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Ameristar Casinos, Inc. Reports Q3 2000 Results

17 November 2000

LAS VEGAS, Nevada – (Press Release) --Nov. 17, 2000 -- Ameristar Casinos, Inc. (Nasdaq: ASCA) reported today the Company earned record net revenues of $86.6 million in the third quarter of 2000. This represents $9.0 million in revenue growth, or 11.6 percent, compared to net revenues of $77.6 million for the third quarter of 1999. Net revenues for the nine months ended September 30, 2000 were also a record, at $252.4 million, compared to $223.9 million for the corresponding period in 1999, which represents 12.7% growth in revenues.

The strong revenue performance resulted from improved market share at three of the Company's properties. Ameristar Council Bluffs continued to be the leading producer of gaming revenue among all Iowa riverboats in the third quarter of 2000, and Ameristar Vicksburg remained the central Mississippi gaming revenue market leader for the 22nd consecutive quarter. The Reserve in Henderson, Nevada also improved its market share.

The growth in revenues is primarily the result of casino and parking expansions at the Company's Iowa and Mississippi properties, the company-wide introduction of new technology slot machines and the strategic implementation of enhanced marketing programs. Property improvements at Ameristar Council Bluffs include the new third level of the riverboat, which opened in November 1999. This expansion increased gaming positions by approximately 400 which is a 31 percent increase.

In addition, Council Bluffs added a 1,000-space parking garage, which opened in April 2000, and opened the Atrium (restaurant & cabaret) in the third quarter of 2000. At Ameristar Vicksburg, the Company expanded the casino and increased the total number of slot machines by 350, added 600 parking spaces in late 1999, and introduced a new signature steakhouse and renovated the 24-hour casual restaurant.

On October 17, 2000, the Company agreed to acquire Station Casino Kansas City and Station Casino St. Charles, from Station Casinos, Inc., for a purchase price of $475 million, subject to regulatory and other approvals. According to unaudited information published by Station Casinos, Inc., the Kansas City and St. Charles properties generated a combined $325.3 million in net revenues and $86.7 million in EBITDA for the twelve months ended September 30, 2000.

The Kansas City property is one of the largest and most impressive casino hotel facilities in the nation. A leading gaming property in the $517 million Kansas City market, it is situated near the heavily traveled Interstate 435 bridge, a major six-lane expressway supporting more than 70,000 vehicles per day.

Recently named the top area tourist attraction in 1999 by Ingram's Magazine, the property features 140,000 square feet of casino space with approximately 3,188 slot machines, 144 table games and 15 poker tables. Other amenities include 184 hotel rooms, six full-service restaurants, 10 express service restaurants, 11 bars and lounges, an 18-screen movie theatre complex, an arcade and a Kid's Quest child-care facility.

The St. Charles property serves customers in the greater St. Louis area, which has a population of approximately 2.7 million people within a 50-mile radius and 3.9 million with a 100-mile radius. Currently, the property includes 45,000 square feet of gaming space with approximately 1,850 slot machines, 51 table games, 15 poker tables and two restaurants.

Several years ago, Station Casinos began construction of a new gaming facility at the St. Charles site, which has not been completed except for a 4,000 space parking garage. Ameristar plans to complete an initial phase of this project, with some design modifications.

The initial phase of the new facility will encompass 70,000 square feet of gaming space with approximately 2,300 slot machines and 70 table games as well as a variety of additional non-gaming amenities.

The Company has obtained $875 million in financing commitments from affiliates of Deutsche Bank AG to finance its acquisition of the Missouri properties and refinance existing debt. The completion of the acquisition of the Missouri properties is subject to regulatory and various other approvals, including the satisfactory completion of a licensure investigation of the Company by the Missouri Gaming Commission. The Company expects to close on the acquisition in December 2000.

``The acquisition of the Missouri properties is an important development in Ameristar's growth,'' said Craig H. Neilsen, president and CEO of the Company. ``The Kansas City and St. Charles properties fit extremely well with our core strategy of operating high quality gaming and entertainment facilities in strong local and regional markets,'' Neilsen continued.

The Company also has agreed to sell The Reserve Hotel & Casino in Henderson, Nevada for $70 million. The sale of The Reserve is expected to close by the end of January 2001, subject to regulatory and various other approvals. The sale will result in a loss of approximately $57.2 million (``impairment loss''), which has been recorded as of September 30, 2000. Net of an income tax benefit of $20.0 million, the impairment loss reduced Company earnings by $1.82 per share in three and nine months ended September 30, 2000.

Excluding the $1.82 per share effect of the impairment loss, the Company would have generated earnings per share of $0.01 and $0.12 for the three and nine months ended September 30, 2000, as compared to $0.01 and $0.05 for the same periods in 1999, respectively.

Excluding the impairment loss, the Company generated $7.6 million income from operations for the quarter ended September 30, 2000 compared to income from operations of $6.6 million for the same period in 1999. Excluding the impairment loss, income from operations for the nine months ended September 30, 2000 was $24.9 million compared to income from operations of $20.3 million for the same period in 1999.

On a company wide basis, earnings before interest, taxes, depreciation and amortization and the impairment loss (EBITDA) for the three and nine months ended September 30, 2000 was $15.1 million and $46.6 million, compared to $12.6 million and $38.4 million for the same periods in 1999, respectively.

The Company's EBITDA margin (EBITDA as a percentage of net revenues) for the three months ended September 30, 2000 increased to 17.5 percent compared to 16.2 percent for the same period in 1999. The Company's EBITDA margin for the nine-months ended September 30, 2000 increased to 18.4 percent compared to 17.1 percent for the same period in 1999.

The Company's EBITDA continues to improve due to the expansions of the casinos in Council Bluffs and Vicksburg, improved slot product, strategic marketing, and growth in gaming markets. The Company's EBITDA growth in 2000 was negatively impacted by $1.9 million in development costs related to the Company's unsuccessful bid for a gaming license in South St. Louis County, Missouri.

Ameristar Council Bluffs continued its strong performance. The property generated a 12.0 percent growth in net revenues for the three months ended September 30, 2000, reporting $32.1 million in net revenues compared to $28.7 million for the three months ended September 30, 1999. For the nine-month period ended September 30, 2000, net revenues were $96.4 million, a 17.1 percent increase over the $82.3 million of net revenues in the prior year period.

Council Bluffs' EBITDA for the third quarter of 2000 increased by 5.4 percent from the third quarter of 1999. EBITDA growth did not match revenue growth due to increased operational costs associated with the third deck expansion and the strategic marketing programs previously discussed.

Income from operations declined slightly from $5.7 million to $5.4 million for the third quarter of 2000 due primarily to higher depreciation expense and other operational costs. Ameristar Council Bluffs' operating income for the nine-month period ended September 30, 2000 was $18.2 million compared to $15.7 million in 1999, a 15.8 percent increase.

Due to the property expansion and slot machine upgrades, Ameristar Council Bluffs' market share increased 1.2 percent to 32.1 percent for the quarter ended September 30, 2000, compared to the same period in the prior year. In addition, the Council Bluffs gaming market experienced a 10.0 percent growth in gaming revenues compared to the nine month period ended September 30, 1999.

Ameristar Vicksburg's net revenues for the three months ended September 30, 2000 rose to $22.1 million, an increase of 10.2 percent compared to $20.0 million for the three months ended September 30, 1999.

For the nine-month period ended September 30, net revenues increased 8.0 percent to $63.1 million in 2000 from $58.5 million in 1999. Income from operations for the three months ended September 30, 2000 declined slightly (by $0.3 million) from the corresponding 1999 period due to increased marketing and depreciation costs.

For the nine months ended September 30, 2000, income from operations increased 10.4 percent to $12.6 million, compared to $11.4 million in the corresponding 1999 period.

These improvements were primarily attributable to increased gaming revenues from the casino expansion in the fall of 1999, the upgraded slot product and improved marketing strategies, combined with improved cost controls. The Company's slot upgrade program has introduced 600 new technology slot machines at Ameristar Vicksburg since November 1999, and the casino expansion has resulted in an increase in the total slot machine count by approximately 170 machines, or 15 percent.

The Jackpot Properties, Cactus Petes Resort Casino and The Horseshu Hotel & Casino, increased net revenues 3.3 percent to $16.5 million in the three months ended September 30, 2000 as compared to $15.9 million in the same period in 1999. Net revenues for the nine months ended September 30, 2000 were $46.9 million, representing a 5.8 percent increase from net revenues of $44.3 million in the corresponding period in 1999.

The improvement in revenue is attributable primarily to the Company's new slot technology upgrades and strategic marketing campaign. Operating income for the Jackpot Properties increased $0.6 million or 20 percent for the three months ended September 30, 2000 compared to the corresponding period in 1999 due to revenue increases and improvement in cost controls in marketing and other areas.

The Jackpot Properties had a slight decrease in operating income to $8.6 million for the nine months ended September 30, 2000 from $8.9 million for the corresponding period in 1999.

The Reserve Hotel & Casino produced a significant improvement in net revenues during the three months ended September 30, 2000 compared to the three months ended September 30, 1999. During the first three quarters of 2000, management continued to implement strategies to drive revenues and gain market share.

Primarily as a result of these efforts, net revenues increased $3.0 million or 23 percent for the three months ended September 30, 2000 compared to the third quarter of 1999, and $7.1 million or 18.2 percent for the nine months ended September 30, 2000, compared to the same period in 1999. The Reserve achieved $4.5 million in EBITDA compared to a $0.3 million loss for the same period in 1999.

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