Anchor stock soars, Station slips

Gary Thompson

Friday, Aug. 1, 1997 | 9:18 a.m.

Anchor Gaming stock jumped more than seven points on another record earnings report, while Station Casinos Inc. slid on an unexpected loss.

Station stock fell 25 cents, to $7.13 a share, in light trading Thursday, even before Salomon Brothers gaming analyst Bruce Turner cut his rating on the company to "hold" from "buy."

Station reported an $8.3 million loss for the quarter ended June 30, compared with net income of $9.5 million, or 22 cents a share, in the fiscal 1997 first period. Revenue rose to $173.5 million from $135.4, the company said.

Turner had forecast Station's fiscal 1998 first-quarter per-share earnings at 12 cents.

Excluding pre-opening expenses from Sunset Station and $5 million of other development writeoffs, Station actually broke even for the latest quarter, according to Glenn Christenson, chief financial officer.

"We believe the decision to terminate certain development opportunities is consistent with the company's strategies of focusing on existing operations and moving to deleverage the balance sheet," he said.

Station said debt totaled more than $1 billion as of June 30. During the quarter, Station renegotiated debt covenants allowing it more flexibility "to address competitive issues in St. Louis," Christenson said.

Cash flow from Nevada operations rose to $30 million from $24.4 million. The latest results included $2.4 million in cash flow from Sunset Station, which opened June 10.

Cash flow from Station's St. Charles, Mo., operation slid to $6.7 million from $11.3 million, due to increased competition, while first-quarter cash flow at Kansas City Station, which opened Jan. 16, was $1.2 million.

Anchor Gaming, meanwhile, reported net income for the fourth quarter, ended June 30, rose 49 percent to $10.7 million, or 78 cents a share, from $7.2 million, or 54 cents a share, in the fiscal 1996 fourth period. Revenue rose to $46.1 million from $32.4 million.

The latest quarter's results included a writedown of $2.1 million, or 10 cents a share, related to architectural fees and other costs associated with the planned expansion of Anchor's Central City, Colo., operations, which has been postponed.

Fiscal 1997 net income jumped 60 percent to $35.7 million, or $2.61 a share, from from $22.3 million, or $1.84 a share, Anchor said. Full-year revenue rose 32 percent to $153.7 million from $116.5 million.

The results propelled the stock of Anchor, which operates one of Nevada's largest gaming machine routes, operates two Colorado casinos and develops proprietary games, to $69 a share Thursday, up $7.25, in Nasdaq trading.

Since May, Anchor has climbed from the mid-20s, and posted the biggest stock gains of any major publicly traded gaming company.

In other earnings news, Monarch Casino & Resort Inc., which operates the Atlantis hotel-casino in Reno, said second-quarter net rose to $1.4 million, or 15 cents a share, from $560,000, or 6 cents a share, in the 1996 period. Revenue climbed to $15.7 million from $13.7 million, the company said.

Monarch Chief Executive John Farahi said the improved results, which included a 48 percent jump in cash flow, "provide strong evidence that the Reno market has successfully absorbed the 26 percent increase in new hotel rooms that occurred in the 18 months ended in December 1996. The Reno market ... is once again poised to resume its long-term, stable growth pattern."

Meanwhile, the Horseshoe Gaming LLC partnership said second-quarter net income fell to $6.1 million from $10 million and six-month net slid to $21.1 million from $25.7 million due to a $5.2 million extraordinary loss on early retirement of debt.

Income before the extraordinary loss was up 12.5 percent for the quarter and 2.3 percent for the first half, the partnership said. Revenue for the second quarter fell to $80 million from $83.9 million and for the first half to $163 million from $171.3 million, Horseshoe Gaming said.

The partnership, which operates casinos in Bossier City, La., and Tunica County, Miss., said increased competition and construction disruptions contributed to the lower results.

Last month, Horseshoe Gaming sold $160 million of senior subordinated debt to refinance other debt and for expansions. It is negotiating a possible joint venture casino in Vicksburg, Miss., with Lady Luck Gaming Corp.