Reserve owner posts a profit

David Strow

Tuesday, Aug. 10, 1999 | 11:25 a.m.

Ameristar Casinos Inc. of Las Vegas broke into the black during the second quarter as the company continued to stem its losses at the Reserve hotel-casino in Henderson.

Ameristar reported net income of $779,000, or 4 cents per share, for the quarter ending June 30, meeting analyst expectations. One year ago, the company lost nearly $2.5 million. During the first quarter, it lost $113,000.

Revenues at the Las Vegas company rose 14 percent, to $76.2 million. Cash flow was $13.4 million, up nearly 135 percent from a year before. Operating income was $7.4 million, up from $2.7 million in 1998.

"We are pleased with the growth at all of our properties," said Craig Neilsen, president and chief executive of Ameristar.

Revenues at the Reserve were $13.4 million for the quarter, an 11.7 percent rise from the year-ago quarter. The Reserve took a $2.1 million operating loss for the quarter, compared to a $4.8 million loss a year before. Ameristar said it has been cutting the property's labor and food costs, as well as "aggressively" marketing the property through direct mail, promotional giveaways and cash-back programs.

The Reserve's cash flow for the quarter was $300,000. A year before, the property recorded negative cash flow of $3.1 million.

Cash flow measures earnings before interest, taxes, depreciation and amortization.

Ameristar's earnings were also assisted by growth at its other properties, particularly gains at its riverboat casino in Council Bluffs, Iowa. That property remains Ameristar's strongest, posting revenues of $28.3 million for the quarter and operating income of $5.5 million. Net income rose $1.3 million for the quarter, while revenues rose $4.3 million. Ameristar attributed its gains to boosted slot revenues and growth in the market.

Neilsen said Ameristar has started expansion on the Iowa riverboat, adding a third level to the casino. The expansion will add 375 machines to the property. The company is also adding a 1,000-space parking garage at the property.

At Vicksburg, Miss., Ameristar's casino recorded net revenues of $19.3 million, a 17.7 percent gain. Operating income rose 48 percent, to $4 million. Ameristar said its Mississippi operations were helped by increased slot operations and the opening of its new 150-room hotel in Vicksburg in June 1998.

Ameristar's properties in Jackpot saw revenues of $15.2 million for the quarter, a 6.3 percent increase. Operating income for the properties was $3.5 million, up 16.7 percent.

"Continued cost-control measures have improved the operating efficiency of the Jackpot Properties," the Ameristar earnings release said.