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Ameristar Casinos Reports Strong Financial Results For Q2 2002

24 July 2002

LAS VEGAS – (Press Release) -- Ameristar Casinos, Inc. (Nasdaq: ASCA) today announced financial results for the quarter ended June 30, 2002. Highlights for the second quarter include:

-Net revenues of $166.3 million, an increase of $19.1 million, or 13.0 percent, from the second quarter of 2001.

-Adjusted operating income of $34.7 million, representing an increase of $5.2 million, or 17.6 percent, over operating income for the same quarter last year. Adjusted operating income for the second quarter of 2002 excludes $5.5 million of non-recurring charges associated with (1) the pending sale of certain Ameristar St. Charles assets and (2) preopening expenses relating to the new St. Charles facility.

-EBITDA (as defined below) of $45.1 million, compared to $38.8 million for the second quarter of 2001, representing a 16.2 percent increase.

-Net income of $12.6 million, up $3.7 million, or 41.6 percent, over the second quarter of 2001. Non-recurring charges at Ameristar St. Charles reduced second quarter 2002 net income by $3.6 million.

-Diluted earnings per share of $0.47 compared to $0.40 for the second quarter of 2001. Diluted earnings per share before non-recurring charges were $0.60, exceeding analysts' consensus expectations of $0.57, as reported by Thomson's First Call.

The Company's improved performance in the second quarter of 2002 was driven primarily by strong operating results at its Council Bluffs, Vicksburg, St. Charles and Jackpot properties. Each of these properties benefited from the continuing implementation of targeted marketing programs, new slot equipment and cost containment programs during the second quarter of 2002. In addition, the Council Bluffs and Vicksburg properties continue to benefit from the renovation and enhancement projects that were completed in 2001.

"We are very pleased with our growth in the second quarter of 2002," said Craig H. Neilsen, the Company's chairman, president and CEO. "We have continued to improve our market share in our Midwestern markets, with remarkable market share growth in Council Bluffs and Vicksburg. With the upcoming opening of the expansive new St. Charles facility on August 6, we look forward to continuing these trends."

Net revenues at Ameristar St. Charles for the second quarter of 2002 were $38.8 million, an increase of 12.8 percent from the first quarter of 2001, marking the sixth straight quarter of double-digit revenue growth for the property. Ameristar St. Charles continued to improve its market share, with an increase in the second quarter of 2002 to 21.1 percent, up from 18.5 percent in the second quarter of 2001. Adjusted operating income (operating income before impairment loss on assets held for sale and preopening expenses related to the new St. Charles facility) was $10.9 million in the second quarter of 2002, representing an increase of 3.8 percent from the corresponding period in 2001.

Operating expenses (excluding impairment loss and preopening expenses) increased by $4.1 million largely due to higher expenses directly associated with increased revenues and additional marketing and depreciation expenses. Consequently, the adjusted operating income margin decreased from 30.6 percent for the quarter ended June 30, 2001 to 28.1 percent for the same quarter in 2002. EBITDA at the St. Charles property improved to $12.3 million in the second quarter of 2002, an increase of 8.8 percent over the corresponding period in 2001.

The Company has entered into an agreement to sell various assets that will not be utilized at the new facility, including the existing casino barge, for $6.6 million (net of expenses), in a transaction that is expected to close shortly after the new facility opens. Ameristar St. Charles also intends to sell approximately 900 slot machines that will not be used by the Company. Accordingly, in the second quarter of 2002, the Company recorded a $4.1 million impairment loss associated with these assets based on their estimated realizable values. In addition, the Company incurred $1.3 million in preopening expenses associated with the opening of the new facility, including payroll and related items, contract labor, and advertising.

Ameristar Kansas City generated net revenues of $52.5 million for the second quarter of 2002, which represents an increase of $1.2 million, or 2.3 percent, from the prior year quarter. The property's 7.5 percent increase in gaming revenues from the second quarter of 2001 to the same quarter in 2002 exceeded the growth in the overall Kansas City market of 6.2 percent and improved the property's market share in the second quarter of 2002 to 34.0 percent, up from 33.5 percent in the second quarter of the prior year. Increased costs of targeted marketing programs, which are recorded as promotional allowances, caused net revenues to grow at a lower rate than gaming revenues.

Despite the increase in revenues, income from operations and EBITDA at Ameristar Kansas City decreased $1.3 million, or 10.9 percent, and $1.4 million, or 9.3 percent, respectively, in the second quarter of 2002 compared to the second quarter of 2001. The increase in operating expenses from the second quarter of 2001 to 2002 was related to higher expenses directly associated with increased revenues, additional employee benefit costs, and increased marketing expenses.

The property also incurred $250,000 in costs to terminate a restaurant lease to accommodate a new casino entrance that provides direct access from the recently-opened parking garage. Ameristar Kansas City's results were also impacted by increased competition in the second quarter of 2002 compared to 2001 due to the completion of a major facility enhancement by one of Ameristar's competitors in the market.

In order to improve its competitive position in the Kansas City market, the property completed its 2,650-space parking garage and related improvements to casino access in mid July and has recently implemented certain management and operational changes. In addition, the Company is considering certain further renovations and enhancements to the property.

Ameristar Council Bluffs posted substantially improved financial results again in the second quarter of 2002. Net revenues increased to $36.6 million, up $6.8 million from the second quarter of 2001. The 22.8 percent increase in net revenues was driven by a 27.9 percent increase in gaming revenues, which far outpaced the Council Bluffs market's strong 7.9 percent growth in gaming revenues. This drove Ameristar Council Bluffs' market share to 37.6 percent for the second quarter of 2002, up from 31.7 percent in the second quarter of 2001. Ameristar has now been the market share leader in Council Bluffs for ten consecutive months. Operating income and EBITDA also improved significantly, up 52.3 percent and 38.2 percent, respectively, over the same quarter in 2001.

Ameristar Vicksburg also experienced dramatic improvement in the second quarter of 2002, with net revenues increasing by $5.5 million, or 31.3 percent, over the same quarter in 2001. Operating income increased $2.8 million, or 77.8 percent, and EBITDA increased $3.3 million, or 60.0 percent, over the same quarter in 2001. Ameristar Vicksburg, the long-time market share leader in Vicksburg, improved its market share to 39.6 percent in the second quarter of 2002, up from 30.8 percent in the second quarter of 2001.

Ameristar Vicksburg's improvement in its financial results is primarily due to the completion of the renovation and enhancement project, which adversely impacted the results for the first quarter of 2001 due to construction disruption and has improved the property's performance significantly since its completion. In addition, effective targeted marketing programs and cost control measures continue to contribute to the success of the property.

Net revenues at the Jackpot Properties in the second quarter of 2002 were $15.3 million, up 7.7 percent from the second quarter of 2001. This improvement is attributable to more effective marketing programs and an improved Southern Idaho economy in the 2002, period compared to the 2001 period. The Jackpot Properties generated operating income of $3.2 million and EBITDA of $4.0 million, up 39.1 percent and 21.2 percent, respectively, over the second quarter of 2001. These substantial improvements in operating income and EBITDA, despite more modest revenue growth, reflect the properties' continuing emphasis on operating efficiencies and cost-control measures.

At June 30, 2002, the Company's total debt was $715.6 million, representing an increase of $42.5 million from total debt at March 31, 2002. The increase is primarily attributable to borrowings made to fund construction of the new casino and entertainment facility at Ameristar St. Charles and the parking garage at Ameristar Kansas City. The Company's cash remained unchanged at $45.8 million at June 30 and March 31, 2002.

The Company's interest expense in the second quarter of 2002 was $9.4 million, down 39.7 percent from $15.6 million in the second quarter of 2001, due to a lower average interest rate on the outstanding debt, increased capitalization of interest as a result of construction in progress at Ameristar St. Charles and Ameristar Kansas City, and lower debt levels in second quarter of 2002 compared to 2001. Total interest cost, before capitalizing interest associated with the Company's ongoing construction projects, was $17.2 million in the second quarter of 2002 compared to $19.6 million for the same period in 2001. In June 2002, the Company amended the credit agreement governing its senior credit facilities to, among other things, significantly reduce its borrowing costs through a reduction in the applicable interest rate.

In accordance with Statement of Financial Accounting Standards No. 142, which the Company adopted on January 1, 2002, the Company no longer records goodwill amortization expense. Ameristar recorded $0.4 million in goodwill amortization expense ($0.3 million after tax) in the second quarter of 2001, which decreased diluted earnings per share by $0.01 for that quarter.

The number of diluted shares outstanding increased by 20.9 percent from the second quarter of 2001 to the second quarter of 2002, primarily due to the issuance of 4.9 million shares in the Company's December 2001 public equity offering. Among other factors, this increase in outstanding shares affects the comparability of earnings per share between the second quarter of 2001 and the second quarter of 2002.

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