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 March 31, 2000
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 May 12, 2000, 20,387,084 shares of Common Stock of the
registrant were issued and outstanding.
<PAGE>
AMERISTAR CASINOS, INC.
FORM 10-Q
INDEX
Page No(s).
Part I. FINANCIAL INFORMATION
Item 1.Financial Statements:
A. Condensed Consolidated Balance
Sheets at December 31, 1999 and
March 31, 2000 (unaudited) 3 - 4
B. Condensed Consolidated Statements
of Operations (unaudited) for the
three months ended March 31, 1999
and March 31, 2000 5
C. Condensed Consolidated Statements
of Cash Flows (unaudited) for the
three months ended March 31, 1999
and March 31, 2000 6
D. Notes to Condensed Consolidated
Financial Statements 7 - 8
Item 2.Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9 - 14
Item 3.Quantitative and Qualitative Disclosures
about Market Risk 15
Part II. OTHER INFORMATION
Item 5.Other Information 16
Item 6.Exhibits and Reports on Form 8-K 16
SIGNATURE 17
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
December 31, March 31,
1999 2000
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 15,531 $ 19,153
Restricted cash 142 154
Accounts receivable, net 2,080 3,264
Income tax refund receivable 1,450 977
Inventories 3,268 2,946
Prepaid expenses 5,162 5,352
Deferred income taxes 3,717 3,376
-------- --------
Total current assets 31,350 35,222
PROPERTY AND EQUIPMENT AND LEASEHOLD
INTERESTS, net of accumulated
depreciation and amortization of
$108,949 and $115,426, respectively 328,617 327,030
EXCESS OF PURCHASE PRICE OVER FAIR MARKET
VALUE OF NET ASSETS ACQUIRED 14,651 14,552
DEPOSITS AND OTHER ASSETS 4,027 3,773
-------- --------
$378,645 $380,577
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(continued)
(In thousands, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, March 31,
1999 2000
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 9,204 $ 9,167
Construction contracts payable 6,341 596
Accrued liabilities 29,539 25,937
Current obligations under capitalized
leases 2,413 2,335
Current maturities of notes payable
and long-term debt 10,615 10,269
-------- --------
Total current liabilities 58,112 48,304
OBLIGATIONS UNDER CAPITALIZED LEASES,
net of current maturities 11,037 6,007
NOTES PAYABLE AND LONG-TERM DEBT,
net of current maturities 231,853 245,091
DEFERRED INCOME TAXES 9,474 10,191
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 at December 31, 1999 and
20,387,384 shares at March 31, 2000 204 204
Additional paid-in capital 43,083 43,114
Retained earnings 24,882 27,666
-------- --------
Total stockholders' equity 68,169 70,984
-------- --------
$378,645 $380,577
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months
Ended March 31,
1999 2000
REVENUES:
Casino $ 58,084 $ 68,938
Food and beverage 11,422 12,993
Rooms 3,851 4,010
Other 2,386 2,646
-------- --------
75,743 88,587
Less: Promotional allowances 5,706 6,895
-------- --------
Net revenues 70,037 81,692
OPERATING EXPENSES:
Casino 26,931 31,258
Food and beverage 7,442 7,811
Rooms 1,524 1,569
Other 2,357 2,582
Selling, general and administrative 19,271 20,207
Depreciation and amortization 6,280 6,931
-------- --------
Total operating expenses 63,805 70,358
Income from operations 6,232 11,334
OTHER INCOME (EXPENSE):
Interest income 60 45
Interest expense (6,097) (6,718)
Other (368) (346)
-------- --------
INCOME (LOSS) BEFORE INCOME TAX PROVISION
(BENEFIT) (173) 4,315
Income tax provision (benefit) (60) 1,531
-------- --------
NET INCOME (LOSS) $ (113) $ 2,784
======== ========
EARNINGS (LOSS) PER SHARE:
Basic $ (0.01) $ 0.14
Diluted $ (0.01) $ 0.13
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING 20,360 20,377
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months
Ended March 31,
1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(113) $2,784
Adjustments to reconcile net income (loss)
to net cash
provided by operating activities:
Depreciation and amortization 6,280 6,931
Amortization of debt issue costs 167 167
Change in deferred income taxes (60) 1,058
Net loss on disposition of assets 370 346
Decrease in other current assets 412 341
Decrease in income tax refund receivable 350 473
Decrease in other current liabilities (2,313) (3,639)
-------- --------
Total adjustments 5,206 5,677
-------- --------
Net cash provided by operating activities 5,093 8,461
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,112) (7,062)
Decrease in construction contracts payable (180) (5,745)
Proceeds from sale of assets 386 104
Increase (decrease) in deposits and other
non-current assets (73) 86
-------- --------
Net cash used in investing activities (4,979) (12,617)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable and
long-term debt 250 10,000
Principal payments of notes payable, long-
term debt and capitalized leases (1,283) (2,253)
Issuance of shares upon exercise of stock
options - 31
-------- --------
Net cash provided by (used in) financing
activities (1,033) 7,778
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (919) 3,622
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 18,223 15,531
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 17,304 $ 19,153
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest (net of amounts
capitalized) $ 8,608 $ 9,229
Assets purchased with long-term debt $ 44 $ 38
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 Pete's, 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. ("ACFSI"), a purchasing subsidiary,
AC Hotel Corp. ("ACHC"), a wholly owned subsidiary of ACVI that
owns and operates the Ameristar Hotel in Vicksburg, Mississippi and
Ameristar Casino St. Louis, Inc. ("ACSLI"), which is pursuing a
gaming license for a new casino to be developed in South St. Louis
County, Missouri. 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. 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. ACLVI owns and operates The
Reserve Hotel Casino, an African safari and big game reserve themed
facility in the Henderson-Green Valley suburban area of Las Vegas,
Nevada.
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 Company's financial position and its 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, 1999.
Note 2 - Notes Payable and Long-Term 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. as Agent Bank,
Arranger and Swingline Lender. The Borrowers do not include ACFSI,
ACHC or ACSLI. The Revolving Credit Facility binds the Borrowers
to a number of affirmative and negative covenants, including
promises to maintain certain financial ratios and tests within
defined parameters. As of March 31, 2000, the Company was in
compliance with all of the Revolving Credit Facility's covenants.
<PAGE>
Ameristar issued $100 million in 10-1/2% Senior Subordinated
Notes due 2004 under an Indenture dated July 15, 1997 (the "Senior
Subordinated Notes"). All of Ameristar's current subsidiaries
other than ACSLI, which is in the developmental stage and has no
operations and no material assets or liabilities (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 other than ACSLI. 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 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.
On March 1, 2000, ACVI exercised its purchase option on one of
the parcels of the Ameristar Vicksburg site that had previously
been under lease. The purchase price for the parcel was
approximately $4.6 million and was paid for by ACVI entering into
two promissory notes in favor of the Seller of the parcels, one in
the principal amount of $250,000 and the second in the principal
amount of approximately $4.3 million. The $250,000 promissory note
bears interest at the rate of 10.0% per annum, with principal and
interest payable in 12 equal monthly installments. The $4.3
million promissory note bears interest at the rate of 10.0% per
annum, with principal and interest payable in equal monthly
installments through February 1, 2024.
Note 3 - Earnings (Loss) Per Share
The Company computes earnings per share in accordance with
Statement of Financial Accounting Standards No. 128 ("SFAS 128"),
"Earnings Per Share." SFAS 128 requires the computation and
presentation of basic and diluted earnings per share for all
periods for which an income statement is presented. Outstanding
stock options issued by the Company represent the only dilutive
securities.
Options to purchase approximately 1,187,500 and 1,634,500
shares of common stock were outstanding at March 31, 1999 and March
31, 2000, respectively, at exercise prices ranging from $2.64 to
$16.00 for both of the periods. For the three months ended March
31, 2000, approximately 1,463,700 options were included in the
computation of diluted earnings per share for which the average
market price of the Company's common shares during the period
exceeded the options' exercise prices. For the three months ended
March 31, 1999, no outstanding options were included in the
computation of diluted loss per share because to do so would have
been anti-dilutive.
<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 Pete's, 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 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
150-room hotel (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.
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.
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.
Summary of Operating Results
Ameristar posted record revenues for the three months ended
March 31, 2000. Consolidated net revenues for the three months
ended March 31, 2000 increased to $81.7 million, an increase of 17
percent compared to $70.0 million for the same quarter in 1999.
Each of the Company's properties achieved increases in revenues
with Ameristar Council Bluffs and The Reserve reporting the
greatest percentage gains.
Income from operations for the three months ended March 31,
2000 was $11.3 million, an increase of 82 percent compared to $6.2
million for the same period in 1999. The Company's operating income
margin (operating income as a percentage of net revenues) increased
to 13.9 percent for the three months ended March 31, 2000 compared
to 8.9 percent for the same period in 1999. Total operating
expenses as a percentage of net revenues decreased to 86.1 percent
for the first quarter of 2000 compared to 91.1 percent for the
first quarter of 1999. The improvement in the operating margin was
due primarily to improved operating performance at all of the
Company's properties, especially Ameristar Council Bluffs and
Ameristar Vicksburg, partially offset by an increase in corporate
overhead related to increased corporate staffing levels and the
greater centralization of certain management functions.
Net income for the quarter ended March 31, 2000 was $2.8
million compared to a net loss of $0.1 million for the same period
in 1999. Earnings per share for the quarter ended March 31, 2000
were $0.14 compared to a loss per share of $0.01 for the same
quarter in 1999.
<PAGE>
Operating Results by Property
Ameristar Council Bluffs posted another record quarter for
both net revenues and operating income. Net revenues of $32.1
million for the quarter ended March 31, 2000 were 27 percent higher
than net revenues of $25.4 million for the same quarter in 1999.
Operating income increased by 64 percent for the three months ended
March 31, 2000 compared to the same period in 1999. These
improvements are due primarily to the recent casino expansion,
which was completed in November 1999, a more aggressive marketing
approach and the Company's strategic systemwide upgrading of slot
technology, as well as the continued growth in the Council Bluffs
gaming market.
The Jackpot Properties' net revenues increased by 11 percent
to $14.5 million for the three months ended March 31, 2000 compared
to $13.1 million for the same period in 1999. The improvement is
attributable primarily to an increase in casino revenues from the
facility's new slot technology upgrades and the implementation of a
strategic advertising campaign. Operating income increased by 7
percent for the three months ended March 31, 2000 compared to the
same period in 1999. The increase is due primarily to the increase
in revenues, partially offset by an increase in operating expenses
(principally increases in employee compensation and marketing
costs).
Ameristar Vicksburg continues to be the gaming revenue market
leader in Warren County, Mississippi with net revenues of $20.7
million for the three months ended March 31, 2000 compared to $19.1
million for the same period in 1999. Operating income for the
three months ended March 31, 2000 increased by 50 percent compared
to the same period in 1999. These improvements were primarily
attributable to increased casino revenues from the expanded casino
and the upgraded slot product (an overall increase of 35 percent or
300 additional slot machines) and improved marketing strategies
combined with operating cost decreases.
The Reserve Hotel Casino experienced significant improvement
in operating results for the three months ended March 31, 2000
compared to the three months ended March 31, 1999. During the first
quarter of 2000, management continued to initiate strategies to
drive revenues and capture market share. As a result of these
implementations, net revenues for the quarter ended March 31, 2000
increased 16 percent compared to the same period in 1999. The
Reserve reduced its operating loss to $0.5 million for the three
months ended March 31, 2000 compared to its operating loss of $1.9
million for the same quarter in 1999, an improvement of 71 percent.
The Company continues to seek further operating improvements at The
Reserve through enhanced revenues and cost controls.
Consolidated Revenues and Expenses
On a consolidated basis for the quarter ended March 31, 2000
compared to the quarter ended March 31, 1999, casino revenues
increased $10.9 million or 19 percent. The increase is due
primarily to the improved casino results previously discussed. Food
and beverage revenues for the quarter ended March 31, 2000
increased $1.6 million or 14 percent compared to the same period in
1999. The improvement was due primarily to increased prices and
additional covers in the food and beverage outlets. Room revenues
for the quarter ended March 31, 2000 increased $0.2 million or 4
percent compared to the same period in 1999 as a result of a slight
increase in hotel occupancy.
For the quarter ended March 31, 2000, compared to the same
period in 1999, casino expenses increased $4.3 million or 16
percent. This increase relates to increases in gaming taxes
associated with the increased casino revenues, as well as increases
in casino complimentary expenses and employee compensation and
benefits. Food and beverage expenses for the quarter ended
March 31, 2000 increased $0.4 million or 5 percent compared to the
first quarter in 1999. The increase is due to the increased cost of
product associated with the increase in revenues. Rooms expenses
for the quarter ended March 31, 2000 increased by less than $0.1
million or 3 percent compared to the first quarter in 1999 due to a
slight increase in employee compensation.
<PAGE>
Selling, general and administrative expenses (including
utilities and maintenance and business development) increased $0.9
million or 5 percent for the quarter ended March 31, 2000 compared
to the same quarter in 1999. This is primarily the result of an
increase in corporate overhead related to increased corporate
staffing levels and the greater centralization of certain
management functions.
Depreciation expense for the three months ended March 31, 2000
increased $0.7 million, or 10 percent over the same period in 1999,
primarily due to the inclusion of new slot product and expansion
projects at Ameristar Council Bluffs and Ameristar Vicksburg in the
Company's depreciable basis for the current period, partially
offset by certain assets in Vicksburg that are now fully
depreciated and are no longer included in depreciation expense.
Interest expense increased $0.6 million or 10 percent for the
three months ended March 31, 2000 compared to the same period in
1999. The increased interest expense for the quarter reflects the
additional debt incurred to finance the Company's various expansion
projects and higher interest rates on those borrowings.
The Company's effective federal income tax rate for the three
months ended March 31, 2000 was 35.5 percent, versus the federal
statutory rate of 34 percent. The difference between the effective
rate and the statutory rate is due to certain expenses deducted in
the current period for financial reporting purposes which are not
deductible for tax purposes.
Liquidity and Capital Resources
Cash flows provided by operating activities were $8.5 million
for the three months ended March 31, 2000 compared to $5.1 million
for the three months ended March 31, 1999. The majority of this
increase is the result of improved operations at all of the
Company's properties, offset partially by higher corporate overhead
expenses.
Cash flows used in investing activities were $12.6 million for
the three months ended March 31, 2000 compared to $5.0 million for
the three months ended March 31, 1999. The increase is due
primarily to an increase in capital expenditures and a decrease in
construction contracts payable. Capital expenditures of $7.1
million for the three months ended March 31, 2000 primarily relate
to expansion projects at Council Bluffs and Vicksburg ($3.3
million), the purchase of new slot machines at Cactus Pete's and
The Reserve ($2.6 million) and other capital expenditures for
equipment and maintenance at each of the properties ($1.2 million).
Cash flows provided by financing activities were $7.8 million
for the three months ended March 31, 2000 compared to $1.0 million
of cash flows used for the three months ended March 31, 1999. The
increase is due primarily to an increase in borrowings incurred to
finance the Company's various expansion projects.
The Company had unrestricted cash of approximately $19.1
million as of March 31, 2000, compared to $15.5 million as of
December 31, 1999, an increase of $3.6 million. The increase in
unrestricted cash at March 31, 2000, results primarily from the
improved operating performance and proceeds from additional debt
borrowings, partially offset by capital expenditures and payments
on construction contracts.
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), a purchasing subsidiary, or Ameristar Casino
St. Louis, Inc. ("ACSLI"), the subsidiary formed in connection with
the Company"s pursuit of a license for a casino in Lemay, Missouri
(see below). At March 31, 2000, the outstanding principal balance
of the Revolving Credit Facility was $117.0 million.
<PAGE>
Under the terms of the Revolving Credit Facility, concurrent
with each loan draw, the Borrowers may select the interest rate
based on either the London Interbank Offering Rate ("LIBOR") or
WFB's prime interest rate. The applicable margins for both LIBOR
draws and prime interest rate draws adjust semiannually based on
the ratio of the Company"s consolidated total debt to consolidated
cash flows, as measured by an EBITDA formula. As of March 31,
2000, the Borrowers have taken LIBOR draws totaling $117.0 million
with an average interest rate of approximately 9.7 percent per
annum.
The Company has entered into an interest rate collar agreement
with WFB to manage interest expense, which is subject to
fluctuation due to the variable-rate nature of the debt under the
Company's Revolving Credit Facility. Under the agreement, which
covers $50.0 million of the borrowings on the Revolving Credit
Facility, the Company has a LIBOR floor rate of 5.39 percent and a
LIBOR ceiling rate of 6.75 percent, plus the applicable margin.
For the three months ended March 31, 2000, the Company did not
incur any additional interest as a result of this agreement. The
agreement terminates on September 30, 2003 to coincide with the
maturity of the Revolving Credit Facility.
Borrowings under the Revolving Credit Facility may not exceed
2.75 times the Borrowers' rolling four-quarter EBITDA (as defined)
and the Borrowers' total funded debt may not exceed the Borrowers'
rolling four-quarter EBITDA (as defined), multiplied by a factor
that varies over time and which is currently 4.50. As of March 31,
2000 borrowings under the Revolving Credit Facility and the total
funded debt of the Borrowers were approximately 2.13 times and 4.18
times the Borrowers' rolling four-quarter EBITDA (as defined),
respectively. 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 covenants require a Minimum
Tangible Net Worth (as defined) of $50.0 million plus 90 percent of
net income as of the end of each quarter. As of March 31, 2000,
the Company was in compliance with all covenants. At March 31,
2000, the maximum amount available under the Revolving Credit
Facility was $120.0 million.
The Company has recently obtained a commitment to refinance
its Revolving Credit Facility, which would increase its available
borrowing capacity to $265.0 million. The increased borrowing
capacity would be used to fund a substantial portion of the
development costs of the Company's proposed casino project in
Lemay, Missouri, a community in South St. Louis County. The
balance of the financing for this project will be provided
primarily by operating cash flow. On October 28, 1999, ACSLI, a
newly formed wholly owned subsidiary of ACI, filed an application
with the Missouri Gaming Commission seeking a gaming license for
this proposed casino, which application was supplemented by ACSLI
on March 30, 2000. If awarded the license, the Company's current
plans call for it to spend approximately $150 million to construct
the new casino property.
Ameristar issued $100 million in 10-1/2% Senior Subordinated
Notes due 2004 (the "Senior Subordinated Notes") under an Indenture
dated July 15, 1997 (the "Indenture"). In addition to Ameristar
and the trustee, all of Ameristar's subsidiaries other than ACSLI
(the "Guarantors") are parties to the Indenture for the purpose of
guaranteeing (the "Guarantees") payments on the Senior Subordinated
Notes. Interest is payable semiannually on February 1 and
August 1, commencing February 1, 1998, 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.
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 less than 2.0 to
1.0 on a rolling four-quarter basis. The Indenture also permits
<PAGE>
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. The
Company was in compliance with the covenants under the Indenture at
March 31, 2000.
On March 1, 2000, ACVI exercised its purchase option on one of
the parcels of the Ameristar Vicksburg site that had previously
been under lease. The purchase price for the parcel was
approximately $4.6 million and was paid for by ACVI entering into
two promissory notes in favor of the Seller of the parcels, one in
the principal amount of $250,000 and the second in the principal
amount of approximately $4.3 million. The $250,000 promissory note
bears interest at the rate of 10.0% per annum, with principal and
interest payable in 12 equal monthly installments. The $4.3
million promissory note bears interest at the rate of 10.0% per
annum, with principal and interest payable in equal monthly
installments through February 1, 2024.
At March 31, 2000, the Company had other indebtedness,
including obligations under capitalized leases, in an aggregate
principal amount of approximately $42.2 million.
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. Adverse changes in the Company's operations or
operating cash flow may affect the ability of the Company to
satisfy these financial covenants.
Additional information concerning the Revolving Credit
Facility, the Senior Subordinated Notes and the Company's other
indebtedness is set forth under "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources" and Note 5 to the Company's
Audited Financial Statements in Ameristar's Annual Report on Form
10-K for the fiscal year ended December 31, 1999.
The covenants under the Revolving Credit Facility limit the
Company's ability to make capital expenditures in excess of
specific permissible amounts. However, the lenders under the
Revolving Credit Facility have waived the maximum capital
expenditure limitation under the Revolving Credit Facility
specifically for certain projects at Ameristar Council Bluffs,
Ameristar Vicksburg and The Reserve. The waiver permits fiscal
1999 and 2000 capital expenditure projects to exceed the limit by
approximately $43.3 million.
Consolidated capital expenditures during the first three
months of 2000 were $7.1 million. Management currently estimates
that total capital expenditures for the remaining nine months of
2000 will be approximately $10.0 million. However, the amount of
capital expenditures may vary based on budget modifications,
construction schedule changes and other factors.
<PAGE>
The above-described capital expenditure requirements are
expected to be funded out of draws under the Revolving Credit
Facility, cash on hand, operating cash flows and purchase money and
lease financing related to the acquisition of furniture, fixtures
and equipment (including gaming equipment).
Because the amount of borrowings permitted to be drawn at any
time under the Revolving Credit Facility is determined in part by
the Company's rolling four-quarter EBITDA (as defined), the
Company's anticipated borrowings under the Revolving Credit
Facility to fund a portion of any capital expenditure project will
be dependent upon the level of the Company's aggregate operating
cash flow. The Company experienced increases of $3.1 million in
cash flows from operations and $5.8 million in EBITDA during the
three months ended March 31, 2000 over the same period in 1999.
The increases resulted largely from operating improvements at all
of the Company's properties. Management anticipates that the
operating improvements will continue during the remainder of the
year. However, no assurances can be given with respect to the
amount of operating cash flow or EBITDA of the Company for any
future period or the timing, cost or scope of any project
undertaken by the Company. At the present time, the Company does
not anticipate undertaking capital expenditure projects during 2000
that could not be funded out of amounts anticipated to be available
through anticipated internally generated cash flow and the
Company's borrowing capacity under the Revolving Credit Facility.
Ameristar has not declared any dividends on its Common Stock
in the past, and the Company intends for the foreseeable future to
retain all earnings for use in the development of its business
instead of paying cash dividends. In addition, as described above,
the Revolving Credit Facility and the Senior Subordinated Notes
obligate the Company to comply with certain financial covenants
that may restrict or prohibit the payment of dividends.
Forward Looking Statements
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,
the future operating performance of the Company's properties, the
ability of the Company to undertake and complete capital
expenditure projects (including its proposed casino project in
Lemay, Missouri) and regulatory restrictions that could affect the
Company. 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 - Risk Factors" in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999 for a
discussion of some of the factors, risks and uncertainties that
could affect the Company's future results.
<PAGE>
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Except for the Revolving Credit Facility, under which $117.0
million was outstanding at March 31, 2000 and certain other long-
term debt outstanding at March 31, 2000, in the aggregate amount of
$6.3 million (collectively, the "Variable Rate Debt"), all of the
Company's other long-term debt bears interest at fixed rates. The
Variable Rate Debt bears interest predominantly based on the WFB
prime interest rate or LIBOR in effect from time to time, in each
case plus an applicable margin determined by the ratio of the
Company's consolidated total debt to consolidated cash flows, as
measured by an EBITDA formula. At March 31, 2000, the average
interest rate applicable to the Variable Rate Debt was 9.6 percent.
An increase of one percentage point in the average interest rate
applicable to the Variable Rate Debt outstanding at March 31, 2000
would increase the Company's annual interest costs by approximately
$1.2 million. The Company has entered into an interest rate collar
agreement with WFB to manage the effects of fluctuations in the
interest rate applicable to up to $50.0 million in LIBOR draws
under the Revolving Credit Facility.
Although the Company manages its short-term cash assets with a
view to maximizing return with minimal risk, the Company does not
invest in market rate sensitive instruments for trading or other
purposes, including so-called derivative securities, and the
Company is not exposed to foreign currency exchange risks or
commodity price risks in its portfolio transactions.
<PAGE>
PART II. OTHER INFORMATION
Item 5.Other Information
On October 28, 1999, ACSLI, a newly formed wholly owned
subsidiary of ACI, filed an application with the Missouri Gaming
Commission seeking a gaming license for a site along the
Mississippi River in Lemay, Missouri, a community in South St.
Louis County. This application was supplemented by ACSLI on March
30, 2000. In conjunction with this application, ACSLI has entered
into an agreement with the current lessee of the proposed site for
the assignment of the lease. The Company has also recently obtained
a commitment to refinance its Revolving Credit Facility, increasing
its available borrowing capacity to $265 million to fund a
substantial portion of the development costs for this project. The
balance of the financing for this project will be provided
primarily by operating cash flow.
The Company's current plans for the Ameristar Casino St. Louis
at Lemay call for a floating barge located within a basin and
integrated within a larger main frame structure that is adjacent to
the Mississippi River. The Company expects that the project will
consist of a single level building of approximately 215,920 square
feet and that the casino will consist of 70,000 square feet of
floating gaming area with 2,000 slot machines, 50 blackjack tables,
two Roulette or big wheel games, eight crap/dice games, one cashier
coin cage with slot and table fills and three change booths with
beverage dispensing counters. The project is expected to include
two casino bars with service stations, including a 50-seat
entertainment lounge, as well as several restaurants, meeting
rooms, a Missouri retail shop and a VIP lounge. The total cost for
development and construction of the project is expected to be
approximately $150 million. The project also calls for a 150-room
hotel adjacent to the casino to be built by a strategic partner.
This project is in the preliminary stages and is subject to
numerous contingencies, including, for example, the satisfactory
completion of due diligence concerning the proposed site, the
selection of the Company's application for investigation by the
Missouri Gaming Commission, obtaining various other regulatory
permits and approvals and completing financing arrangements for the
project. The project is also subject to various development and
construction risks typical of large-scale development projects of
this type. Accordingly, there can be no assurances concerning the
success of the Company's efforts to obtain a gaming license and to
pursue the development of this project. The Company recently
submitted a revised application for a gaming license to the
Missouri Gaming Commission and expects the Missouri Gaming
Commission to take action with respect to its application during
2000.
Item 6.Exhibits and Reports on Form 8-K
a. Exhibits filed as part of this report
27 Financial Data Schedule
99.1 Supplemental Agreement of Ameristar Casinos, Inc.
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: May 12, 2000 /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
and notes included in this filing.
</LEGEND>
<CIK> 0000912145
<NAME> AMERISTAR CASINOS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 19,153
<SECURITIES> 0
<RECEIVABLES> 3,264
<ALLOWANCES> 0
<INVENTORY> 2,946
<CURRENT-ASSETS> 35,222
<PP&E> 442,456
<DEPRECIATION> 115,426
<TOTAL-ASSETS> 380,577
<CURRENT-LIABILITIES> 48,304
<BONDS> 100,000
0
0
<COMMON> 204
<OTHER-SE> 70,780
<TOTAL-LIABILITY-AND-EQUITY> 380,577
<SALES> 81,692
<TOTAL-REVENUES> 81,692
<CGS> 0
<TOTAL-COSTS> 70,358
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,718
<INCOME-PRETAX> 4,315
<INCOME-TAX> 1,531
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,784
<EPS-BASIC> 0.14
<EPS-DILUTED> 0.13
</TABLE>
EXHIBIT 99.1
SUPPLEMENTAL AGREEMENT OF AMERISTAR CASINOS, INC.
Ameristar Casinos, Inc. ("ACI") hereby agrees to furnish
supplementally to the Securities and Exchange Commission a copy
of the Purchase Money Deed of Trust Note in the principal amount
of $1,168,750 executed by Ameristar Casino Vicksburg, Inc., a
Mississippi corporation, in favor of Lawrence O. Branyan, Jr., as
Trustee of The Brady/Lum Family Trust Dated May 15, 1993, which
instrument defines the rights of holders of long-term debt issued
by ACI or its subsidiaries: