility.
<PAGE>The Revolving Credit Facility will mature on June 30,
2003. Prior to maturity, the maximum principal available under the
Revolving Credit Facility will reduce semiannually (commencing on
July 1, 1999) by an aggregate of $50.0 million in increasing
increments ranging from $2.5 million to $10.0 million. The
Revolving Credit Facility is secured by substantially all the real
and personal property of the Company. The balance on the Revolving
Credit facility at June 30, 1998 was $86.0 million with a current
interest rate of approximately 8.9%.
The Company and WFB have entered into a letter of
understanding dated June 29, 1998, for the amendment of the
Revolving Credit Facility effective June 30, 1998. The amendment
will limit the maximum borrowings permitted under the Revolving
Credit Facility to the lesser of the Borrowers' rolling four-
quarter EBITDA multiplied by 2.75 and the Borrowers' total funded
debt to not more than the Borrowers' rolling four-quarter EBITDA
multiplied by a factor as follows: 5.25 commencing June 30, 1998;
5.50 commencing September 30, 1998; 5.25 commencing June 30, 1999;
4.75 commencing December 31, 1999; 4.50 commencing March 31, 2000;
and 4.00 commencing September 30, 2000. The amendment also will
increase the maximum base rate margin to 2.75% and the maximum
LIBOR margin to 4.00%. The amendment will decrease the rolling
four-quarter gross fixed charge coverage ratio to 1.25 to 1.0 until
September 30, 1999. The amendment also will limit the Borrowers'
aggregate capital expenditures in each year to an amount equal to
5% of their consolidated net revenue for the preceding year and
will prohibit the Borrowers from incurring any additional secured
indebtedness without the approval of the bank lenders.
Although the amendment has not yet been completed as of the
date of this report and no assurances can be given it will be
completed, the Company believes it is likely that the lenders will
approve the amendment as contemplated by the letter of
understanding. As of June 30, 1998, the Company was in violation
of certain of the financial covenants under the Revolving Credit
Facility, but it was in compliance with all covenants under the
Revolving Credit Facility as proposed to be amended. The lenders
under the Revolving Credit Facility have not taken any steps to
declare a default under the Revolving Credit Facility.
The Senior Subordinated Notes were issued under an Indenture
dated July 15, 1997. The Senior Subordinated Notes will mature on
August 1, 2004, but are subject to earlier redemption in whole or
in part under certain circumstances. The Senior Subordinated Notes
are not secured and are subordinate to all existing and future
Senior Indebtedness (as defined), which includes the Revolving
Credit Facility. All of Ameristar's current subsidiaries (the
"Guarantors") have jointly and severally, and fully and
unconditionally, guaranteed the Senior Subordinated Notes. Each of
the Guarantors is a wholly owned subsidiary of Ameristar, and the
Guarantors constitute all of Ameristar's direct and indirect
subsidiaries.
Ameristar is a holding company with no operations independent
of those of the Guarantors and no assets other than its investments
in the Guarantors, and the aggregate assets, liabilities, earnings
and equity of the Guarantors are substantially equivalent to the
assets, liabilities, earnings and equity of the Company on a
consolidated basis. Separate financial statements and certain other
disclosures concerning the Guarantors are not included in this
report because, in the opinion of management, they are not deemed
material to investors. Other than customary restrictions imposed
by applicable corporate statutes, there are no restrictions on the
ability of the Guarantors to transfer funds to Ameristar in the
form of cash dividends, loans or advances.
Notes payable and long-term debt at June 30, 1998 include
notes issued to the former stockholders (the "Gem Stockholders") of
Gem Gaming, Inc. ("Gem"), for merger consideration in connection
with the October 9, 1996 acquisition of The Reserve. The
outstanding balance of these notes payable at June 30, 1998 was
$28.7 million.
<PAGE>In August 1997, AC Hotel Corp. entered into a loan
agreement providing for borrowings of up to $7.5 million for the
purpose of funding a portion of the construction costs of a 149-
room hotel at Ameristar Vicksburg. This nonrecourse loan from a
private lender is secured by a deed of trust on the hotel and the
underlying land senior in priority to the liens securing the
Revolving Credit Facility. Borrowings under this loan bear
interest at 15% per annum, payable in periodic installments. The
loan was scheduled to mature in July 1998. However, the loan was
extended to October 1998. The Company is required to pay a non-
usage fee at the rate of 3% per annum on the undrawn loan balance,
and draws are subject to the satisfaction of various conditions
typically applicable to construction loans. The balance on this
loan was $6.1 million at June 30, 1998.
On February 12, 1998, ACLVI and Wells Fargo Leasing
Corporation entered into a four-year lease agreement for financing
slot equipment for The Reserve in the amount of $6.7 million.
Monthly principal payments of $111,000 plus interest are required
through February 2002 with a final payment of $1.4 million due
March 1, 2002.
NOTE 3 - EARNINGS (LOSS) PER SHARE
In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 ("SFAS 128"),
"Earnings Per Share", effective for fiscal years ending after
December 15, 1997. The Company adopted SFAS 128 for the year
ending December 31, 1997. SFAS 128 requires the computation and
presentation of basic and diluted earnings per share for all
periods for which an income statement is presented. For the three
months and six months ended June 30, 1998 and 1997, the Company had
no material dilutive securities outstanding.
Options to purchase 575,500 and 620,000 shares of common stock
were outstanding at June 30, 1998 and 1997, respectively, at
exercise prices of $5.06-$16.00 for both periods. These options
were not included in a pro forma computation of earnings per share
assuming dilution because the options' exercise prices were greater
than the average market price of the common shares during the
respective periods presented.
<PAGE>
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
The Company
Ameristar Casinos, Inc. ("Ameristar" or "ACI") develops, owns
and operates casinos and related hotel, food and beverage,
entertainment and other facilities, with five properties in
operation in Nevada, Mississippi and Iowa. Ameristar's principal
operations are conducted through four wholly owned subsidiaries:
Cactus Petes, Inc. ("CPI"); Ameristar Casino Vicksburg, Inc.
("ACVI"); Ameristar Casino Council Bluffs, Inc. ("ACCBI"); and
Ameristar Casino Las Vegas, Inc. ("ACLVI"). Ameristar and its
wholly owned subsidiaries are collectively referred to herein as
the "Company."
CPI owns and operates Cactus Petes Resort Casino ("Cactus
Petes") and The Horseshu Hotel and Casino (collectively, the
"Jackpot Properties"), two casino-hotels located in Jackpot, Nevada
at the Idaho border. ACVI owns and operates a riverboat-themed
dockside casino (the "Vicksburg Casino") and related land-based
facilities including a 149-room hotel that opened on June 5, 1998
(collectively, "Ameristar Vicksburg") in Vicksburg, Mississippi.
ACCBI owns and operates a riverboat casino (the "Council Bluffs
Casino") and related land-based hotel and other facilities
(collectively, "Ameristar Council Bluffs") in Council Bluffs, Iowa
across the Missouri River from Omaha, Nebraska. Ameristar Council
Bluffs was opened in stages during 1996 and early 1997. The
Council Bluffs Casino opened on January 19, 1996, and most of the
land-based facilities opened during the second and fourth quarters
of 1996. The land-based facilities were completed during the first
quarter of 1997, with the opening of the steakhouse and the indoor
swimming pool and spa. ACLVI owns and operates The Reserve, ('The
Reserve') an African safari and big game reserve themed facility in
the Henderson-Green Valley suburban area of Las Vegas, Nevada. The
Reserve opened February 10, 1998.
The Company's quarterly and annual operating results may be
affected by competitive pressures, the timing of the commencement
of new gaming operations, the amount of preopening costs incurred
by the Company, construction at existing facilities and general
weather conditions. Consequently, the Company's operating results
for any quarter or year may not be indicative of results to be
expected for future periods.
The following table highlights the results of operations of
Ameristar's operating subsidiaries for its principal properties:
<PAGE>
<TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
<S> <C> <C> <C> <C>
Three months ended Six months ended
June 30 June 30 June 30 June 30
-------- -------- -------- --------
1998 1997 1998 1997
-------- -------- -------- --------
Consolidated cash flow
information (1):
Cash flow from operations $5,246 $13,001
Cash flow from investing (29,555) (15,331)
Cash flow from financing 33,567 4,228
Net revenues:
Jackpot Properties $14,282 $14,174 $26,695 $26,552
Ameristar Vicksburg 16,388 16,751 32,918 32,299
Ameristar Council Bluffs 24,030 21,045 48,143 42,732
The Reserve 12,036 - 20,391 -
-------- -------- -------- --------
Consolidated net revenues $ 66,736 $51,970 $128,147 $101,583
======== ======== ======== ========
Adjusted operating income (loss)(2):
Jackpot Properties $2,977 $3,080 $4,573 $5,301
Ameristar Vicksburg 2,713 4,038 6,193 6,954
Ameristar Council Bluffs 4,218 3,311 7,961 7,411
The Reserve (4,816) - (7,259) -
Corporate and other (2,391) (2,328) (4,695) (4,571)
-------- -------- -------- --------
Consolidated operating income $2,701 $8,101 $6,773 $15,095
======== ======== ======== ========
Adjusted Operating income (loss) margins (2):
Jackpot Properties 20.8% 21.7% 17.1% 20.0%
Ameristar Vicksburg 16.6% 24.1% 18.8% 21.5%
Ameristar Council Bluffs 17.6% 15.7% 16.5% 17.3%
The Reserve (40.0%) - % (35.6%) - %
Consolidated operating
income margin 4.0% 15.6% 5.3% 14.9%
======== ======== ======== ========
EBITDA (3)
Jackpot Properties $3,790 $3,820 $6,197 $6,661
Ameristar Vicksburg 4,325 5,558 9,364 10,056
Ameristar Council Bluffs 5,978 5,017 11,443 10,734
The Reserve (3,057) - (4,605) -
Corporate and other (2,309) (2,143) (4,530) (4,284)
-------- -------- -------- --------
Consolidated EBITDA $8,727 $12,252 $17,869 $23,167
======== ======== ======== ========
EBITDA Margins (3):
Jackpot Properties 26.5% 27.0% 23.2% 25.1%
Ameristar Vicksburg 26.4% 33.2% 28.4% 31.1%
Ameristar Council Bluffs 24.9% 23.8% 23.8% 25.1%
The Reserve (25.4%) - % (22.6%) - %
Consolidated EBITDA margin 13.1% 23.6% 13.9% 22.8%
======== ======== ======== ========
</TABLE>
(see following page for footnotes)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(1) Cash flows are only calculated on a year-to-date basis.
(2) Adjusted operating income (loss) for the 1998 period is
calculated before the write off of $10.6 million in preopening
costs related to the opening of The Reserve on February 10, 1998.
(3) EBITDA consists of income from operations plus depreciation,
amortization and preopening costs. EBITDA Margin is EBITDA as a
percentage of net revenues. EBITDA information is presented solely
as a supplemental disclosure because management believes that it is
a widely used measure of operating performance in the gaming
industry and for companies with a significant amount of
depreciation and amortization. EBITDA should not be construed as
an alternative to income from operations (as determined in
accordance with generally accepted accounting principles) as an
indicator of the Company's operating performance, or as an
alternative to cash flow from operating activities (as determined
in accordance with generally accepted accounting principles) as a
measure of liquidity. The Company has significant uses of cash
flows, including capital expenditures and debt principal
repayments, that are not reflected in EBITDA. It should also be
noted that not all gaming companies that report EBITDA information
may calculate EBITDA in the same manner as the Company.
Summary of Operating Results
Ameristar showed continuing overall growth in revenues for the
three and six months ended June 30, 1998 compared to the same
periods in 1997. Consolidated net revenues for the three months
ended June 30, 1998 increased to $66.7 million compared to $52.0
million for the same quarter in 1997. Of this increase, $12.0
million came from operations at The Reserve and $2.7 million was
generated by the Company's other properties. Revenues for the six
months ended June 30, 1998 were $128.1 million compared to $101.6
million in 1997. Again, the majority of this increase was related
to The Reserve with $20.4 million in revenues for the period and a
$6.1 million increase in revenues from the existing properties.
Income from operations for the quarter ended June 30, 1998 was
$2.7 million compared to $8.1 million for the same quarter in 1997.
Total operating expenses as a percentage of net revenues increased
to 96.0 percent for the three months ended June 30, 1998 compared
to 84.4 percent for the same period in 1997. For the six-month
periods ended June 30, 1998 and 1997, total operating expenses as a
percentage of net revenues before preopening costs were 94.7
percent and 85.1 percent, respectively. Income from operations
before preopening costs for the six months ended June 30, 1998 was
$6.8 million compared to $15.1 million for the same period in 1997.
Loss from operations for the six months ended June 30, 1998 after
preopening costs of $10.6 million was $3.8 million.
Net loss for the quarter ended June 30, 1998 was $2.5 million
compared to net income of $3.1 million for the same period in 1997.
For the six months ended June 30, 1998, the net loss was $2.0
million before preopening costs and $9.1 million after preopening
costs, compared to net income of $5.6 million for the first six
months of 1997.
Loss per share for the quarter ended June 30, 1998 was $0.12
compared to earnings per share of $0.15 for the same quarter in
1997. Loss per share before preopening costs was $0.10 and $0.45
after preopening costs for the first six months of 1998 compared to
earnings per share of $0.27 for the first six months of 1997.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Revenues and Operating Income(Loss) by Property
Net revenues for Ameristar Council Bluffs were $24.0 million
for the quarter ended June 30, 1998, compared to $21.0 million for
the same quarter in 1997, an increase of $3.0 million or 14.2
percent. For the six months ended June 30, 1998, net revenues were
$48.1 million compared to $42.7 million for the same period in
1997, 12.7 percent increase. All revenue areas had increases for
both the three and six months ended June 30, 1998 compared to 1997.
Operating income increased by $0.9 million or 27.4 percent for the
three months and $0.6 million or 7.4 percent for the six months
ended June 30, 1998 compared to the same periods in 1997. Cost
control measures instituted in the second quarter brought expenses
into line with management's expectations for this property.
The Jackpot Properties were relatively stable with revenues of
$14.3 million and $26.7 million, respectively, for the three and
six months ended June 30, 1998 compared to $14.2 million and $26.6
million, respectively, for the same periods in 1997. Operating
income decreased to $3.0 million and $4.6 million, respectively,
for the second quarter and six-month period ended June 30, 1998
compared to $3.1 million and $5.3 million for the same periods in
1997. The decline in operating income was the result of slightly
higher costs in all areas and a lower table game win percentage
which was partially offset by higher slot revenue.
Ameristar Vicksburg continues to be the gaming revenue market
leader in Warren County, Mississippi with net revenues of $16.4
million for the second quarter of 1998 and $32.9 million for the
first six months of 1998 compared to $16.8 million and $32.3
million, respectively, for the same periods in 1997. Overall, the
Warren County gaming revenues increased by approximately 6.0
percent for the first six months of 1998 compared to the same
period in 1997. Operating income for the three and six months
ended June 30, 1998 was $2.7 million and $6.2 million,
respectively, compared to $4.0 million and $7.0 million in the same
periods in 1997. This decrease was due primarily to slightly
higher promotional costs and a lower table game hold percentage in
1998 as compared to the same period in 1997. In an effort to
expand the market territory of Ameristar Vicksburg and encourage
longer visits, the Company opened a 149-room hotel across from the
main entrance to the casino on June 5, 1998. The hotel generated
an average daily room rate of approximately $58 with an occupancy
rate of 54.5 percent with limited advertising in its first month of
operations.
The Reserve, which opened on February 10, 1998, had net
revenues of $12.0 million for the second quarter and $20.4 million
for its first 140 days of operation. Operating loss before
preopening costs of $10.6 million was $4.8 million and $7.3
million, respectively, for the three and six months ended June 30,
1998. While higher than anticipated, these losses are due to the
normal inefficiencies associated with the opening of a new property
and lower than expected revenues in the intensely competitive
"locals" market in which The Reserve operates. Management is
adjusting labor and other expenditures to levels that are
appropriate for the current operational activity. Management is
also reviewing promotional and advertising campaigns to enhance The
Reserve's competitive position within the Henderson/Green Valley
market. A new slot advertising campaign began on June 19, 1998 and
the initial results have been positive for this property.
Consolidated Revenues and Expenses
On a consolidated basis for the quarter ended June 30, 1998
compared to the quarter ended June 30, 1997, casino revenues
increased $10.4 million or 24.0 percent, food and beverage revenues
increased $4.3 million or 56.8 percent, and rooms revenues
increased $1.3 million or 50.2 percent. On a consolidated basis
for the six months ended June 30, 1998 compared to the six months
ended June 30, 1997, casino revenues increased $19.6 million or
22.9 percent, food and beverage revenues increased $7.6 million or
51.4 percent, and rooms revenues increased $1.6 million or 35.1
percent.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Casino expenses increased $11.2 million or 57.4 percent, food
and beverage expenses increased $0.2 million or 3.1 percent, and
rooms expenses increased $0.2 million or 28.8 percent for the
quarter ended June 30, 1998 compared to the 1997 second quarter.
For the six month period ended June 30, 1998 compared to the 1997
period, casino expenses increased $16.1 million or 41.2 percent,
food and beverage expenses increased $2.8 million or 29.2 percent,
and rooms expenses increased $0.6 million or 38.1 percent. A
significant portion of the increases in revenues and expenses was
the result of the commencement of operations at The Reserve on
February 10, 1998.
Selling, general and administrative expenses (including
utilities and maintenance and business development) increased $6.5
million or 51.3 percent for the quarter ended June 30, 1998
compared to the same quarter of the prior year, due primarily to
the commencement of operations at The Reserve, increased costs at
Ameristar Council Bluffs and other costs associated with the
Company's continued growth.
Depreciation expenses for the second quarter of 1998 and first
six months of 1998 increased primarily due to the inclusion of The
Reserve facilities in the Company's depreciable asset base.
Interest expense was $5.8 million and $10.1 million,
respectively, net of capitalized interest of $0.1 million and $1.4
million, respectively, for the three and six months ended June 30,
1998, compared to $2.7 million and $5.9 million for the same
periods in 1997. The increased interest expense relates primarily
to increased debt incurred to finance construction of The Reserve
and the cessation of capitalized interest for that project.
Liquidity and Capital Resources
Cash flow provided by operations was $5.2 million for the six
months ended June 30, 1998 compared to $13.0 million for the six
months ended June 30, 1997. The Company had unrestricted cash of
approximately $22.3 million as of June 30, 1998. The increase in
cash resulted from a net increase in borrowings of $35.7 million
for the period in 1998 that was offset by capital expenditures of
$23.3 million related primarily to The Reserve, the Vicksburg hotel
and other capital improvement projects and the negative operating
cash flow for the quarter. The Company's current assets increased
by approximately $13.1 million from December 31, 1997 to June 30,
1998, primarily resulting from an increase in cash on hand, income
tax refund receivable, inventories and prepaid expenses. The
Company historically has funded its daily operations through net
cash provided by operating activities and its significant capital
expenditures primarily through bank debt and other debt financing.
The Company's cash flow used in investing activities totaled
$29.6 million for the six-month period ended June 30, 1998 compared
to $15.3 million for the same period in 1997. This was primarily a
result of increased capital expenditures related to the
construction of The Reserve and the Vicksburg hotel.
Cash flow provided by financing activities totaled $33.6
million for the six-month period ended June 30, 1998 compared to
$4.2 million for the same period in 1997 as a result of additional
borrowing on the Company's Revolving Credit Facility described
below and less payment on outstanding debt.
The Company maintains a $125 million revolving credit facility
(the "Revolving Credit Facility") pursuant to a Credit Agreement
among Ameristar and its principal subsidiaries (the "Borrowers"), a
syndicate of bank lenders and Wells Fargo Bank, N.A. ("WFB") as
Agent Bank, Arranger and Swingline Lender. The Borrowers do not
include AC Hotel Corp., a subsidiary of ACVI that owns the hotel at
Ameristar Vicksburg, and a purchasing subsidiary. At June 30,
1998, the outstanding principal balance of the Revolving Credit
Facility was $86.0 million.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Until Phase I of The Reserve was completed in February 1998,
draws under the Revolving Credit Facility could only be used to
fund construction of The Reserve and certain other specified
expenditures. Following the completion of Phase I of The Reserve,
the Revolving Credit Facility proceeds may be used only for working
capital purposes of the Borrowers and funding ongoing capital
expenditures for existing facilities.
Borrowings under the Revolving Credit Facility are designated
by the Borrowers on a quarterly basis as either base rate or London
Interbank Offered Rate ("LIBOR") borrowings. The interest rate
generally is equal to WFB's per annum prime rate in effect from
time to time or the per annum LIBOR, plus in each case an
applicable margin determined by reference to the Borrowers' rolling
four-quarter ratio of total funded debt to EBITDA (as defined
below). The range of the base rate margin is from 0.25 percentage
points to 2.25 percentage points, and the range of the LIBOR margin
is from 1.50 percentage points to 3.50 percentage points. At June
30, 1998, the average interest rate applicable to Revolving Credit
Facility borrowings was 8.9%.
The Revolving Credit Facility will mature on June 30, 2003.
Prior to maturity, the maximum principal available under the
Revolving Credit Facility will reduce semiannually (commencing on
July 1, 1999) by an aggregate of $50.0 million in increasing
increments ranging from $2.5 million to $10.0 million. The
Revolving Credit Facility includes covenants and conditions that
limit the Borrowers' outstanding borrowings under the Revolving
Credit Facility to not more than the lesser of the Borrowers'
rolling four-quarter EBITDA multiplied by 3.25 and the Borrowers'
total funded debt to not more than the Borrowers' rolling four-
quarter EBITDA multiplied initially by 5.0, which multiplier will
decline to 4.5 commencing March 31, 1999 and to 4.0 commencing
March 31, 2000. For purposes of the Revolving Credit Facility, the
Borrowers' EBITDA is generally defined as net income before
interest expense, income taxes, depreciation and amortization,
preopening costs and certain extraordinary and non-cash items.
The Revolving Credit Facility also includes covenants
requiring the Borrowers to maintain rolling four-quarter gross
fixed charge coverage and adjusted fixed charge coverage ratios (as
defined) of 1.5 to 1.0 and 1.1 to 1.0, respectively. For purposes
of these covenants, principal payments on the Gem Notes (as defined
below) will be included only to the extent actually paid in the
applicable period. The Revolving Credit Facility prohibits
Ameristar from making any dividend or other distribution on its
capital stock during any period in which the Borrowers' rolling
four-quarter ratio of total funded debt to EBITDA is greater than
2.0 to 1.0.
The Revolving Credit Facility is secured by liens on
substantially all of the real and personal property of the
Borrowers. The Revolving Credit Facility prohibits any future
secondary liens on these properties without the prior written
approval of the lenders. Certain changes in control of Ameristar
may constitute a default under the Revolving Credit Facility. The
Revolving Credit Facility also requires the Borrowers to expend 2%
of their consolidated net revenues on capital maintenance annually.
The Revolving Credit Facility binds the Borrowers to a number of
additional affirmative and negative covenants, including promises
to maintain certain financial ratios and tests within defined
parameters.
The Company and WFB have entered into a letter of
understanding dated June 29, 1998, for the amendment of the
Revolving Credit Facility effective June 30, 1998. The amendment
will limit the maximum borrowings permitted under the Revolving
Credit Facility to the lesser of the Borrowers' rolling four-
quarter EBITDA multiplied by 2.75 and the Borrowers' total funded
debt to not more than the Borrowers' rolling four-quarter EBITDA
multiplied by a factor as follows: 5.25 commencing June 30, 1998;
5.50 commencing September 30, 1998; 5.25 commencing June 30, 1999;
4.75 commencing December 31, 1999; 4.50 commencing March 31, 2000;
and 4.00 commencing September 30, 2000. The amendment also will
increase the maximum base rate margin to 2.75% and the maximum
LIBOR margin to 4.00%. The amendment will decrease the rolling
four-quarter gross fixed charge coverage ratio to 1.25 to
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
1.0 until September 30, 1999. The amendment also will limit the
Borrowers' aggregate capital expenditures in each year to an amount
equal to 5% of their consolidated net revenue for the preceding
year and will prohibit the Borrowers from incurring any additional
secured indebtedness without the approval of the bank lenders.
Although the amendment has not yet been completed as of the
date of this report and no assurances can be given it will be
completed, the Company believes it is likely that the lenders will
approve the amendment as contemplated by the letter of
understanding. As of June 30, 1998, the Company was in violation
of certain of the financial covenants under the Revolving Credit
Facility, but it was in compliance with all covenants under the
Revolving Credit Facility as proposed to be amended. The lenders
under the Revolving Credit Facility have not taken any steps to
declare a default under the Revolving Credit Facility.
The Company issued $100 million aggregate principal amount of
10-1/2% Senior Subordinated Notes due 2004 (the "Senior
Subordinated Notes") at par under an Indenture dated July 15, 1997
(the "Indenture"). In addition to Ameristar and the trustee, all
of Ameristar's subsidiaries (the "Guarantors") are parties to the
Indenture for the purpose of guaranteeing (the "Guarantees")
payments on the Senior Subordinated Notes.
The Senior Subordinated Notes will mature on August 1, 2004.
Interest is payable semiannually on February 1 and August 1 at the
per annum rate of 10.5%. The Senior Subordinated Notes and the
Guarantees are not secured and are subordinate to all existing and
future Senior Indebtedness (as defined), which includes the
Revolving Credit Facility.
Ameristar may redeem the Senior Subordinated Notes, in whole
or in part, at any time on or after August 1, 2001, at redemption
prices that decline over time from 105.25% to 101.75%. Senior
Subordinated Notes may also be redeemed if the holder or beneficial
owner thereof is required to be licensed, qualified or found
suitable under applicable Gaming Laws (as defined) and is not so
licensed, qualified or found suitable. Ameristar may also be
required to redeem a portion of the Senior Subordinated Notes in
the event of certain asset sales or the loss of a material gaming
license, and each holder of the Senior Subordinated Notes will have
the right to require Ameristar to redeem such holder's Senior
Subordinated Notes upon a Change of Control (as defined) of
Ameristar. The Senior Subordinated Notes are not subject to any
mandatory redemption or sinking fund obligations.
The Indenture includes covenants that restrict the ability of
Ameristar and the Restricted Subsidiaries (as defined and which
includes all Guarantors) from incurring future Indebtedness (as
defined); provided, however, that Ameristar or any Guarantor may
incur Indebtedness if the incurrence thereof would not result in
the Consolidated Coverage Ratio (as defined) being greater than 2.0
to 1.0 on a rolling four-quarter basis. As of June 30, 1998
Ameristar and the Restricted Subsidiaries Consolidated Coverage
Ratio was less than 2.0 to 1.0 on a rolling four-quarter basis.
The Indenture also permits Ameristar or a Restricted Subsidiary to
incur Indebtedness without regard to the Consolidated Coverage
Ratio test in certain circumstances, including borrowings of up to
$140 million under the Revolving Credit Facility, as amended or
replaced from time to time, up to $15.0 million in recourse
furniture, fixtures and equipment financings, up to $7.5 million in
borrowings for the construction of the hotel at Ameristar Vicksburg
and up to $5.0 million of other Indebtedness.
The Indenture also includes certain covenants that, among
other things, limit the ability of Ameristar and its Restricted
Subsidiaries to pay dividends or other distributions (excluding
dividends and distributions from a Restricted Subsidiary to
Ameristar or a Guarantor), make investments, repurchase
subordinated obligations or capital stock, create certain liens
(except those securing Senior Indebtedness), enter into certain
transactions with affiliates, sell assets, issue or sell subsidiary
stock, create or permit restrictions on distributions from
subsidiaries or enter into certain mergers and consolidations.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Company has constructed a 149-room hotel at Ameristar
Vicksburg, which is expected to cost approximately $10.3 million,
including capitalized construction period interest and preopening
costs. The Company has obtained a nonrecourse loan facility for
$7.5 million with a private lender for the purpose of funding a
portion of the construction costs, with the balance to be provided
out of operating cash flow. The loan matured July 31, 1998 and was
extended to October 1998 and requires periodic interest payments at
the rate of 15% per annum. The Company is required to pay a non-
usage fee at the rate of 3% per annum on the undrawn loan balance,
and draws are subject to the satisfaction of various conditions
typically applicable to construction loans. The Company is
currently seeking to obtain permanent financing to replace this
loan prior to its maturity. As of June 30, 1998, the outstanding
balance on the loan was $6.1 million.
On June 20, 1997 and as part of the consideration for the
acquisition of The Reserve, Ameristar issued unsecured subordinated
promissory notes to the former stockholders of Gem Gaming, Inc.,
the original developer of the Reserve, in an aggregate principal
amount of $28.7 million (the "Gem Notes"). The per annum interest
rate on the Gem Notes is 8%, subject to increases up to a maximum
of 18% per annum, following one or more failures to make payments
under the Gem Notes by scheduled dates. Any interest not paid when
scheduled will thereafter accrue interest as principal. The Gem
Notes require annual principal reduction payments ranging from $2.0
million to $3.0 million commencing in November 1998. The Gem Notes
mature on December 31, 2004 and may be prepaid in whole or in part
without penalty at any time. The Gem Notes are not subject to
acceleration or other collection efforts upon failure to make a
scheduled payment prior to maturity, and the only remedy for such a
failure to make a scheduled payment is an increase in interest rate
as described above. The Gem Notes are subordinate to the Revolving
Credit Facility, the Senior Subordinated Notes and other long-term
indebtedness of Ameristar specified by Ameristar up to a maximum of
$250 million.
At June 30, 1998, the Company had other long-term indebtedness
in an aggregate principal amount of $19.1 million, including $6.7
million in lease financing incurred during the first quarter of
1998 for slot equipment for The Reserve. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 for
additional information relating to the Company's borrowings.
No assurance can be given that the Company will be able to
satisfy, when necessary, the financial covenants under the
Revolving Credit Facility, the Senior Subordinated Notes or other
debt instruments for purposes of incurring additional debt,
including additional draws under the Revolving Credit Facility. In
addition, a failure to satisfy the financial covenants under the
Revolving Credit Facility could either require the Company to
reduce the outstanding balance of the Revolving Credit Facility,
which requirements could adversely affect or exceed the Company's
liquidity, or result in an event of default under one or more debt
instruments. A failure to improve the operating performance of The
Reserve or other adverse changes in the Company's operations or
operating cash flow are expected to adversely affect the ability of
the Company to satisfy these financial covenants.
Capital expenditures for the six months ended June 30, 1998
were approximately $30.0 million, including approximately $21.3
million relating to development of The Reserve, $5.3 million
relating to the development of the Ameristar Vicksburg hotel and
$3.4 million in other normal capital improvement projects. The
Company funded these capital expenditures primarily from net cash
provided by operating activities and borrowings.
Among remaining capital expenditures anticipated for 1998, the
Company intends to make capital expenditures of approximately $3.9
million in connection with the completion of Phase I of The Reserve
and approximately $1.0 million in connection with the completion of
the Ameristar Vicksburg hotel. Management believes that the above-
described minimum capital expenditure requirements will be funded
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
from draws under the Revolving Credit Facility and the $7.5 million
loan facility for the development of the Ameristar Vicksburg hotel,
cash on hand, and operating cash flow.
Management has under consideration several additional
potential capital expenditure projects at The Reserve, Ameristar
Council Bluffs and Ameristar Vicksburg. In evaluating these
projects, management is considering, among other factors, the
operating performance of each of the Company's properties, the
anticipated relative costs and benefits of the various projects,
competitive factors, and the availability of operating cash flow
and debt financing to fund capital expenditures. As discussed
above, availability of borrowing under the Revolving Credit
Facility is dependent upon the Company's rolling four-quarter
EBITDA (as defined). Accordingly, the ability of the Company to
commit to any capital improvement project, and the timing, scope
and cost of any such project, are expected to be dependent upon the
Company's operating performance generally and at The Reserve in
particular, as to which no assurances can be given. At the present
time, the Company does not anticipate undertaking any significant
capital expenditure projects during 1998 that could not be funded
out of amounts anticipated to be available through internally
generated cash flow and the Company's borrowing capacity under the
Revolving Credit Facility.
Year 2000 Issues
The Company has recently completed an initial evaluation of
its material information technology infrastructure for Year 2000
issues (i.e., computer applications that use only two digits to
identify a year and could produce erroneous results after 1999).
This evaluation has included inquiries to the vendors of various
hardware and software products. Most of the Company's information
technology infrastructure is currently Year 2000 compliant, and the
Company has received assurances that it believes to be reasonable
from the vendors of material products used by the Company that
their products will be Year 2000 compliant in advance of
December 31, 1999. The Company does not expect that the cost to
modify its information technology infrastructure to be Year 2000
compliant will be material to its financial condition or results of
operations.
The Company is currently in the process of evaluating material
non-information technology for Year 2000 compliance. Based on the
initial results of this evaluation, the Company has not identified
any Year 2000 issues that it believes will materially adversely
affect its results of operations or financial condition. The full
evaluation will be completed by December 31, 1998.
The Company and its results of operations and financial
condition could be materially and adversely affected by a failure
of one or more third parties with whom it does business to
satisfactorily address and resolve Year 2000 issues on a timely
basis. Although most of the goods and services used by the Company
are available from multiple sources, no assurance can be given that
the Company would be able to obtain necessary goods and services
from alternative vendors or providers if it experiences
difficulties in satisfying its requirements from its customary
sources due to Year 2000 compliance problems. In addition, Year
2000 difficulties, if any, experienced by public utilities, the
banking system, the postal system or other similar infrastructure
enterprises could adversely affect the Company. However, the
Company believes that the impact of any such problems on the
Company generally would be the same as on other businesses in the
same area or areas.
Recently Issued Accounting Pronouncements
The Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of
Position ("SOP") No. 98-5 "Reporting the Costs of Start-up
Activities." The
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
provisions of SOP 98-5 are effective for fiscal years beginning
after December 15, 1998, and require that the costs associated with
start-up activities (including preopening costs of casinos) be
expensed as incurred.
Factors Affecting Forward-Looking Information
This Report contains certain forward-looking statements,
including the plans and objectives of management for the business,
operations and economic performance of the Company. These
forward-looking statements generally can be identified by the
context of the statement or the use of words such as the Company or
its management "believes," "anticipates," "intends," "expects,"
"plans," or words of similar meaning. Similarly, statements that
describe the Company's future operating performance, financial
results, plans, objectives, strategies or goals are forward-looking
statements. Although management believes that the assumptions
underlying the forward-looking statements are reasonable, these
assumptions and the forward-looking statements are subject to
various factors, risks and uncertainties, many of which are beyond
the control of the Company, including but not limited to
uncertainties concerning operating cash flow in future periods, the
Company's borrowing capacity under the Revolving Credit Facility
and otherwise, the completion of the proposed amendment to the
Revolving Credit Facility, the future operating performance of the
Company's properties, particularly the recently opened The Reserve,
the ability of the Company to commit to capital expenditure
projects and the ability of the Company and its vendors and service
providers to successfully and timely resolve Year 2000 issues.
Accordingly, actual results could differ materially from those
contemplated by the forward-looking statements. In addition to the
other cautionary statements relating to certain forward-looking
statements throughout this Report, attention is directed to
"Item 1.- Business - Cautionary Information Regarding Forward-
Looking Statements" in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 for discussion of some of
the factors, risks and uncertainties that could affect the outcome
of future results contemplated by forward-looking statements.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Not applicable.
<PAGE>PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The Company's Annual Meeting of Stockholders was held on
June 30, 1998.
b. The following table shows the tabulation of votes for all
matters put to vote at the Company's Annual Meeting of
Shareholders.
Abstentions/
Against/ Broker
Matters Put to Vote For Withheld Non-votes
Election of Class C Directors
Craig H. Neilsen 20,186,297 18,035
Warren E. McCain 20,187,222 20,710
The terms of the following directors have continued after the
meeting:
Class A Directors (term expiring in 1999)
Larry A. Hodges and John R. Spina (1)
Class B Directors (term expiring in 2000)
Paul I. Corddry and Thomas M. Steinbauer
(1) Mr. Spina resigned as a director, officer and employee of the
Company effective July 28, 1998.
ITEM 5. OTHER INFORMATION
FUTURE STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the
1999 Annual Meeting of Stockholders in accordance with the
procedures set forth in Rule 14a-8 of the Securities and Exchange
Commission must be submitted sufficiently far in advance so that it
is received by the Company not later than February 2, 1999. In the
event that any stockholder proposal is presented at the 1999 Annual
Meeting of Stockholders other than in accordance with the
procedures set forth in Rule 14a-8, proxies solicited by the
Company for such meeting will confer upon the proxy holders
discretionary authority to vote on any matter so presented of which
the Company does not have notice prior to April 16, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits filed as port of this report
27. Financial Data Schedule
b. Reports on Form 8-K
None
<PAGE>SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMERISTAR CASINOS, INC.
Registrant
Date: August 13, 1998 /s/Thomas Steinbauer
Thomas Steinbauer
Senior Vice President of Finance
and Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This data should be reviewed in conjunction with the financial statements
included in this filing.
</LEGEND>
<CIK> 0000912145
<NAME> AMERISTAR CASINOS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 22,289
<SECURITIES> 0
<RECEIVABLES> 1,369
<ALLOWANCES> 0
<INVENTORY> 3,408
<CURRENT-ASSETS> 37,150
<PP&E> 381,079
<DEPRECIATION> 79,861
<TOTAL-ASSETS> 357,876
<CURRENT-LIABILITIES> 50,085
<BONDS> 100,000
0
0
<COMMON> 204
<OTHER-SE> 71,307
<TOTAL-LIABILITY-AND-EQUITY> 357,876
<SALES> 128,147
<TOTAL-REVENUES> 128,147
<CGS> 0
<TOTAL-COSTS> 131,985
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,119
<INCOME-PRETAX> (13,626)
<INCOME-TAX> (4,513)
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