Yesterday Ameristar Casinos announced financial results for the second quarter ended 30 June 2008. Although the company reported a profit, just slightly lower than the previous year at US$17 million compared to US$17.3 million, the state of the US economy has meant Ameristar cutting its workforce by 3% as leisure spending falls and costs rise.

“Economic conditions continued to result in difficult year-over-year comparisons,” said Gordon Kanofsky, Chief Executive Officer and Vice Chairman. “On a same-store basis, net revenues were flat, while EBITDA declined 5.5 percent when compared to last year. In addition to the weakening economy, increased promotional spending companywide and the impact from the Colorado smoking ban contributed to lower margins.”

Kanofsky commented that regrettably the economic downturn is more prolonged than many economists expected. “In response to the weakness in the economy, we first attempted to drive incremental profitable revenue through increased promotional activity in the first and second quarters, which proved unsuccessful. Therefore, in addition to the staffing adjustments, we began curtailing promotional spending in the third quarter, and we plan to make more significant reductions beginning in the fourth quarter compared to second quarter levels.”

For the second quarter of 2008, Ameristar reported net revenues of US$328.1 million compared to US$253.2 million in last year’s second quarter. Included in 2008 results were net revenues of US$74.5 million from the East Chicago property, which was acquired on September 18, 2007. Operating income for the second quarter of 2008 was US$48.0 million, compared to US$43.3 million in the same 2007 period. Same-store operating income in the 2008 second quarter was US$40.0 million, a decrease of US$3.3 million, or 7.7%, from the 2007 second quarter.

In conclusion Kanofsky said, “We expect current difficult business conditions to continue at least through the second half of 2008, reflecting the impact of the general economic slowdown and higher fuel prices on the gaming industry. Ameristar remains focused on delivering the highest quality guest experience in our markets while diligently seeking to maximize profitability. Our efforts to adjust our workforce and promotional spending to obtain greater efficiencies, combined with the capital investments we have made, should position us well to capture additional growth again once the economy starts to rebound.” (E-08.05.08)

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