Friday, May 05, 2006

* Record first quarter consolidated net revenues of $256.1 million,
representing an increase of $16.0 million, or 6.7%, over the first quarter
of 2005. * First quarter consolidated operating income of $43.7 million, a
decrease of $2.6 million, or 5.7%, from the prior-year first quarter, after
giving effect to $2.1 million of stock option compensation expense in the
2006 first quarter, as described in the following paragraph. * First quarter
consolidated EBITDA (a non-GAAP financial measure that is defined and
reconciled with operating income below) of $66.2 million, representing a
decrease of $0.9 million, or 1.3%, from the first quarter of 2005. 2006
first quarter operating income and EBITDA give effect to $2.1 million of
stock option compensation expense resulting from the adoption on January 1,
2006 of Financial Accounting Standards Board Statement No. 123® ("FAS
123®"), which requires the recognition of compensation expense in an amount
equal to the fair value of share-based payments (e.g., stock options)
granted to employees. 2005 operating income and EBITDA do not include this
expense.

* Adjusted to exclude the loss on early retirement of our senior
subordinated notes described below, first quarter consolidated net income
was $19.7 million (adjusted net income is a non-GAAP financial measure that
is reconciled to reported net income below), an increase of $0.5 million, or
2.4%, compared to the first quarter of 2005. Consolidated reported net
income for the quarter ended March 31, 2006 was adversely impacted by a
one-time $17.1 million after-tax loss on early retirement of all $380.0
million aggregate principal amount of our 10.75% senior subordinated notes
due 2009, which we redeemed on February 15, 2006 using borrowings under our
$800.0 million revolving loan facility. The revolving loan facility bears
interest at variable rates that are currently substantially lower than the
10.75% fixed rate on the senior subordinated notes, and we expect that the
redemption will result in significant savings in future interest expense.
The redemption of the senior subordinated notes resulted in $1.3 million in
after-tax savings on interest expense during the first quarter of 2006.

* Adjusted to exclude the loss on early retirement of our senior
subordinated notes, first quarter diluted earnings per share were $0.35
(adjusted diluted earnings per share is a non-GAAP financial measure that is
reconciled to reported diluted earnings per share below), compared to $0.34
for the first quarter of 2005. The adoption of FAS 123® negatively impacted
diluted earnings per share in the first quarter of 2006 by $0.02. Analysts'
latest consensus estimate for the first quarter of 2006, as reported by
Thomson First Call, was $0.37, before the impact of the loss on early
retirement of the senior subordinated notes, which adversely impacted
reported diluted earnings per share by $0.30. Our reported diluted earnings
per share for the first quarter of 2006 were $0.05. Our previously issued
earnings guidance for the first quarter of 2006 indicated a range of diluted
earnings per share, on a GAAP basis, of $0.08 to $0.10. All share and
per-share information in this press release has been adjusted as necessary
to give effect to our 2-for-1 stock split effective June 6, 2005.

* On April 1, 2006, we rebranded our newly renovated and expanded casino in
Black Hawk, Colorado. Ameristar Black Hawk, formerly known as Mountain High
Casino, now features an expanded parking garage with 1,550 parking spaces,
refurbished and rebranded dining venues, additional gaming space, 1,600 slot
machines and an upscale Star Club for our top players. Additionally, we
announced the details of the 33-story, 536- room Four Diamond-quality hotel
that we plan to begin constructing this quarter.

* We were the leader in market share (based on gross gaming revenues) for
the first quarter of 2006 in all our markets, with the exception of our
Black Hawk property, which was undergoing the renovation and expansion
project throughout the first quarter.

* On February 15, 2006, our Board of Directors declared a quarterly cash
dividend of $0.09375 per share, which was paid to stockholders of record as
of March 1, 2006. This amount represents a 20% increase in the dividend rate
over 2005.

Craig H. Neilsen, Chairman and CEO, stated: "In the first quarter of 2006,
we completed the initial phase of our expansion activity at our Black Hawk
property. We nearly doubled the parking garage's capacity, the first and
second floor gaming areas and non-gaming venues have been remodeled and we
have added a second floor casino area that now features 650 slot machines.
On April 1, 2006, we rebranded the property as Ameristar Black Hawk, and the
increase in business volumes we have experienced since the rebranding
indicates that we are on the way for the property to gain a solid presence
in the greater Denver market similar to our achievements in our other
markets.

"We faced a number of competitive challenges in the first quarter of 2006
that adversely impacted our financial results. The heightened competition in
our Missouri markets resulted in increased promotional spending and lower
operating margins. In response to the ongoing competitive pressures, we are
currently implementing several cost-containment initiatives that we believe
will effectively modify our cost structure and create operating efficiencies
with the goal of maintaining our leadership in operating margin and market
share in these jurisdictions. Our proven business model has historically
resulted in high operating margins and market share leadership, and with the
help of these initiatives and our previously announced capital improvement
projects, we believe we will be able to achieve similar results.

"In Council Bluffs, the competitive pressure from the recently completed
expansion and rebranding of our land-based competitor has also resulted in
declines in operating margin and market share. Although we are slightly
above the market share level we had prior to the competitor's construction
disruption, we do not anticipate achieving market share levels reached while
construction was in progress. Once the market environment stabilizes, we
will complete a thorough evaluation of our cost structure in Council Bluffs
along with an in-depth analysis of our marketing and advertising costs in
order to maximize operating margin and market share.

"In Vicksburg, our first quarter financial performance was significantly
improved over the prior-year first quarter due to the increased business
volumes following Hurricane Katrina. However, we are seeing a quicker than
expected lessening of these increased business volumes as gaming capacity
continues to be restored on the Mississippi Gulf Coast.

As for external development, we continue to seriously consider new
jurisdictions, acquisitions and other opportunities to broaden our earnings
base and diversify the geographic profile of our Company. Our ongoing
commitment to internal and external expansion provides us the opportunity to
continue to build shareholder value."

Financial Results

Net Revenues

Consolidated net revenues for the first quarter of 2006 were $256.1 million,
an increase of 6.7% compared to the first quarter of 2005. All of our
properties improved in net revenues, with increases of 23.4% at Ameristar
Vicksburg, 8.9% at the Jackpot Properties, 5.1% at Ameristar Kansas City,
3.9% at Ameristar Council Bluffs, 3.6% at Ameristar St. Charles and 1.1% at
Ameristar Black Hawk. The improved financial performance of our Vicksburg
property continues to be primarily attributable to the increase in business
volume following the closure of the Gulf Coast casinos as a result of
Hurricane Katrina. However, this increase in the property's business volume
diminished significantly from the fourth quarter of 2005 following the
reopening of three Mississippi Gulf Coast casinos in December 2005, and we
expect it to diminish further as more Gulf Coast casinos reopen.

For the quarter, Ameristar Kansas City and Ameristar St. Charles increased
market share by 0.9 and 0.1 percentage point to 36.7% and 31.7%,
respectively, over the prior-year first quarter. Ameristar Council Bluffs
and Ameristar Vicksburg continued their long-time market leadership
positions, despite decreases of 0.5 and 0.2 percentage point to 42.1% and
45.6%, respectively, from the first quarter of 2005. Our Council Bluffs
property's market share was adversely impacted by the completion in March
2006 of a major expansion and rebranding by a competing land-based casino.
We anticipate the increased competition from the land-based casino will have
an ongoing negative impact on our market share in Council Bluffs.

Consolidated casino revenues for the first quarter of 2006 increased $19.8
million over the 2005 first quarter, principally due to a $20.1 million
(9.5%) increase in slot revenues. We believe the growth in slot revenues at
all our properties has been driven by our continued slot product
enhancements and our successful slot mix strategy. We further believe casino
revenues increased in part as a result of the continued successful
implementation of our targeted marketing programs, as evidenced by a 10.6%
increase in rated play at our properties from the first quarter of 2005. For
the quarter ended March 31, 2006, promotional allowances increased $10.0
million, or 22.9%, over the prior-year first quarter due in part to the rise
in rated play and the increasingly competitive environment in our Missouri
and Iowa markets.

Operating Income and EBITDA

In the first quarter of 2006, consolidated operating income decreased $2.6
million, or 5.7%, to $43.7 million compared to the first quarter of 2005.
Consolidated operating income margin decreased 2.2 percentage points from
the prior-year first quarter to 17.0%. Consolidated EBITDA decreased 1.3% to
$66.2 million and the related margin decreased 2.0 percentage points to
25.9% compared to the first quarter of 2005. The decline in operating
income, EBITDA and the related margins from the prior-year first quarter was
mostly attributable to the increased competitive pressures experienced by
our Missouri and Iowa properties and greater than expected construction
disruption at Ameristar Black Hawk. The financial performance of these
properties was somewhat offset by Ameristar Vicksburg's strong first quarter
2006 results, namely a 34.9% increase in operating income and a 27.7%
increase in EBITDA.

Consolidated operating income and EBITDA were also affected by the stock
option compensation expense we were required to recognize in the first
quarter of 2006 as described above. Additionally, depreciation and
amortization expense increased $1.8 million (8.4%) over the first quarter of
2005, primarily due to $0.8 million in depreciation expense from capital
improvements placed in service over the last six months at Ameristar Black
Hawk. The rate of growth in health benefit costs moderated significantly in
the first quarter of 2006, as compared to the trend of the last several
quarters. During the first quarter of 2006, Ameristar Vicksburg increased
operating income $3.2 million over the first quarter of 2005, to $12.5
million. EBITDA improved by $3.4 million over the prior-year quarter. We
expect the property's quarterly financial performance to be better than in
2005 through the third quarter. However, as previously mentioned, we
anticipate the increase in the property's business volume to diminish
further as the Gulf Coast casinos continue to reopen.

At Ameristar St. Charles, increased revenues and a reduction in workers'
compensation expense were mostly offset by increased costs associated with
marketing and promotional activities. As a result, operating income and
EBITDA were relatively flat compared to the prior-year first quarter.
Ameristar St. Charles' 2006 first quarter operating income and EBITDA
margins decreased by 1.1 and 1.2 percentage points, respectively, from the
first quarter of 2005.

Ameristar Kansas City's 2006 first quarter operating income decreased $1.5
million, or 10.7%, and EBITDA decreased $1.2 million, or 6.0%, compared to
the corresponding prior-year period. The related operating income and EBITDA
margins declined 3.5 and 3.3 percentage points, respectively, over the first
quarter of 2005, due in part to increased marketing, advertising and
entertainment costs.

First quarter operating income at Ameristar Council Bluffs declined by $0.6
million, or 4.1%, and EBITDA declined by $0.3 million, or 1.6%, compared to
the prior-year first quarter. The property also experienced decreases in its
operating income margin and EBITDA margin of 2.2 and 1.8 percentage points,
respectively. As previously noted, this property's first quarter financial
performance was adversely impacted by the completion of the competing
land-based casino's rebranding and expansion.

For the quarter ended March 31, 2006, our Black Hawk property's operating
income decreased $2.5 million, or 109.6%, and EBITDA decreased $1.7 million,
or 46.1%, compared to the prior-year first quarter. Significant construction
disruption due to the recently completed casino expansion project materially
affected this property's operating results during the first quarter. During
the quarter ended March 31, 2006, our Black Hawk property also incurred $0.4
million in costs related to its rebranding as Ameristar Black Hawk that
occurred on April 1, 2006. The rebranding costs are non-recurring in nature
and are expected to total approximately $1.7 million over the first and
second quarters of 2006.

During the first quarter of 2006, corporate expense increased $1.3 million,
or 10.6%, compared to the first three months of 2005. The increase resulted
primarily from the recognition in the 2006 period of $1.4 million of stock
option compensation expense at the corporate level related to the adoption
of FAS 123® (the remaining $0.7 million of this expense was recognized at
our various properties), which was partially offset by a reduction in
development-related costs.

Net Income and Diluted Earnings Per Share

Reported net income decreased 86.4%, from $19.2 million in the first quarter
of 2005 to $2.6 million for the first three months of 2006. Reported diluted
earnings per share were $0.05 in the quarter ended March 31, 2006, compared
to $0.34 in the corresponding prior-year quarter. The one-time charge
relating to the loss on redemption of our senior subordinated notes
adversely impacted reported diluted earnings per share by $0.30.
Additionally, diluted earnings per share for the first quarter of 2006 were
negatively impacted by $0.02 by the adoption of FAS 123®. Interest expense
for the 2006 first quarter was $13.5 million, down $1.7 million from the
first quarter of 2005. The decrease was due primarily to a reduced average
interest rate resulting from the November 2005 refinancing of our senior
secured credit facility and the February 2006 redemption of our senior
subordinated notes with borrowings under the new credit facility at a
substantially lower interest rate.

Our effective income tax rate increased from 36.9% for the quarter ended
March 31, 2005 to 43.0% for the quarter ended March 31, 2006, due primarily
to a change in our recorded tax reserves.

Liquidity and Capital Resources

Our financial position remains strong, with approximately $107.9 million of
cash and cash equivalents and $369.6 million of available borrowing capacity
under our $800.0 million revolving loan facility as of March 31, 2006. Upon
satisfaction of certain conditions, we will also have the option to increase
the total amount available under the credit facility by up to an additional
$400.0 million. During the first quarter of 2006, our long-term debt
increased by approximately $45.8 million, due primarily to $425.0 million in
borrowings under our revolving loan facility, of which $420.9 million were
used to redeem the senior subordinated notes at a redemption price of
105.375% of the principal amount plus $20.4 million in accrued and unpaid
interest at the redemption date. Capital expenditures for the 2006 first
quarter totaled $56.4 million. These expenditures were mostly funded with
cash from operations and, to a lesser extent, with the proceeds of a senior
term loan under our new credit facility that was drawn in the fourth quarter
of 2005. Capital expenditures during the first quarter included $17.8
million for capital improvement projects at Ameristar Black Hawk, $13.6
million for the acquisition of slot machines, $12.1 million related to our
expansion activities at Ameristar St. Charles described below and $8.9
million for the construction of a new parking garage at Ameristar Vicksburg.
Capitalized interest for the quarter ended March 31, 2006 totaled $1.6
million.

Capital Projects

At Ameristar St. Charles, we have commenced the construction of a 400- room,
all-suite hotel, an indoor/outdoor swimming pool, a 7,000 square-foot
full-service spa, 20,000 square feet of new meeting and conference
facilities and an additional 2,000-space parking garage. The total cost of
these projects is expected to be approximately $240 million, with the
completion dates projected to be the second quarter of 2006 for the
conference facilities, the fourth quarter of 2006 for the initial 1,400
spaces of the parking garage and the fourth quarter of 2007 for the hotel
and the remainder of the garage. We believe these planned improvements will
allow us to further enhance our competitive advantage in the St. Louis
market, which should position us to extend our market share leadership. We
expect minimal construction disruption to existing operations as these
capital improvement projects are being completed.

At Ameristar Vicksburg, we have commenced the first phase of our master
expansion plan with the construction of a new 1,100-space parking garage,
which is expected to be completed in the second quarter of 2007. In June
2006, we intend to commence an expansion of the casino vessel that will
directly connect to the new parking garage. The expanded casino will allow
for the addition of up to 800 slot machines. The expansion project will also
include the addition of two new restaurants, a new Star Club for our VIP
guests, a poker room, a retail shop and other amenities. This project is
slated for a mid-year 2007 completion. The expected cost of our planned
capital improvements at Ameristar Vicksburg is approximately $90 million.
These improvements will help alleviate long-standing capacity constraints in
parking and gaming positions, which we believe will allow us to increase our
market dominance in Vicksburg. In addition to these internal capital
expenditure projects, we will continue to explore opportunities in new
jurisdictions and potential growth from acquisitions. We will continue to
aggressively pursue external expansion opportunities in an attempt to
further diversify our assets and increase shareholder value.

Outlook

Based on our preliminary results of operations in April 2006 and our outlook
for the remainder of the quarter, we currently estimate operating income of
$33 million to $35 million, EBITDA of $57 million to $59 million (given
anticipated depreciation expense of $24 million), interest expense of $12
million and diluted earnings per share of $0.23 to $0.25 for the second
quarter of 2006.

We are revising our financial guidance for the full year 2006. We currently
estimate operating income of $154 million to $160 million (decreased from
prior guidance of $166 million to $174 million), EBITDA of $248 million to
$254 million (decreased from prior guidance of $263 million to $271 million)
and diluted earnings per share of $0.86 to $0.92 (decreased from prior
guidance of $0.98 to $1.06). We currently anticipate $94 million of
depreciation expense, $49 million of interest expense and $9 million of
stock option compensation expense for the full year 2006.

Our revised financial guidance for the full year 2006 primarily reflects
quicker than expected lessening of increased business volumes at Ameristar
Vicksburg (i.e., increases that resulted post-Hurricane Katrina) due to
capacity being added at Mississippi Gulf Coast casinos faster than we
originally anticipated and the higher-than-anticipated business levels at
the reopened casinos. The declining business volumes at our Vicksburg
property resulted in a reduction of our previously issued annual operating
income and EBITDA guidance of $11 million, of which $4 million related to
the first quarter of 2006 and $7 million relates to the remaining three
quarters of 2006. To a lesser extent, our revised guidance reflects the
increased competition in Council Bluffs due to the recent completion of our
competitor's major expansion, the effect of which is somewhat greater than
we originally expected.

The above estimates of operating income, EBITDA and diluted earnings per
share give effect to the impact of FAS 123®, which we anticipate will result
in additional after-tax expense of $1.3 million for the second quarter of
2006 and $5.7 million for the full year 2006 and adversely impact diluted
earnings per share by $0.02 and $0.10 for the second quarter and full year
2006, respectively.

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.