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Ameristar Casinos Reports Record Third-Quarter Results

Record diluted earnings per share of $0.49, exceeding analysts' consensus expectations of approximately $0.47 per share.

Record net revenues of $162.7 million, an increase of $78.2 million or 93 percent from the third quarter of 2000.

Record income from operations of $32.0 million.

Record EBITDA (as defined below) of $41.9 million compared to $15.1 million for the third quarter of 2000, an increase of $26.8 million or 177 percent.

The record performance is due primarily to contributions from the Kansas City and St. Charles, Mo. properties, which were acquired in December 2000, and the sale of The Reserve Hotel & Casino in late January 2001. Improvements at the Council Bluffs, Vicksburg and Jackpot properties also contributed to many of these record results. Diluted earnings per share were adversely impacted by a $0.03 per share non-cash charge to interest expense related to the fluctuation in the fair value of a 1997 interest rate collar agreement relating to $50 million principal amount of the Company's senior credit facilities.

The Missouri properties generated $90.4 million of net revenues during the third quarter of 2001. These revenues were partially offset by the absence of net revenues from The Reserve, which generated $15.9 million in net revenues during the third quarter of 2000. Since the Company's customers primarily reside within a 100-mile radius of the Company's properties, revenues were not materially impacted by the slowdown in air travel resulting from the tragic events of Sept. 11, 2001.

Net revenues at Ameristar St. Charles for the third quarter of 2001 were up approximately 20 percent from the corresponding period in 2000. The increase is due to Ameristar's introduction of more than 200 new technology multi-coin slot machines since acquiring the property and the implementation of new marketing campaigns and promotions. Ameristar St. Charles also benefited from strong, steady growth in the St. Louis market, which grew 11 percent from $517.9 million in the first nine months of 2000 to $574.7 million in the first nine months of 2001, based on preliminary information published by regulatory agencies.

The recently completed renovation project at Ameristar Council Bluffs has continued to pay handsome dividends, with net revenues for the third quarter of 2001 improving to $34.5 million, up 11 percent from $31.2 million in the same period last year. Net revenues at Ameristar Kansas City in the third quarter of 2001 were flat compared to the third quarter of 2000, due to several factors described below.

Each of the St. Charles, Council Bluffs and Vicksburg properties improved its market share position in the third quarter of 2001. Ameristar St. Charles continued its trend of market share growth in the steadily growing St. Louis market with a market share of 19.0 percent in the third quarter of 2001, up from 17.5 percent in the third quarter of 2000. Ameristar Council Bluffs' market share increased to 34.4 percent in the third quarter of 2001 from 32.1 percent in the same quarter in 2000. In September 2001, Ameristar led the Council Bluffs market with a 34.9 percent market share, marking the first time Ameristar has surpassed both the land-based property and the other riverboat property in this market. In the first full quarter of operations since completion of a renovation project at Ameristar Vicksburg, the property improved its market share to 34.6 percent from 33.4 percent in the same quarter in 2000.

``Our third quarter results demonstrate that our strategy of investing in ourselves is paying off,'' said Craig H. Neilsen, Ameristar's President and Chief Executive Officer. ``In Council Bluffs and Vicksburg, guests are enjoying the like-new properties following their recent renovations. We expect this strategy to continue to yield positive results next year when the new casino and entertainment facility at Ameristar St. Charles opens and the parking garage at Ameristar Kansas City is completed.''

Ameristar St. Charles' EBITDA of $11.8 million in the third quarter of 2001 represents an increase of more than 40 percent over the EBITDA generated under prior ownership in the corresponding period in 2000. Ameristar Council Bluffs, Ameristar Vicksburg and the Jackpot properties also contributed to the Company's EBITDA growth, posting EBITDA of $10.2 million, $5.9 million and $4.9 million, respectively, for the third quarter of 2001, representing increases of 27.2 percent, 11.6 percent and 8.7 percent, respectively, over the corresponding period in 2000.

Ameristar Kansas City's EBITDA of $13.8 million in the third quarter of 2001 represents an approximately 12 percent decline from the EBITDA generated under prior ownership in the third quarter of 2000. This decline was caused by a variety of factors, including enhanced competition resulting from a competitor's opening of its newly renovated and consolidated casino, construction disruption associated with the one-boat consolidation, casino floor reconfiguration and site work in the parking lot performed in preparation for construction of the new parking garage, as well as an 11.7 percent market-wide decline in table games revenues from the third quarter of 2000 to the third quarter of 2001. In addition, while various new marketing and promotional programs implemented by Ameristar Kansas City in the third quarter of 2001 contributed to an approximately 7 percent increase in slot revenues over the third quarter of 2000, a larger increase in marketing expense and promotional allowances adversely affected the property's EBITDA.

Ameristar expects to improve EBITDA performance at the Kansas City property in future periods through a variety of revenue enhancement and cost control measures. The Company believes this improvement will be driven in part by the ongoing casino reconfiguration following the consolidation of the vessels into a single casino. These modifications, which are expected to be completed by the end of 2001, should allow the property to take full advantage of the synergies created by a single casino, including a more exciting central core area where the wall separating the two vessels has been removed creating improved flow and access throughout the casino. Operating a single casino is also expected to improve operational efficiencies. In addition, the property is in the process of refining its marketing and promotional programs to improve its return on these expenditures. Finally, the property's new 2,660-space parking garage is expected to open in July 2002 and should improve Ameristar Kansas City's competitive position since it is currently the only casino property in the Kansas City market without covered parking.

``Despite Ameristar Kansas City's third quarter results being below our expectations, we are excited about the property's prospects in the future,'' said Neilsen. ``We are confident that the one-boat consolidation and the completion of the parking garage will have a meaningful impact on the performance of the Kansas City property.''

Improvements in EBITDA margin at the Company's properties in Council Bluffs, Vicksburg and the Jackpot properties, along with the addition of the Missouri properties and the sale of The Reserve, led to a consolidated EBITDA margin of 25.8 percent for the quarter ended Sept. 30, 2001, up from 17.9 percent for the third quarter in 2000. Ameristar Council Bluffs improved its EBITDA margin from 25.7 percent in the third quarter of 2000 to 29.5 percent in the third quarter of 2001, primarily as a result of increased revenue and improved operating efficiencies. Ameristar Vicksburg improved its EBITDA margin from 24.9 percent in the third quarter of 2000 to 27.5 percent in the third quarter of 2001, primarily due to increased casino revenues and a continuing emphasis on controlling costs. The improvement in EBITDA margin at the Jackpot properties from 27.9% in the third quarter of 2000 to 30.2% in the third quarter of 2001 was primarily due to its continuing emphasis on controlling costs. The Company's combined EBITDA margin before corporate overhead also increased from 22.2 percent for the quarter ended Sept. 30, 2000 to 28.7 percent for the quarter ended Sept. 30, 2001.

The Company's income from operations in the third quarter of 2001 was $32.0 million compared to $7.6 million in the third quarter of 2000 (excluding the $57.2 million impairment loss associated with the sale of The Reserve) for the same reasons that affected EBITDA.

For the nine months ended Sept. 30, 2001, the Company also reported record earnings per share, revenues, income from operations and EBITDA. The Company had diluted earnings per share of $1.07 for the nine months ended Sept. 30, 2001 compared to $0.13 diluted earnings per share for the nine months ended Sept. 30, 2000 (excluding the effect of the impairment loss associated with the sale of The Reserve). The Company also reported net revenues of $466.7 million and EBITDA of $116.5 million, increases of 89 percent and 150 percent, respectively, over the first nine months of 2000. The Company's income from operations of $88.2 million was an increase of 254 percent over income from operations of $24.9 million in the third quarter of 2000 (excluding the impairment loss associated with the sale of The Reserve).

At September 30, 2001, notwithstanding the Company's various renovation and capital improvement projects, total debt increased only slightly to $721.8 million from $717.6 million at June 30, 2001. These projects have been funded primarily out of operating cash flow through the third quarter of 2001. The Company's cash remained stable, with $41.9 million at September 30, 2001 compared to $40.8 million at June 30, 2001.

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