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Ameristar Casinos reports results

21 February 2008

LAS VEGAS, Nevada -- (PRESS RELEASE) -- Ameristar Casinos, Inc. (Nasdaq: ASCA ) today announced financial results for the fourth quarter and year ended December 31, 2007.

"Ameristar retained its strong positions in all locations in 2007," said John Boushy, Chief Executive Officer and President. "We maintained stable profit margins and market positions on a same-store basis for the year due to the high quality of our assets and the broad array of amenities at our properties. This is indicative of the strong appeal of the Ameristar brand and our ongoing commitment to drive profitable growth."

"Although slowing market growth, severe weather and construction-related disruption negatively impacted our fourth quarter performance, Ameristar demonstrated substantial resilience in the face of this confluence of factors," Mr. Boushy said.

Net revenues for the fourth quarter were $302.8 million compared to $244.0 million in last year's fourth quarter. Included in 2007 results were net revenues of $64.4 million from the Company's East Chicago property, which was acquired on September 18, 2007.

Fourth quarter 2007 adjusted EBITDA was $66.8 million, similar to the $66.6 million in adjusted EBITDA for the 2006 fourth quarter. Adjusted EBITDA for the 2007 fourth quarter represents EBITDA of $59.3 million, excluding:

-- pre-opening expenses of $2.1 million related to the St. Charles hotel and other new amenities;

-- integration and transition costs of $974,000 related to the East Chicago property acquisition; and

-- an impairment loss of $4.5 million related to a previously-planned hotel project.

Adjusted EBITDA for the 2006 fourth quarter represents EBITDA of $66.1 million, excluding:

-- an impairment loss of $581,000 related to a previously-planned hotel project.

More information on non-GAAP financial measures, EBITDA and Adjusted EBITDA can be found under the caption "Use of Non-GAAP Financial Measures" on page 15 of this release.

Operating income for the fourth quarter of 2007 was $34.5 million compared to $42.0 million in the same 2006 period. Fourth quarter operating income was negatively affected by the $4.5 million impairment charge and the $3 million of pre-opening and acquisition-related expenses cited above, as well as an increase of $1.8 million in stock-based compensation expense.

Net income for the fourth quarter was $8.2 million, or $0.14 per share on a diluted basis, which included $4.9 million, or $0.08 per share, representing the after-tax impact of the impairment loss and pre-opening and acquisition-related expenses. Fourth quarter 2007 net income benefited by $1.9 million, or $0.03 per diluted share, from the favorable outcome of a state income tax matter. In last year's fourth quarter, the Company reported net income of $17.8 million, or $0.31 per diluted share, which included $378,000, or $0.01 per share, representing the after-tax impact of the impairment loss.

Net revenues for full year 2007 were $1.1 billion and included $73.6 million in net revenues from the recently-acquired East Chicago property. For 2006, the Company reported net revenues of $1.0 billion.

Adjusted EBITDA for 2007 reached $277.9 million, up 3.8% from 2006 adjusted EBITDA of $267.7 million. Adjusted EBITDA for 2007 represents EBITDA of $268.5 million, excluding:

-- pre-opening expenses of $2.8 million related to the St. Charles hotel and other new amenities;

-- integration and transition costs of $2.1 million related to acquisition of the East Chicago property; and

-- the impairment loss of $4.5 million related to the previously-planned hotel project.

Adjusted EBITDA for 2006 represents EBITDA of $265.4 million, excluding:

-- rebranding costs of $1.7 million related to the Black Hawk property; and

-- the impairment loss of $581,000 related to the previously-planned hotel project.

Operating income for the year was $173.7 million, an increase of 1.3% from the $171.5 million reported in 2006. Net income was $69.4 million, or $1.19 per diluted share, compared to $59.6 million, or $1.04 per diluted share reported for 2006. Net income for 2007 included $6.7 million, or $0.11 per diluted share, representing the after-tax impact of the impairment loss, pre-opening expenses and acquisition-related integration and transition costs cited above, as well as the net negative impact of an adjustment to state income tax expense. In 2006, net income included a $17.1 million, or $0.30 per diluted share, after-tax impact of a loss on early retirement of debt and $1.5 million, or $0.03 per diluted share, related to rebranding costs and the impairment loss.

In 2007, the Company repurchased 376,400 shares of common stock in the open market at an average price of $25.65 per share for a total cost of $9.7 million. Since August 2006, the Company has repurchased 787,236 shares at an average price of $22.43 per share for an aggregate cost of $17.7 million. Approximately 2.0 million shares remain available for repurchase under the currently authorized repurchase program.

2007 Property Highlights

-- Ameristar Black Hawk remained a strong performer in 2007, reporting EBITDA growth of 49.6% for the year and 23.6% for the fourth quarter and increasing its market share in both periods. This property has reported excellent results since its rebranding as "Ameristar" in April 2006 and demonstrates the Company's successful strategy to generate profitable growth through its high quality product, superior guest service and proven marketing techniques.

-- Ameristar Kansas City posted increased profitability for the year despite softer market conditions in the fourth quarter. EBITDA increased 3.7% on a year-over-year basis, overcoming a significant increase in the number of bad weather days during the fourth quarter and the major expansion of a competitor's property in the second quarter.

-- Ameristar St. Charles continued to be a strong market competitor. Net revenues remained stable on a year-over-year basis and EBITDA, excluding pre-opening expenses, declined by a modest 1% in 2007 despite the significant construction-related disruptions and delays, the impact of bad weather during the fourth quarter and increased competition in the market that occurred in the second half of the year.

-- Ameristar Council Bluffs increased its sequential market share in the fourth quarter without incremental promotional spending. Net revenues for 2007 were slightly below 2006 levels, primarily due to the opening of a competitor's property in the first quarter of 2006. EBITDA declined 2% for the year principally due to softer market conditions throughout most of the year and inclement weather during the fourth quarter.

-- The Jackpot properties recorded 6.6% net revenue growth for the year and a 9.2% increase in EBITDA, reflecting the strength of Ameristar's position in this market.

-- Ameristar Vicksburg's net revenue performance was affected by the re-opening of Gulf Coast casinos that were previously closed as a result of Hurricane Katrina and, during the second half of the year, by significant construction-related disruptions at the property and general economic weakness in the region. Net revenues were down 3.5% for the year and EBITDA declined 5.2% from 2006 levels.

-- East Chicago, which the Company acquired late in the third quarter, experienced a 13.5% decline in fourth quarter gross gaming revenues during this transition period. This was slightly greater than the market decline. Year-to-date EBITDA was $8.8 million, including $1.2 million in integration costs.

Outlook

Based upon current economic forecasts and initial revenue trends in the Company's markets, management expects that the first half of 2008 will be a period of difficult same-store, year-over-year comparisons. "Within what is projected to be a challenging economic environment," Mr. Boushy said, "we believe that Ameristar will continue to benefit from the broad appeal of our properties, our disciplined operating and marketing strategies, and the expansions that we are bringing on-line in 2008 and beyond."

Within a period of slower than historical market growth, management expects to maintain Ameristar's market share positions and industry-leading margins on a same-store basis.

"In 2007, the Company made significant investments in the expansion and enhancement of our properties," Mr. Boushy noted. "As we complete our St. Charles and Vicksburg projects and rebrand our East Chicago property, Ameristar will be well-positioned to drive market growth, increase market share and post improving operating profitability during 2008."

For the full year 2008, the Company currently expects:

-- depreciation to range from $110 million to $115 million

-- interest expense to be between $77 million and $82 million

-- the combined state and federal income tax rate to be in the range of 42 percent to 43 percent

-- capital spending of $275 million to $300 million

-- capitalized interest of $12 million to $15 million

-- non-cash stock-based compensation expense of $12 million to $13 million.

Expansion Projects

St. Charles. In late December 2007, Ameristar opened two high-quality amenities to complement its St. Charles facility. HOME, a 17,500 square-foot nightclub, was launched on December 27th with a five-day celebration that attracted sellout crowds. Lixx, the trendy new circle bar located on the gaming floor, features high energy music provided by a state-of-the-art audio system.

At the end of January 2008, the Company opened the first 100 guest suites at the luxurious Ameristar St. Charles hotel. The hotel currently has 159 suites in operation. Over each of the next several months, 80 to 100 suites should be added. It is expected that all 400 guest suites, as well as the 7,000-square-foot spa and indoor-outdoor pool, will be fully operational by May.

In addition, the renovation and modernization of Ameristar Boulevard, the five-lane access road to Ameristar St. Charles, was completed in December 2007 and provides a greatly improved approach to the property. New lighting and additional landscaping to enhance the entrance and arrival experience are currently being installed.

East Chicago. The Company's East Chicago property, which represents an important market for future growth, is undergoing a number of improvements that are designed to positively impact performance.

Upgrades to the casino and enhancements to the dining experiences are ongoing in an effort to bring the property closer to the Ameristar standard. The Company is also fine-tuning its marketing and promotional activities in order to most effectively reach its target customers.

Ameristar remains on budget for the upgrades and related expenses to be incurred in connection with the rebranding of the property. The Company continues to expect to launch the Ameristar brand in the Chicagoland market no later than the third quarter of 2008.

Jackpot. In order to reinforce its AAA Four Diamond rating, the hotel at Cactus Petes is undergoing renovation. The project is expected to be complete by Memorial Day at a cost of approximately $16 million.

Vicksburg. Ameristar Vicksburg is undergoing a major expansion program at a cost of approximately $100 million. Work is progressing on the 1,000-space garage and expanded gaming facility with completion targeted for the end of June 2008. Renovation of the hotel was completed in December 2007 on schedule and slightly below budget.

Black Hawk. Excavation and rock removal at the site of the new Ameristar Black Hawk hotel has been completed. Work on the 536-room hotel tower is continuing, and the planned opening for the hotel remains in the second half of 2009. The cost of the hotel is expected to be approximately $235 million to $240 million, representing an increase of $15 million to $20 million over the previous budget. The revised cost estimate is attributable to increases in material costs and the unforeseen site conditions, which necessitated the relocation of incoming utilities.

Council Bluffs. The Company continues to evaluate design alternatives for its planned expansion project at Council Bluffs. The current plan calls for doubling the casino floor by adding approximately 60,000 square feet to the facility with a budget of approximately $100 million and a scheduled completion date in the second half of 2009.

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