UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-22494
AMERISTAR CASINOS, INC.
(Exact name of Registrant as Specified in its Charter)
Nevada 88-0304799
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3773 Howard Hughes Parkway
Suite 490 South
Las Vegas, Nevada 89109
(Address of principal executive offices)
(702) 567-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]
As of November 10, 1997, 20,360,000 shares of Common Stock of the
registrant were issued and outstanding.
<PAGE>
AMERISTAR CASINOS, INC.
FORM 10-Q
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements:
A. Condensed Consolidated Balance
Sheets at September 30, 1997
(unaudited) and December 31, 1996 3 - 4
B. Condensed Consolidated Statements
of Income (unaudited) for the three
months and nine months ended
September 30, 1997 and 1996 5
C. Condensed Consolidated Statements
of Cash Flows (unaudited) for the
nine months ended September 30,
1997 and 1996 6
D. Notes to Condensed Consolidated
Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10 - 19
Item 3. Quantitative and Qualitative Disclosures
About
Market Risk 19
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURE 21
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
<S> <C> <C>
September 30, December 31,
1997 1996
---------- ----------
(unaudited)
CURRENT ASSETS:
Cash $ 17,286 $ 10,724
Restricted cash 236 418
Accounts receivable, net 982 1,408
Inventories 2,399 2,385
Income tax refund receivable 2,579 -
Prepaid expenses and
deferred income taxes 7,498 5,219
---------- ----------
Total current assets 30,980 20,154
PROPERTY AND EQUIPMENT AND LEASEHOLD
INTERESTS, at cost, less accumulated
depreciation and amortization of
$67,108 and $56,253, respectively 240,604 225,470
PREOPENING COSTS 4,542 2,594
EXCESS OF PURCHASE PRICE OVER FAIR
MARKET VALUE OF NET ASSETS ACQUIRED 15,382 19,043
DEPOSITS AND OTHER ASSETS 5,310 2,791
---------- ----------
$ 296,818 $ 270,052
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1997 1996
---------- ----------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 4,339 $ 7,303
Construction contracts payable 8,314 5,336
Accrued liabilities 19,086 13,564
Current obligations under
capitalized leases 867 506
Current maturities of
notes payable and long-term debt 2,286 19,740
Federal income tax payable - 49
---------- ----------
Total current liabilities 34,892 46,498
---------- ----------
OBLIGATIONS UNDER CAPITALIZED LEASES,
net of current maturities 9,844 8,333
---------- ----------
NOTES PAYABLE AND LONG-TERM DEBT,
net of current maturities 163,297 135,560
---------- ----------
DEFERRED INCOME TAXES 9,732 8,446
---------- ----------
MINORITY INTEREST - 271
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value:
Authorized - 30,000,000 shares
Issued - None - -
Common stock, $.01 par value:
Authorized - 30,000,000 shares
Issued and outstanding -
20,360,000 shares 204 204
Additional paid-in capital 43,043 43,043
Retained earnings 35,806 27,697
---------- ----------
Total stockholders' equity 79,053 70,944
---------- ----------
$ 296,818 $ 270,052
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Nine Months
Ended September 30,Ended September 30,
1997 1996 1997 1996
------- ------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Casino $44,852 $43,359 $130,501 $121,984
Food and beverage 8,186 7,267 23,037 17,681
Rooms 2,843 2,297 7,509 5,798
General store 678 661 1,897 1,821
Other 1,569 1,507 4,324 4,048
------- ------- -------- --------
58,128 55,091 167,268 151,332
Less: Promotional allowances 4,085 3,637 11,642 9,162
------- ------- -------- --------
Net Revenues 54,043 51,454 155,626 142,170
------- ------- -------- --------
OPERATING EXPENSES:
Casino 20,246 19,363 59,442 56,538
Food and beverage 4,977 6,226 14,462 12,234
Rooms 826 593 2,341 1,708
General store 617 589 1,647 1,600
Other 1,417 1,383 4,020 3,710
Selling, general and
administrative 10,654 11,346 29,746 27,631
Business development 301 462 801 1,264
Utilities and maintenance 2,689 1,830 7,684 6,766
Depreciation and amortization 3,977 3,774 12,049 10,575
Preopening costs - - - 6,147
------- ------- -------- --------
Total operating expenses 45,704 45,566 132,192 128,173
------- ------- -------- --------
INCOME FROM OPERATIONS 8,339 5,888 23,434 13,997
OTHER INCOME (EXPENSE):
Interest income 100 45 267 311
Interest expense, net of
capitalized interest (3,404) (2,089) (9,288) (5,602)
Other (22) - (571) 63
------- ------- -------- --------
INCOME BEFORE INCOME TAX PROVISION
AND EXTRAORDINARY ITEM 5,013 3,844 13,842 8,769
Income tax provision 1,793 1,416 5,060 3,198
------- ------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEM 3,220 2,428 8,782 5,571
Extraordinary item-loss on early
retirement of debt, net of
applicable income tax benefit (673) - (673) -
------- ------- -------- --------
NET INCOME $ 2,547 $ 2,428 $ 8,109 $ 5,571
======= ======= ======== ========
EARNINGS PER SHARE:
Before extraordinary item $ 0.16 $ 0.12 $ 0.43 $ 0.27
Extraordinary item (0.03) - (0.03) -
------- ------- -------- --------
Earning per share $ 0.13 $ 0.12 $ 0.40 $ 0.27
======= ======= ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING 20,360 20,360 20,360 20,360
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Nine Months
Ended September 30,
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,109 $ 5,571
-------- --------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 12,049 10,575
Amortization of preopening costs - 6,147
Extraordinary loss on early
retirement of debt 1,060 -
Net loss (gain) on disposition of
assets 468 (63)
Amortization of debt issuance costs 251 175
Change in assets and liabilities:
Increase in other current assets (1,341) (1,696)
Deferred income taxes 2,540 -
Increase in income tax receivable (2,578) (239)
Current tax payable (65) -
Increase in other current liabilities 2,558 4,738
-------- --------
Total adjustments 14,942 19,637
-------- --------
Net cash provided by operating activities 23,051 25,208
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (25,021) (34,634)
Increase (decrease) in construction
contracts payable 2,978 (2,655)
Proceeds from sale of assets 178 63
Decrease in deposits and other non-
current assets (5,780) (4,494)
-------- --------
Net cash used in investing activities (27,645) (41,720)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable
and long-term debt 122,273 8,057
Restricted security deposit - 11,511
Principal payments of notes payable,
long-term debt and capitalized leases (111,117) (6,835)
-------- --------
Net cash provided by financing activities 11,156 12,733
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 6,562 (3,779)
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 10,724 14,787
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 17,286 $ 11,008
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid during the period for interest
(net of amounts capitalized) $ 4,692 $ 4,908
======== ========
Cash paid for income taxes $ 4,760 $ 2,900
======== ========
Assets purchased with long-term debt $ 1,424 $ 3,006
======== ========
Assets purchased with capitalized leases $ 3,481 $ 107
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
AMERISTAR CASINOS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements
include the accounts of Ameristar Casinos, Inc. ("Ameristar") and
its wholly owned and majority owned subsidiaries (collectively, the
"Company"). The Company's principal subsidiaries, all of which are
wholly owned, are Cactus Pete's, Inc. ("CPI"), Ameristar Casino
Vicksburg, Inc. ("ACVI"), Ameristar Casino Council Bluffs, Inc.
("ACCBI") and Ameristar Casino Las Vegas, Inc. ("ACLVI"). All
significant intercompany transactions have been eliminated.
CPI owns and operates two casino-hotels in Jackpot, Nevada -
Cactus Pete's Resort Casino and The Horseshu Hotel and Casino
(collectively, the "Jackpot Properties"). ACVI owns and operates
Ameristar Vicksburg, a riverboat-themed dockside casino and related
land-based facilities in Vicksburg, Mississippi. ACCBI owns and
operates Ameristar Council Bluffs, a riverboat casino and related
hotel and other land-based facilities in Council Bluffs, Iowa.
ACLVI owns and is developing The Reserve Hotel & Casino ("The
Reserve") in the Henderson-Green Valley suburban area of Las Vegas,
Nevada.
The accompanying condensed consolidated financial statements
have been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission.
Accordingly, the condensed consolidated financial statements do not
include all of the disclosures required by generally accepted
accounting principles. However, the accompanying unaudited
condensed consolidated financial statements do contain all
adjustments that, in the opinion of management, are necessary to
present fairly the financial position and the results of operations
for the interim periods included therein. The interim results
reflected in the condensed consolidated financial statements are
not necessarily indicative of results to be expected for the full
fiscal year.
Certain reclassifications, having no effect on net income,
have been made to the prior periods' condensed consolidated
financial statements to conform to the current periods'
presentation.
The accompanying condensed consolidated financial statements
should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K,
as amended, for the fiscal year ended December 31, 1996.
NOTE 2 - NOTES PAYABLE AND LONG-TERM DEBT
In July 1997, the Company completed a refinancing of its long-
term debt through a new $125 million Revolving Credit Facility (the
"Revolving Credit Facility") and the sale of $100 million aggregate
principal amount of 10-1/2% Senior Subordinated Notes due 2004 (the
"Senior Subordinated Notes"). The Revolving Credit Facility was
entered into on July 8, 1997, pursuant to a Credit Agreement among
Ameristar, CPI, ACVI, ACCBI and ACLVI, a syndicate of banks and
Wells Fargo Bank, National Association as Agent Bank, Arranger and
Swingline Lender. The Company's prior bank credit facility (with a
$94.5 million outstanding principal balance) was terminated and
repaid upon the funding of the initial draw under the Revolving
Credit Facility. The Senior Subordinated Notes were issued by
Ameristar at par in a private placement. The net proceeds from the
sale of the Senior Subordinated Notes were used to repay
$82.4 million in borrowings and interest under the Revolving Credit
Facility, $13.1 million in other indebtedness and $800,000 in loan
fees for the Revolving Credit Facility.
<PAGE>
Notes to Condensed Consolidated Financial Statements (continued)
The Revolving Credit Facility will mature on June 30, 2003.
Prior to maturity, the maximum principal available under the
Revolving Credit Facility will reduce semiannually (commencing on
July 1, 1999) by an aggregate of $50.0 million in increasing
increments ranging from $2.5 million to $10.0 million. The
Revolving Credit Facility is secured by substantially all the real
and personal property of the Company. The balance on the Revolving
Credit facility at September 30, 1997 was $32.6 million with a
current interest rate of 8.25%.
The Senior Subordinated Notes were issued under an Indenture
dated July 15, 1997. The Senior Subordinated Notes will mature on
August 1, 2004, but are subject to earlier redemption in whole or
in part under certain circumstances. The Senior Subordinated Notes
are not secured and are subordinate to all existing and future
Senior Indebtedness (as defined), which includes the Revolving
Credit Facility.
Ameristar is a holding company with no material assets or
operations other than its investments in its subsidiaries. All of
Ameristar's current subsidiaries (the "Guarantors") have jointly
and severally, and fully and unconditionally, guaranteed the Senior
Subordinated Notes. Each of the Guarantors is a wholly owned
subsidiary of Ameristar, and the Guarantors constitute all of
Ameristar's direct and indirect subsidiaries. Separate financial
statements and certain other disclosures concerning the Guarantors
are not included in this report because, in the opinion of
management, they are not deemed material to investors. Other than
customary restrictions imposed by applicable corporate statutes,
there are no restrictions on the ability of the Guarantors to
transfer funds to Ameristar in the form of cash dividends, loans or
advances.
Notes payable and long-term debt at September 30, 1997 include
notes payable to the former stockholders (the "Gem Stockholders")
of Gem Gaming, Inc. ("Gem"), for merger consideration in connection
with the October 9, 1996 acquisition of The Reserve. The
outstanding balance of these notes payable at September 30, 1997
was $28.7 million.
In August 1997, AC Hotel Corp, a newly formed wholly owned
subsidiary of ACVI, entered into a loan agreement providing for
borrowings of up to $7.5 million for the purpose of funding a
portion of the construction costs of a 150-room hotel at Ameristar
Vicksburg. This nonrecourse loan from a private lender is secured
by a deed of trust on the hotel and the underlying land senior in
priority to the liens securing the Revolving Credit Facility.
Borrowings under this loan bear interest at 15% per annum, payable
in periodic installments, and the loan matures in July 1998. The
Company is required to pay a non-usage fee at the rate of 3% per
annum on the undrawn loan balance, and draws are subject to the
satisfaction of various conditions typically applicable to
construction loans. The balance on this loan was $75,000 at
September 30, 1997.
NOTE 3 - ACQUISITION OF THE RESERVE
The amount recorded as notes payable in connection with the
Company's acquisition of The Reserve from Gem, the original
developer of the property, exceeds the fair market value of the net
assets acquired by the Company in the merger. The excess of
purchase price over fair market value of net assets acquired will
be amortized over the estimated 40-year depreciable life beginning
in the period in which the acquired property commences operations.
NOTE 4 - EARNINGS PER SHARE
In March, 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128 ("SFAS
128"), "Earnings Per Share", effective for fiscal years ending
after December 15, 1997. The Company will adopt SFAS 128 for the
year ending December 31, 1997.
<PAGE>
Notes to Condensed Consolidated Financial Statements (continued)
SFAS 128 requires the computation and presentation of basic and
diluted earnings per share for all periods for which an income
statement is presented. For the three- and nine-month periods
ended September 30, 1997 and 1996, the Company had no material
dilutive securities outstanding.
Options to purchase 640,000 and 580,500 shares of common stock
were outstanding at September 30, 1997 and 1996, respectively, at
exercise prices of $5.94-$16.00 for both periods. These options
were not included in a pro forma computation of earnings per share
assuming dilution because the options' exercise prices were
predominantly greater than the average market price of the common
shares during the respective periods presented. Therefore, the
effect of dilutive securities on earnings per share was not
material.
<PAGE>
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Ameristar Casinos, Inc. ("Ameristar" or "ACI") develops, owns
and operates casinos and related hotel, food and beverage,
entertainment and other facilities, with four properties in
operation in Nevada, Mississippi and Iowa and a fifth property
under development in Nevada. Ameristar's principal operations are
conducted through four wholly owned subsidiaries: Cactus Pete's,
Inc. ("CPI"); Ameristar Casino Vicksburg, Inc. ("ACVI"); Ameristar
Casino Council Bluffs, Inc. ("ACCBI"); and Ameristar Casino Las
Vegas, Inc. ("ACLVI"). Ameristar and its wholly owned and majority
owned subsidiaries are collectively referred to herein as the
"Company."
CPI owns and operates Cactus Pete's Resort Casino ("Cactus
Pete's") and The Horseshu Hotel and Casino (collectively, the
"Jackpot Properties"), two casino-hotels located in Jackpot, Nevada
at the Idaho border. ACVI owns and operates a riverboat-themed
dockside casino (the "Vicksburg Casino") and related land-based
facilities (collectively, "Ameristar Vicksburg") in Vicksburg,
Mississippi. ACVI is also developing a 150-room hotel at Ameristar
Vicksburg expected to open in April of 1998. ACCBI owns and
operates a riverboat casino (the "Council Bluffs Casino") and
related land-based hotel and other facilities (collectively,
"Ameristar Council Bluffs") in Council Bluffs, Iowa across the
Missouri River from Omaha, Nebraska. Ameristar Council Bluffs was
opened in stages during 1996 and early 1997. The Council Bluffs
Casino opened on January 19, 1996, and most of the land-based
facilities opened during the second and fourth quarters of 1996.
The land-based facilities were completed during the first quarter
of 1997, with the opening of the steakhouse on February 25 and the
indoor swimming pool and spa on March 3, 1997.
ACLVI is developing The Reserve Hotel & Casino ("The Reserve")
in Henderson, Nevada at the intersection of Interstate 515 and Lake
Mead Drive. The Company acquired The Reserve on October 9, 1996,
through the merger of Gem Gaming, Inc. ("Gem"), the initial
developer of The Reserve, into ACLVI. ACLVI redesigned The Reserve
to expand and enhance the property and is completing construction
of The Reserve and will operate the property. Management expects
that Phase I of The Reserve will open in January 1998.
The Company's quarterly and annual operating results may be
affected by competitive pressures, the timing of the commencement
of new gaming operations, the amount of preopening costs incurred
by the Company, construction at existing facilities and general
weather conditions. Consequently, the Company's operating results
for any quarter or year may not be indicative of results to be
expected for future periods.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The following table highlights the results of operations of
Ameristar's operating subsidiaries for its principal properties:
<TABLE>
Three months ended Nine months ended
September 30 September 30
1997 1996 1997 1996
(unaudited)
<S> <C> <C> <C> <C>
Net revenues
Jackpot Properties $15,267 $15,062 $ 41,819 $ 40,471
Ameristar Vicksburg 16,398 17,120 48,697 50,303
Ameristar Council Bluffs 22,378 19,272 65,110 51,396
Corporate and other - - - -
------- ------- -------- --------
Consolidated net revenues $54,043 $51,454 $155,626 $142,170
======= ======= ======== ========
Operating income (1)
Jackpot Properties $ 3,344 $ 3,731 $ 8,645 $ 8,246
Ameristar Vicksburg 3,195 3,229 10,149 10,228
Ameristar Council Bluffs 3,844 846 11,255 6,874
Corporate and other (2,044) (1,918) (6,615) (5,204)
------- ------- -------- --------
Consolidated operating
income $ 8,339 $ 5,888 $ 23,434 $ 20,144
======= ======= ======== ========
Operating income margins (1)
Jackpot Properties 21.9% 24.8% 20.7% 20.4%
Ameristar Vicksburg 19.5% 18.9% 20.8% 20.3%
Ameristar Council Bluffs 17.2% 4.4% 17.3% 13.4%
Consolidated operating
income margin 15.4% 11.4% 15.1% 14.2%
EBITDA (2)
Jackpot Properties $ 4,088 $ 4,373 $ 10,749 $ 10,245
Ameristar Vicksburg 4,736 4,950 14,793 15,394
Ameristar Council Bluffs 5,430 2,187 16,164 10,195
Corporate and other (1,938) (1,848) (6,223) (5,115)
------- ------- -------- --------
Consolidated EBITDA $12,316 $ 9,662 $ 35,483 $ 30,719
======= ======= ======== ========
EBITDA margins (2)
Jackpot Properties 26.8% 29.0% 25.7% 25.3%
Ameristar Vicksburg 28.9% 28.9% 30.4% 30.6%
Ameristar Council Bluffs 24.3% 11.3% 24.8% 19.8%
Consolidated EBITDA margin 22.8% 18.8% 22.8% 21.6%
</TABLE>
(1) Before Ameristar Casino Council Bluffs preopening costs in the
data for the nine months ended September 30, 1996.
(2) EBITDA consists of income from operations plus depreciation,
amortization and preopening costs. EBITDA Margin is EBITDA as a
percentage of net revenues. EBITDA information is presented solely
as a supplemental disclosure because management believes that it is
a widely used measure of operating performance in the gaming
industry and for companies with a significant amount of
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
depreciation and amortization. EBITDA should not be construed
as an alternative to income from operations (as determined in
accordance with generally accepted accounting principles) as
an indicator of the Company's operating performance, or as an
alternative to cash flow from operating activities (as
determined in accordance with generally accepted accounting
principles) as a measure of liquidity. The Company has
significant uses of cash flows, including capital expenditures
and debt principal repayments, that are not reflected in
EBITDA. It should also be noted that not all gaming companies
that report EBITDA information may calculate EBITDA in the
same manner as the Company.
Results of Operations
Summary of Operating Results
Ameristar showed continuing overall growth in revenues and
income from operations for the three and nine months ended
September 30, 1997 compared to the three and nine months ended
September 30, 1996. These increases can be attributed primarily to
the land-based amenities at Ameristar Council Bluffs operating for
a full six-month period and the casino operating for the entire
nine-month period in 1997 compared to the prior year. Consolidated
net revenues for the three and nine months ended September 30, 1997
showed 5.0% and 9.5% increases, respectively, to $54.0 million and
$155.6 million, respectively, compared to $51.5 million and $142.2
million respectively for the three and nine months ended September
30, 1996.
Income from operations for the three and nine months ended
September 30, 1997 was $8.3 million and $23.4 million,
respectively, compared to $5.9 million and $20.1 million before
preopening costs for the same periods in 1996. Total operating
expenses before preopening costs as a percentage of net revenues
showed improvement on a year-to-year basis, at 84.6% and 88.6% for
the three-month periods ended September 30, 1997 and 1996,
respectively, and 84.9% and 85.8% for the nine months ended
September 30, 1997 and 1996, respectively.
Net income before extraordinary item and preopening costs for
the three and nine months ended September 30, 1997 was $3.2 million
and $8.8 million, respectively, compared to $2.4 million and $9.5
million, respectively, for the three and nine months ended
September 30, 1996. The increase for the three-month period can be
attributed to the operation of the completed facility in Council
Bluffs in 1997 as compared to only partial operations in 1996. The
lower net income before extraordinary item and preopening costs for
the nine months ended September 30, 1997 compared to the same
period in 1996 primarily reflects increased interest expense, due
to higher debt levels and the cessation of interest capitalization
on Ameristar Council Bluffs, and increased depreciation and
amortization. After taking into account the pretax write-off of
$6.1 million in preopening costs relating to Ameristar Council
Bluffs in the nine-month period ended September 30, 1996, the
Company had net income of $5.6 million. Net income for the three
and nine months ended September 30, 1997 after the extraordinary
write off of $673,000 (after tax benefit) of unamortized loan costs
(see "--Liquidity and Capital Resources") was $2.5 million and $8.1
million, respectively.
Earnings per share before extraordinary item and preopening
costs for the three and nine months ended September 30, 1997 were
$0.16 and $0.43, respectively, compared to $0.12 and $0.47,
respectively, for the three and nine months ended September 30,
1996. Earnings per share after extraordinary item for the three
and nine months ended September 30, 1997 were $0.13 and $0.40,
respectively. After the write-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
off of preopening costs for Ameristar Council Bluffs in the first
two quarters of 1996, the earnings per share for the nine months
ended September 30, 1996 were $0.27.
Revenues
At Ameristar Council Bluffs, a full nine months of operations
of the casino and a full six months of operations with the
completed land-based facilities in 1997 compared to only casino
operations from mid-January to mid-June 1996 and only casino and
two restaurant operations from late June 1996 through September
1996 propelled Ameristar Council Bluffs' net revenues to $22.4
million and $65.1 million, respectively, for the three- and nine-
month periods ended September 30, 1997, compared to $19.3 million
and $51.4 million for the same periods in 1996, increases of $3.1
million or 16.1% and $13.7 million or 26.7%, respectively.
Operating income at Ameristar Council Bluffs increased from $0.9
million and $6.9 million (before preopening costs of $0 and $6.1
million), respectively, for the three- and nine-month periods ended
September 30, 1996 to $3.8 million and $11.3 million for the same
periods in 1997, despite aggregate increases of $0.2 million and
$1.6 million, respectively, in depreciation and amortization
relating primarily to the new land-based facilities for the three-
and nine- month periods ended September 30, 1997.
The Jackpot Properties' operating income decreased 10.4% for
the three-month period but improved by 4.8% for the nine-month
period ended September 30, 1997 compared to the same periods in
1996. For the comparable three-month periods, operating income
decreased from $3.7 million in 1996 to $3.3 million in 1997 on a
1.4% increase in revenues from $15.1 million in 1996 to $15.3
million in 1997. For the nine-month period, operating income
increased from $8.2 million in 1996 to $8.6 million in 1997 on a
3.3% increase in net revenues from $40.5 million in 1996 to $41.8
million in 1997. Management believes that these increases are the
result of the replacement of older slot machines with 587 state-of-
the-art models, as well as the installation of an enhanced slot
player tracking system and an aggressive marketing strategy. These
actions were taken to offset decreases in revenues experienced in
1996, which management attributed to increased competition in
Jackpot and from Native American and other casinos in the outer
market, including Washington, Oregon and Alberta, Canada
While Ameristar Vicksburg continued to be the gaming revenue
market leader in Warren County, Mississippi, net revenues decreased
approximately 4.2% and 3.2%, respectively, from $17.1 million and
$50.3 million for the three months and nine months ended September
30, 1996 to $16.4 million and $48.7 million for the three and nine
months ended September 30, 1997. Management believes that the
decrease in 1997 reflects shrinkage in the territorial size of the
Vicksburg market due to competition from casinos in Shreveport and
Bossier City, Louisiana and Philadelphia, Mississippi. Operating
income for the three-month periods was stable at $3.2 million in
both 1996 and 1997. Operating income for the nine months ended
September 30, 1997 decreased slightly to $10.1 million from $10.2
million in the 1996 period. In an effort to expand the market
territory of Ameristar Vicksburg and encourage longer visits, the
Company is constructing a 150-room hotel, across from the main
entrance to the casino, which is expected to open in the second
quarter of 1998. In August 1997, two companies announced the
formation of a joint venture to develop and operate a casino
facility on a site along the Mississippi River near Ameristar
Vicksburg, subject to certain contingencies. The addition of this
or other competition in the Vicksburg market could have a material
adverse effect on Ameristar Vicksburg and the Company.
On a consolidated basis for the three and nine months ended
September 30, 1997 compared to the same periods in 1996, casino
revenues increased $1.5 million or 3.4% and $8.5 million or 7.0%,
respectively, food and beverage revenues increased $0.9 million or
12.6%, and $5.4 million or 30.3%, respectively, and rooms revenues
increased $0.5 million or 23.8% and $1.7 million or 29.5%,
respectively.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The increases in consolidated total net revenues are attributable
to the completed Ameristar Council Bluffs property and the
improvements at the Jackpot Properties partially offset by the net
revenues decrease at Ameristar Vicksburg.
Expenses
For the three- and nine-month periods ended September 30, 1997
as compared to the 1996 periods, casino expenses increased $0.9
million or 4.6% and $2.9 million or 5.1%, respectively, food and
beverage expenses decreased by $1.2 million or 20.1% and increased
$2.2 million or 18.2% respectively, and rooms expenses increased
$0.2 million or 39.3% and $0.6 million or 37.1%, respectively. The
expense increases are primarily attributable to the expanded
operations at Ameristar Council Bluffs. Food and beverage costs
decreased during the quarter primarily due to cost-control measures
at Council Bluffs in 1997 compared to the inefficiencies related to
the opening of the facility in 1996.
Selling, general and administrative expenses decreased by $0.7
million or 6.1% and increased $2.1 million or 7.7%, respectively,
for the three and nine months ended September 30, 1997 as compared
to the same periods of the prior year. Costs decreased in the
quarter due to a change in the marketing program at Ameristar
Council Bluffs from year to year but were up for the nine-month
period due primarily to the expanded operations at Ameristar
Council Bluffs and other costs associated with the Company's
continued growth.
Business development costs decreased $0.2 million and $0.5
million for the three- and nine- month periods ended September 30,
1997 compared to the same period of the prior year, respectively,
as the Company focused its efforts on current projects, including
the development of The Reserve and the hotel at Ameristar Vicksburg
and the casino enhancements at the Jackpot Properties. The Company
continues to explore gaming development opportunities in other
jurisdictions and potential acquisitions in the gaming industry.
However, until Phase I of The Reserve is completed, the Company
does not anticipate undertaking any additional expansion
opportunities that would require a material amount of capital
expenditures by the Company.
Depreciation expenses for the three and nine months ended
September 30, 1997 increased due to the inclusion of the completed
Ameristar Council Bluffs facilities in the Company's depreciable
asset base, offset by modest decreases in depreciation expenses at
the Jackpot Properties and Ameristar Vicksburg.
Interest expense was $3.4 million and $9.3 million,
respectively, net of capitalized interest of $1.2 million and $3.0
million, respectively, for the three and nine months ended
September 30, 1997, increases of $1.3 million or 62.9% and $3.7
million or 65.8%, respectively, over the same periods in 1996. The
increased interest expense relates primarily to increased debt
incurred to finance construction of Ameristar Council Bluffs and
the cessation of capitalized interest related to that project.
The Company's effective federal income tax rate for the three
and nine months ended September 30, 1997 was approximately 36% and
37%, respectively, versus the federal statutory rate of 35%. The
excess of the effective rate over the statutory rate is due to
certain expenses deducted in the current period for financial
reporting purposes which are not currently deductible for tax
purposes.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Liquidity and Capital Resources
The Company's cash flow from operations was $23.1 million and
$25.2 million, respectively, for the nine months ended September
30, 1997 and 1996. The Company had unrestricted cash of
approximately $17.3 million as of September 30, 1997 compared to
$10.7 million at December 31, 1996. This increase in cash resulted
from a net increase in borrowings of $11.2 million during the nine
months and the $23.1 million of cash flow from operations,
partially offset by capital expenditures related to The Reserve
(including a $4.0 million payment to the former Gem stockholders),
Ameristar Council Bluffs and other capital improvement projects.
The Company's current assets increased by approximately $10.8
million from December 31, 1996 to September 30, 1997, primarily
resulting from an increase in cash on hand, income tax refund
receivable, deferred taxes and prepaid expenses. The Company
historically has funded its daily operations through net cash
provided by operating activities and its significant capital
expenditures primarily through bank debt and other debt financing.
Until July 15, 1997, Ameristar, as borrower, and its principal
subsidiaries, as guarantors, maintained a Revolving Credit Facility
with Wells Fargo Bank, NA ("WFB") and a syndicate of banks (the
"1995 Revolving Credit Facility"). On July 15, 1997, the Company
refinanced its long-term debt through a new $125 million revolving
bank credit facility (the "Revolving Credit Facility") and the sale
of $100 million aggregate principal amount of 10-1/2% Senior
Subordinated Notes due 2004 (the "Senior Subordinated Notes").
The Revolving Credit Facility was entered into on July 8,
1997, pursuant to a Credit Agreement among Ameristar and CPI, ACVI,
ACCBI and ACLVI (the "Borrowers"), a syndicate of bank lenders and
WFB as Agent Bank, Arranger and Swingline Lender. The Borrowers
made an initial draw of $114.5 million under the Revolving Credit
Facility on July 15, 1997, which was used to repay $94.5 million in
borrowings outstanding under the 1995 Revolving Credit Facility and
the $20.0 million short-term loan from WFB.
The Senior Subordinated Notes were issued by Ameristar at par
in a private placement to certain initial purchasers for resale to
qualified institutional buyers pursuant to the exemption provided
by Rule 144A of the Securities and Exchange Commission. The
Company is currently offering to exchange the initial series of the
Senior Subordinated Notes, which are restricted securities, for a
series of substantially identical Senior Subordinated Notes that
will not be restricted securities. The net proceeds from the sale
of the Senior Subordinated Notes were used to repay $82.4 million
in borrowings and interest under the Revolving Credit Facility,
$13.1 million in other indebtedness and $800,000 in loan fees for
the Revolving Credit Facility. At September 30, 1997, the
outstanding principal balance of the Revolving Credit Facility was
$32.6 million.
Until Phase I of The Reserve is completed, additional draws
under the Revolving Credit Facility may be used only for the
construction of The Reserve, the acquisition of additional land for
the development of The Reserve currently under option and the
replenishment of working capital used to fund the $4.0 million
payment paid in June 1997 to the former Gem stockholders related to
the acquisition of The Reserve and certain expenses incurred in
connection with the Revolving Credit Facility. Draws for
construction of The Reserve are subject to the satisfaction of
various conditions typically applicable to construction loans.
Following completion of Phase I of The Reserve, Revolving Credit
Facility proceeds may be used only for working capital purposes of
the Borrowers and funding ongoing capital expenditures
for existing facilities, including construction of Phase II of The
Reserve and the acquisition of additional land under option
adjacent to The Reserve site.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Borrowings under the Revolving Credit Facility are designated by
the Borrowers on a quarterly basis as either base rate or London
Interbank Offered Rate ("LIBOR") borrowings. The interest rate
generally is equal to WFB's per annum prime rate in effect from
time to time or the per annum LIBOR rate, plus in each case an
applicable margin determined by reference to the Borrowers' rolling
four-quarter ratio of total funded debt to EBITDA (as defined
below). The range of the base rate margin is from 0.25 percentage
points to 2.25 percentage points, and the range of the LIBOR margin
is from 1.50 percentage points to 3.50 percentage points. At
September 30, 1997, the interest rate applicable to Revolving
Credit Facility borrowings was 8.25%.
The Revolving Credit Facility will mature on June 30, 2003.
Prior to maturity, the maximum principal available under the
Revolving Credit Facility will reduce semiannually (commencing on
July 1, 1999) by an aggregate of $50.0 million in increasing
increments ranging from $2.5 million to $10.0 million. The
Revolving Credit Facility includes covenants and conditions that
limit the Borrowers' outstanding borrowings under the Revolving
Credit Facility to not more than the lesser of the Borrowers'
rolling four-quarter EBITDA multiplied by 3.25 and the Borrowers'
total funded debt to not more than the Borrowers' rolling four-
quarter EBITDA multiplied initially by 5.0, which multiplier will
decline to 4.5 commencing March 31, 1999 and to 4.0 commencing
March 31, 2000. For purposes of the Revolving Credit Facility, the
Borrowers' EBITDA is generally defined as net income before
interest expense, income taxes, depreciation and amortization,
preopening costs and certain extraordinary and non-cash items.
The Revolving Credit Facility also includes covenants
requiring the Borrowers to maintain rolling four-quarter gross
fixed charge coverage and adjusted fixed charge coverage ratios (as
defined) of 1.5 to 1.0 and 1.1 to 1.0, respectively. For purposes
of these covenants, principal payments on the Gem Notes will be
included only to the extent actually paid in the applicable period.
The Revolving Credit Facility prohibits Ameristar from making
any dividend or other distribution on its capital stock during
any period in which the Borrowers' rolling four-quarter ratio of
total funded debt to EBITDA is greater than 2.0 to 1.0.
The Revolving Credit Facility is secured by liens on
substantially all of the real and personal property of the
Borrowers. The Revolving Credit Facility prohibits any future
secondary liens on these properties without the prior written
approval of the lenders. Certain changes in control of Ameristar
may constitute a default under the Revolving Credit Facility. The
Revolving Credit Facility also requires the Borrowers to expend 2%
of their consolidated net revenues on capital maintenance annually.
The Revolving Credit Facility binds the Borrowers to a number of
additional affirmative and negative covenants, including promises
to maintain certain financial ratios and tests within defined
parameters. As of September 30, 1997, the Company was in
compliance with these covenants.
The Borrowers paid various fees and other loan costs upon the
closing of the Revolving Credit Facility that will be amortized
over the term of the Revolving Credit Facility. In addition,
commencing on the first anniversary of the closing of the Revolving
Credit Facility, the Borrowers will be required to pay quarterly
commitment fees at an annual rate of 0.50% or 0.375% of the unused
portion of the Revolving Credit Facility.
The 1995 Revolving Credit Facility was terminated early in
connection with entering into the Revolving Credit Facility. As a
result, the Company incurred a $1.1 million pre-tax non-cash
extraordinary charge ($673,000 or $0.03 per share on an after-tax
basis) during the 1997 third quarter to reflect the accelerated
write-off of unamortized deferred financing costs.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Senior Subordinated Notes were issued under an Indenture
dated July 15, 1997 (the "Indenture"). In addition to Ameristar
and the Trustee, all of Ameristar's subsidiaries (the "Guarantors")
are parties to the Indenture for the purpose of guaranteeing (the
"Guarantees") payments on the Senior Subordinated Notes.
The Senior Subordinated Notes will mature on August 1, 2004.
Interest is payable semiannually on February 1 and August 1,
commencing February 1, 1998, at the per annum rate of 10.5%. The
Senior Subordinated Notes and the Guarantees are not secured and
are subordinate to all existing and future Senior Indebtedness (as
defined), which includes the Revolving Credit Facility.
Ameristar may redeem the Senior Subordinated Notes, in whole
or in part, at any time on or after August 1, 2001, at redemption
prices that decline over time from 105.25% to 101.75%. Senior
Subordinated Notes may also be redeemed if the holder or beneficial
owner thereof is required to be licensed, qualified or found
suitable under applicable Gaming Laws (as defined) and is not so
licensed, qualified or found suitable. Ameristar may also be
required to redeem a portion of the Senior Subordinated Notes in
the event of certain asset sales or the loss of a material gaming
license, and each holder of the Senior Subordinated Notes will have
the right to require Ameristar to redeem such holder's Senior
Subordinated Notes upon a Change of Control (as defined) of
Ameristar. The Senior Subordinated Notes are not subject to any
mandatory redemption or sinking fund obligations.
The Indenture includes covenants that restrict the ability of
Ameristar and the Restricted Subsidiaries (as defined) from
incurring future Indebtedness (as defined); provided, however, that
Ameristar or any Guarantor may incur Indebtedness if the incurrence
thereof would not result in the Consolidated Coverage Ratio (as
defined) being greater than 2.0 to 1.0 on a rolling four-quarter
basis. The Indenture also permits Ameristar or a Restricted
Subsidiary to incur Indebtedness without regard to the Consolidated
Coverage Ratio test in certain circumstances, including borrowings
of up to $140 million under the Revolving Credit Facility, as
amended or replaced from time to time, up to $15.0 million in
recourse FF&E financings, up to $7.5 million in borrowings for the
construction of the hotel at Ameristar Vicksburg and up to
$5.0 million of other Indebtedness.
The Indenture also includes certain covenants that, among
other things, limit the ability of Ameristar and its Restricted
Subsidiaries to pay dividends or other distributions, make
investments, repurchase subordinated obligations or capital stock,
create certain liens (except those securing Senior Indebtedness),
enter into certain transactions with affiliates, sell assets, issue
or sell subsidiary stock, create or permit restrictions on
distributions from subsidiaries or enter into certain mergers and
consolidations. If certain securities registration obligations are
not satisfied, Ameristar will be required to pay liquidated damages
to the holders of the Senior Subordinated Notes under certain
circumstances.
The Company is constructing a 150-room hotel at Ameristar
Vicksburg, which is expected to cost approximately $10.3 million,
including capitalized construction period interest and preopening
costs. The Company has obtained a nonrecourse loan facility for
$7.5 million with a private lender for the purpose of funding a
portion of the construction costs, with the balance expected to be
provided out of operating cash flow. The loan matures July 1, 1998
and requires periodic interest payments at the rate of 15% per
annum. The Company is required to pay a non-usage fee at the rate
of 3% per annum on the undrawn loan balance, and draws are subject
to the satisfaction of various conditions typically applicable to
construction loans. As of September 30, 1997, the outstanding
balance on the loan was $75,000.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
On June 20, 1997 and as part of the consideration for the
acquisition of The Reserve, Ameristar issued unsecured subordinated
promissory notes to the former Gem stockholders in an aggregate
principal amount of $28.7 million (the "Gem Notes"). The per annum
interest rate on the Gem Notes is 8%, subject to increases up to a
maximum of 18% per annum, following one or more failures to make
payments under the Gem Notes by scheduled dates. Any interest not
paid when scheduled will thereafter accrue interest as principal.
The Gem Notes require annual principal reduction payments ranging
from $2.0 million to $3.0 million commencing in November 1998. The
Gem Notes mature on December 31, 2004 and may be prepaid in whole
or in part without penalty at any time. The Gem Notes are not
subject to acceleration or other collection efforts upon failure to
make a scheduled payment prior to maturity, and the only remedy for
such a failure to make a scheduled payment is an increase in
interest rate as described above. The Gem Notes are subordinate to
the Revolving Credit Facility, the Senior Subordinated Notes and
other long-term indebtedness of Ameristar specified by Ameristar up
to a maximum of $250 million.
At September 30, 1997, the Company had other long-term
indebtedness in an aggregate principal amount of $15.1 million.
Capital expenditures for the nine months ended September 30,
1997 were approximately $29.7 million, including approximately
$18.5 million relating to development of The Reserve, $1.4 million
relating to the development of the Ameristar Vicksburg hotel,
approximately $2.7 million for casino equipment at the Jackpot
Properties, and approximately $3.8 million relating to Ameristar
Council Bluffs in addition to other normal capital improvement
projects. The Company funded these capital expenditures primarily
from net cash provided by operating activities and borrowings.
The Company anticipates making capital expenditures of
approximately $49.8 million in the last quarter of 1997, including
approximately $43.5 million for the development of The Reserve
(including capitalized construction period interest and preopening
costs), approximately $4.6 million for the development and
construction of a 150-room hotel at Ameristar Vicksburg (including
capitalized construction period interest), and approximately $1.7
million for capital improvements at existing facilities and certain
other purposes. Among other capital expenditures anticipated for
1998, the Company intends to make capital expenditures of
approximately $23.0 million in connection with the completion and
opening of Phase I of The Reserve and approximately $4.3 million in
connection with the completion of the Ameristar Vicksburg hotel.
Management believes that the above-described minimum capital
expenditure requirements will be funded out of draws under the
Revolving Credit Facility and the $7.5 million loan facility for
the development of the Ameristar Vicksburg hotel, cash on hand,
operating cash flow and purchase money and lease financing related
to the acquisition of furniture, fixtures and equipment (including
gaming equipment). Although no assurance can be given, the Company
anticipates that it will have sufficient funds to satisfy these
capital expenditure plans. However, an adverse change in the
Company's operations or operating cash flow may affect the
Company's ability to fund these capital expenditures and/or
maintain compliance with the terms of the Revolving Credit
Facility, the Indenture or other debt instruments.
Management anticipates funding the capital expenditures for
the construction of Phase II of The Reserve out of additional draws
under the Revolving Credit Facility and operating cash flow.
Because the amount of borrowing permitted to be drawn under the
Revolving Credit Facility will be determined in part
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
by the Company's rolling four-quarter EBITDA (as defined), the
Company's planned borrowing under the Revolving Credit Facility to
fund a portion of the construction costs for Phase II of The
Reserve will be dependent upon increases in the Company's aggregate
operating cash flow, which increases will be primarily dependent
upon the operating performance of The Reserve. Management
anticipates that cash flow from at least the first one or two full
quarters of operation at The Reserve and operations at the
Company's other properties will be necessary to provide the
borrowing capability under the Revolving Credit Facility and other
capital resources for the commencement of construction of Phase II
of The Reserve. However, no assurances can be given with respect
to the amount of operating cash flow of the Company for any future
period.
Factors Affecting Forward-Looking Information
This Report contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Among others, such forward-looking statements include
statements with respect to (i) the availability of operating cash
flow in amounts and at the times anticipated by management, (ii)
the adequacy of budgeted amounts for capital expenditure projects
and the adequacy of the Company's liquidity and capital resources
generally, (iii) the anticipated time of completion of capital
projects, including Phase I of The Reserve and the hotel at
Ameristar Vicksburg and (iv) the ability of the Company to continue
to satisfy covenant and other requirements applicable to the
Revolving Credit Facility, the Senior Subordinated Notes and other
debt obligations.
These forward-looking statements involve important risks and
uncertainties, many of which will be beyond the control of the
Company, and which could significantly affect anticipated future
results, both short-term and long-term. As a result, actual
results may differ, in some cases materially, from those
anticipated or contemplated by forward-looking statements in this
Report. In addition to the cautionary statements included in this
section and elsewhere throughout this Report, attention is directed
to the cautionary statements included in the Company's other
publicly available filings with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1993 and
the Securities Exchange Act of 1934, including without limitation
the cautionary statements set forth under the caption "Risk
Factors" in the Company's Registration Statement on Form S-4 filed
with the Commission on November 10, 1997.
Item 3.Quantitative and Qualitative Disclosures About
Market Risk
Not applicable.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Perini-Anderson v. ACCBI. On November 13, 1997, the American
Arbitration Association released the decision on this arbitration
proceeding between ACCBI and the general contractor for
construction of certain improvements at Ameristar Council Bluffs.
The award of the three-arbitrator panel increases the guaranteed
maximum price under the construction contract by approximately
$690,000 to approximately $33 million and requires Perini-Anderson
to pay to ACCBI approximately $825,000, plus interest, to
compensate for certain cost overruns. Additional information
concerning this arbitration is set forth under "Legal Proceedings"
in Part 1, Item 3 of the Registrant's Annual Report on Form 10-K,
as amended, for the fiscal year ended December 31, 1996.
ITEM 6. Exhibits and Reports on Form 8-K
A. Exhibits filed as part of this report
4.1 Supplemental Indenture, dated as of October 24, 1997,
among Ameristar Casinos, Inc. Cactus Pete's, Inc.,
Ameristar Casino Vicksburg, Inc. Ameristar Casino Council
Bluffs, Inc., Ameristar Casino Las Vegas, Inc., A.C. Food
Services, Inc., AC Hotel Corp. and First Trust National
Association. Incorporated by reference to Exhibit 4.1(c)
to the Registration Statement on Form S-4 (SEC File No.
333-34381) of Ameristar Casinos, Inc. and its
subsidiaries filed with the Securities and Exchange
Commission on November 10, 1997.
27.1 Financial Data Schedule. Electronically filed herewith.
B. Reports on Form 8-K
Form 8-K filed on July 30, 1997, reporting under Item 5 the
refinancing of the Registrant's principal long-term debt.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMERISTAR CASINOS, INC.
Registrant
Date: November 13, 1997 /s/ Thomas Steinbauer
Thomas Steinbauer
Senior Vice President of Finance
and Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS DATE SHOULD BE REVIEWED IN CONJUNCTION WITH THE FINANCIAL STATEMENTS
INCLUDED IN THIS REGISTRATION STATEMENT.
</LEGEND>
<CIK> 0000912145
<NAME> AMERISTAR CASINOS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 17,286
<SECURITIES> 0
<RECEIVABLES> 982
<ALLOWANCES> 0
<INVENTORY> 2,399
<CURRENT-ASSETS> 30,980
<PP&E> 307,712
<DEPRECIATION> 67,108
<TOTAL-ASSETS> 296,818
<CURRENT-LIABILITIES> 34,892
<BONDS> 100,000
0
0
<COMMON> 204
<OTHER-SE> 79,053
<TOTAL-LIABILITY-AND-EQUITY> 296,818
<SALES> 155,626
<TOTAL-REVENUES> 155,626
<CGS> 0
<TOTAL-COSTS> 132,192
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,288
<INCOME-PRETAX> 13,842
<INCOME-TAX> 5,060
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (673)
<CHANGES> 0
<NET-INCOME> 8,109
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0
</TABLE>