Aztar Reports Third-Quarter 2005 Results

PHOENIX, Oct. 19 /PRNewswire-FirstCall/ -- Aztar Corporation today reported financial results for its 2005 third quarter, which ended on September 29, 2005; the fiscal 2004 quarter had ended on September 30, 2004. Consolidated EBITDA was $63.4 million for the third quarter of 2005; in the 2004 third quarter, EBITDA was $46.4 million. Diluted earnings per share in the 2005 third quarter were 51 cents, compared with 36 cents in the 2004 third quarter.

The momentum generated by the major expansion of Tropicana Atlantic City that opened in late 2004 continued to accelerate in the third quarter of 2005, with revenue up 29 percent and EBITDA up nearly 59 percent. Ramada Express led our other properties with a 28 percent increase in EBITDA, while our riverboat casinos had EBITDA growth of 6 percent. Tropicana Las Vegas suffered a 3 percent decline in EBITDA as a result of lower non-gaming revenue.

"The drivers at the expanded Atlantic City Tropicana during the third quarter were all in full gear and the property led the market in revenue growth in all casino products," said Robert M. Haddock, Aztar Chairman of the Board, President and Chief Executive Officer. "Table games win was up 40 percent and slot revenue grew 21 percent. Even with a 30 percent increase in room capacity, the hotel ran 97 percent occupancy at an average daily rate that was 17 percent higher than a year earlier. EBITDA grew to over $41 million on a five-percentage-point increase in margin. It was a performance that employees of the Trop rightly deserve to be proud of."

Tropicana Atlantic City Expansion

The Tropicana Atlantic City expansion includes a new 502-room hotel tower; The Quarter at Tropicana, which is a 200,000-square-foot dining, entertainment and retail complex; a 2,400-space parking garage and 20,000 square feet of meeting and conference space.

Other Income (Expense)

Other income (expense) 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.

Capital Expenditures

In the third quarter of 2005, purchases of property and equipment totaled $13 million. Approximately $8 million of the total was spent on routine expenditures, and $5 million went for development.

Year-to-Date Results

For the first three quarters of 2005, the company reported EBITDA of $163.4 million, compared with $139.8 million in the comparable 2004 period. Diluted earnings per share through three quarters of 2005 were $1.19. Diluted earnings per share were 71 cents in the 2004 period, which is after 18 cents associated with a loss on early retirement of debt and 31 cents associated with an adverse court ruling regarding income taxes in Indiana and which included 10 cents of construction accident insurance recoveries net of expenses and preopening costs.

Conference Call

Our third-quarter 2005 earnings conference call will be broadcast live on the Internet beginning at 4:30 p.m. Eastern Daylight Time on Wednesday, October 19, 2005. 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 for one year following the call.

Selected Results ($ in millions, except ADR, which is Average Daily Rate) Third Quarter Year to Date 2005 2004 2005 2004 (unaudited) (unaudited) Tropicana Atlantic City Revenue $137.7 $106.4 $372.1 $294.6 EBITDA $41.4 $26.1 $93.4 $74.0 Depreciation and amortization $11.1 $8.3 $32.7 $24.3 Operating income $30.3 $17.8 $60.7 $49.7 EBITDA margin 30.1% 24.5% 25.1% 25.1% Operating income margin 22.0% 16.7% 16.3% 16.9% Occupancy 96.9% 97.1% 90.0% 92.5% ADR $113.33 $96.60 $98.26 $87.48 Tropicana Las Vegas Revenue $40.0 $40.5 $124.0 $123.2 EBITDA $8.5 $8.8 $30.2 $28.1 Depreciation and amortization $1.4 $1.5 $4.3 $4.4 Operating income $7.1 $7.3 $25.9 $23.7 EBITDA margin 21.3% 21.7% 24.4% 22.8% Operating income margin 17.8% 18.0% 20.9% 19.2% Occupancy 98.1% 100.1% 98.5% 99.4% ADR $75.08 $73.88 $88.91 $81.28 Ramada Express Laughlin Revenue $22.6 $21.3 $72.5 $68.3 EBITDA $5.5 $4.3 $20.3 $17.5 Depreciation and amortization $1.8 $1.6 $5.1 $4.7 Operating income $3.7 $2.7 $15.2 $12.8 EBITDA margin 24.3% 20.2% 28.0% 25.6% Operating income margin 16.4% 12.7% 21.0% 18.7% Occupancy 68.9% 67.9% 73.4% 71.4% ADR $35.34 $33.76 $34.55 $32.72 Casino Aztar Evansville Revenue $34.0 $33.5 $103.0 $98.9 EBITDA $10.3 $9.9 $31.6 $29.6 Depreciation and amortization $1.7 $1.8 $5.4 $4.6 Operating income $8.6 $8.1 $26.2 $25.0 EBITDA margin 30.3% 29.6% 30.7% 29.9% Operating income margin 25.3% 24.2% 25.4% 25.3% Occupancy 93.0% 93.4% 90.2% 89.0% ADR $63.29 $61.88 $63.64 $61.33 Casino Aztar Caruthersville Revenue $6.7 $5.9 $21.0 $17.3 EBITDA $1.5 $1.2 $4.9 $3.4 Depreciation and amortization $0.8 $0.7 $2.3 $2.1 Operating income $0.7 $0.5 $2.6 $1.3 EBITDA margin 22.4% 20.3% 23.3% 19.7% Operating income margin 10.4% 8.5% 12.4% 7.5% Corporate EBITDA $(3.8) $(3.9) $(17.0) $(12.8) Depreciation and amortization $0.0 $0.0 $0.0 $0.0 Operating income $(3.8) $(3.9) $(17.0) $(12.8) Consolidated Revenue $241.0 $207.6 $692.6 $602.3 EBITDA $63.4 $46.4 $163.4 $139.8 Depreciation and amortization $16.8 $13.9 $49.8 $40.1 Operating income $46.6 $32.5 $113.6 $99.7 Net income $19.4 $13.2 $44.7 $26.2 EBITDA margin 26.3% 22.4% 23.6% 23.2% Operating income margin 19.3% 15.7% 16.4% 16.6% Net income margin 8.0% 6.4% 6.5% 4.3% EBITDA Explanation and Reconciliation

EBITDA is net income before income taxes, loss on early retirement of debt, interest expense, interest income, other income (expense), and depreciation and amortization. EBITDA should not be construed as a substitute for either operating income or net income 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. Other income (expense), interest expense, net of interest income, loss on early retirement of debt, and income taxes 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 and net income as determined in accordance with GAAP is shown below (in millions).

Third Quarter Year to Date 2005 2004 2005 2004 (unaudited) (unaudited) EBITDA Tropicana Atlantic City $41.4 $26.1 $93.4 $74.0 Tropicana Las Vegas 8.5 8.8 30.2 28.1 Ramada Express Laughlin 5.5 4.3 20.3 17.5 Casino Aztar Evansville 10.3 9.9 31.6 29.6 Casino Aztar Caruthersville 1.5 1.2 4.9 3.4 Property EBITDA 67.2 50.3 180.4 152.6 Corporate (3.8) (3.9) (17.0) (12.8) Depreciation and amortization (16.8) (13.9) (49.8) (40.1) Operating income 46.6 32.5 113.6 99.7 Other income (expense) (0.3) 0.3 4.1 0.3 Interest income 0.5 0.2 1.0 0.6 Interest expense (14.2) (8.9) (42.3) (26.3) Loss on early retirement of debt -- (1.7) -- (10.4) Income taxes (13.2) (9.2) (31.7) (37.7) Net income $19.4 $13.2 $44.7 $26.2 Margins Margins are calculated as a percentage of revenue.

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.

The disclosures herein include statements that are 'forward looking' within the meaning of federal securities law. These forward-looking statements generally can be identified by phrases such as the company "believes," "expects," "anticipates," "foresees," "forecasts," "estimates," "targets," or other words or phrases of similar import. Similarly, statements herein that describe the company's business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. Such forward-looking information involves important risks and uncertainties that could significantly affect results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of the company. These risks and uncertainties include, but are not limited to, those relating to war and terrorist activities and other factors affecting discretionary consumer spending, economic conditions, the impact of prospective new competition in Pennsylvania, uncertainties 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, the extent to which our existing operations will continue to be adversely affected by the ongoing effects of the accident on October 30, 2003, the extent to which we realize revenue and EBITDA increases as a result of the Tropicana Atlantic City expansion, our ability to execute our development plans, estimates of development costs and returns on development capital, weather, litigation outcomes, judicial actions, labor negotiations, legislative matters and referenda including the potential legalization of gaming in Maryland and New York and VLTs at the Meadowlands in New Jersey, and taxation including potential tax increases in Indiana, Missouri, Nevada and New Jersey. For more information, review the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K for December 30, 2004 and certain registration statements of the company.

For additional information, please contact Joe Cole, Vice President, Corporate Communications, at 602-381-4111.

Aztar Corporation and Subsidiaries Consolidated Statements of Operations (unaudited) For the periods ended September 29, 2005 and September 30, 2004 (in thousands, except per share data) Third Quarter Nine Months 2005 2004 2005 2004 Revenues (a) Casino $184,254 $159,789 $528,909 $464,127 Rooms 26,997 22,751 80,223 66,215 Food and beverage 14,973 14,340 45,061 42,119 Other 14,756 10,742 38,418 29,873 240,980 207,622 692,611 602,334 Costs and expenses (a) Casino 71,380 65,424 208,899 192,044 Rooms 12,538 11,455 36,232 32,072 Food and beverage 14,139 13,867 42,681 40,789 Other 8,176 7,708 24,275 22,650 Marketing 21,937 18,773 71,074 55,268 General and administrative 21,897 20,609 71,116 61,934 Utilities 7,747 6,160 20,062 14,965 Repairs and maintenance 7,036 6,700 20,402 19,335 Provision for doubtful accounts 636 355 1,343 848 Property taxes and insurance 8,696 7,021 24,989 22,051 Rent 1,949 2,220 5,972 6,468 Construction accident related 1,383 1,808 2,652 3,423 Construction accident insurance recoveries -- (2,000) (526) (10,500) Depreciation and amortization 16,821 13,894 49,848 40,129 Preopening costs -- 1,123 -- 1,123 194,335 175,117 579,019 502,599 Operating income 46,645 32,505 113,592 99,735 Other income (expense) (267) 315 4,161 315 Interest income 465 199 1,001 578 Interest expense (14,256) (8,883) (42,324) (26,292) Loss on early retirement of debt -- (1,751) -- (10,372) Income before income taxes 32,587 22,385 76,430 63,964 Income taxes (13,204) (9,191) (31,683) (37,756) Net income $19,383 $13,194 $44,747 $26,208 Net income per common share $.54 $.37 $1.25 $.74 Net income per common share assuming dilution $.51 $.36 $1.19 $.71 Weighted-average common shares applicable to: Net income per common share 35,642 34,617 35,190 34,498 Net income per common share assuming dilution 37,351 36,548 37,065 36,448 (a) The Company makes cash promotional offers to certain of its customers, including cash rebates as part of loyalty programs generally based on an individual's level of gaming play. In the first quarter of 2005, the Company concluded that it was appropriate to classify these costs as a reduction in casino revenue. Previously, these costs were classified primarily as a casino expense. Accordingly, the Company has revised the classification of these costs as a reduction in casino revenue for the third quarter and nine months ended September 29, 2005 in its Consolidated Statement of Operations. The Company has also made corresponding adjustments to its Consolidated Statement of Operations for the third quarter and nine months ended September 30, 2004 to classify $7,842 and $21,155, respectively of these costs, previously classified as an expense as a reduction in casino revenue. This revision in classification had no effect on operating income or net income in the Consolidated Statements of Operations for any period. Aztar Corporation and Subsidiaries Consolidated Balance Sheet Summaries (unaudited) (in thousands) September 29, 2005 December 30, 2004 Assets Cash and cash equivalents $54,061 $52,908 Other current assets 55,227 77,646 Total current assets 109,288 130,554 Investments 24,476 23,602 Property and equipment 1,241,511 1,239,146 Intangible assets 33,915 34,380 Other assets 85,408 83,958 $1,494,598 $1,511,640 Liabilities and Shareholders' Equity Current portion of long-term debt $1,293 $1,292 Other current liabilities 124,070 143,087 Total current liabilities 125,363 144,379 Long-term debt 682,812 731,253 Other long-term liabilities 57,908 64,803 Series B convertible preferred stock 4,722 4,914 Shareholders' equity 623,793 566,291 $1,494,598 $1,511,640