Exhibit 99.1
CONTACT: John P. Saldarelli
Secretary and Treasurer
(914) 242-7700
FOR IMMEDIATE RELEASE
AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC REPORTS 2003 FULL YEAR AND
ESTIMATED 2004 FIRST QUARTER FINANCIAL RESULTS
MOUNT KISCO, N.Y., April 23, 2004--American Real Estate Partners, L.P.
(NYSE:ACP) ("AREP") announced today the 2003 full year and estimated 2004 first
quarter financial results for American Casino & Entertainment Properties LLC
("ACEP"), an indirect wholly-owned subsidiary.
As previously announced, on January 5, 2004, ACEP entered into an
agreement to acquire two Las Vegas casino/hotels, Arizona Charlie's Decatur
and Arizona Charlie's Boulder from Carl C. Icahn and an entity affiliated
with Mr. Icahn, for aggregate consideration of $125.9 million. The closing of
the acquisition is subject to certain conditions, including among other things,
obtaining all approvals necessary under the Nevada gaming laws. The terms of the
transaction were approved by AREP's audit committee. Upon receiving all
approvals necessary under gaming laws and upon closing of the acquisition,
AREP's subsidiary, American Real Estate Holdings Limited Partnership, will
transfer 100% of the common stock of Stratosphere Corporation to ACEP. As a
result, following the acquisition and contribution, ACEP will own and operate
three casino/hotels in the Las Vegas metropolitan area.
Also, as previously announced, in January 2004, ACEP closed on its
offering of senior secured notes due 2012. The notes, in the aggregate principal
amount of $215 million, bear interest at the rate of 7.85% per annum. The
proceeds are being held in escrow pending receipt of all approvals necessary
under gaming laws and certain other conditions in connection with the
acquisition of Arizona Charlie's Decatur and Arizona Charlie's Boulder
and the contribution of the Stratosphere. ACEP intends to use the proceeds of
the notes offering to finance the acquisitions and to repay intercompany
indebtedness and for a distribution to AREP.
The following financial results reflect the combined operating results
of the Stratosphere, Arizona Charlie's Decatur and Arizona Charlie's Boulder
properties. Combined net revenues for the year ended December 31, 2003 amounted
to $262.8 million, an increase of $12.8 million, or 5.1%, over the year ended
December 31, 2002. Combined EBITDA for the year ended December 31, 2003 was
$45.5 million as compared to combined EBITDA of $31.7 million for the year ended
December 31, 2002.
"Our year end results exceeded our expectations. We attribute this to
enhanced customer flow at all three of the casino/hotels. Strong local and
improved national economies, diligent expense controls, expanded and improved
facilities and enhanced targeting of our respective markets were the key drivers
of our results," said Richard Brown, ACEP's President and Chief Executive
Officer. AREP has furnished ACEP's 2003 audited financial
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statements and Management's Discussion and Analysis of Results of Operations and
Financial Condition to the SEC on a Form 8-K filed on the date hereof.
AREP estimates that, for the three months ended March 31, 2004, ACEP's
combined net revenues will be approximately $75.0 million compared to combined
net revenues of $66.0 million for the three months ended March 31, 2003. For the
three months ended March 31, 2004, ACEP's combined EBITDA is estimated to be
approximately $20.8 million compared to combined EBITDA of $12.3 million for the
three months ended March 31, 2003. AREP estimates that, for the twelve months
ended March 31, 2004, ACEP's combined net revenues will be approximately $271.8
million compared to combined net revenues of $255.7 million for the twelve
months ended March 31, 2003. For the twelve months ended March 31, 2004, ACEP's
combined EBITDA is estimated to be approximately $54.0 million compared to
combined EBITDA of $34.6 million for the twelve months ended March 31, 2003.
"Our first quarter results easily surpassed our budgeted numbers and we are
pleased with our performance to date, especially since all three casino/hotels
are EBITDA positive," remarked Mr. Brown. "Our first quarter results easily
surpassed our budgeted numbers and we are pleased with our performance to date,
especially since all three casino/hotels are EBITDA positive," remarked Mr.
Brown.
The following table reconciles for the periods indicated actual and
estimated EBITDA to actual and estimated net income (computed in accordance with
GAAP) for ACEP. These amounts do not include interest expense incurred to date
on the senior secured notes or other expenses incurred with respect to their
issuance.
ACTUAL ACTUAL ACTUAL ESTIMATED ACTUAL ESTIMATED
TWELVE MONTHS TWELVE MONTHS THREE MONTHS THREE MONTHS TWELVE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2002 2003 2003 2004 2003 2004
------------- ------------- ------------- ------------- ------------- -------------
(IN THOUSANDS)
Net income..................... $ 863 $ 20,682 $ 3,392 $ 9,019 $ 2,457 $ 26,309
Other expenses, primarily
interest..................... 5,677 6,364 1,224 1,310 5,321 6,450
Provision for income tax....... 4,907 (1,798) 2,400 4,554 6,179 356
Depreciation and amortization.. 20,209 20,222 5,267 5,883 20,686 20,838
------------ ----------- ------------ ----------- ----------- -----------
EBITDA(1).................. $ 31,656 $ 45,470 $ 12,283 $ 20,766 $ 34,643 $ 53,953
============ =========== ============ =========== =========== ===========
(1) EBITDA consists of net income plus (i) other income (expense) which
includes interest expense, interest income and gain (loss) on disposal of
property and equipment, (ii) income tax provision and (iii) depreciation
and amortization. EBITDA is presented as a measure of operating performance
because we believe analysts, investors and others frequently use it in the
evaluation of companies in the gaming industry, in particular as an
indicator of the ability of a company to meet its debt service
requirements. Other companies in the gaming industry may calculate EBITDA
differently, particularly as it relates to non-recurring, unusual items.
EBITDA is not a measurement of financial performance under generally
accepted accounting principles and should not be considered as an
alternative to cash flow from operating activities or as a measure of
liquidity, or as an alternative to net income or as an indication of
operating performance or any other measure of performance derived in
accordance with generally accepted accounting principles.
The amounts above for each of the three and twelve months ended March
31, 2004 are based upon many estimates which may be subject to adjustment in
connection with a review of the results of ACEP for this period. The inclusion
of these estimates should not be regarded as an indication that AREP considers
these estimates to be a reliable prediction of actual results. Actual results
may differ materially from those expressed or implied. AREP does not intend to
update or otherwise revise these estimates to reflect circumstances existing
after the date when
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made or to reflect the occurrence of future events even if any or all of the
assumptions underlying these estimates are shown to be in error.
These estimates were not prepared with a view to compliance with
published guidelines of the SEC or the guidelines established by the American
Institute of Certified Public Accountants regarding projections or forecasts.
These forward-looking statements (as that term is defined in the Private
Securities Litigation Reform Act of 1995) are subject to significant
contingencies and uncertainties that could cause actual results to differ
materially from these estimates. There can be no assurance that the assumptions
made in preparing these estimates will prove accurate, and actual results may be
materially different from those contained in these estimates.
American Real Estate Partners, L.P. is a master limited partnership.
This release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, many of which
are beyond our ability to control or predict. Among these risks and
uncertainties are changes in general economic conditions, the extent, duration
and strength of any economic recovery, the extent of any tenant bankruptcies and
insolvencies, our ability to maintain tenant occupancy at current levels, our
ability to obtain, at reasonable costs, adequate insurance coverage, competition
for investment properties and other risks and uncertainties detailed from time
to time in our filings with the SEC, including our 2003 Form 10-K, Form 10-Qs
and Form 8-Ks.
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