Ameristar Casinos Reports Second Quarter 2010 Results

SOURCE: Ameristar Casinos, Inc.

LAS VEGAS, NV–(Marketwire – August 4, 2010) – Ameristar Casinos, Inc. (NASDAQ: ASCA)

  • Second Quarter Consolidated Net Revenues Decreased $15.9 Million and
    Adjusted EBITDA Declined $7.2 Million Year Over Year, Reflecting Greater
    than Anticipated Impact from East Chicago Bridge Closure
  • Strong Consolidated Adjusted EBITDA Margin of 27.2% Despite
    Year-Over-Year Net Revenue Decline
  • Ameristar Black Hawk Adjusted EBITDA Grew 121.5% ($7.7 Million) Year
    Over Year, Reflecting Transformation by Regulatory Enhancements and Resort
    Hotel Opening
  • Continued Strengthening of Balance Sheet with $28 Million in Second
    Quarter Debt Repayments

Ameristar Casinos, Inc. (NASDAQ: ASCA) today announced financial results
for the second quarter of 2010.

“All of our properties performed quite well during the second quarter, with
the exception of Ameristar East Chicago,” said Gordon Kanofsky, Ameristar’s
Chief Executive Officer. “Although our East Chicago property’s financial
results were adversely affected by a nearby bridge closure to a degree much
greater than originally anticipated, the rest of our property portfolio
produced solid year-over-year results that were consistent with our
expectations going into the second quarter. In fact, if we exclude East
Chicago from our consolidated financial results for both 2010 and 2009, our
Adjusted EBITDA for the second quarter would have increased 2.9% year over
year and our Adjusted EBITDA margin would have increased 0.7 point to
30.6%, illustrating the Company’s efficient revenue flow-through at all its
other properties.

“As was the case in the first quarter, changed conditions for our Black
Hawk and St. Charles properties also significantly influenced our
consolidated second quarter financial performance,” added Kanofsky.
“Ameristar Black Hawk once again posted substantial year-over-year
improvement in all financial metrics thanks to the September 2009 opening
of its luxury hotel and the July 2009 regulatory reform in Colorado. One
of those metrics, Adjusted EBITDA margin, reached 37.6% for the second
quarter of 2010 and set a new quarterly record for the property, far
surpassing its previous record of 34.6% established last quarter. Our St.
Charles property was negatively impacted by new competition that entered
the St. Louis gaming market in early March 2010, although to a lesser
degree than we had anticipated prior to its opening. In addition to
Ameristar Black Hawk, our Council Bluffs and Vicksburg properties were our
most notable positive contributors to this quarter’s operating results, as
demonstrated by their year-over-year growth in Adjusted EBITDA and
margins.”

Second Quarter 2010 Results

The following factors impacted the comparison between the second quarters
of 2010 and 2009:

  • East Chicago bridge closure. The permanent closure of the Cline Avenue
    bridge in the fourth quarter of 2009 has made access inconvenient for many
    of the property’s guests. The closure resulted in decreases of 25.6% and
    62.6% in the property’s net revenues and Adjusted EBITDA, respectively, as
    compared to the prior-year second quarter. To date, the bridge closure has
    had a larger-than-anticipated adverse impact on Ameristar East Chicago’s
    financial performance. The Company has significantly reduced forecasted
    financial results for the property based on the actual operating results
    since the bridge closure. As a result, in the second quarter of 2010 the
    Company recorded a non-cash impairment charge of $56.0 million ($33.2
    million on an after-tax basis) that completely eliminates the remaining net
    book value of goodwill associated with the acquisition of the East Chicago
    property and reduces the carrying value of the property’s gaming license to
    $12.6 million.
  • Black Hawk hotel and regulatory changes. The regulatory changes that
    became effective early in the third quarter of 2009 and our hotel that
    opened in September 2009 contributed to Ameristar Black Hawk’s 81.7% and
    121.5% increases in year-over-year net revenues and Adjusted EBITDA,
    respectively.
  • Ameristar St. Charles. During the second quarter of 2010, our St.
    Charles property’s net revenues and Adjusted EBITDA declined 11.6% and
    14.2%, respectively, from the prior-year second quarter. The decreases
    were mostly due to the entry of a new competitor in the St. Louis gaming
    market.

Consolidated net revenues for the second quarter decreased 5.1%, from
$308.9 million in the prior year to $293.0 million in the current year.
The year-over-year comparison was mostly impacted by the combined effect of
the East Chicago, Black Hawk and St. Charles factors noted above. For the
quarter ended June 30, 2010, promotional allowances increased $15.6 million
(23.7%) over the prior-year second quarter. The year-over-year rise in
promotional allowances was mostly due to increased promotional spending
related to the new hotel in Black Hawk and our efforts to draw business
following the bridge closure near our East Chicago property. For the
second quarter of 2010, as a result of the East Chicago non-cash impairment
charge, we generated an operating loss of $6.0 million, compared to
operating income of $55.6 million in the same period in 2009. Consolidated
Adjusted EBITDA decreased 8.3%, from $86.8 million in the second quarter of
2009 to $79.6 million in 2010. Consolidated Adjusted EBITDA margin
decreased 0.9 percentage point, from 28.1% in the second quarter of 2009 to
27.2% in the second quarter of 2010.

For the three months ended June 30, 2010, the Company incurred a net loss
of $24.9 million, or $0.43 per diluted share, compared to net income of
$14.3 million, or $0.25 per diluted share, for the quarter ended June 30,
2009. Excluding the impact of the East Chicago impairment charge, net
income would have been $8.3 million for the second quarter of 2010.
Adjusted EPS was $0.13 for the quarter ended June 30, 2010, compared to
$0.32 for the 2009 second quarter. The decrease in Adjusted EPS from the
prior-year second quarter was primarily attributable to higher borrowing
costs resulting from the Company’s 2009 debt restructuring, as well as the
decline in net revenues. Adjusted EPS for the 2010 second quarter reflects
a $0.09 negative impact from increased interest expense.

Additional Financial Information

Debt. At June 30, 2010, the face amount of our outstanding debt was
$1.63 billion. Net repayments in the second quarter of 2010 totaled $28.0
million, including a $27.0 million repayment of a portion of the principal
balance outstanding under the revolving credit facility. After taking into
consideration the $62.0 million in net repayments under the revolving
credit facility for the first six months of 2010, the Company has $118.6
million due in November 2010, with approximately $122 million available for
borrowing under the extended portion of the revolving credit facility. The
Company intends to repay all 2010 debt maturities with cash from operations
and availability under the extended portion of the revolving credit
facility. At June 30, 2010, our total leverage and senior leverage ratios
(each as defined in the senior credit facility) were required to be no more
than 6.00:1 and 5.50:1, respectively. As of that date, our total leverage
and senior leverage ratios were each 4.95:1.

Interest Expense. For the second quarter of 2010, net interest
expense was $34.1 million, compared to $25.6 million in the prior-year
second quarter. The increase is due mostly to the May 2009 issuance of our
9-1/4% senior unsecured notes due in 2014 and the incremental interest
expense incurred on the portion of the revolving credit facility that was
extended in November 2009. Additionally, capitalized interest decreased
from $2.4 million for the second quarter of 2009 to $0.2 million in the
2010 second quarter, due to the completion of the Black Hawk hotel.

Capital Expenditures. For the second quarters of 2010 and 2009,
capital expenditures were $12.2 million and $35.6 million, respectively.

Dividends. During the second quarter of 2010, our Board of Directors
declared a cash dividend of $0.105 per share, which we paid on June 25,
2010.

Outlook

“As we look into the third quarter, we are optimistic regarding the
performance of the properties in our more stable markets, including Kansas
City, Council Bluffs and Vicksburg,” said Kanofsky. “We anticipate Black
Hawk will continue to produce year-over-year growth based on the new hotel
and related amenities despite reaching the July anniversary of the
regulatory changes. We also expect some opportunities for growth in
Missouri, as both of our properties have been permitted to operate 24 hours
daily (except for one hour each Wednesday morning) since July 1, 2010.
Prior to the change in operating hours, our Missouri properties were
required to be closed for three hours per day on non-holiday weekdays.
From an Adjusted EPS standpoint, assuming no significant changes in LIBOR,
we expect to save approximately $6.5 million in interest expense per
quarter from the July 19, 2010 expiration of our interest rate swap
agreements. We also intend to seek Adjusted EPS growth through further
deleveraging with free cash flow.”

In the third quarter of 2010, the Company currently expects:

  • depreciation to range from $27 million to $28 million.
  • interest expense, net of capitalized interest, to be between $27.5
    million and $28.5 million, including non-cash interest expense of
    approximately $2.8 million.
  • the combined state and federal income tax rate to be in the range of
    42.5% to 43.5%.
  • capital spending of $15 million to $20 million.
  • capitalized interest of $0.1 million to $0.2 million.
  • debt reduction of approximately $25 million.
  • non-cash stock-based compensation expense of $3.4 million to $3.9
    million.

Conference Call Information

We will hold a conference call to discuss our second quarter results on
Wednesday, August 4, 2010 at 11 a.m. EDT. The call may be accessed live by
dialing toll-free (888) 694-4728 domestically, or (973) 582-2745, and
referencing conference ID number 87046127. Conference call participants
are requested to dial in at least five minutes early to ensure a prompt
start. Interested parties wishing to listen to the conference call and
view corresponding informative slides on the Internet may do so live at our
website — www.ameristar.com — by clicking on “About Us/Investor
Relations” and selecting the “Webcasts and Events” link. A copy of the
slides will be available in the corresponding “Earnings Releases” section
one-half hour before the conference call. In addition, the call will be
recorded and can be replayed from 2 p.m. EDT, August 4, 2010 until 11:59
p.m. EDT, August 18, 2010. To listen to the replay, call toll-free (800)
642-1687 domestically, or (706) 645-9291, and reference the conference ID
number above.

Forward-Looking Information

This release contains certain forward-looking information that generally
can be identified by the context of the statement or the use of
forward-looking terminology, such as “believes,” “estimates,”
“anticipates,” “intends,” “expects,” “plans,” “is confident that,” “should”
or words of similar meaning, with reference to Ameristar or our management.
Similarly, statements that describe our future plans, objectives,
strategies, financial results or position, operational expectations or
goals are forward-looking statements. It is possible that our expectations
may not be met due to various factors, many of which are beyond our
control, and we therefore cannot give any assurance that such expectations
will prove to be correct. For a discussion of relevant factors, risks and
uncertainties that could materially affect our future results, attention is
directed to “Item 1A. Risk Factors” and “Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in our
Annual Report on Form 10-K for the year ended December 31, 2009, and “Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations” in our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2010.

On a monthly basis, gaming regulatory authorities in certain states in
which we operate publish gross gaming revenue and/or certain other
financial information for the gaming facilities that operate within their
respective jurisdictions. Because various factors in addition to our gross
gaming revenue (including operating costs, promotional allowances and
corporate and other expenses) influence our operating income, Adjusted
EBITDA and diluted earnings per share, such reported information, as it
relates to Ameristar, may not accurately reflect the results of our
operations for such periods or for future periods.

About Ameristar

Ameristar Casinos, Inc. is a leading Las Vegas-based gaming and
entertainment company known for its premier properties characterized by
state-of-the-art casino floors and superior dining, lodging and
entertainment offerings. Ameristar’s focus on the total entertainment
experience and the highest quality guest service has earned it leading
positions in the markets in which it operates. Founded in 1954 in Jackpot,
Nev., Ameristar has been a public company since November 1993. The Company
has a portfolio of eight casinos in seven markets: Ameristar Casino Resort
Spa St. Charles (greater St. Louis); Ameristar Casino Hotel East Chicago
(Chicagoland area); Ameristar Casino Hotel Kansas City; Ameristar Casino
Hotel Council Bluffs (Omaha, Neb., and southwestern Iowa); Ameristar Casino
Hotel Vicksburg (Jackson, Miss., and Monroe, La.); Ameristar Casino Resort
Spa Black Hawk (Denver metropolitan area); and Cactus Petes Resort Casino
and The Horseshu Hotel and Casino in Jackpot, Nev. (Idaho and the Pacific
Northwest).

Visit Ameristar Casinos’ website at www.ameristar.com (which shall not be
deemed to be incorporated in or a part of this news release).

Please refer to the tables near the end of this release for the
reconciliation of the non-GAAP financial measures Adjusted EBITDA and
Adjusted EPS reported throughout this release. Additionally, more
information on these non-GAAP financial measures can be found under the
caption “Use of Non-GAAP Financial Measures” at the end of this release.

                 AMERISTAR CASINOS, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              (Amounts in Thousands, Except Per Share Data)
                                (Unaudited)


                                 Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------
REVENUES:
  Casino                        $ 313,120  $ 315,526  $ 627,660  $ 638,404
  Food and beverage                32,674     34,808     65,935     72,773
  Rooms                            20,245     15,810     39,632     30,486
  Other                             8,453      8,615     16,182     16,814
                                ---------  ---------  ---------  ---------
                                  374,492    374,759    749,409    758,477
Less: promotional allowances      (81,488)   (65,857)  (153,786)  (133,737)
                                ---------  ---------  ---------  ---------
    Net revenues                  293,004    308,902    595,623    624,740

OPERATING EXPENSES:
  Casino                          134,102    142,136    269,642    286,480
  Food and beverage                15,618     16,580     32,076     33,084
  Rooms                             4,576      2,102      9,132      4,334
  Other                             3,301      4,355      6,550      7,747
  Selling, general and
   administrative                  58,169     62,050    120,570    115,585
  Depreciation and amortization    27,193     26,229     54,805     52,701
  Impairment of goodwill           21,438          -     21,438          -
  Impairment of other
   intangible assets               34,600          -     34,600          -
  Impairment of fixed assets            4         42          4         95
  Net loss (gain) on
   disposition of assets                1       (170)        53       (165)
                                ---------  ---------  ---------  ---------
    Total operating expenses      299,002    253,324    548,870    499,861

      (Loss) income from
       operations                  (5,998)    55,578     46,753    124,879

OTHER INCOME (EXPENSE):
  Interest income                     112        125        224        269
  Interest expense, net of
   capitalized interest           (34,059)   (25,602)   (68,499)   (42,517)
  Loss on early retirement of
   debt                                 -     (5,210)         -     (5,210)
  Other                              (722)     1,028       (301)       583
                                ---------  ---------  ---------  ---------

(LOSS) INCOME BEFORE INCOME TAX
  (BENEFIT) PROVISION             (40,667)    25,919    (21,823)    78,004
    Income tax (benefit)
     provision                    (15,775)    11,639     (7,609)    33,823
                                ---------  ---------  ---------  ---------
      NET (LOSS) INCOME         $ (24,892) $  14,280  $ (14,214) $  44,181
                                =========  =========  =========  =========

(LOSS) EARNINGS PER SHARE:
  Basic                         $   (0.43) $    0.25  $   (0.25) $    0.77
                                =========  =========  =========  =========
  Diluted                       $   (0.43) $    0.25  $   (0.25) $    0.76
                                =========  =========  =========  =========

CASH DIVIDENDS DECLARED PER
 SHARE                          $    0.11  $    0.11  $    0.21  $    0.11
                                =========  =========  =========  =========

WEIGHTED-AVERAGE SHARES
 OUTSTANDING:
  Basic                            58,005     57,483     57,908     57,411
                                =========  =========  =========  =========
  Diluted                          58,005     58,237     57,908     57,947
                                =========  =========  =========  =========





                 AMERISTAR CASINOS, INC. AND SUBSIDIARIES
                    SUMMARY CONSOLIDATED FINANCIAL DATA
                          (Dollars in Thousands)
                                (Unaudited)


                                    June 30, 2010      December 31, 2009
                                --------------------  --------------------
Balance sheet data
 Cash and cash equivalents      $             97,906  $             96,493
 Total assets                   $          2,131,595  $          2,214,628
 Total debt, net of discount of
  $11,344 and $12,779           $          1,614,369  $          1,677,128
 Stockholders' equity           $            333,457  $            335,993


                                 Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------
Consolidated cash flow
 information
  Net cash provided by
   operating activities         $  37,515  $  57,165  $ 107,301  $ 126,204
  Net cash used in investing
   activities                   $ (14,620) $ (45,920) $ (31,191) $ (96,404)
  Net cash used in financing
   activities                   $ (33,290) $  (2,953) $ (74,697) $  (9,496)

Net revenues
  Ameristar St. Charles         $  64,791  $  73,311  $ 135,100  $ 150,483
  Ameristar East Chicago           50,959     68,495    106,979    136,122
  Ameristar Kansas City            55,421     58,656    110,045    118,826
  Ameristar Council Bluffs         38,456     39,989     77,382     82,239
  Ameristar Vicksburg              29,503     31,026     60,154     64,145
  Ameristar Black Hawk             37,510     20,649     74,464     41,045
  Jackpot Properties               16,364     16,776     31,499     31,880
                                ---------  ---------  ---------  ---------
   Consolidated net revenues    $ 293,004  $ 308,902  $ 595,623  $ 624,740
                                =========  =========  =========  =========

Operating income (loss)
  Ameristar St. Charles         $  13,636  $  16,523  $  31,454  $  38,438
  Ameristar East Chicago          (54,525)    11,055    (49,926)    23,582
  Ameristar Kansas City            14,423     15,951     28,700     32,607
  Ameristar Council Bluffs         11,895     11,482     23,824     24,207
  Ameristar Vicksburg               8,931      8,493     19,017     19,274
  Ameristar Black Hawk              9,155      1,996     16,828      5,871
  Jackpot Properties                3,451      4,032      6,437      7,301
  Corporate and other             (12,964)   (13,954)   (29,581)   (26,401)
                                ---------  ---------  ---------  ---------
   Consolidated operating
    (loss) income               $  (5,998) $  55,578  $  46,753  $ 124,879
                                =========  =========  =========  =========

Adjusted EBITDA
  Ameristar St. Charles         $  20,252  $  23,610  $  44,662  $  52,409
  Ameristar East Chicago            5,520     14,763     14,062     30,939
  Ameristar Kansas City            18,177     19,840     36,187     40,705
  Ameristar Council Bluffs         14,629     14,242     29,372     29,970
  Ameristar Vicksburg              12,758     12,609     26,860     27,803
  Ameristar Black Hawk             14,102      6,366     26,883     13,098
  Jackpot Properties                4,863      5,674      9,406     10,479
  Corporate and other             (10,708)   (10,351)   (22,686)   (20,729)
                                ---------  ---------  ---------  ---------
   Consolidated Adjusted EBITDA $  79,593  $  86,753  $ 164,746  $ 184,674
                                =========  =========  =========  =========






                 AMERISTAR CASINOS, INC. AND SUBSIDIARIES
              SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED
                          (Dollars in Thousands)
                                (Unaudited)


                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------

Operating income (loss) margins (1)
  Ameristar St. Charles                 21.0%     22.5%     23.3%     25.5%
  Ameristar East Chicago              -107.0%     16.1%    -46.7%     17.3%
  Ameristar Kansas City                 26.0%     27.2%     26.1%     27.4%
  Ameristar Council Bluffs              30.9%     28.7%     30.8%     29.4%
  Ameristar Vicksburg                   30.3%     27.4%     31.6%     30.0%
  Ameristar Black Hawk                  24.4%      9.7%     22.6%     14.3%
  Jackpot Properties                    21.1%     24.0%     20.4%     22.9%
   Consolidated operating (loss)
    income margin                       -2.0%     18.0%      7.8%     20.0%

Adjusted EBITDA margins (2)
  Ameristar St. Charles                 31.3%     32.2%     33.1%     34.8%
  Ameristar East Chicago                10.8%     21.6%     13.1%     22.7%
  Ameristar Kansas City                 32.8%     33.8%     32.9%     34.3%
  Ameristar Council Bluffs              38.0%     35.6%     38.0%     36.4%
  Ameristar Vicksburg                   43.2%     40.6%     44.7%     43.3%
  Ameristar Black Hawk                  37.6%     30.8%     36.1%     31.9%
  Jackpot Properties                    29.7%     33.8%     29.9%     32.9%
   Consolidated Adjusted EBITDA
    margin                              27.2%     28.1%     27.7%     29.6%

(1) Operating income (loss) margin is operating income (loss) as a
percentage of net revenues.
(2) Adjusted EBITDA margin is Adjusted EBITDA as a percentage of net
revenues.

       RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA
                    (Dollars in Thousands) (Unaudited)

The following tables set forth reconciliations of operating income (loss),
a GAAP financial measure, to Adjusted EBITDA, a non-GAAP financial measure.

                             Three Months Ended June 30, 2010
                ----------------------------------------------------------
                                    Impairment
                                      Loss
                                    and (Gain)          Deferred
                          Depreci-   Loss on   Stock-   Compen-
               Operating   ation     Disposi-  Based    sation
                 Income  and Amorti-  tion     Compen-   Plan     Adjusted
                 (Loss)    zation   of Assets  sation  Expense(1)  EBITDA
                --------  --------- --------  --------- --------  --------
Ameristar St.
 Charles        $ 13,636  $   6,453 $     (2) $     165 $      -  $ 20,252
Ameristar East
 Chicago         (54,525)     3,925   56,041         79        -     5,520
Ameristar
 Kansas City      14,423      3,620        -        134        -    18,177
Ameristar
 Council Bluffs   11,895      2,622        -        112        -    14,629
Ameristar
 Vicksburg         8,931      3,684        -        143        -    12,758
Ameristar Black
 Hawk              9,155      4,827        -        120        -    14,102
Jackpot
 Properties        3,451      1,297        -        115        -     4,863
Corporate and
 other           (12,964)       765        4      2,221     (734)  (10,708)
                --------  --------- --------  --------- --------  --------
   Consolidated $ (5,998) $  27,193 $ 56,043  $   3,089 $   (734) $ 79,593
                ========  ========= ========  ========= ========  ========


                                 Three Months Ended June 30, 2009
                        ---------------------------------------------------
                                                   Impairment
                                                    Loss and
                                                  (Gain) Loss
                         Operating   Depreciation     on
                          Income         and      Disposition  Stock-Based
                          (Loss)     Amortization  of Assets   Compensation
                        -----------  ------------ -----------  ------------
Ameristar St. Charles   $    16,523  $      6,929 $         -  $        158
Ameristar East Chicago       11,055         3,640          17            51
Ameristar Kansas City        15,951         3,746           -           143
Ameristar Council
 Bluffs                      11,482         2,795        (140)          105
Ameristar Vicksburg           8,493         3,992          (3)          127
Ameristar Black Hawk          1,996         2,798           -            99
Jackpot Properties            4,032         1,541          (2)          103
Corporate and other         (13,954)          788           -         1,851
                        -----------  ------------ -----------  ------------
   Consolidated         $    55,578  $     26,229 $      (128) $      2,637
                        ===========  ============ ===========  ============

                                 Three Months Ended June 30, 2009
                        ---------------------------------------------------
                          Deferred
                        Compensation                One-Time
                        Plan Expense Pre-Opening  Property Tax   Adjusted
                            (1)         Costs     Adjustment     EBITDA
                        ------------ ------------ ------------ -----------
Ameristar St. Charles   $          - $          - $          - $    23,610
Ameristar East Chicago             -            -            -      14,763
Ameristar Kansas City              -            -            -      19,840
Ameristar Council
 Bluffs                            -            -            -      14,242
Ameristar Vicksburg                -            -            -      12,609
Ameristar Black Hawk               -          197        1,276       6,366
Jackpot Properties                 -            -            -       5,674
Corporate and other              964            -            -     (10,351)
                        ------------ ------------ ------------ -----------
   Consolidated         $        964 $        197 $      1,276 $    86,753
                        ============ ============ ============ ===========

(1) Deferred compensation plan expense represents the change in the
Company’s non-cash liability based on plan participant investment results.
This expense is included in selling, general and administrative expenses in
the accompanying condensed consolidated statements of operations.

 RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA - CONTINUED
                    (Dollars in Thousands) (Unaudited)


                              Six Months Ended June 30, 2010
                ----------------------------------------------------------
                                    Impairment
                                      Loss
                                    and (Gain)          Deferred
                          Depreci-   Loss on   Stock-   Compen-
               Operating   ation     Disposi-  Based    sation
                 Income  and Amorti-  tion     Compen-   Plan     Adjusted
                 (Loss)    zation   of Assets  sation  Expense(1)  EBITDA
                --------  --------- --------  --------- --------  --------
Ameristar St.
 Charles        $ 31,454  $  12,866 $     14  $     328 $      -  $ 44,662
Ameristar East
 Chicago         (49,926)     7,801   56,029        158        -    14,062
Ameristar
 Kansas City      28,700      7,267      (44)       264        -    36,187
Ameristar
 Council Bluffs   23,824      5,325        -        223        -    29,372
Ameristar
 Vicksburg        19,017      7,543       14        286        -    26,860
Ameristar Black
 Hawk             16,828      9,814        -        241        -    26,883
Jackpot
 Properties        6,437      2,662       78        229        -     9,406
Corporate and
 other           (29,581)     1,527        4      5,550     (186)  (22,686)
                --------  --------- --------  --------- --------  --------
   Consolidated $ 46,753  $  54,805 $ 56,095  $   7,279 $   (186) $164,746
                ========  ========= ========  ========= ========  ========



                                   Six Months Ended June 30, 2009
                        ---------------------------------------------------
                                                  Impairment
                                                    Loss and
                                                  (Gain) Loss
                         Operating   Depreciation     on
                          Income         and      Disposition  Stock-Based
                          (Loss)     Amortization  of Assets   Compensation
                        -----------  ------------ -----------  ------------
Ameristar St. Charles   $    38,438  $     13,615 $        41  $        315
Ameristar East Chicago       23,582         7,186          69           102
Ameristar Kansas City        32,607         7,863         (49)          284
Ameristar Council
 Bluffs                      24,207         5,700        (146)          209
Ameristar Vicksburg          19,274         8,259          16           254
Ameristar Black Hawk          5,871         5,545           -           209
Jackpot Properties            7,301         2,974          (1)          205
Corporate and other         (26,401)        1,559           -         3,608
                        -----------  ------------ -----------  ------------
   Consolidated         $   124,879  $     52,701 $       (70) $      5,186
                        ===========  ============ ===========  ============

                                   Six Months Ended June 30, 2009
                        ---------------------------------------------------
                          Deferred
                        Compensation                One-Time
                        Plan Expense Pre-Opening  Property Tax   Adjusted
                            (1)         Costs     Adjustment     EBITDA
                        ------------ ------------ ------------ -----------
Ameristar St. Charles   $          - $          - $          - $    52,409
Ameristar East Chicago             -            -            -      30,939
Ameristar Kansas City              -            -            -      40,705
Ameristar Council
 Bluffs                            -            -            -      29,970
Ameristar Vicksburg                -            -            -      27,803
Ameristar Black Hawk               -          197        1,276      13,098
Jackpot Properties                 -            -            -      10,479
Corporate and other              505            -            -     (20,729)
                        ------------ ------------ ------------ -----------
   Consolidated         $        505 $        197 $      1,276 $   184,674
                        ============ ============ ============ ===========

(1) Deferred compensation plan expense represents the change in the
Company’s non-cash liability based on plan participant investment results.
This expense is included in selling, general and administrative expenses in
the accompanying condensed consolidated statements of operations.

          RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA
                    (Dollars in Thousands) (Unaudited)

The following table sets forth a reconciliation of consolidated net (loss)
income, a GAAP financial measure, to consolidated Adjusted EBITDA, a
non-GAAP financial measure.

                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------
Net (loss) income                   $(24,892) $ 14,280  $(14,214) $ 44,181
  Income tax (benefit) provision     (15,775)   11,639    (7,609)   33,823
  Interest expense, net of
   capitalized interest               34,059    25,602    68,499    42,517
  Interest income                       (112)     (125)     (224)     (269)
  Other                                  722    (1,028)      301      (583)
  Net loss (gain) on disposition of
   assets                                  1      (170)       53      (165)
  Impairment of goodwill              21,438         -    21,438         -
  Impairment of other intangible
   assets                             34,600         -    34,600         -
  Impairment of fixed assets               4        42         4        95
  Depreciation and amortization       27,193    26,229    54,805    52,701
  Stock-based compensation             3,089     2,637     7,279     5,186
  Deferred compensation plan
   expense                              (734)      964      (186)      505
  Loss on early retirement of debt         -     5,210         -     5,210
  Black Hawk hotel pre-opening
   costs                                   -       197         -       197
  One-time non-cash adjustment to
   Black Hawk property taxes               -     1,276         -     1,276
                                    --------  --------  --------  --------
Adjusted EBITDA                     $ 79,593  $ 86,753  $164,746  $184,674
                                    ========  ========  ========  ========





          RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
                                (Unaudited)

The following table sets forth a reconciliation of diluted (loss) earnings
per share (EPS), a GAAP financial measure, to adjusted diluted earnings per
share (Adjusted EPS), a non-GAAP financial measure.

                                 Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                  2010       2009       2010       2009
                                ---------  ---------- ---------  ----------
Diluted (loss) earnings per
 share (EPS)                    $   (0.43) $     0.25 $   (0.25) $     0.76
Impairment loss on East Chicago
 intangible assets                   0.56           -      0.56           -
Loss on early retirement of
 debt                                   -        0.06         -        0.06
One-time non-cash adjustment to
 Black Hawk property taxes              -        0.01         -        0.01
                                ---------  ---------- ---------  ----------
    Adjusted diluted earnings
     per share (Adjusted EPS)   $    0.13  $     0.32 $    0.31  $     0.83
                                =========  ========== =========  ==========

Use of Non-GAAP Financial Measures

Securities and Exchange Commission Regulation G, “Conditions for Use of
Non-GAAP Financial Measures,” prescribes the conditions for use of non-GAAP
financial information in public disclosures. We believe our presentation
of the non-GAAP financial measures Adjusted EBITDA and Adjusted EPS are
important supplemental measures of operating performance to investors. The
following discussion defines these terms and explains why we believe they
are useful measures of our performance.

Adjusted EBITDA is a commonly used measure of performance in the gaming
industry that we believe, when considered with measures calculated in
accordance with United States generally accepted accounting principles, or
GAAP, gives investors a more complete understanding of operating results
before the impact of investing and financing transactions, income taxes and
certain non-cash and non-recurring items and facilitates comparisons
between us and our competitors.

Adjusted EBITDA is a significant factor in management’s internal evaluation
of total Company and individual property performance and in the evaluation
of incentive compensation for employees. Therefore, we believe Adjusted
EBITDA is useful to investors because it allows greater transparency
related to a significant measure used by management in its financial and
operational decision-making and because it permits investors similarly to
perform more meaningful analyses of past, present and future operating
results and evaluations of the results of core ongoing operations.
Furthermore, we believe investors would, in the absence of the Company’s
disclosure of Adjusted EBITDA, attempt to use equivalent or similar
measures in assessment of our operating performance and the valuation of
our Company. We have reported Adjusted EBITDA to our investors in the past
and believe its inclusion at this time will provide consistency in our
financial reporting.

Adjusted EBITDA, as used in this press release, is earnings before
interest, taxes, depreciation, amortization, other non-operating income and
expenses, stock-based compensation, deferred compensation plan expense,
impairment charges related to intangible assets, pre-opening costs and a
one-time Black Hawk property tax adjustment. In future periods, the
calculation of Adjusted EBITDA may be different than in this release. The
foregoing tables reconcile Adjusted EBITDA to operating income (loss) and
net (loss) income, based upon GAAP.

Adjusted EPS, as used in this press release, is diluted (loss) earnings per
share, excluding the after-tax per-share impacts of impairment charges
related to intangible assets, the one-time Black Hawk property tax
adjustment and the loss on early debt retirement. Management adjusts EPS,
when deemed appropriate, for the evaluation of operating performance
because we believe that the exclusion of certain non-recurring items is
necessary to provide the most accurate measure of our core operating
results and as a means to compare period-to-period results. We have chosen
to provide this information to investors to enable them to perform more
meaningful analysis of past, present and future operating results and as a
means to evaluate the results of our core ongoing operations. Adjusted EPS
is a significant factor in the internal evaluation of total Company
performance. Management believes this measure is used by investors in
their assessment of our operating performance and the valuation of our
Company. In future periods, the adjustments we make to EPS in order to
calculate Adjusted EPS may be different than or in addition to those made
in this release. The foregoing table reconciles EPS to Adjusted EPS.

Limitations on the Use of Non-GAAP Measures

The use of Adjusted EBITDA and Adjusted EPS has certain limitations. Our
presentation of Adjusted EBITDA and Adjusted EPS may be different from the
presentations used by other companies and therefore comparability among
companies may be limited. Depreciation expense for various long-term
assets, interest expense, income taxes and other items have been and will
be incurred and are not reflected in the presentation of Adjusted EBITDA.
Each of these items should also be considered in the overall evaluation of
our results. Additionally, Adjusted EBITDA does not consider capital
expenditures and other investing activities and should not be considered as
a measure of our liquidity. We compensate for these limitations by
providing the relevant disclosure of our depreciation, interest and income
tax expense, capital expenditures and other items both in our
reconciliations to the GAAP financial measures and in our consolidated
financial statements, all of which should be considered when evaluating our
performance.

Adjusted EBITDA and Adjusted EPS should be used in addition to and in
conjunction with results presented in accordance with GAAP. Adjusted
EBITDA and Adjusted EPS should not be considered as an alternative to net
income, operating income or any other operating performance measure
prescribed by GAAP, nor should these measures be relied upon to the
exclusion of GAAP financial measures. Adjusted EBITDA and Adjusted EPS
reflect additional ways of viewing our operations that we believe, when
viewed with our GAAP results and the reconciliations to the corresponding
GAAP financial measures, provide a more complete understanding of factors
and trends affecting our business than could be obtained absent this
disclosure. Management strongly encourages investors to review our
financial information in its entirety and not to rely on a single financial
measure.

Leave a Comment

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Scroll to Top