March 31, 2005 Editor: Ian Madsen, mba, cfa, Editor

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Key Positive Arguments Key Negative Arguments

March 31, 2005

Editor: Ian Madsen, MBA, CFA, Editor

imadsen@zacks.com, Tel: 1-800-767-3771,x417
Marla Harkness, MBA, CFA, Senior Analyst
Maitreyi Sen, M.A., Res. Assoc.

Research Digest

www.zackspro.com 155 North Wacker Drive  Chicago, IL 60606

Aztar Corporation (AZR-NYSE) $28.56
Note to Readers: This report contains substantially new material. Subsequent editions will have new or revised material highlighted.

Overview

Aztar Corporation (AZR) develops and operates casinos in major domestic gaming markets in the United States. The Company has casino hotel facilities in Atlantic City, New Jersey and Las Vegas and Laughlin, Nevada, and riverboat casinos in Caruthersville, Missouri, and Evansville, Indiana. The Tropicana Casino and Resort in Atlantic City has 1,625 hotel rooms and a 137,000-square-foot casino, while the Tropicana Casino and Resort in Las Vegas has 1,875 hotel rooms and suites and a 62,000-square-foot casino. The Ramada Express Hotel and Casino in Laughlin has 1,500 hotel rooms and a 52,000-square-foot casino. Casino Aztar Evansville contains approximately 38,360 square feet of casino, while Casino Aztar Caruthersville has a capacity of 1,200 passengers plus crew and contains approximately 20,000 square feet of casino space. The Company is based in Phoenix, Arizona, and employs 9,400 people.

Aztar reported a disappointing fourth quarter 2004. The results were negatively impacted by a month- long strike in Atlantic City, ongoing construction at its Atlantic City property, a late opening of The Quarter into the slowest months of the year for gaming, and New Year’s Eve falling in 1Q’05. Not only has the weaker quarter results affected the analysts’ view on the stock, but most of them also appear disappointed with management’s non-committal attitude on future development of its prime 34-acre land in Las Vegas. This has also led most analysts to lower their estimates and rating for AZR’s stock.
Analysts have identified the following issues as critical to an evaluation of the investment merits of AZR:

Key Positive Arguments

Key Negative Arguments

Company’s Atlantic City Tropicana expansion (The Quarter) finally opened in late November, after several delays and operational charges; analysts believe these issues are now behind the company.
Analysts believe AZR’s growth prospects are very favorable after it resolves the Atlantic City issues and the Las Vegas property potential is fully realized.
Strike in AC was resolved in November as union workers tentatively accepted a new 5-year plan; this resolves an ongoing issue for AZR.

Disappointing results in 4Q’04 have made most analysts lower estimates for FY2005.
Management’s non-committal attitude on development of the prime Las Vegas strip has diluted the future visibility on AZR’s stock.
A decline in the Atlantic City market remains a cause for concern to some analysts.

For more information about the company, visit its website at www.aztar.com.

Aztar Corporation’s fiscal year ends December 31.

Sales

For fiscal 2004, the company reported consolidated EBITDA of $165.4 million, which included $12.2 million of insurance recoveries related to business interruption and the delay in the opening of the expansion of Tropicana Atlantic City. The 2004 EBITDA excludes $6.2 million of expenses related to the construction accident, and also excludes $2.9 million of pre-opening costs.

Analysts are estimating strong top-line growth for FY2005 as the long-anticipated opening of the AC Tropicana expansion finally comes to fruition. That being said, overall sales growth in FY2005 is expected to be in the low- to mid-double digits (roughly 13% year-over-year) as Atlantic City operates in a more normal business climate. For FY2006, analysts anticipate growth in the mid-single digit (5.6% year-over-year).

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