Aztar Reports Fourth-Quarter 2003 Results

12th Feb 2004

Aztar Corporation today reported its fourth-quarter 2003 financial
results. Revenue and EBITDA were lower in the quarter primarily as a
result of the impact on operations from the collapse of a parking garage
under construction at the Tropicana Atlantic City. Consolidated EBITDA was
$30.2 million, which does not include potential profit recovery from
claims made under the company’s business interruption insurance, compared
to $40.3 million in the 2002 quarter. Diluted earnings per share in the
2003 fourth quarter were 32 cents which include 19 cents from an IRS
settlement; diluted earnings per share in the 2002 fourth quarter were 31
cents which include three cents from an IRS settlement.
Operating results in the fourth quarter of 2003 were significantly impacted by the decline in revenue caused by the disruption that followed
the tragic accident that occurred on October 30, 2003 at the site of the
expansion of the Tropicana Atlantic City. The garage collapse resulted in
the temporary evacuation of 600 hotel rooms; the closure of two blocks of
Pacific Avenue and two blocks of Brighton Avenue; and obstruction of
access to the Tropicana’s porte cochere, self-park garage and bus
terminal. While Pacific Avenue reopened on January 30, 2004, normal
traffic patterns are still hindered by the continuing closure of one block
of Brighton Avenue. As a result, the bus terminal remains closed and
access to the porte cochere and the self-park garage continues to be
accomplished via secondary routes.

Claims for business interruption for fiscal November and December have
been filed with the company’s insurers in the amount of $7.0 million of
EBITDA, and additional claims will be filed for continuing business
interruption in 2004. Profit recovery from business interruption insurance
will be recorded when the amount of recovery, which may be different from
the amount claimed, is agreed to by the insurers. In the fourth quarter,
had the insurers agreed to the amount of the claims filed by the company,
that recovery would have contributed approximately 12 cents to diluted
earnings per share for the quarter.

“With Pacific Avenue now reopened, in early February the Tropicana began
augmenting its marketing programs to offset the loss of business caused by
the continuing physical disruption as well as the perception of disruption
caused by the accident,” said Paul E. Rubeli, Aztar chairman of the board
and chief executive officer. “The marketing emphasis is on substantially
increasing advertising, entertainment and promotions, not on increasing
coin giveaways or complimentaries. A new promotion called ‘Derby Days’ was
launched this month and will be heavily advertised; entertainment
schedules in our lounges have been significantly expanded; and our hotel
room packages will be promoted heavily on television, radio and in
newspapers. It is our goal to remain competitive in an aggressive and
productive way while we await the opening of our expansion later this

As previously reported, construction has resumed on the new 500-room hotel
tower and portions of the 200,000-square-foot dining, entertainment and
retail complex to be known as The Quarter. Preparation for removal of the
garage debris is underway. Although a final schedule for the
reconstruction must await completion of the debris removal and further
inspection of the adjacent structure, the preliminary schedule calls for
the opening of the expansion by the end of September 2004. The focus of
the planning is to open the entire expansion, consisting of The Quarter, a
20,000-square-foot conference center, the hotel tower and a 2,400-space
garage, at the same time in a complete and first-class manner. 

The company and the Internal Revenue Service settled some unresolved
issues in connection with the examination of the company’s income tax
returns for the years 1994 through 1999. The settlement resulted in a tax
benefit in the 2003 fourth quarter of $6.7 million, equivalent to 19 cents
diluted earnings per share. In the fourth quarter of 2002, the company
settled the same issues with the IRS in connection with the 1992 and 1993
examination, resulting in a tax benefit of $1.0 million, equivalent to
three cents diluted earnings per share. 


In the fourth quarter of 2003, purchases of property and equipment totaled
$44 million. Approximately $13 million of the total was spent on routine
expenditures, and $31 million (including $2.6 million of capitalized
interest) went for development. There were no share repurchases during the
fourth quarter. 

For fiscal 2003, the company reported EBITDA of $175.9 million, compared
with $187.0 million in 2002. Diluted earnings per share were $1.66, to
which an IRS settlement contributed 19 cents; diluted earnings per share
in 2002 were $1.51, to which an IRS settlement contributed three cents.

Our fourth-quarter 2003 earnings conference call will be broadcast live on
the Internet beginning at 4:30 p.m. Eastern Standard Time on Wednesday,
February 11, 2004. Individuals may access the live audio webcast through
our website at . The call also will be available on
replay through that website for one year following the call.


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