Ameristar profits fall slightly, miss forecast

Acquiring an Indiana riverboat casino just outside the lucrative market of Chicago helped expand Ameristar Casinos' reach, but integrating the gambling vessel into the company's structure had a negative impact on the third quarter earnings.

Las Vegas-based Ameristar said Monday its net income for the three-month period ended Sept. 30 was $20 million or 34 cents a share. The figure included a net loss of $800,000 from Resorts East Chicago, which was acquired on Sept. 18 for $675 million.

A year ago, Ameristar reported net income of $21.1 million or 37 cents per share.

Analysts polled by Thomson Financial expected Ameristar to earn 35 cents a share in the latest quarter.

Ameristar said its revenues for the quarter were $265.4 million and included $9.2 million from just 12 days of owning Resorts East Chicago. The company's revenues in the same quarter a year ago were $253.6 million.

"Ameristar succeeded in generating higher net revenues at four of our six locations and we achieved companywide net revenue growth despite slower than expected growth in most of our markets during the third quarter," Ameristar President and CEO John Boushy said.

In total, Ameristar said its integration and transition costs related to Resorts East Chicago were $1.1 million.

Boushy said Ameristar expects to spend between $20 million and $25 million on the casino to rebrand the property as an Ameristar branded property by September next year.

Ameristar executives refused to address Wall Street speculation the company might be on the market.

Last month, the estate of company founder Craig Neilsen, who died in November 2006, said it may pursue one or more strategic alternatives for its nearly 55 percent stake in the casino operator.

Neilsen's estate owns 31.5 million shares of Ameristar, which is traded on the Nasdaq National Market. In a filing with the Securities and Exchange Commission, the estate said it may consider selling all or part of its holdings in the company, or participate in a merger or other business transaction that could change control of Ameristar.

"As we said on Oct. 22, management will not be addressing questons related to (the SEC filing)," Boushy said.

Ameristar has several expansion projects in place totaling $344 million, including a 400-room hotel tower at Ameristar St. Charles outside St. Louis that was expected to open in December. The opening, however, was delayed slightly due to construction issues.

Also, Ameristar has a $98 million expansion to the Ameristar Vicksburg in Mississippi in he process and is planning a $100 million expansion to the company's casino in Council Bluffs, Iowa. Also, construction on a new hotel tower at Ameristar Black Hawk, the company's casino outside Denver was delayed slightly due to a rock slide.

Even with the ongoing construction projects, Ameristar co-chairman Gordon Kanofsky said acquisitions, similar to the Resorts East Chicago purchase, are being sought out.

"We announced a strategy earlier this year to double the size of the company, half through internal projects and half through acquisitions," Kanofsky said. "We'll continue to look for attractive acquisitions. We will still be open and opportunistic as we always have been."

Ameristar announced earnings after trading closed on the Nasdaq. Shares fell $1.44, or 4.5 percent to finish at $30.51.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or (702) 477-3871.