AMERISTAR CASINOS INC - 10-Q Quarterly Report

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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, 2002

[ ] 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 incorporation or organization)		(I.R.S. employer 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 12, 2002, 26,117,918 shares of Common Stock of the registrant were issued and outstanding.

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TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF INCOME
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. OTHER INFORMATION
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
EXHIBIT 3.1
EXHIBIT 99.1
EXHIBIT 99.2

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, 2001 and June 30, 2002 (unaudited)		3 - 4
			B. Condensed Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2001 and June 30, 2002		5 - 6
			C. Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2001 and June 30, 2002		7 - 8
			D. Notes to Condensed Consolidated Financial Statements		9 - 14
		Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			15 - 24
		Item 3. Quantitative and Qualitative Disclosures about Market Risk			24
Part II. OTHER INFORMATION
		Item 4. Submission of Matters to a Vote of Security Holders			24 - 25
		Item 6. Exhibits and Reports on Form 8-K			25 - 26
	SIGNATURE				27

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMERISTAR CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS
(Amounts in Thousands)


				December 31,		June 30,
				2001		2002

						(Unaudited)
CURRENT ASSETS:
		Cash and cash equivalents		$	41,143	$	45,821
		Accounts receivable, net			3,608		2,048
		Inventories			5,206		5,295
		Prepaid expenses			7,421		6,400
		Deferred income taxes			3,452		5,789
		Assets held for sale			—		6,855

			Total current assets		60,830		72,208

PROPERTY AND EQUIPMENT
	Net of accumulated depreciation and amortization of $149,945 and $160,937, respectively				720,515		855,168
EXCESS OF PURCHASE PRICE OVER FAIR MARKET VALUE OF NET ASSETS ACQUIRED					83,224		82,622
DEPOSITS AND OTHER ASSETS					28,023		28,247

TOTAL ASSETS				$	892,592	$	1,038,245

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS-CONTINUED

LIABILITIES AND STOCKHOLDERS’ EQUITY
(Amounts in Thousands, Except Share Data)


			December 31,			June 30,
			2001			2002

						(Unaudited)
CURRENT LIABILITIES:
	Accounts payable		$	10,331		$	7,039
	Construction contracts payable			16,455			30,380
	Accrued liabilities			51,648			61,361
	Current obligations under capitalized leases			1,170			1,188
	Current maturities of notes payable and long-term debt			8,433			9,122
	Total current liabilities			88,037			109,090

OBLIGATIONS UNDER CAPITALIZED LEASES, net of current maturities				2,184			1,584

LONG-TERM DEBT, net of current maturities				622,071			703,703

DEFERRED INCOME TAXES AND OTHER LONG-TERM LIABILITIES				22,964			35,458
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
	Preferred stock, $.01 par value: Authorized – 30,000,000			—			—
		shares; Issued — None
	Common stock, $.01 par value: Authorized — 60,000,000 shares; Issued and outstanding — 25,858,771 shares at December 31, 2001 and 26,102,918 shares at June 30, 2002			258			261
	Additional paid-in capital			141,302			144,720
	Accumulated other comprehensive loss			(1,953	)		(2,379	)
	Retained earnings			17,729			45,808

	Total stockholders’ equity			157,336			188,410

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	892,592		$	1,038,245

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMERISTAR CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in Thousands, Except Per Share Data)
(Unaudited)


			Three Months						Six Months
			Ended June 30,						Ended June 30,

			2001			2002			2001			2002

REVENUES:
	Casino		$	133,643		$	157,584		$	266,686		$	309,533
	Food and beverage			16,110			19,167			33,762			37,683
	Rooms			5,810			6,519			11,595			12,137
	Other			4,519			4,495			8,650			8,640

				160,082			187,765			320,693			367,993
	Less: Promotional allowances			12,856			21,474			25,700			38,907

	Net revenues			147,226			166,291			294,993			329,086

OPERATING EXPENSES:
	Casino			61,128			69,221			123,698			136,272
	Food and beverage			10,756			11,923			22,783			23,125
	Rooms			1,900			1,859			3,897			3,673
	Other			3,156			3,165			6,015			5,916
	Selling, general and administrative			31,522			35,057			64,066			69,373
	Depreciation and amortization			9,314			10,327			18,318			20,423
	Impairment loss on assets held for sale			—			4,136			—			4,136
	Preopening expenses			—			1,326			—			1,476

	Total operating expenses			117,776			137,014			238,777			264,394
		Income from operations		29,450			29,277			56,216			64,692
OTHER INCOME (EXPENSE):
	Interest income			172			38			282			86
	Interest expense, net			(15,585	)		(9,356	)		(36,021	)		(19,996	)
	Other			(238	)		(48	)		(285	)		(97	)

INCOME BEFORE INCOME TAX PROVISION AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE				13,799			19,911			20,192			44,685
	Income tax provision			4,924			7,280			7,321			16,606

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE				8,875			12,631			12,871			28,079
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE — adoption of SFAS No. 133, net of income tax benefit of $73				—			—			(135	)		—
NET INCOME			$	8,875		$	12,631		$	12,736		$	28,079

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME-CONTINUED
(Amounts in Thousands, Except Per Share Data)
(Unaudited)


			Three Months				Six Months
			Ended June 30,				Ended June 30,

			2001		2002		2001		2002

EARNINGS PER SHARE:
	Income before cumulative effect of change in accounting principle:
		Basic	$	0.43	$	0.48	$	0.63	$	1.08

		Diluted	$	0.40	$	0.47	$	0.58	$	1.04

	Net income:
		Basic	$	0.43	$	0.48	$	0.62	$	1.08

		Diluted	$	0.40	$	0.47	$	0.57	$	1.04

WEIGHTED AVERAGE SHARES OUTSTANDING:
		Basic		20,620		26,078		20,559		26,021

		Diluted		22,426		27,112		22,365		27,042

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMERISTAR CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)
(Unaudited)


			Six Months
			Ended June 30,

			2001			2002

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income		$	12,736		$	28,079

	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization		18,318			20,423
		Amortization of debt issuance costs and debt discounts		5,127			2,242
		Impairment loss on assets held for sale		—			4,136
		Net loss on disposition of assets		238			41
		Change in deferred income taxes		6,675			16,158
		Decrease in other current assets		1,249			2,494
		Increase in current liabilities		12,025			2,673

	Total adjustments			43,632			48,167

Net cash provided by operating activities				56,368			76,246

CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital expenditures			(35,678	)		(164,657	)
	(Decrease) increase in construction contracts payable			(303	)		13,925
	Proceeds from sale of The Reserve			71,559			—
	Other			(1,546	)		(2,673	)

Net cash provided by (used in) investing activities				34,032			(153,405	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from issuance of notes payable and long-term debt			378,585			85,677
	Principal payments of notes payable, long-term debt and capitalized leases			(457,880	)		(4,247	)
	Debt issuance costs			(7,333	)		—
	Amendment fee for senior credit facilities			—			(936	)
	Proceeds from stock option exercises			822			1,343

Net cash (used in) provided by financing activities				(85,806	)		81,837

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—CONTINUED
(Amounts in Thousands)
(Unaudited)


	Six Months
	Ended June 30,

	2001		2002

NET INCREASE IN CASH AND CASH EQUIVALENTS		4,594		4,678
CASH AND CASH EQUIVALENTS — BEGINNING OF PERIOD		36,245		41,143

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