Aztar Corporation's

In what turned out to be Aztar Corporation’s (NYSE: AZR) final quarterly financial conference call, the company reported decreased earnings. During the 2006 third quarter revenue was $234.0 million, compared with $234.3 million in the comparable 2005 quarter.

Under the merger agreement, Columbia Entertainment will acquire all of the outstanding shares of common stock of Aztar for $54.00 per share in cash. WT-Columbia Development, Inc., an indirect wholly-owned subsidiary of Columbia Entertainment, will merge with and into Aztar, with Aztar being the surviving corporation and becoming an indirect subsidiary of Columbia Entertainment.

Its widely expected the company will be absorbed by Columbia Entertainment before the end of the year.

Reported diluted net income per share was 60 cents in the 2006 third quarter, compared with diluted net income per share of 51 cents in the 2005 quarter. Adjusted diluted net income per share was 54 cents in the 2006 third quarter, which is after stock option compensation expense equivalent to one cent per share, compared with 51 cents in the 2005 third quarter. This includes property EBITDA from continuing operations of $71.0 million, compared with $65.7 million in the year-earlier quarter.

For the year, consolidated revenue was $677.2 million in the first three quarters of 2006, compared with $671.6 million in the first three quarters of 2005. Property EBITDA from continuing operations was $191.7 million in the 2006 period, compared with $175.5 million a year earlier. Year-to-date 2006 net loss was $39.6 million, equivalent to $1.14 per diluted share, compared with net income of $44.7 million, equivalent to $1.19 per diluted share, in the first three quarters of 2005.

The conference call marks the end of an era for the gaming company that was embroiled in the year’s fiercest bidding war. For two months last spring, a heated bidding war upped the purchase price of Aztar by more than $600 million. An Aztar sale was first announced on March 13 when its Board of Directors said the company would be acquired by Pinnacle Entertainment (NYSE: PNK) in a deal for $38 per common share. Aztar’s board was satisfied with this initial offer since it represented a 24% premium over its stock price on March 10, 2006. However, it became immediately apparent that Aztar Pinnacle agreement was seriously undervalued as other gaming companies quickly pounced on Aztar with offers that waylaid the initial deal.

Several other companies got involved in the deal, eventually pushing up to $54 per common share in a deal valued at $2.75 billion including the assumption of about $676 million in debt.

What was at stake was not only one of Atlantic City’s top properties -- The Tropicana, which earned $39.8 million in revenue in September 2006 alone --  but also the Tropicana in Las Vegas which sits on 34-acres of prime real estate on the Strip. It is expected that the property will eventually be implodes in favor of creating an all-new casino experience.

Earlier this year Aztar was forced to pay Pinnacle a termination fee of $52.16 million and termination expenses of $25.84 million. The payment is not deductible for tax purposes. The payment to Pinnacle and certain other costs, consisting mainly of professional fees, are reported as merger-related expenses. Adjusted diluted net income per share was $1.26 in the first three quarters of 2006, which is after stock option compensation expense equivalent to five cents per share, compared with $1.18 in the comparable 2005 period.

As part of the Columbia merger, Aztar is selling its Casino Aztar Caruthersville. The company signed an agreement with Fortunes Entertainment, LLC on August 17, 2006 under which Fortunes Entertainment will acquire the Caruthersville property. Approval of the sale by Missouri gaming authorities is required.


© Copyright 2006 Online Casino Crawle & Glenn Haussman. This material may not be published, broadcast, rewritten, or redistributed.