Ameristar Casinos Reports Across the Board Record Third Quarter 2006 Financial Results

LAS VEGAS, Oct. 25 /PRNewswire-FirstCall/ -- Ameristar Casinos, Inc. (NASDAQ: ASCA) today announced 2006 third quarter financial results, which set all-time quarterly records for EBITDA, net income and diluted earnings per share and third quarter records for consolidated net revenues and operating income.

  Highlights

  *  Third quarter consolidated net revenues of $253.6 million, an increase
     of $15.0 million, or 6.3%, over the third quarter of 2005.
  *  Third quarter consolidated operating income of $46.3 million, an
     increase of $5.8 million, or 14.3%, from the prior-year third quarter.
  *  Third quarter consolidated EBITDA (a non-GAAP financial measure that is
     defined and reconciled with operating income below) of $69.6 million,
     representing an increase of $7.8 million, or 12.6%, from the third
     quarter of 2005.  2006 third quarter operating income and EBITDA were
     adversely impacted by $2.5 million of stock-based compensation expense.
     No such expense was recognized in 2005.
  *  Third quarter diluted earnings per share of $0.37, compared to $0.28
     for the third quarter of 2005.  Stock-based compensation expense
     negatively impacted diluted earnings per share in the third quarter of
     2006 by $0.03.  Analysts' latest consensus estimate for the third
     quarter of 2006, as reported by Thomson First Call, was $0.35.  Our
     most recently issued earnings guidance for the third quarter of 2006
     indicated a range of diluted earnings per share of $0.35 to $0.36, an
     increase from our original earnings guidance for the quarter of $0.27
     to $0.29 per share.
  *  On August 15, 2006, our Board of Directors declared a quarterly cash
     dividend of $0.09375 per share, which was paid to stockholders of
     record as of August 30, 2006.
  *  On July 24, 2006, our Board of Directors approved the repurchase from
     time to time of up to 2.8 million shares of Ameristar common stock,
     representing approximately 5% of our outstanding common stock.  During
     the third quarter of 2006, we repurchased approximately 0.4 million
     shares of common stock at a total cost of approximately $8.0 million
     under the stock repurchase program.
  *  On July 28, 2006, we hired John Boushy as President.  Before joining
     Ameristar, Mr. Boushy served as Executive VP of Project Development,
     Design and Construction for Harrah's Entertainment.  Previously, he was
     responsible for the successful integration of Caesars into Harrah's,
     while serving as its Chief Integration Officer.  With his proven
     leadership acumen, Mr. Boushy is responsible for overseeing operations,
     finance, human resources, marketing, information technology, food and
     beverage, administration, communications and entertainment.  He is also
     focusing on continuing to leverage the Ameristar brand, while
     participating in the Company's pursuit of development opportunities as
     we consider growth through acquisitions, building new properties and
     expansion.

Craig H. Neilsen, Chairman and CEO, stated: "We are very pleased with our record-setting third quarter financial performance. Our financial results reflect the strength of our operating strategies and our ability to continue to grow the Ameristar brand by providing the most complete entertainment experience for our guests while successfully managing costs. To date, we have improved margins without sacrificing our commitment to guest service, as evidenced by our recent guest satisfaction scores. We expect to continue the successful application of our cost management strategies for the foreseeable future."

  Third Quarter Summary


               Consolidated Selected Quarterly Financial Data
                (Amounts in Thousands, Except Per Share Data)
                                 (Unaudited)

                                    Three Months
                                Ended September 30,
                                  2006       2005     $ Change    % Change

   Gross revenues              $303,526    $286,834    $16,692        5.8%
   Promotional allowances        49,948      48,243      1,705        3.5%
   Net revenues                $253,578    $238,591    $14,987        6.3%

   Operating income             $46,253     $40,479     $5,774       14.3%

   Net income                   $21,085     $16,100     $4,985       31.0%

   Diluted earnings per share     $0.37       $0.28      $0.09       32.1%

   EBITDA                       $69,582     $61,798     $7,784       12.6%

Our record quarterly financial results were largely driven by the following four factors:

  *  Ameristar Black Hawk achieved all-time record financial results in
     every key performance measure during the third quarter of 2006.  Our
     Black Hawk property has experienced significant growth in business
     volume and strong improvement in financial performance since its
     rebranding on April 1, 2006.  We anticipate continued market share
     growth in the Denver gaming market as the property gains further
     momentum from the recently completed capital improvements and from the
     hotel, which we expect to be completed in December 2008.  The Black
     Hawk property's financial results also benefited from reduced
     construction disruption following the completion of the initial phase
     of our expansion activities in the first quarter of 2006.
     Additionally, Ameristar Black Hawk was adversely affected during most
     of the third quarter of 2005 by the temporary closure of a principal
     highway connecting Black Hawk and Denver.
  *  Our Vicksburg property surpassed our expectations in the third quarter
     of 2006 with growth in all key financial performance indicators as we
     continue to benefit from reduced Mississippi Gulf Coast gaming capacity
     caused by Hurricane Katrina.  We anticipate the increase in the
     property's business volume to diminish in the fourth quarter of 2006
     now that a year has elapsed and several Gulf Coast casinos have
     reopened.
  *  Ameristar Council Bluffs' third quarter 2006 financial performance
     exceeded our expectations in the face of enhanced competition from the
     March 2006 major expansion and rebranding of a nearby land-based
     casino, which has increased its promotional spending since the
     rebranding.  Recent trends indicate a partial recovery of our market
     share.  Ameristar Council Bluffs' EBITDA and the related margin have
     increased $3.7 million and 5.5 percentage points, respectively,
     compared to the second quarter of 2006.
  *  We have successfully modified our cost structure to optimize operating
     income, EBITDA and margins through the implementation of cost-
     containment initiatives.  During the third quarter of 2006, we began to
     see the positive impact from our efforts to utilize promotional
     allowances more efficiently.  Our promotional allowances decreased as a
     percentage of gaming revenues compared to the prior-year third quarter,
     and we expect this trend to continue in the fourth quarter.  In
     addition to more effective promotional spending, we are continuing to
     achieve further efficiencies through improved labor management
     practices.  The successful application of these strategies was most
     notably evident at our St. Charles property where revenues declined
     from the prior-year third quarter while our margins and EBITDA
     improved.


  Financial Results

The increase in consolidated net revenues for the third quarter of 2006 was primarily attributable to increases over the prior-year third quarter of 101.8% at Ameristar Black Hawk and 11.2% at Ameristar Vicksburg.

Consolidated casino revenues for the third quarter of 2006 increased $13.4 million over the 2005 third quarter, principally due to an $11.1 million (102.8%) increase in slot revenues at Ameristar Black Hawk, which now features an additional 600 slot machines on its expanded casino floor. We further believe consolidated casino revenues increased in part as a result of the continued successful implementation of our targeted marketing programs, as evidenced by an overall 7.0% increase in rated play at our properties from the third quarter of 2005.

Consolidated operating income and EBITDA were adversely affected by the $2.5 million in stock-based compensation expense we were required to recognize in the third quarter of 2006 as described above. Consolidated operating income was also impacted by a $2.0 million (9.4%) increase in depreciation and amortization expense over the third quarter of 2005, primarily due to $1.5 million in depreciation expense from the capital improvements placed in service as part of the Ameristar Black Hawk expansion.

Interest expense for the 2006 third quarter decreased $2.5 million from the third quarter of 2005. The decline was due primarily to a reduced average interest rate resulting from the November 2005 refinancing of our senior secured credit facility and the February 2006 redemption of our senior subordinated notes with borrowings under the new credit facility at a substantially lower interest rate. Capitalized interest for the quarter ended September 30, 2006 totaled $2.2 million, representing an increase of 37.9% over the prior-year third quarter.

During the third quarter of 2006, corporate expense increased $0.9 million, or 7.2%, compared to the 2005 third quarter. The increase is attributable to the recognition in the 2006 period of $1.8 million of stock-based compensation expense at the corporate level (the remaining $0.7 million of this expense was recognized at our various properties). The prior-year third quarter's financial results reflect a $1.0 million charge in connection with the discontinued pursuit of a casino license in Philadelphia, Pennsylvania.

Building for Future Growth

Capital expenditures for the 2006 third quarter totaled $63.2 million. These expenditures were mostly funded with cash from operations and, to a lesser extent, with the borrowings under our revolving loan facility. Capital expenditures during the third quarter included $26.1 million related to our expansion activities at Ameristar St. Charles described below, $12.0 million for capital improvement projects at Ameristar Black Hawk, $5.5 million for the acquisition of slot machines and $2.3 million for the construction of a new parking garage at Ameristar Vicksburg.

Construction continues to progress on schedule at Ameristar St. Charles on our 400-room, all-suite hotel with an indoor/outdoor swimming pool and a 7,000 square-foot full-service spa, and an additional 2,000-space parking garage. The 20,000 square feet of new meeting and conference facilities were completed and opened in the third quarter. The completion dates are projected to be the first quarter of 2007 for the initial 1,400 spaces of the parking garage and the fourth quarter of 2007 for the hotel and the remainder of the garage. We believe these planned improvements will allow us to further enhance our competitive position in the St. Louis market.

The construction of the hotel at Ameristar Black Hawk also remains on track. The 33-story tower's 536 well-appointed, oversized rooms will feature upscale furnishings and amenities. The tower will include a meeting center that will feature a main ballroom, a junior ballroom, break-out rooms, pre- function space, a business center and a boardroom. The tower will also have Black Hawk's only swimming pool and indoor and outdoor spas. Once completed, Ameristar Black Hawk will offer destination resort amenities and services never before seen in the Denver gaming market.

In Vicksburg, we have completed 65 percent of the garage, ordered steel for the casino expansion and plan to start casino foundation work in November 2006. Construction on the casino expansion, which will add 800 gaming positions to the property, a VIP club, retail and a parking garage, will be completed in the fourth quarter of 2007. These improvements will help to alleviate long-standing capacity constraints and improve convenience of access, which we believe will allow us to increase our market dominance in Vicksburg.

In addition to our internal capital expenditure projects, we continue to aggressively pursue external expansion opportunities in an attempt to further broaden our overall distribution channels and increase scale that can support our long-term growth plans. We are focusing primarily on the potential acquisition of existing cash flow producing casino-entertainment properties in the United States that can be improved through the implementation of our development and operational expertise. We also selectively consider new development opportunities in existing and emerging domestic and some international markets. Longer term, we contemplate larger scale development projects in major national and international markets.

Outlook

Based on our preliminary results of operations in October 2006 and our outlook for the remainder of the quarter, we currently estimate operating income of $35 million to $37 million, EBITDA of $58 million to $60 million (given anticipated depreciation expense of $23 million), interest expense of $13 million and diluted earnings per share of $0.24 to $0.26 for the fourth quarter of 2006.

The above estimates of operating income, EBITDA and diluted earnings per share give effect to the recognition of stock-based compensation expense, which we anticipate will result in additional after-tax expense of $2.0 million and adversely impact diluted earnings per share by $0.03 for the fourth quarter of 2006.

We are revising our financial guidance for the full year 2006. We currently estimate operating income of $164 million to $166 million (increased from our most recent guidance of $154 million to $160 million), EBITDA of $257 million to $259 million (increased from our most recent guidance of $248 million to $254 million) and diluted earnings per share of $0.97 to $0.99 (increased from our most recent guidance of $0.86 to $0.92). We currently anticipate $94 million of depreciation expense, $51 million of interest expense and $10 million of stock-based compensation expense for the full year 2006.

Gaming regulatory authorities in Iowa, Mississippi and Missouri currently publish, on a monthly basis, gross gaming revenue, market share and other financial information with respect to the gaming facilities, including Ameristar's, that operate within their respective jurisdictions. Because various factors in addition to our gross gaming revenue (including changes in operating costs, promotional allowances and corporate and other expenses) influence our operating income, EBITDA and diluted earnings per share, such reported information, as it relates to Ameristar, may not accurately reflect the results of our operations for such periods or for future periods.

Conference Call

We will hold a conference call to discuss our third quarter results and guidance for the fourth quarter at 5:00 p.m. Eastern Time on October 25, 2006. The call can be accessed live by calling (800) 310-6649. It can be replayed until November 2, 2006 at 3:00 a.m. Eastern Time by calling (888) 203-1112 and using the access code number 4000547. Interested parties wanting to listen to the live conference call on the Internet may do so on our web site -- http://www.ameristar.com/ -- in "About Ameristar/Investor Relations" under the "Quarterly Results Conference Calls" section.

Forward-Looking Information

This press release contains certain forward-looking information that generally can be identified by the context of the statement or the use of forward-looking terminology, such as "believes," "estimates," "anticipates," "intends," "expects," "plans," "is confident that" or words of similar meaning, with reference to Ameristar or our management. Similarly, statements that describe our future plans, objectives, strategies, financial results or position, operational expectations or goals are forward-looking statements. It is possible that our expectations may not be met due to various factors, many of which are beyond our control, and we therefore cannot give any assurance that such expectations will prove to be correct. For a discussion of relevant factors, risks and uncertainties that could materially affect our future results, attention is directed to "Item 1A. Risk Factors" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2005 and "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.

About Ameristar

Ameristar Casinos, Inc. is a leading Las Vegas-based gaming and entertainment company known for its premier properties characterized by innovative architecture, state-of-the-art casino floors and superior dining, lodging and entertainment offerings. Ameristar's focus on the total entertainment experience and the highest quality guest service has earned it a leading market share position in each of the markets in which it operates. Founded in 1954 in Jackpot, Nevada, Ameristar has been a public company since November 1993. The company has a portfolio of seven casinos in six markets: Ameristar St. Charles (greater St. Louis); Ameristar Kansas City; Ameristar Council Bluffs (Omaha, Nebraska and southwestern Iowa); Ameristar Vicksburg (Jackson, Mississippi and Monroe, Louisiana); Ameristar Black Hawk (Denver metropolitan area); and Cactus Petes and the Horseshu in Jackpot, Nevada (Idaho and the Pacific Northwest).

Visit Ameristar Casinos' web site at http://www.ameristar.com/ (which shall not be deemed to be incorporated in or a part of this news release). AMERISTAR CASINOS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands, Except Per Share Data) (Unaudited) Three Months Nine Months Ended September 30, Ended September 30, 2006 2005 2006 2005 REVENUES: Casino $254,724 $241,287 $765,923 $725,346 Food and beverage 33,478 32,023 100,027 92,818 Rooms 7,521 6,804 21,364 18,762 Other 7,803 6,720 22,065 18,657 303,526 286,834 909,379 855,583 Less: Promotional allowances 49,948 48,243 153,123 138,018 Net revenues 253,578 238,591 756,256 717,565 OPERATING EXPENSES: Casino 109,858 106,885 333,575 320,439 Food and beverage 17,219 16,554 51,398 48,665 Rooms 1,630 1,653 5,004 4,913 Other 5,162 4,405 14,768 12,192 Selling, general and administrative 50,068 47,153 151,807 138,671 Depreciation and amortization 23,329 21,319 69,859 63,011 Impairment loss on assets held for sale 59 143 350 683 Total operating expenses 207,325 198,112 626,761 588,574 Income from operations 46,253 40,479 129,495 128,991 OTHER INCOME (EXPENSE): Interest income 739 184 2,115 532 Interest expense, net (12,373) (14,850) (38,140) (45,321) Loss on early retirement of debt -- -- (26,264) (184) Net (loss) gain on disposition of assets (8) (407) 113 (1,545) INCOME BEFORE INCOME TAX PROVISION 34,611 25,406 67,319 82,473 Income tax provision 13,526 9,306 25,586 30,491 NET INCOME $21,085 $16,100 $41,733 $51,982 EARNINGS PER SHARE: Basic $0.38 $0.29 $0.74 $0.94 Diluted $0.37 $0.28 $0.73 $0.91 CASH DIVIDENDS DECLARED PER SHARE $0.09 $0.08 $0.28 $0.23 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 56,157 55,825 56,153 55,582 Diluted 57,184 57,232 57,177 57,139 AMERISTAR CASINOS, INC. AND SUBSIDIARIES SUMMARY CONSOLIDATED FINANCIAL DATA (Dollars in Thousands) (Unaudited) Three Months Nine Months Ended September 30, Ended September 30, 2006 2005 2006 2005 Consolidated cash flow information Net cash provided by operating activities $55,073 $40,338 $138,408 $152,749 Net cash used in investing activities (57,603) (45,450) (166,387) (125,319) Net cash provided by (used in) financing activities 5,887 4,815 36,582 (31,177) Net revenues Ameristar St. Charles $70,974 $71,367 $216,125 $215,527 Ameristar Kansas City 62,350 62,127 189,549 185,701 Ameristar Council Bluffs 46,420 46,956 137,365 140,580 Ameristar Vicksburg 32,825 29,516 103,182 88,160 Jackpot Properties 18,667 17,553 52,018 48,421 Ameristar Black Hawk 22,342 11,072 58,017 39,176 Consolidated net revenues $253,578 $238,591 $756,256 $717,565 Operating income (loss) Ameristar St. Charles $16,253 $15,157 $49,838 $49,197 Ameristar Kansas City 11,745 12,439 35,676 38,648 Ameristar Council Bluffs 14,222 15,151 37,586 43,045 Ameristar Vicksburg 9,923 8,040 32,821 24,924 Jackpot Properties 3,963 3,909 10,150 8,839 Ameristar Black Hawk 3,825 (1,454) 5,384 1,555 Corporate and other (13,678) (12,763) (41,960) (37,217) Consolidated operating income $46,253 $40,479 $129,495 $128,991 EBITDA (1) Ameristar St. Charles $22,904 $21,786 $69,660 $68,829 Ameristar Kansas City 17,032 17,673 52,342 54,084 Ameristar Council Bluffs 17,571 18,216 47,459 52,050 Ameristar Vicksburg 12,879 10,977 41,955 33,799 Jackpot Properties 5,043 4,906 13,392 12,058 Ameristar Black Hawk 7,008 202 14,037 6,001 Corporate and other (12,855) (11,962) (39,491) (34,819) Consolidated EBITDA $69,582 $61,798 $199,354 $192,002 AMERISTAR CASINOS, INC. AND SUBSIDIARIES SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED (Dollars in Thousands) (Unaudited) Three Months Nine Months Ended September 30, Ended September 30, 2006 2005 2006 2005 Operating income margins (2) Ameristar St. Charles 22.9% 21.2% 23.1% 22.8% Ameristar Kansas City 18.8% 20.0% 18.8% 20.8% Ameristar Council Bluffs 30.6% 32.3% 27.4% 30.6% Ameristar Vicksburg 30.2% 27.2% 31.8% 28.3% Jackpot Properties 21.2% 22.3% 19.5% 18.3% Ameristar Black Hawk 17.1% (13.1%) 9.3% 4.0% Consolidated operating income margin 18.2% 17.0% 17.1% 18.0% EBITDA margins (1) Ameristar St. Charles 32.3% 30.5% 32.2% 31.9% Ameristar Kansas City 27.3% 28.4% 27.6% 29.1% Ameristar Council Bluffs 37.9% 38.8% 34.5% 37.0% Ameristar Vicksburg 39.2% 37.2% 40.7% 38.3% Jackpot Properties 27.0% 27.9% 25.7% 24.9% Ameristar Black Hawk 31.4% 1.8% 24.2% 15.3% Consolidated EBITDA margin 27.4% 25.9% 26.4% 26.8% (1) EBITDA is earnings before interest, taxes, depreciation and amortization. EBITDA is presented solely as a supplemental disclosure because management believes that it is a widely used measure of operating performance in the gaming industry and a principal basis for the valuation of gaming companies. Our credit agreement also requires the use of EBITDA as a measure of compliance with our principal debt covenants. In addition, management uses property-level EBITDA (EBITDA before corporate expense) as the primary measure of our operating properties' performance, including the evaluation of operating personnel. EBITDA margin is EBITDA as a percentage of net revenues. EBITDA should not be construed as an alternative to income from operations (as determined in accordance with GAAP) as an indicator of our operating performance, as an alternative to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity, or as an alternative to any other measure determined in accordance with GAAP. We have significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in EBITDA. It should also be noted that not all gaming companies that report EBITDA calculate EBITDA in the same manner as we do. (2) Operating income margin is operating income (loss) as a percentage of net revenues. RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA (Dollars in Thousands) (Unaudited)

The following table sets forth a reconciliation of operating income (loss), a GAAP financial measure, to EBITDA, a non-GAAP financial measure.

                                    Three Months           Nine Months
                                 Ended September 30,   Ended September 30,
                                  2006       2005       2006        2005
  Ameristar St. Charles:
    Operating income            $16,253    $15,157    $49,838      $49,197
    Depreciation and
     amortization                 6,651      6,629     19,822       19,632
    EBITDA                      $22,904    $21,786    $69,660      $68,829

  Ameristar Kansas City:
    Operating income            $11,745    $12,439    $35,676      $38,648
    Depreciation and
     amortization                 5,287      5,234     16,666       15,436
    EBITDA                      $17,032    $17,673    $52,342      $54,084

  Ameristar Council Bluffs:
    Operating income            $14,222    $15,151    $37,586      $43,045
    Depreciation and
     amortization                 3,349      3,065      9,873        9,005
    EBITDA                      $17,571    $18,216    $47,459      $52,050

  Ameristar Vicksburg:
    Operating income            $9,923     $8,040     $32,821      $24,924
    Depreciation and
     amortization                 2,956      2,937      9,134        8,875
    EBITDA                      $12,879    $10,977    $41,955      $33,799

  Jackpot Properties:
    Operating income             $3,963     $3,909    $10,150       $8,839
    Depreciation and
     amortization                 1,080        997      3,242        3,219
    EBITDA                       $5,043     $4,906    $13,392      $12,058

  Ameristar Black Hawk:
    Operating income (loss)      $3,825    $(1,454)    $5,384       $1,555
    Depreciation and
     amortization                 3,183      1,656      8,653        4,446
    EBITDA                       $7,008       $202    $14,037       $6,001

  Corporate and other:
    Operating loss             $(13,678)  $(12,763)  $(41,960)    $(37,217)
    Depreciation and
     amortization                   823        801      2,469        2,398
    EBITDA                     $(12,855)  $(11,962)  $(39,491)    $(34,819)

  Consolidated:
    Operating income            $46,253    $40,479   $129,495     $128,991
    Depreciation and
     amortization                23,329     21,319     69,859       63,011
    EBITDA                      $69,582    $61,798   $199,354     $192,002