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Ameristar Results Up

3 February 2005

LAS VEGAS – (PRESS RELEASE) -- Ameristar Casinos, Inc. (Nasdaq: ASCA) today announced 2004 fourth quarter and annual financial results, which set records for consolidated net revenues, operating income, EBITDA, net income and earnings per share.

Financial Highlights

* Fourth quarter consolidated net revenues of $214.7 million, representing an increase of $17.6 million, or 8.9%, over the fourth quarter of 2003. Consolidated net revenues of $854.7 million for the year ended December 31, 2004, an increase of $72.7 million, or 9.3%, from 2003.

* Fourth quarter consolidated operating income of $37.9 million, an increase of $6.6 million, or 20.9%, from the prior-year fourth quarter. Consolidated operating income of $159.5 million for 2004, an increase of $19.5 million, or 14.0%, from 2003.

* Fourth quarter consolidated EBITDA (a non-GAAP financial measure which is defined and reconciled with operating income below) of $57.1 million, representing an increase of $8.8 million, or 18.3%, over the fourth quarter of 2003. Consolidated EBITDA of $232.7 million for the year ended December 31, 2004, an increase of $29.2 million, or 14.3%, from 2003. Our December 21, 2004 acquisition of Mountain High Casino in Black Hawk, Colorado contributed $1.0 million to EBITDA for the quarter and year ended December 31, 2004.

* Fourth quarter consolidated net income of $14.5 million, up $4.9 million, or 51.4%, from the fourth quarter of 2003. Consolidated net income of $62.0 million for the year ended December 31, 2004, an increase of $14.4 million, or 30.2%, from 2003.

* Fourth quarter diluted earnings per share of $0.52, compared to $0.35 for the fourth quarter of 2003. Diluted earnings per share were $2.23 for the year ended December 31, 2004, representing an increase of 26.7% from 2003. Analysts' latest consensus estimates for the fourth quarter and full year 2004, as reported by Thomson First Call, were $0.45 and $2.18, respectively. Our previously issued earnings guidance for the fourth quarter of 2004 indicated a range of $0.41 to $0.45 per share. The Mountain High Casino acquisition had a favorable impact of $0.02 on diluted earnings per share for the fourth quarter and year ended December 31, 2004.

* On November 15, 2004, our Board of Directors declared a quarterly cash dividend of $0.125 per share, which was paid on December 15, 2004 to our shareholders of record as of November 30, 2004.

* Late in the fourth quarter of 2004, we borrowed $115.0 million to fund the Mountain High acquisition, and during the quarter we prepaid $20.0 million of long-term debt under our senior credit facilities. In 2004, we prepaid a total of $65.0 million in debt associated with our senior credit facilities. We improved our total debt leverage ratio (as defined in our senior credit agreement) from 3.49:1 at December 31, 2003 to 3.29:1 at December 31, 2004.

* We continued to be the leader in market share in our Kansas City, Council Bluffs, Vicksburg and Jackpot markets during the fourth quarter of 2004. We were the market share leader in all of our markets for the year ended December 31, 2004.

Craig H. Neilsen, Chairman and CEO, stated: "The 2004 year was the most prosperous in the Company's history, as our reported financial results clearly demonstrate. In 2004, we continued to improve upon the financial successes of prior years by further increasing revenues, profitability and cash flows. Our performance in 2004 extends our trend of growth in all key performance indicators -- net revenues, operating income, EBITDA, net income and earnings per share -- for a third consecutive year. Our success is largely the result of our dedicated and talented team and continuing successful implementation of the four key strategies of our business model: 1) creating the best facility in each of our markets; 2) further building the Ameristar brand; 3) leading our markets in slot technology; and 4) our hands-on management approach at the property and corporate levels."

Financial Results

Net Revenues

Consolidated net revenues for the fourth quarter of 2004 were $214.7 million, an increase of 8.9% compared to the fourth quarter of 2003. All of our properties improved in net revenues, with increases of 9.6% at Ameristar Kansas City, 8.4% at Ameristar Vicksburg, 7.4% at Ameristar St. Charles, 7.0% at Ameristar Council Bluffs and 5.0% at the Jackpot Properties. Mountain High Casino contributed $2.0 million in net revenues during the 11 days that we owned the property in 2004. For the quarter, Ameristar Vicksburg and Ameristar Kansas City improved their market leadership positions (based on gross gaming revenues) to 45.0% and 36.1%, respectively, with increases of 1.6 and 0.5 percentage points, respectively, over the prior-year fourth quarter. Ameristar Council Bluffs maintained its market share leadership position with 39.7% of the market despite a 0.4 percentage point decrease from the last quarter of 2003. The reported market share for Ameristar St. Charles was 31.3%, which represented a 0.7 percentage point decline compared to the fourth quarter of 2003.

Led by a $20.3 million (12.2%) increase in slot revenues, consolidated casino revenues for the fourth quarter of 2004 increased $21.1 million, or 10.9%, from the fourth quarter of 2003. We believe that the growth in slot revenues has been driven by our continued implementation of coinless slot technology at our Ameristar-branded properties, which are now nearly 100% coinless. In addition, we believe our continued leadership in the introduction of new-generation, lower-denomination slot machines at our Ameristar-branded properties has contributed to the improvement in slot revenues, due to the popularity of this segment of the slot market. We further believe casino revenues increased in part as a result of our continued successful implementation of our targeted marketing programs, which is evidenced by a 16.5% increase in rated play at our Ameristar-branded properties when compared to the fourth quarter of 2003, and in part as a result of a relative absence of adverse weather, which had negatively impacted the prior-year fourth quarter. Promotional allowances (which are deducted in arriving at net revenues) increased $4.5 million, or 13.1%, in the fourth quarter of 2004 compared to the 2003 fourth quarter, in part due to the increase in rated play.

For the full year, we had record net revenues of $854.7 million, an increase of $72.7 million, or 9.3%, over 2003. All our properties improved their net revenues over the prior year, with increases of $22.3 million (8.7%) at Ameristar St. Charles, $19.6 million (9.1%) at Ameristar Kansas City, $15.1 million (9.6%) at Ameristar Council Bluffs, $12.4 million (13.0%) at Ameristar Vicksburg and $1.3 million (2.3%) at the Jackpot Properties. For the year ended December 31, 2004, promotional allowances increased $37.2 million, or 29.0%, over the prior year due in part to the rated play increase.

For the year ended December 31, 2004, all our properties improved their market share over the prior year, including increases by Ameristar Vicksburg of 5.0 percentage points to 45.4%, Ameristar Council Bluffs of 1.7 percentage points to 40.9%, Ameristar Kansas City of 0.7 percentage point to 35.1% and Ameristar St. Charles of 0.8 percentage point to 32.0%.

Casino revenues for the year ended December 31, 2004 increased $96.5 million, or 12.7%, from 2003, including increases in slot revenues and table games revenues of 14.0% and 4.6%, respectively. The increased gaming revenues in 2004 are mostly attributable to the improvement in our slot product, as described above. Non-gaming revenues increased $13.4 million, or 8.9%, in 2004 compared to the prior year. The increase in non-gaming revenues was primarily due to a full year of operations of the new dining and entertainment venues at Ameristar Kansas City, which were completed in September 2003.

Operating Income and EBITDA

In the fourth quarter of 2004, consolidated operating income increased $6.6 million, or 20.9%, to $37.9 million. Consolidated operating income margin improved 1.8 percentage points from the prior-year fourth quarter, to 17.7%, driven by increases at Ameristar Vicksburg, Ameristar Kansas City and the Jackpot Properties of 4.9, 2.2, and 9.8 percentage points, respectively, when compared to the same period in 2003. Consolidated EBITDA increased 18.3% to $57.1 million compared to the fourth quarter of 2003. Additionally, consolidated EBITDA margin in the fourth quarter of 2004 increased from 24.5% to 26.6%, with improvements at Ameristar Vicksburg, Ameristar Kansas City, Ameristar St. Charles and the Jackpot Properties of 5.7, 2.2, 0.3 and 10.2 percentage points, respectively, from the prior-year fourth quarter. The growth in operating income, EBITDA and the related margins at these properties was principally driven by the increase in revenues noted above and the continued implementation of cost containment initiatives.

Operating income and EBITDA at Ameristar St. Charles increased $1.0 million and $1.8 million, respectively, in the fourth quarter of 2004, while the change in the related margins was nominal. The margins were impacted by a more competitive market environment that has resulted in increased marketing and promotional costs.

Ameristar Council Bluffs increased fourth quarter operating income by $0.4 million and fourth quarter EBITDA by $0.9 million when compared to the prior-year period. The improvements in operating income and EBITDA occurred despite a 2.0% increase in the Iowa tax rate on gaming revenues of riverboat casinos, which became effective July 1, 2004. Operating income margin decreased 0.9 percentage point to 28.7% and EBITDA margin declined 0.3 percentage point to 35.8% due to higher health benefit costs, a sales and use tax assessment and the aforementioned gaming tax increase.

Mountain High Casino contributed $0.9 million to consolidated operating income and $1.0 million to EBITDA for the 11-day period from the acquisition date through December 31, 2004.

Corporate expense increased $1.1 million in the fourth quarter of 2004 compared to the same quarter of 2003. The increase was primarily the result of higher costs, including employee compensation, employee benefits and professional fees and related costs, associated with our expanded development activities.

Depreciation and amortization expense increased to $19.2 million in the fourth quarter of 2004 from $16.9 million in the fourth quarter of 2003, primarily due to the increase in our depreciable assets resulting from the completion of enhancement and renovation projects at Ameristar Kansas City in September 2003 and Ameristar Vicksburg in December 2003, the continued implementation of coinless slot technology and the introduction of lower-denomination slot machines at our Ameristar-branded properties.

For the full year 2004, operating income and EBITDA reached record levels of $159.5 million and $232.7 million, respectively. Corporate expense increased $4.1 million, or 11.1%, compared to 2003. This increase resulted primarily from the continued growth of the company and increased development activities. Development-related costs totaled $4.3 million for the year ended December 31, 2004, a $2.3 million increase over 2003. We expect this trend to continue through 2005 as we seek growth through development opportunities in the United Kingdom, Pennsylvania and elsewhere and through acquisition opportunities.

Net Income and Diluted Earnings Per Share

For the fourth quarter of 2004, net income increased 51.4% to $14.5 million, from $9.5 million for the fourth quarter of 2003. Diluted earnings per share were $0.52 in the quarter ended December 31, 2004, compared to $0.35 in the corresponding prior-year quarter. Diluted earnings per share in the 2004 quarter benefited by $0.02 as a result of the acquisition of the Black Hawk property. Interest expense for the 2004 fourth quarter was $14.0 million, down $2.0 million from the fourth quarter of 2003. The decline was due to a decrease in our average long-term debt level for the quarter as we prepaid senior debt, the termination of our interest rate swap agreement on March 31, 2004, and lower interest rates on our senior credit facilities year-over-year. We incurred $0.3 million in non-operating losses on early retirement of debt in the fourth quarters of both 2004 and 2003.

Net income for the full year 2004 increased to $62.0 million from $47.6 million in 2003, and diluted earnings per share improved to $2.23 from $1.76. Interest expense for 2004 decreased to $57.0 million from $64.3 million in 2003 for the reasons noted above.

Our effective income tax rate for the quarter ended December 31, 2004 decreased to 36.9% from 37.7% for the quarter ended December 31, 2003, due primarily to a decrease in our effective state income tax rate. Our effective income tax rate for the year ended December 31, 2004 was 38.6%, compared to 37.0% for the prior year. The federal statutory rate was 35.0% in each year. The difference from the statutory rate was due to the effects of certain expenses we incurred that are not deductible for federal income tax purposes and certain tax credits.

Liquidity and Capital Resources

Our financial position remains strong, with approximately $86.5 million of cash and cash equivalents and $68.9 million of available borrowing capacity under our senior credit facilities as of December 31, 2004. During the fourth quarter of 2004, we increased our long-term debt by approximately $96.6 million, due primarily to the borrowing of $115.0 million under our senior credit facilities in order to fund the acquisition of the Black Hawk property. Partially offsetting our borrowings, we made prepayments totaling $20.0 million of principal under our senior credit facilities in the fourth quarter of 2004. At December 31, 2004, our total debt was $766.3 million, representing an increase of $49.4 million from December 31, 2003.

Capital expenditures for the 2004 fourth quarter and full year totaled $26.8 million and $89.6 million, respectively, and included the continued acquisition of coinless slot machines, the implementation of information technology solutions to enhance our operating capabilities and capital projects at all of our properties.

In 2005, we expect to incur approximately $200.0 million in capital expenditures. We anticipate spending approximately $50.0 million on maintenance capital expenditures (including the acquisition of slot machines) and approximately $150.0 million on internal expansion projects. Actual 2005 capital expenditures will depend on the start date of certain projects and the progress of construction through year-end. Our planned internal expansion projects include: 1) the reconfiguration and expansion of the gaming area, additional covered parking, an upgrade of the food and beverage outlets and construction of a 300-room AAA Four Diamond-quality hotel at our newly acquired property in Black Hawk, Colorado; 2) the renovation of hotel rooms at our Council Bluffs and Kansas City properties, which began in the fourth quarter of 2004; 3) the expansion of our gaming space at Ameristar Council Bluffs and Ameristar Vicksburg to accommodate increases of 300 and 200 slot machines, respectively, and the addition of a poker room at both properties; and 4) the construction of a 300-room, all-suite hotel, 20,000 square feet of meeting facilities, a new 1,300-seat entertainment pavilion and an additional parking garage at Ameristar St. Charles. We anticipate the benefit associated with these internal growth projects will primarily be realized commencing in 2006 and 2007.

Outlook

Based on our preliminary results of operations to date in 2005 and our outlook for the remainder of the quarter, we currently estimate operating income of $42 million to $44 million, EBITDA of $62 million to $64 million (given anticipated depreciation expense of $20 million), interest expense of $15 million and diluted earnings per share of $0.58 to $0.63 for the first quarter of 2005.

For the year ending December 31, 2005, we currently estimate operating income of $171 million to $179 million, EBITDA of $254 million to $262 million (given anticipated depreciation expense of $83 million), interest expense of $62 million and diluted earnings per share of $2.34 to $2.51. These estimates take into account construction disruption at most of our properties associated with the projects described above as we position them for future growth. Financial Accounting Standards Board Statement No. 123(R), Share-Based Payment, will become effective in the quarter ending September 30, 2005. Statement 123(R) requires the recognition of compensation expense in an amount equal to the fair value of share-based payments (e.g., stock options and restricted stock) granted to employees. Our estimates of operating income, EBITDA and diluted earnings per share for the full year 2005 do not give effect to the impact of this new standard, as we are unable to reasonably estimate the impact at this time.

Gaming regulatory authorities in Colorado, 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 other expenses) influence our operating income, EBITDA and diluted earnings per share, such reported information, as it relates to Ameristar, may not be indicative of the results of our operations for such periods or for future periods.

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