AZR Aztar

PHOENIX, July 19 /PRNewswire-FirstCall/ -- Aztar Corporation (NYSE:AZR) today reported financial results for its 2006 second quarter, including property EBITDA from continuing operations of $60.2 million, compared with $57.9 million in the year-earlier quarter. Second-quarter 2006 revenue was $221.9 million, compared with $221.4 million in the comparable 2005 quarter. The company reported a net loss of $66.1 million for the 2006 quarter, largely attributable to payment of a fee and associated expenses totaling $78.0 million related to termination of its merger agreement with Pinnacle Entertainment, Inc.; net income was $15.5 million in the 2005 second quarter. Reported diluted net loss per share was $1.84 in the 2006 second quarter, compared with diluted net income per share of 41 cents in the 2005 quarter. Adjusted diluted net income per share was 35 cents in the 2006 second quarter, which is after stock option compensation expense equivalent to two cents per share, compared with 38 cents in the 2005 second quarter. Merger-Related Expenses On May 19, 2006, the company announced it had signed a merger agreement with Wimar Tahoe Corporation d/b/a Columbia Entertainment, the gaming affiliate of Columbia Sussex Corporation. Prior to signing that merger agreement, the company terminated its earlier merger agreement with Pinnacle and paid to Pinnacle a termination fee of $52.16 million and termination expenses of $25.84 million. The payment is not deductible for tax purposes. The payment to Pinnacle and certain other costs, consisting mainly of professional fees, are reported as merger-related expenses. Property EBITDA Property EBITDA in the 2006 second quarter includes construction accident related expenses of $2.0 million and insurance recoveries of $3.6 million, compared with expenses of $0.9 million and recoveries of $0.3 million in the 2005 second quarter. Other income (expense) of ($0.4) million consists of insurance recoveries for the rebuilding of the damaged portion of the Tropicana Atlantic City expansion after the construction accident that occurred on October 30, 2003, net of direct costs to obtain the recoveries, compared to $2.9 million in the comparable 2005 quarter. Discontinued Operations Results for Casino Aztar in Caruthersville, Missouri, are reported as discontinued operations, net of income taxes, reflecting our commitment to sell or close that property as part of our merger agreement with Columbia Entertainment. Capital Expenditures In the second quarter of 2006, purchases of property and equipment totaled $18 million. Approximately $12 million of the total was spent on routine capital expenditures, and $6 million went for development. Year-to-Date Results Consolidated revenue was $443.2 million in the first half of 2006, compared with $437.3 million in the first half of 2005. Property EBITDA from continuing operations was $120.8 million in the 2006 period, compared with $109.8 million a year earlier. First-half 2006 net loss was $62.9 million, equivalent to $1.77 per diluted share, compared with net income of $25.4 million, equivalent to 68 cents per diluted share, in the first half of 2005. Adjusted diluted net income per share was 72 cents in the 2006 first half, which is after stock option compensation expense equivalent to four cents per share, compared with 67 cents in the 2005 first half. Fiscal Year Change The company changed its fiscal year to the calendar year, effective December 31, 2005. The company previously used a 52/53 week fiscal year ending on the Thursday nearest December 31. The information in this release for the 2006 first half reflects the company's results of operations for a 181-day period beginning January 1, 2006 and ending June 30, 2006. The 2005 first half contained 182 days, beginning on December 31, 2004, and ending on June 30, 2005. Status of Merger with Columbia Entertainment Our merger with Columbia Entertainment is subject to approval by Aztar shareholders and the satisfaction of customary closing conditions, including the receipt of necessary gaming and other regulatory approvals. On June 21, 2006, Aztar and Columbia Entertainment filed the required notifications and report forms under the Hart-Scott-Rodino Act. On July 14, 2006, the company filed with the SEC a preliminary proxy statement in connection with the approval of the transaction by Aztar shareholders. Initial filings regarding approval of the transaction have been made by Columbia Entertainment in each of New Jersey, Nevada and Indiana. Columbia Entertainment is also in the process of preparing filings relating to their financing of the transaction in each of Louisiana and Mississippi. The merger is presently expected to close in the fourth quarter of 2006. In our merger agreement with Columbia Entertainment, we agreed to use commercially reasonable efforts to sell our Missouri property, Casino Aztar Caruthersville. To assist us in those efforts, we have retained an investment banking firm. We are currently in discussions with, and have received indications of interest from, several potential buyers. Approval by Missouri gaming authorities will be required for any transaction involving the sale of our Missouri property. Conference Call Our second-quarter 2006 earnings conference call is scheduled to be broadcast live on the Internet beginning at 4:30 p.m. Eastern Time on Wednesday, July 19, 2006. Individuals may access the live audio webcast through our website at http://www.aztar.com/. The call also will be available on replay through that website following the call. Selected Results ($ in millions, except ADR, which is Average Daily Rate) Second Quarter Year to Date 2006 2005 2006 2005 (unaudited) (unaudited) Tropicana Atlantic City Revenue $124.9 $122.7 $241.7 $234.5 EBITDA $36.3 $30.9 $67.6 $52.0 Depreciation and amortization $12.0 $10.9 $25.1 $21.6 Operating income $24.3 $20.0 $42.5 $30.4 EBITDA margin 29.1% 25.2% 28.0% 22.2% Operating income margin 19.5% 16.3% 17.6% 13.0% Occupancy 95.6% 91.9% 91.9% 86.5% ADR $104.70 $94.74 $101.15 $89.81 Tropicana Las Vegas Revenue $39.6 $41.8 $80.5 $84.0 EBITDA $8.2 $10.7 $17.7 $21.7 Depreciation and amortization $1.4 $1.5 $2.7 $2.9 Operating income $6.8 $9.2 $15.0 $18.8 EBITDA margin 20.7% 25.6% 22.0% 25.8% Operating income margin 17.2% 22.0% 18.6% 22.4% Occupancy 96.1% 100.0% 95.8% 98.8% ADR $87.90 $92.17 $90.16 $95.78 Ramada Express Laughlin Revenue $24.6 $23.4 $52.0 $49.9 EBITDA $6.3 $6.0 $15.0 $14.8 Depreciation and amortization $1.8 $1.6 $3.8 $3.3 Operating income $4.5 $4.4 $11.2 $11.5 EBITDA margin 25.6% 25.6% 28.8% 29.7% Operating income margin 18.3% 18.8% 21.5% 23.0% Occupancy 67.5% 70.2% 74.9% 75.7% ADR $40.02 $38.12 $36.13 $34.19 Casino Aztar Evansville Revenue $32.8 $33.5 $69.0 $68.9 EBITDA $9.4 $10.3 $20.5 $21.3 Depreciation and amortization $1.8 $1.9 $3.6 $3.7 Operating income $7.6 $8.4 $16.9 $17.6 EBITDA margin 28.7% 30.7% 29.7% 30.9% Operating income margin 23.2% 25.1% 24.5% 25.5% Occupancy 89.8% 93.2% 89.2% 88.8% ADR $64.41 $63.92 $63.07 $63.83 Property Revenue $221.9 $221.4 $443.2 $437.3 EBITDA $60.2 $57.9 $120.8 $109.8 Depreciation and amortization $17.0 $15.9 $35.2 $31.5 Operating income $43.2 $42.0 $85.6 $78.3 EBITDA margin 27.1% 26.2% 27.3% 25.1% Operating income margin 19.5% 19.0% 19.3% 17.9% Corporate EBITDA $(85.3) $(5.2) $(91.7) $(13.2) Depreciation and amortization $0.0 $0.0 $0.0 $0.0 Tropicana Las Vegas capitalized development costs write-off $0.0 $0.0 $26.0 $0.0 Operating income (loss) $(85.3) $(5.2) $(117.7) $(13.2) Consolidated Revenue $221.9 $221.4 $443.2 $437.3 EBITDA $(25.1) $52.7 $29.1 $96.6 Depreciation and amortization $17.0 $15.9 $35.2 $31.5 Tropicana Las Vegas capitalized development costs write-off $0.0 $0.0 $26.0 $0.0 Operating income (loss) $(42.1) $36.8 $(32.1) $65.1 Income (loss) from continuing operations $(67.0) $14.9 $(64.5) $24.1 EBITDA margin -11.3% 23.8% 6.6% 22.1% Operating income (loss) margin -19.0% 16.6% -7.2% 14.9% Income (loss) from continuing operations margin -30.2% 6.7% -14.6% 5.5% Margins Margins are calculated as a percentage of revenue. EBITDA Explanation and Reconciliation EBITDA is net income (loss) before discontinued operations, income taxes, interest expense, interest income, other income (expense), Tropicana Las Vegas capitalized development costs write-off and depreciation and amortization. EBITDA should not be construed as a substitute for either operating income (loss) or net income (loss) as they are determined in accordance with generally accepted accounting principles (GAAP). Management uses EBITDA as a measure to compare operating results among our properties and between accounting periods. We manage cash and finance our operations at the corporate level. We manage the allocation of capital among properties at the corporate level. We also file a consolidated income tax return. Management accordingly believes EBITDA is useful as a measure of operating results at the property level because it reflects the results of operating decisions at that level separated from the effects of tax and financing decisions that are managed at the corporate level. We also use EBITDA as the primary operating performance measure in our bonus programs for executive officers. Management also believes that EBITDA is a commonly used measure of operating performance in the gaming industry and is an important basis for the valuation of gaming companies. Our calculation of EBITDA may not be comparable to similarly titled measures reported by other companies and, therefore, any such differences must be considered when comparing performance among different companies. While management believes EBITDA provides a useful perspective for some purposes, EBITDA has material limitations as an analytical tool. For example, among other things, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA does not reflect the requirements for such replacements. Tropicana Las Vegas capitalized development costs write-off, other income (expense), interest expense, net of interest income, income taxes and discontinued operations are also not reflected in EBITDA. Therefore, management does not consider EBITDA in isolation, and it should not be considered as a substitute for measures determined in accordance with GAAP. A reconciliation of EBITDA with operating income (loss) and net income (loss) as determined in accordance with GAAP is shown below (in millions). Second Quarter Year to Date 2006 2005 2006 2005 (unaudited) (unaudited) EBITDA Tropicana Atlantic City $36.3 $30.9 $67.6 $52.0 Tropicana Las Vegas 8.2 10.7 17.7 21.7 Ramada Express Laughlin 6.3 6.0 15.0 14.8 Casino Aztar Evansville 9.4 10.3 20.5 21.3 Property EBITDA 60.2 57.9 120.8 109.8 Corporate (85.3) (5.2) (117.7) (13.2) Depreciation and amortization (17.0) (15.9) (35.2) (31.5) Operating income (loss) (42.1) 36.8 (32.1) 65.1 Other income (expense) (0.4) 2.9 2.2 4.4 Interest income 0.5 0.3 0.9 0.5 Interest expense (14.1) (14.2) (28.3) (28.0) Income taxes (10.9) (10.9) (7.2) (17.9) Income (loss) from continuing operations (67.0) 14.9 (64.5) 24.1 Discontinued operations, net of income taxes 0.9 0.6 1.6 1.3 Net income (loss) $(66.1) $15.5 $(62.9) $25.4 Adjusted Diluted Earnings Per Share Second Quarter Year to Date 2006 2005 2006 2005 (unaudited) (unaudited) Net income (loss) per common share assuming dilution: As reported $(1.84) $.41 $(1.77) $.68 Adjustments: Construction accident related expenses .03 .02 .06 .02 Construction accident insurance recoveries (.06) (.01) (.13) (.01) Other income (expense) .01 (.04) (.04) (.07) Defined benefit plan settlement loss -- -- -- .05 Merger related expenses 2.13 -- 2.16 -- Tropicana Las Vegas capitalized development costs write-off -- -- .45 -- Nonrecurring income tax benefits -- -- (.09) -- Effect of dilution on net loss .08 -- .08 -- As adjusted $.35 $.38 $.72 $.67 Aztar is a publicly traded company that operates Tropicana Casino and Resort in Atlantic City, New Jersey, Tropicana Resort and Casino in Las Vegas, Nevada, Ramada Express Hotel and Casino in Laughlin, Nevada, Casino Aztar in Caruthersville, Missouri, and Casino Aztar in Evansville, Indiana. Forward-Looking Information This release contains "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. The statements in this release that are not historical facts are forward-looking statements and may involve a number of risks and uncertainties. When used in this release, the terms "anticipate," "believe," "could," "continue," "estimate," "expect," "intend," "may," "objective," "plan," "possible," "potential," "pursue," "project," "will," "would" and similar expressions, or the negative formulation of these expressions, generally identify forward-looking statements. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. Generally, forward-looking statements express expectations for or about the future, rather than historical fact. Forward-looking statements are subject to inherent risks and uncertainties that may cause actual results or events to differ materially from those contemplated by such statements. In addition to the risk factors identified elsewhere, important factors that could cause actual results or events to differ materially from those contemplated by such statements include, without limitation: * the financial performance of each of Aztar and Columbia Entertainment through the completion of the merger; * the ability of Columbia Entertainment to obtain the acquisition financing pursuant to its financing commitment letter agreement; * any delays in securing the adoption of the merger agreement by our stockholders, and the risk that our stockholders do not adopt the merger agreement; * the timing (including any possible delays) and receipt of regulatory approvals from various federal and state governmental entities (including any conditions, limitations or restrictions placed on these approvals) and the risk that one or more governmental authorities may deny approval of the merger; * the possibility that the merger agreement is terminated and the merger is not completed, resulting in disruptions to our business and, under certain circumstances, requiring us to pay to Columbia Entertainment a termination fee of $55,228,000 and to reimburse Columbia Entertainment for its fees and expenses incurred in connection with the merger up to a maximum of $27,360,000 and to reimburse Columbia Sussex Corporation the $78,000,000 that was paid to Pinnacle in connection with the termination of the Pinnacle merger agreement; * legislative and regulatory matters, changes in government regulation, and regulatory action resulting from market conduct activity, including the potential (1) legalization of gaming in additional states, (2) tax increases in our states of operation or (3) proscription or prohibition of smoking in our gaming facilities in our states of operation; * increased competition in our markets, including from the potential legalization of gaming in additional states; * general business conditions, including competitive practices and changes in customer demand, and general economic conditions that impact the performance of our operations; * the potential impact of the announcement of the merger, and the merger, on relations with customers, partners, suppliers, vendors and other third parties; * the cyclical nature of the gaming and hospitality business; * the effects of weather; * those factors relating to terrorism and the uncertainty of war and fuel costs and other factors affecting discretionary consumer spending; * adverse outcomes of legal proceedings and development of and changes in claims or litigation reserves, including those related to the extent and timing of our recoveries from our insurance carriers for our various losses suffered in connection with the accident on October 30, 2003 on the site of the Tropicana Casino and Resort in Atlantic City, New Jersey; * the potential relative underperformance of the Tropicana Resort and Casino in Las Vegas, Nevada, due to our reduced efforts to engage in marketing of, and accepting reservations at, this property until the date of the merger agreement, in light of our previously contemplated redevelopment of the site; * the potential inability of us or Columbia Entertainment to satisfy the closing conditions in the merger agreement; * reliance on key personnel; and * other risks and uncertainties that may be referred to in our reports and other documents filed with the SEC from time to time. Forward-looking statements made in this release express expectations only as of the date they are made. We do not undertake any obligation to update or revise such statements to reflect events or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events, except as required by applicable law. Additional Information and Where to Find It This release may be deemed to be solicitation material in respect of the proposed merger of Aztar and Columbia Entertainment. In connection with the proposed merger, Aztar plans to file a proxy statement with the SEC. On July 14, 2006, Aztar filed a preliminary proxy statement with the SEC. INVESTORS AND SECURITY HOLDERS OF AZTAR ARE ADVISED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final proxy statement will be mailed to stockholders of Aztar. Investors and security holders may obtain a free copy of the proxy statement, when it becomes available, and other documents filed by Aztar with the SEC, at the SEC's web site at http://www.sec.gov/. Free copies of the proxy statement, when it becomes available, and Aztar's other filings with the SEC may also be obtained from Aztar. Free copies of Aztar's filings may be obtained by directing a request to Aztar Corporation, 2390 East Camelback Road, Suite 400, Phoenix, Arizona 85016, Attention: Secretary. Aztar, Columbia Entertainment and their respective directors, executive officers and other members of their management and employees may be deemed to be soliciting proxies from Aztar's stockholders in favor of the proposed merger. Information regarding Aztar's directors and executive officers is available in Aztar's proxy statement for its 2006 annual meeting of stockholders, which was filed with the SEC on April 10, 2006. Additional information regarding the interests of such potential participants will be included in the proxy statement and the other relevant documents filed with the SEC when they become available. Contact: Joe Cole, Aztar Corporation, 602-381-4111 Aztar Corporation and Subsidiaries Consolidated Statements of Operations (unaudited) For the periods ended June 30, 2006 and June 30, 2005 (in thousands, except per share data) Second Quarter Six Months 2006 2005 2006 2005 Revenues Casino $165,686 $166,142 $335,118 $330,804 Rooms 27,911 28,098 53,258 53,226 Food and beverage 14,914 14,976 29,815 29,793 Other 13,415 12,183 25,005 23,491 221,926 221,399 443,196 437,314 Costs and expenses Casino 66,137 65,865 133,787 132,395 Rooms 12,639 12,696 24,258 23,694 Food and beverage 14,726 14,334 29,255 28,365 Other 7,390 7,574 14,632 14,909 Marketing 20,527 23,429 40,634 47,815 General and administrative 22,180 21,875 45,796 47,075 Utilities 5,647 5,822 11,850 12,084 Repairs and maintenance 7,076 6,551 13,937 13,008 Provision for doubtful accounts 585 329 1,078 707 Property taxes and insurance 8,843 7,559 17,465 15,875 Rent 2,408 2,085 4,738 4,023 Construction accident related 1,997 860 3,641 1,269 Construction accident insurance recoveries (3,569) (301) (8,358) (526) Merger related 80,476 -- 81,360 -- Depreciation and amortization 17,003 15,906 35,242 31,497 Tropicana Las Vegas capitalized development costs write-off -- -- 26,021 -- 264,065 184,584 475,336 372,190 Operating income (loss) (42,139) 36,815 (32,140) 65,124 Other income (expense) (398) 2,855 2,242 4,428 Interest income 526 294 920 536 Interest expense (14,147) (14,206) (28,283) (28,068) Income (loss) from continuing operations before income taxes (56,158) 25,758 (57,261) 42,020 Income taxes (10,880) (10,848) (7,267) (17,954) Income (loss) from continuing operations (67,038) 14,910 (64,528) 24,066 Discontinued operations, net of income taxes 931 543 1,635 1,298 Net income (loss) $(66,107) $15,453 $(62,893) $25,364 ======= ======= ======= ======= Earnings per common share assuming no dilution: Income (loss) from continuing operations $(1.87) $.42 $(1.82) $.67 Discontinued operations, net of income taxes .03 .01 .05 .04 Net income (loss) $(1.84) $.43 $(1.77) $.71 Earnings per common share assuming dilution: Income (loss) from continuing operations $(1.87) $.40 $(1.82) $.64 Discontinued operations, net of income taxes .03 .01 .05 .04 Net income (loss) $(1.84) $.41 $(1.77) $.68 Weighted-average common shares applicable to: Earnings per common share assuming no dilution 36,150 35,141 36,014 34,965 Earnings per common share assuming dilution 36,150 36,980 36,014 36,929 Aztar Corporation and Subsidiaries Consolidated Balance Sheet Summaries (unaudited) (in thousands) June 30, 2006 December 31, 2005 Assets Cash and cash equivalents $75,322 $86,361 Other current assets 76,348 62,476 Total current assets 151,670 148,837 Assets held for sale 33,513 33,559 Investments 26,764 25,215 Property and equipment 1,207,706 1,211,887 Intangible assets 33,069 33,331 Other assets 86,039 102,505 $1,538,761 $1,555,334 ========= ========= Liabilities and Shareholders' Equity Current portion of long-term debt $1,283 $1,293 Other current liabilities 130,009 126,295 Merger termination fee reimbursement 78,000 -- Liabilities related to assets held for sale 2,064 2,495 Total current liabilities 211,356 130,083 Long-term debt 675,037 721,676 Other long-term liabilities 60,105 62,425 Series B convertible preferred stock 4,382 4,620 Shareholders' equity 587,881 636,530 $1,538,761 $1,555,334 ========= ========= DATASOURCE: Aztar Corporation CONTACT: Joe Cole of Aztar Corporation, +1-602-381-4111 Web site: http://www.aztar.com/

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