Ameristar Casinos swung to a loss in the second quarter on a $56 million non-cash impairment charge tied to its East Chicago casino.
The closing of the Cline Avenue bridge has had a larger-than-anticipated adverse impact on Ameristar East Chicago's financial performance, and that impact will continue for some time, Ameristar CEO Gordon Kanofsky told Wall Street analysts on a 10 a.m. conference call Wednesday.
"We can't instantly have a bridge appear, the way oil can magically disappear from the Gulf," Kanofsky told analysts, alluding to a government report that morning that 75 percent of the BP oil spill had disappeared from the Gulf of Mexico.
Ameristar Casinos suffered a first-quarter loss of $24.9 million, or 43 cents per share, compared to a gain in net income of $14.3 million, or 25 cents per share, in the first quarter of 2009.
Without the impairment charges, the company would have realized a gain of $31.1 million for the quarter.
Ameristar Casinos stock was trading at $15.39 per share, down 12 cents, at around noon Wednesday on the Nasdaq stock exchange.
The non-cash impairment charge on Ameristar East Chicago eliminates the remaining net book value of goodwill associated with the acquisition of the East Chicago property and reduces the carrying value of the property's gaming license to $12.6 million.
Adjusted income before interest, taxes, depreciation, and amortization (EBITDA) in the second quarter decreased $7.2 million, or 8.3 percent.
If Ameristar East Chicago were excluded from Ameristar's consolidated results for 2010 and 2009, adjusted EBITDA for the second quarter would have increased 2.9 percent year over year, according to Ameristar Casinos.
The Cline Avenue bridge was closed Nov. 13 after bridge inspectors found the bridge to be gravely weakened. The Indiana Department of Transportation in December announced the bridge would be closed permanently and demolished. In April, INDOT unveiled plans for construction of a $73 million permanent detour to be completed in the summer of 2012.
The closure of the bridge eliminated one of the key gateways to the casino boat from Chicago and points west. That has been reflected in sharply decreased revenues at the casino.
Ameristar East Chicago net revenues for the first six months of this year were $107 million, a 21.4 percent drop from net revenues of $136.1 million in the first six months of 2009, according to Ameristar Casinos. It swung to an operating income loss of $49.9 million in the first six months of 2010 from an operating income gain of $23.6 million in the first six months of 2009.