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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 or
 o
    
    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.
  Nevada
    
    88-0304799State or Other Jurisdiction of
    
    (I.R.S. Employer Identification No.)Incorporation or Organization
 3773 Howard Hughes Parkway
Suite 490 South
Las Vegas, Nevada 89169
 (702) 567-7000
 Common Stock, $.01 par value
 None
 þ o
 o þ
 þ o
 o
  o þ o
 o þ




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##### Table of Contents



TABLE OF CONTENTS
  
 PagePART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    30Item 1B. Unresolved Staff Comments
    
    
    37Item 2. Properties
    
    
    37Item 3. Legal Proceedings
    
    
    38Item 4. Submission of Matters to a Vote of Security Holders
    
    
    38PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    39Item 6. Selected Financial Data
    
    
    40Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    42Item 7a. Quantitative and Qualitative Disclosures About Market Risk
    
    
    56Item 8. Financial Statements and Supplementary Data
    
    
    57Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    57Item 9a.Controls and Procedures
    
    
    57Item 9b.Other Information
    
    
    57PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    58Item 11. Executive Compensation
    
    
    58Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    58Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    58Item 14. Principal Accounting Fees and Services
    
    
    58PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    58SIGNATURES
    
    
    S-1EXHIBIT 10.4EXHIBIT 14EXHIBIT 21EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
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Unless the context indicates otherwise, all references in this Report to Ameristar or ACI
refer to Ameristar Casinos, Inc. and all references to the Company, we, our, ours or us
refer to Ameristar and its consolidated subsidiaries, collectively. This Report contains certain
forward-looking statements within the meaning of Section 27A of the Securities Act, including
managements plans and objectives for our business, operations and financial performance. These
forward-looking statements 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 or words of similar meaning, with reference to us or our
management. Similarly, statements that describe our future plans, objectives, strategies, financial
results, financial position, operational expectations or goals are forward-looking statements.
Although management believes that the assumptions underlying the forward-looking statements are
reasonable, these assumptions and the forward-looking statements are subject to various factors,
risks and uncertainties, many of which are beyond our control. Accordingly, actual results could
differ materially from those contemplated by any forward-looking statements. In addition to the
other cautionary statements relating to certain forward-looking statements throughout this Report,
attention is directed to Item 1A. Risk Factors and Item 7. Managements Discussion and Analysis
of Financial Condition and Results of Operations for a discussion of some of the factors, risks
and uncertainties that could materially affect the outcome of future results contemplated by
forward-looking statements.
 You should also be aware that while we communicate from time to time with securities analysts,
we do not disclose to them any material non-public information, internal forecasts or other
confidential business information. Therefore, you should not assume that we agree with any
statement or report issued by any analyst, irrespective of the content of the statement or report.
To the extent that reports issued by securities analysts contain projections, forecasts or
opinions, those reports are not our responsibility. Furthermore, we do not undertake any duty to
update any earnings guidance or other forward-looking statements that we may publicly issue, and
you should not assume that information set forth in any publicly issued forward-looking statements
remains accurate.
 
 PART I
 
 Item 1 . Business
 Introduction
  3




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1.
    
    Developing the highest quality facilities in our markets with a wide range of
amenities;2.
    
    Leading our markets in the gaming experience;3.
    
    Building the Ameristar brand; and4.
    
    Employing a collaborative, hands-on
management approach.
   4




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Ameristar
    
    Ameristar
    
    Ameristar
    
    Ameristar
    
    Ameristar Black
    
    The JackpotSt. Charles
    
    Kansas City
    
    Council Bluffs
    
    Vicksburg
    
    Hawk(1)
    
    Properties(2)Opening Year
    
    
    1994
    
    
    
    1997
    
    
    
    1996
    
    
    
    1994
    
    
    
    2001
    
    
    
    1956Acquisition Year
    
    
    2000
    
    
    
    2000
    
    
    
    
    
    
    
    
    
    
    
    2004
    
    
    Casino Square
Footage (approx.)
    
    130,000 (3)
    
    
    140,000
    
    
    38,500 (3)
    
    44,500 (3)
    
    
    55,871
    
    
    
    29,000Slot Machines
(approx.)
    
    
    3,234
    
    
    
    3,033
    
    
    
    1,651
    
    
    
    1,499
    
    
    
    1,636
    
    
    
    993Table Games
    
    98 (4)
    
    105 (4)
    
    
    31
    
    
    
    36
    
    
    26 (4)
    
    35 (4)Hotel Rooms
    
    
    
    
    
    
    184
    
    
    444 (5)
    
    
    149
    
    
    
    
    
    
    
    416Restaurants/Bars
    
    
    7/6
    
    
    11/9 (6)
    
    
    4/4
    
    
    
    3/3
    
    
    
    3/3
    
    
    
    5/4Restaurant/Bar
Seating Capacity
    
    
    1,613/166
    
    
    1,910/507 (6)
    
    
    1,030/61
    
    
    
    870/47
    
    
    
    479/112
    
    
    
    534/113Guest Parking
Spaces (approx.)
    
    
    4,000
    
    
    
    7,150
    
    
    
    3,000
    
    
    
    1,200
    
    
    
    1,553
    
    
    
    1,107Other Amenities
    
    Conference and
Meeting Center
featuring two
ballrooms, five
meeting rooms
and an executive
board room
providing 19,200
square feet of
meeting space,
which opened
September 2006;
300-Seat VIP
Players Club;
Gift Shop;
Amusement
Arcade
    
    1,400-Seat
Entertainment
Facility;
18-Screen Movie
Theater (7);
85-seat VIP
Players Club; Gift
Shop;
Kids Quest
Childrens
Activity
Center (7);
Amusement
Arcade (7)
    
    Meeting Space;
75-seat VIP
Players Club;
Indoor Swimming
Pool;
Exercise
Facility;
Gift Shop;
Kids Quest
Childrens Activity
Center (7);
Amusement
Arcade
    
    Meeting Space;
Swimming
Pool;
Gift Shop;
Service Station;
Convenience
Store; Subway
Restaurant
Franchise; RV
Park
    
    78-seat VIP
Players Club;
Starbucks Coffee
Bar; Gift Shop
    
    3,550-Seat Outdoor
Entertainment
Facility;
318-Seat
Showroom;
Meeting Space;
Sports Book(7);
Swimming Pool;
Gift Shop;
Service Station;
General Store;
Amusement
Arcade;
Styling Salon;
RV Park;
Tennis Courts
 
 (1)
    
    We acquired Ameristar Black Hawk on December 21, 2004.(2)
    
    Includes the operations of Cactus Petes Resort Casino and The Horseshu Hotel & Casino.(3)
    
    The Ameristar St. Charles casino was increased to 130,000 square feet of gaming space on
August 6, 2002 upon the opening of a completely new casino-entertainment facility. Expansions
of the casinos at Ameristar Council Bluffs and Ameristar Vicksburg opened in November 1999 and
December 1999, respectively.(4)
    
    Includes 19 poker tables at Ameristar St. Charles, 15 poker tables at Ameristar Kansas City,
14 poker tables at Ameristar Black Hawk and 6 poker tables at the Jackpot Properties.(5)
    
    Includes 284 rooms operated by affiliates of Kinseth Hospitality Corporation and located on
land owned by us and leased to affiliates of Kinseth.(6)
    
    Includes a 52-seat food court and Arthur Bryants Barbeque restaurant leased to and operated
by third parties.(7)
    
    Leased to and/or operated by a third party. 5




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Ameristar St. Charles.
    Ameristar Kansas City.
 Zagat Surve
    6




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Ameristar Council Bluffs.
     Ameristar Vicksburg.
     Ameristar Black Hawk.
  7




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The Jackpot Properties.
    Construction Projects
  Property
    
    Estimated Total Project Costs
    
    Expected Completion DateAmeristar St. Charles
    
    $265 million
    
    December 2007Ameristar Black Hawk
    
    $220 million
    
    2nd half of 2009Ameristar Vicksburg
    
    Phase I 
$80 million
Phase II 
$18 million
    
    Phase I 
March 2008
Phase II 
2nd half of 2008
    8




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Our Operating Strategies
   High Quality Facilities; Diverse Range of Amenities
   Leading Our Markets in the Gaming Experience
  9




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Building
the Ameristar Brand
  Hands-on Management
  Growth Strategies
    10




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Markets
  Ameristar
    
    
    Ameristar
    
    
    Ameristar
    
    
    Ameristar
    
    
    AmeristarSt. Charles
    
    
    Kansas City
    
    
    Council Bluffs
    
    
    Vicksburg
    
    
    Black Hawk (1)Adult population 
within 50 miles
    
    1.9 million
    
    1.5 million
    
    
    700,000
    
    
    
    400,000
    
    
    2.0 millionAdult population 
within 100 miles
    
    2.8 million
    
    2.0 million
    
    1.2 million
    
    1.0 million
    
    2.8 millionNo. of market participants
    
    
    5
    
    
    
    4
    
    
    
    3
    
    
    
    4
    
    
    
    262006 annual market gaming
revenue  $ in millions
    
    $
    991.0
    
    
    $
    714.6
    
    
    $
    478.0
    
    
    $
    290.3
    
    
    $
    629.02006 market growth rate
    
    
    3.3
    %
    
    
    3.8
    %
    
    
    10.1
    %
    
    
    6.3
    %
    
    
    4.1
    %2006 market share
    
    
    30.7
    %
    
    
    36.3
    %
    
    
    38.5
    %
    
    
    46.5
    %
    
    
    12.6
    %2005 market share
    
    
    31.9
    %
    
    
    36.7
    %
    
    
    43.1
    %
    
    
    46.7
    %
    
    
    8.9
    %2006 market share rank
    
    
    #2
    
    
    
    #1
    
    
    
    #2
    
    
    
    #1
    
    
    Not reported
 
 (1)
    
    The Black Hawk market includes Black Hawk and Central City, Colorado.
  Competition
 St. Charles
    11




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Kansas City
   Council Bluffs
   12




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Vicksburg
    Black Hawk
   Jackpot
  13




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Other
  Employees and Labor Relations
  Incorporation
  Government Regulation
  Missouri
    14




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
    
    any transfer or issuance of an ownership interest in a gaming licensee that is not a
publicly held entity or a holding company that is not a publicly held entity, and
    
    any pledge or grant of a security interest in an ownership interest in a gaming
licensee that is not a publicly held entity or a holding company that is not a publicly
held entity; provided that no ownership interest may be transferred in any way pursuant to
any pledge or security interest without separate notice to the Missouri Gaming Commission
at least 30 days prior to such transfer, which restriction must be specifically included in
the pledge or grant of a security interest.
   
    
    any issuance of an ownership interest in a publicly held gaming licensee or a publicly
held holding company, if such issuance would involve, directly or indirectly, an amount of
ownership interest equaling 5% or greater of the ownership interest in the gaming licensee
or holding company after the issuance is complete,
    
    any private incurrence of debt equal to or exceeding $1 million by a gaming licensee or
holding company that is affiliated with the holder of a license,
    
    any public issuance of debt by a gaming licensee or holding company that is affiliated
with the holder of a license, and
    
    any significant related party transaction as defined in the regulations.
    15




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Iowa
    16




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Mississippi
    18




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Colorado
    23




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
    
    0.25% up to and including $2 million of the subject amounts;
    
    2% on amounts from $2 million to $4 million;
    
    4% on amounts from $4 million to $5 million;
    
    11% on amounts from $5 million to $10 million;
    
    16% on amounts from $10 million to $15 million; and
    
    20% on amounts over $15 million.
   24




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Nevada
     26




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Other Jurisdictions
  Federal Regulation of Slot Machines
  Other Regulations
   Web Access to Periodic Reports
 www.ameristar.com
 
 Item 1A . Risk Factors
 The gaming industry is very competitive and increased competition could have a material adverse
effect on our future operations.
    30




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If the jurisdictions in which we operate increase gaming taxes and fees, our results could be
adversely affected.
      Our business is subject to restrictions and limitations imposed by gaming regulatory authorities
that could adversely affect us.
   32




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Financial leverage may impair our financial condition and restrict our operations.
  
    
    Increasing our vulnerability to general adverse economic and industry conditions;
    
    Limiting our ability to obtain additional financing to fund future working capital,
capital expenditures, acquisitions and other general corporate requirements;
    
    Requiring a substantial portion of our cash flows from operations for the payment of
interest on our debt and reducing our ability to use our cash flows to fund working
capital, capital expenditures, acquisitions, stock repurchases, dividends and general
corporate requirements;
    
    Limiting our flexibility in planning for, or reacting to, changes in our business and
the industry in which we operate; and
    
    Placing us at a competitive disadvantage to less leveraged competitors.
  We are subject to the risk of rising interest rates.
  Many factors, some of which are beyond our control, could adversely affect our ability to
successfully complete our construction and development projects as planned.
 General Construction Risks  Delays and Cost Overruns.
  33




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Unforeseen Geological Conditions May Continue to Affect Our Black Hawk Construction Project.
 Our Expansion Project at Ameristar Vicksburg Presents Unique Engineering and Construction
Challenges.
 Construction Dependent upon Available Financing and Cash Flows from Operations.
 34




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Worsening economic conditions or geopolitical circumstances may adversely affect our business.
  We have limited opportunities to develop new properties.
  Our business may be adversely affected by legislation prohibiting tobacco smoking.
  The Estate of Craig H. Neilsen owns a majority of our common stock and controls our affairs.
   35




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A change in control could result in the acceleration of our debt obligations.
  Our business may be materially impacted by an act of terrorism or by additional security
requirements that may be imposed on us.
  Our business may be adversely affected by our ability to retain and attract key personnel.
 
    
    We depend on the continued performance of our entire senior executive team, including
John M. Boushy, our Chief Executive Officer and President, who joined us in August 2006 and
became Chief Executive Officer following Mr. Neilsens unexpected death in November 2006. As
a result, if we lose the services of any of our key executives or our senior property
management personnel and cannot replace such persons in a timely manner, it could have an
adverse effect on our business.
    
    We have experienced and expect to continue to experience strong competition in hiring and
retaining qualified property and corporate management personnel, including competition from
numerous Native American gaming facilities that are not subject to the same taxation regimes
as we are and therefore may be willing and able to pay higher rates of compensation. We
currently have a number of vacancies in key corporate and property management positions.
Recruiting and retaining qualified management personnel is particularly difficult at
Ameristar Vicksburg, Ameristar Black Hawk and the Jackpot properties due to their geographic
locations. If we are unable to successfully recruit and retain qualified management
personnel at our properties or at our corporate level, our results of operations could be
adversely affected.
    
    As we recruit personnel, we expect successful candidates to exhibit a collaborative,
communicative and collegial nature. We also employ a high degree of centralization in a
highly decentralized industry. We use multi-faceted recruitment, assessment and
interviewing approaches that include several levels of interactions and interviews over a
period of time. These factors create risk in attracting management personnel in a timely
fashion, as well as hiring candidates we expect to be successful within our company.
 Adverse weather conditions or natural disasters in the areas in which we operate could have an
adverse effect on our results of operations and financial condition.
  36




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Any loss from service of our riverboat and barge facilities for any reason could materially
adversely affect us.
    We could face severe penalties and material remediation costs if we fail to comply with
applicable
environmental regulations.
  
 Item 1B Unresolved Staff Comments
  
 Item 2 Properties
 Ameristar St. Charles.
 Ameristar Kansas City.
 Ameristar Council Bluffs.
 37




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Ameristar Vicksburg.
 Ameristar Black Hawk.
 The Jackpot Properties.
 Other.
  
 Item 3. Legal Proceedings
  
 Item 4 . Submission of Matters to a Vote of Security Holders
  38




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 (a) Market Information
  High
    
    Low2006First Quarter
    
    $
    25.79
    
    
    $
    21.35Second Quarter
    
    
    26.57
    
    
    
    17.98Third Quarter
    
    
    23.22
    
    
    
    16.73Fourth Quarter
    
    
    33.41
    
    
    
    21.662005First Quarter
    
    $
    28.99
    
    
    $
    20.47Second Quarter
    
    
    29.13
    
    
    
    23.83Third Quarter
    
    
    30.31
    
    
    
    20.04Fourth Quarter
    
    
    24.97
    
    
    
    18.12
  (b) Holders
  (c) Dividends
    39




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Item 6 . Selected Financial Data
  AMERISTAR CASINOS, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
 For the years ended December 31,Statement
of income data (1):
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(Amounts in Thousands, Except Per Share Data)REVENUES:Casino
    
    $
    1,008,311
    
    
    $
    974,178
    
    
    $
    856,901
    
    
    $
    760,376
    
    
    $
    678,642Food and beverage
    
    
    131,795
    
    
    
    125,918
    
    
    
    114,010
    
    
    
    103,176
    
    
    
    80,783Rooms
    
    
    27,972
    
    
    
    25,355
    
    
    
    26,082
    
    
    
    25,136
    
    
    
    22,824Other
    
    
    29,082
    
    
    
    26,041
    
    
    
    23,166
    
    
    
    21,557
    
    
    
    19,3871,197,160
    
    
    
    1,151,492
    
    
    
    1,020,159
    
    
    
    910,245
    
    
    
    801,636Less: Promotional allowances
    
    
    196,862
    
    
    
    190,134
    
    
    
    165,461
    
    
    
    128,278
    
    
    
    103,673Net revenues
    
    
    1,000,298
    
    
    
    961,358
    
    
    
    854,698
    
    
    
    781,967
    
    
    
    697,963OPERATING EXPENSES:Casino
    
    
    439,101
    
    
    
    431,101
    
    
    
    379,909
    
    
    
    349,845
    
    
    
    297,476Food and beverage
    
    
    68,744
    
    
    
    66,299
    
    
    
    63,758
    
    
    
    59,747
    
    
    
    53,963Rooms
    
    
    6,780
    
    
    
    6,454
    
    
    
    6,565
    
    
    
    6,343
    
    
    
    6,826Other
    
    
    18,749
    
    
    
    16,503
    
    
    
    13,687
    
    
    
    12,522
    
    
    
    13,962Selling, general and administrative
    
    
    200,588
    
    
    
    186,050
    
    
    
    157,907
    
    
    
    149,292
    
    
    
    150,228Depreciation and amortization
    
    
    93,889
    
    
    
    85,366
    
    
    
    73,236
    
    
    
    63,599
    
    
    
    48,711Impairment loss on assets held for sale
    
    
    931
    
    
    
    869
    
    
    
    174
    
    
    
    687
    
    
    
    5,213Preopening costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,401Total operating expenses
    
    
    828,782
    
    
    
    792,642
    
    
    
    695,236
    
    
    
    642,035
    
    
    
    582,780INCOME FROM OPERATIONS
    
    
    171,516
    
    
    
    168,716
    
    
    
    159,462
    
    
    
    139,932
    
    
    
    115,183OTHER INCOME (EXPENSE):Interest income
    
    
    2,746
    
    
    
    830
    
    
    
    245
    
    
    
    330
    
    
    
    174Interest expense, net
    
    
    (50,291
    )
    
    
    (60,913
    )
    
    
    (57,003
    )
    
    
    (64,261
    )
    
    
    (51,206
    )Loss on early retirement of debt
    
    
    (26,264
    )
    
    
    (2,074
    )
    
    
    (923
    )
    
    
    (701
    )
    
    
    Net gain (loss) on disposition of assets
    
    
    683
    
    
    
    (1,655
    )
    
    
    (904
    )
    
    
    288
    
    
    
    (272
    )Income before income tax provision
    
    
    98,390
    
    
    
    104,904
    
    
    
    100,877
    
    
    
    75,588
    
    
    
    63,879Income tax provision
    
    
    38,825
    
    
    
    38,619
    
    
    
    38,898
    
    
    
    27,968
    
    
    
    23,345NET INCOME
    
    $
    59,565
    
    
    $
    66,285
    
    
    $
    61,979
    
    
    $
    47,620
    
    
    $
    40,534
 40




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AMERISTAR CASINOS, INC.
CONSOLIDATED SELECTED FINANCIAL DATA  (continued)
 For the years ended December 31,STATEMENT
OF INCOME DATA (CONTINUED):
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(Amounts in Thousands, Except Per Share Data)EARNINGS PER SHARE:Basic
    
    $
    1.06
    
    
    $
    1.19
    
    
    $
    1.15
    
    
    $
    0.90
    
    
    $
    0.78Diluted
    
    $
    1.04
    
    
    $
    1.16
    
    
    $
    1.11
    
    
    $
    0.88
    
    
    $
    0.75WEIGHTED AVERAGE SHARES
OUTSTANDING:Basic
    
    
    56,155
    
    
    
    55,664
    
    
    
    54,114
    
    
    
    52,846
    
    
    
    52,214Diluted
    
    
    57,327
    
    
    
    57,127
    
    
    
    55,653
    
    
    
    54,240
    
    
    
    53,984
 December 31,(Amounts in Thousands)BALANCE SHEET AND OTHER DATA:
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Cash and cash equivalents
    
    $
    101,140
    
    
    $
    106,145
    
    
    $
    86,523
    
    
    $
    78,220
    
    
    $
    90,573Total assets
    
    
    1,541,475
    
    
    
    1,383,986
    
    
    
    1,315,469
    
    
    
    1,155,250
    
    
    
    1,173,492Total
long-term debt, net of current maturities
    
    
    878,668
    
    
    
    776,029
    
    
    
    761,799
    
    
    
    713,044
    
    
    
    760,665Stockholders equity (2)
    
    
    434,164
    
    
    
    383,710
    
    
    
    321,300
    
    
    
    255,843
    
    
    
    202,196Capital expenditures
    
    
    249,123
    
    
    
    177,789
    
    
    
    89,633
    
    
    
    69,219
    
    
    
    255,530
 
 (1)
    
    We opened the new Ameristar St. Charles facility on August 6, 2002. We acquired
Ameristar Black Hawk (formerly Mountain High Casino) on December 21, 2004.(2)
    
    Dividends of $21.1 million, $17.4 million and $13.6 million were paid in 2006, 2005 and
2004, respectively. The annual dividend per share was $0.375 in 2006, $0.3125 in 2005 and
$0.25 in 2004. No dividends were paid in 2002 or 2003. 
 41




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
 The following information should be read in conjunction with our Consolidated Financial
Statements and the Notes thereto included in this Report. The information in this section and in
this Report generally includes forward-looking statements. See Item 1A. Risk Factors.
 Overview
   
    
    Slots handle/Table games drop  measurements of gaming volume;
    
    Win/Hold percentages  the percentage of handle or drop that is won by the casino
and recorded as casino revenue;
    
    Hotel occupancy rate  the average percentage of available hotel rooms occupied
during a period;
    
    Average daily room rate  average price of occupied hotel rooms per day;
    
    REVPAR  revenue per available room is a summary measure of hotel results that
combines average daily room rate and hotel occupancy rate;
    
    Market share  share of gross gaming revenues in each of our markets other than
Jackpot and our share of gaming devices in the Jackpot market (Nevada does not publish
separate gaming revenue statistics for this market);
    
    Fair share percentage  a percentage of gross gaming revenues based on the number
of gaming positions relative to the total gaming positions in the market;
    
    Admissions  the number of patrons who enter our casinos in jurisdictions that
record admissions; and
    
    Win per admission  the amount of gaming revenues generated per admission.
  42




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##### Table of Contents




    
    Ameristar Black Hawk.On April 1, 2006, we rebranded our renovated and
expanded casino in Black
Hawk, Colorado. Ameristar Black Hawk, formerly known as Mountain High, 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.
For the last three quarters of 2006, the property experienced significant growth in business
volume and strong improvement in financial performance following the casino expansion and
rebranding, as evidenced by increases in net revenues and operating income of 67.9% and
494.6%, respectively, over the last three quarters of 2005. The propertys financial
performance was adversely impacted by construction disruption throughout 2005 and during the
first quarter of 2006. Additionally, Ameristar Black Hawk was adversely affected during
most of the third quarter of 2005 by the temporary closure of a principal highway connecting
Black Hawk and Denver.
    
    Post-hurricane improvement at Ameristar Vicksburg.In 2006, Ameristar
Vicksburg increased operating income by $4.8 million, or 12.4%, over 2005. The improved
financial performance of this property is mostly attributable to reduced Mississippi Gulf
Coast gaming capacity caused by Hurricane Katrina in August 2005. In 2006, business volumes
and our financial performance continued to surpass results prior to Hurricane Katrina
despite the reopening of several Gulf Coast casinos during the year. During the fourth
quarter of 2006, we began to experience declines in our Vicksburg propertys financial
performance relative to the 2005 fourth quarter. We expect the propertys business volumes
and financial performance for each of the first three quarters of 2007 to decline, as
compared to the same quarterly periods in 2006, mostly as a result of the restored Gulf
Coast gaming capacity.
    
    Increased competition for Ameristar Council Bluffs.Ameristar Council
Bluffs faced enhanced competition following the March 2006 completion of a major expansion
and rebranding of a nearby land-based casino. For the year ended December 31, 2006, our
Council Bluffs property experienced a $5.5 million (9.7%) decrease in operating income and
a 2.3 percentage point decline in operating income margin as compared to 2005. During
2005, our Council Bluffs property benefited from significant construction disruption and a
reduced number of available slot machines at the competing casino.
    
    Profit maximization.We continue to see the positive impact from our
efforts to utilize promotional allowances and labor more efficiently. During the last two
quarters of 2006, we decreased our promotional allowances as a percentage of gaming
revenues by 1.6 percentage points compared to the same period in the prior year, and we
expect this trend to continue in 2007. In addition to more effective promotional spending,
we are continuing to achieve further efficiencies through improved labor management and
cost containment practices. The successful application of these strategies was most
evident at our St. Charles property, where revenues declined $1.2 million from the prior
year while operating income margin improved 0.7 percentage point over 2005.
    
    Promotional spending and marketing.For the year ended December 31, 2006,
promotional allowances at our properties increased $6.7 million (3.5%) over 2005. The
increase in our rate of promotional spending was partially attributable to our ongoing
efforts to strengthen the Ameristar brand through targeted marketing, as evidenced by an
overall 4.9% increase in rated play from 2005 to 2006. In addition to improving rated
play, our marketing and promotional spending in 2006 also increased, particularly in the
first quarter of 2006, as a result of competitive pressures in the Missouri and Iowa
markets. As indicated above, we believe we addressed these competitive challenges with
more efficient promotional spending, resulting in decreased promotional allowances in the
second half of 2006 as compared to the last six months of 2005.
    
    Renovations and enhancements at Ameristar St. Charles.At Ameristar St.
Charles, we continue to make progress on the construction of a 400-room, all-suite hotel
with an indoor/outdoor swimming
 43




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##### Table of Contents



pool and a 7,000 square-foot full-service spa, and an
additional 2,000-space parking garage. The hotel is designed to surpass
four-diamond-quality standards and we believe it will be the premier hotel in greater St.
Louis. We completed and opened 19,200 square feet of new meeting and conference facilities
in the third quarter of 2006 and the initial 1,000 spaces of the parking garage in February
 2007. The total cost of these ongoing and recently completed projects is expected to be
$265.0 million, representing an increase of $25.0 million over the original budget. The
revised cost is mostly attributable to upgraded design and finishes intended to enhance the
guest experience, greater-than-anticipated site preparation costs and an increase in the
cost of materials. The completion date of the hotel and the remainder of the project is
expected to be December 2007. We believe these new amenities will allow us to further
enhance our competitive position in the St. Louis market.
 
    
    Ameristar Black Hawk hotel project.The construction of our four-diamond
quality hotel is progressing at Ameristar Black Hawk. The 33-story towers 536
well-appointed, oversized rooms will feature upscale furnishings and amenities. The tower
will include a versatile meeting and ballroom center and will also have Black Hawks only
full-service spa, an enclosed rooftop swimming pool and indoor/outdoor whirlpool
facilities. Once completed, Ameristar Black Hawk will offer destination resort amenities
and services that we believe are unprecedented in the Denver gaming market. The hotels
scheduled completion date has been delayed until the second half of 2009, primarily due to
unforeseen site conditions and inclement weather. The cost of the hotel is expected to be
$220.0 million, representing an increase of $40.0 million over the previous budget. The
revised cost estimate is mostly attributable to an increase in materials costs, the
unforeseen site conditions and upgraded finishes and amenities designed to enhance the
guest experience.
    
    Expansion project at Ameristar Vicksburg.We are continuing to progress
with a multi-phase casino and parking expansion project at Ameristar Vicksburg.
The first phase of the project will require dry-docking the vessel and will add 800 gaming positions, two new
restaurants, a VIP club, retail space and a
parking garage to the property, and is expected to be completed by
March 2008. We believe
these improvements will help to alleviate long-standing capacity constraints, provide more
convenient access and increase our long-time market dominance in
Vicksburg. The second phase of the project will feature improvements
to the existing casino layout and flow as well as enhancements to
existing non-gaming amenities, and is expected to be completed in the
second half of 2008. The total cost for both phases of the project is expected to be $98.0 million. In addition to the Vicksburg
projects noted above, we expect to commence a $12 million renovation of the hotel in August
2007.
    
    External development costs.Development activities have contributed to our
corporate expense as we continue to pursue growth through acquisition and other development
opportunities. Development-related costs totaled $3.2 million in 2006 compared to $6.6
million in 2005. The decrease in costs is mostly attributable to reduced efforts in the
United Kingdom and the termination in November 2005 of our pursuit of a casino license
application in Pennsylvania. In April 2006, we submitted a proposal to acquire a publicly
traded U.S.-based gaming operator. The gaming operator received several competing
proposals and we ultimately determined not to further pursue the acquisition. In
connection with this proposed acquisition, professional fees and internal costs totaled
approximately $0.9 million. As part of our continued pursuit of external expansion
opportunities, we expect to incur future development costs, the amounts of which we cannot
currently determine.
    
    Stock-based compensation expense.On January 1, 2006, we adopted SFAS No.
123(R), 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. The
adoption of SFAS No. 123(R) resulted in a pre-tax non-cash operating expense of $7.8
million for the year ended December 31, 2006.
 44




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##### Table of Contents



Results of Operations
 Selected Financial Measures by Property
  Years ended December 31,2006
    
    
    2005
    
    
    2004(Dollars in Thousands)Consolidated Cash Flow Information:Net cash provided by operating activities
    
    $
    169,538
    
    
    $
    197,459
    
    
    $
    176,504Net cash used in investing activities
    
    $
    (237,681
    )
    
    $
    (175,849
    )
    
    $
    (208,658
    )Net cash provided by (used in) financing
activities
    
    $
    63,138
    
    
    $
    (1,988
    )
    
    $
    40,457Net Revenues:Ameristar St. Charles
    
    $
    284,841
    
    
    $
    286,028
    
    
    $
    278,887Ameristar Kansas City
    
    
    252,991
    
    
    
    247,586
    
    
    
    234,432Ameristar Council Bluffs
    
    
    181,840
    
    
    
    186,367
    
    
    
    171,755Ameristar Vicksburg
    
    
    135,236
    
    
    
    126,089
    
    
    
    107,440Jackpot Properties
    
    
    68,698
    
    
    
    63,939
    
    
    
    60,160Ameristar Black Hawk (1)
    
    
    76,692
    
    
    
    51,349
    
    
    
    2,024Consolidated net revenues
    
    $
    1,000,298
    
    
    $
    961,358
    
    
    $
    854,698Operating Income (Loss):Ameristar St. Charles
    
    $
    64,842
    
    
    $
    63,268
    
    
    $
    67,125Ameristar Kansas City
    
    
    47,625
    
    
    
    48,226
    
    
    
    44,803Ameristar Council Bluffs
    
    
    50,950
    
    
    
    56,452
    
    
    
    50,656Ameristar Vicksburg
    
    
    43,630
    
    
    
    38,812
    
    
    
    27,592Jackpot Properties
    
    
    12,812
    
    
    
    10,851
    
    
    
    8,962Ameristar Black Hawk (1)
    
    
    7,555
    
    
    
    304
    
    
    
    851Corporate and other
    
    
    (55,898
    )
    
    
    (49,197
    )
    
    
    (40,527
    )Consolidated operating income
    
    $
    171,516
    
    
    $
    168,716
    
    
    $
    159,462Operating Income Margins:Ameristar St. Charles
    
    
    22.8
    %
    
    
    22.1
    %
    
    
    24.1
    %Ameristar Kansas City
    
    
    18.8
    %
    
    
    19.5
    %
    
    
    19.1
    %Ameristar Council Bluffs
    
    
    28.0
    %
    
    
    30.3
    %
    
    
    29.5
    %Ameristar Vicksburg
    
    
    32.3
    %
    
    
    30.8
    %
    
    
    25.7
    %Jackpot Properties
    
    
    18.6
    %
    
    
    17.0
    %
    
    
    14.9
    %Ameristar Black Hawk (1)
    
    
    9.9
    %
    
    
    0.6
    %
    
    
    42.0
    %Consolidated operating income margin
    
    
    17.1
    %
    
    
    17.5
    %
    
    
    18.7
    %
 
 (1)
    
    We acquired Ameristar Black Hawk on December 21, 2004. Accordingly, Ameristar Black
Hawks operating results are included only since the acquisition date for 2004 and for the
full years 2005 and 2006. 45




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##### Table of Contents



Years ended December 31,2006
    
    
    2005
    
    
    2004(Amounts in Thousands)Casino Revenues:Slots
    
    $
    897,728
    
    
    $
    860,948
    
    
    $
    747,247Table games
    
    
    110,583
    
    
    
    113,230
    
    
    
    109,654Casino revenues
    
    
    1,008,311
    
    
    
    974,178
    
    
    
    856,901Non-Casino Revenues:Food and beverage
    
    
    131,795
    
    
    
    125,918
    
    
    
    114,010Rooms
    
    
    27,972
    
    
    
    25,355
    
    
    
    26,082Other
    
    
    29,082
    
    
    
    26,041
    
    
    
    23,166Non-casino revenues
    
    
    188,849
    
    
    
    177,314
    
    
    
    163,2581,197,160
    
    
    
    1,151,492
    
    
    
    1,020,159Less: Promotional Allowances
    
    
    (196,862
    )
    
    
    (190,134
    )
    
    
    (165,461
    )Total Net Revenues
    
    $
    1,000,298
    
    
    $
    961,358
    
    
    $
    854,698
 Year Ended December 31, 2006 Versus Year Ended December 31, 2005
 Net Revenues
   Operating Income
   46




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##### Table of Contents



Interest Expense
  Years ended December 31,2006
    
    
    2005(Dollars in thousands)Interest cost
    
    $
    58,411
    
    
    $
    65,956Less: Capitalized interest
    
    
    (8,120
    )
    
    
    (5,043
    )Interest expense, net
    
    $
    50,291
    
    
    $
    60,913Cash paid for interest, net of amounts capitalized
    
    $
    65,675
    
    
    $
    54,015Weighted average total debt balance outstanding
    
    $
    838,256
    
    
    $
    755,343Weighted average interest rate
    
    
    6.8
    %
    
    
    8.6
    %
  Income Tax Expense
  Net Income
  47




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Year Ended December 31, 2005 Versus Year Ended December 31, 2004
 Net Revenues
    Operating Income
     Interest Expense
  48




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##### Table of Contents



Income Tax Expense
  Net Income
  Liquidity and Capital Resources
 Cash Flows  Summary
  Years ended December 31,2006
    
    
    2005
    
    
    2004(Amounts in Thousands)Net cash provided by operating activities
    
    $
    169,538
    
    
    $
    197,459
    
    
    $
    176,504Cash flows from investing activities:Capital expenditures
    
    
    (249,123
    )
    
    
    (177,789
    )
    
    
    (89,633
    )Net cash paid for acquisition of Mountain High Casino
    
    
    
    
    
    
    
    
    
    
    (114,171
    )Increase (decrease) in construction contracts payable
    
    
    16,157
    
    
    
    4,437
    
    
    
    (5,536
    )Proceeds from sale of assets
    
    
    1,368
    
    
    
    896
    
    
    
    879Increase in deposits and other non-current assets
    
    
    (6,083
    )
    
    
    (3,393
    )
    
    
    (197
    )Net cash used in investing activities
    
    
    (237,681
    )
    
    
    (175,849
    )
    
    
    (208,658
    )Cash flows from financing activities:Debt borrowings
    
    
    485,000
    
    
    
    410,000
    
    
    
    115,000Principal payments of debt
    
    
    (384,346
    )
    
    
    (396,554
    )
    
    
    (68,562
    )Premium on early redemption of senior subordinated notes
    
    
    (20,425
    )
    
    
    
    
    
    
    Cash dividends paid
    
    
    (21,068
    )
    
    
    (17,425
    )
    
    
    (13,561
    )Debt issuance costs
    
    
    (153
    )
    
    
    (5,134
    )
    
    
    (88
    )Excess tax benefit from stock option exercises
    
    
    4,266
    
    
    
    
    
    
    
    Purchases of treasury stock
    
    
    (8,014
    )
    
    
    
    
    
    
    Proceeds from stock option exercises
    
    
    7,878
    
    
    
    7,125
    
    
    
    7,668Net cash provided by (used in) financing activities
    
    
    63,138
    
    
    
    (1,988
    )
    
    
    40,457Net (decrease) increase in cash and cash equivalents
    
    $
    (5,005
    )
    
    $
    19,622
    
    
    $
    8,303
 49




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##### Table of Contents



Cash flows from operating activities
  Cash flows from investing activities
  Cash flows from financing activities
  
    
    The February 15, 2006 redemption of our senior subordinated notes with
borrowings under our revolving loan facility;
    
    The November 10, 2005 borrowing of $400.0 million as a term loan under our
new credit facility, of which $362.2 million was used to repay the principal amount of
loans outstanding under our prior senior credit facilities, with the balance being held to
provide funding for future capital needs;
    
    Debt borrowings primarily to fund capital improvement projects;
    
    The December 21, 2004 borrowing of $115.0 million under our senior credit
facilities in order to fund the acquisition of our Black Hawk property;
    
    Principal payments on long-term debt;
    
    Prepayments of $26.0 million and $65.0 million on our senior credit
facilities in 2005 and 2004, respectively;
    
    Dividend payments;
    
    Proceeds from employee stock option exercises;
    
    The repurchase of 0.4 million shares of Common Stock at a cost of $8.0
million under our stock repurchase program during 2006; and
    
    Debt issuance costs relating to the new credit facility.
  Capital expenditures
  50




---



##### Table of Contents



Liquidity
       51




---



##### Table of Contents



Off-Balance Sheet Arrangements
 
 52




---



##### Table of Contents



Contractual and Other Commitments
  Payments Due by Period (in Thousands)Contractual Obligations:
    
    2007
    
    2008-2009
    
    2010-2011
    
    After 2011
    
    TotalLong-term debt instruments
    
    $
    4,344
    
    
    $
    8,699
    
    
    $
    587,034
    
    
    $
    282,935
    
    
    $
    883,012Estimated interest payments on
long-term debt (1)
    
    
    63,937
    
    
    
    144,357
    
    
    
    97,914
    
    
    
    21,693
    
    
    
    327,901Operating leases
    
    
    3,703
    
    
    
    1,538
    
    
    
    974
    
    
    
    851
    
    
    
    7,066Material construction
contracts
    
    
    228,216
    
    
    
    47,395
    
    
    
    
    
    
    
    
    
    
    
    275,611Total
    
    $
    300,200
    
    
    $
    201,989
    
    
    $
    685,922
    
    
    $
    305,479
    
    
    $
    1,493,590
 
 (1)
    
    Estimated interest payments on long-term debt are based on principal amounts
outstanding after giving effect to projected borrowings in 2007 and forecasted LIBOR rates
for our senior secured credit facilities. Amount of Commitment Expiration Per Period (in Thousands)Other Commitments:
    
    2007
    
    2008-2009
    
    2010-2011
    
    After 2011
    
    TotalLetters of credit
    
    $
    5,373
    
    
    $
    
    $
    
    $
    
    $
    5,373
     53




---



##### Table of Contents



Critical Accounting Policies and Estimates
  Property and Equipment
  Excess of Purchase Price Over Fair Value of Net Assets Acquired
  Star Awards Program
  54




---



##### Table of Contents



Cash Coupons
  Self-Insurance Reserves
  Accounting for Share-Based Compensation
  Income Taxes
    55




---



##### Table of Contents



Recently Issued Accounting Standards
 FIN 48
  SAB
108
  SFAS No. 157
  
 Item 7A . Quantitative and Qualitative Disclosures About Market Risk
   56




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##### Table of Contents



Item 8 . Financial Statements and Supplementary Data
  
 Item 9 . Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A . Controls and Procedures
       
 Item 9B . Other Information
  57




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##### Table of Contents



PART III
 
 Item 10 . Directors, Executive Officers and Corporate Governance
  
 Item 11 . Executive Compensation
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
  
 Item 13 . Certain Relationships and Related Transactions, and Director Independence
  
 Item 14 . Principal Accounting Fees and Services
  
 PART IV
 
 Item 15 . Exhibits, Financial Statement Schedules
  Financial Statements
 Managements Annual Report on Internal Control over Financial ReportingReports of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of December 31, 2006 and 2005Consolidated
Statements of Income for the years ended December 31, 2006,
2005 and 2004Consolidated Statements of Stockholders Equity and Comprehensive Income for
the years ended December 31, 2006, 2005 and 2004Consolidated Statements of Cash Flows for the years ended December 31, 2006,
2005 and 2004
 58




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##### Table of Contents



Notes to Consolidated Financial Statements
 Financial Statement Schedules
  Exhibits
  ExhibitNumber
    
    Description of Exhibit
    
    Method of Filing3(i)(a)
    
    Articles of Incorporation of ACI
    
    Incorporated by reference to
Exhibit 3.1 to Registration
Statement on Form S-1 filed
by ACI under the Securities
Act of 1933, as amended (File
No. 33-68936) (the Form
S-1).3(i)(b)
    
    Certificate of Amendment to Articles of
Incorporation of ACI
    
    Incorporated by reference to
Exhibit 3.1 to ACIs
Quarterly Report on Form 10-Q
for the quarter ended June
30, 2002.3(i)(c)
    
    Certificate of Change Pursuant to NRS 78.209
    
    Incorporated by reference to
Exhibit 3(i).1 to ACIs
Current Report on Form 8-K
filed on June 8, 2005.3(ii)
    
    Bylaws of ACI
    
    Incorporated by reference to
Exhibit 3.2 to ACIs Annual
Report on Form 10-K for the
year ended December 31, 1995.4.1
    
    Specimen Common Stock Certificate
    
    Incorporated by reference to
Exhibit 4 to Amendment No. 2
to the Form S-1.4.2
    
    Credit Agreement dated as of November 10,
2005 among ACI, the various Lenders party
thereto from time to time, Wells Fargo
Bank, N.A., as Joint Lead Arranger and
Syndication Agent, Deutsche Bank Securities
Inc., as Joint Lead Arranger, the
Documentation Agents and Managing Agents
party thereto, and Deutsche Bank Trust
Company Americas, as Administrative Agent
(exhibits and schedules omitted) (the
Credit Agreement)
    
    Incorporated by reference to
Exhibit 4.2 to ACIs Annual
Report on Form 10-K for the
year ended December 31, 2005
(the 2005 10-K).
 59




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit
    
    Method of Filing4.3
    
    First Amendment to Credit Agreement, dated
as of August 21, 2006, among ACI, the
various Lenders party to the Credit
Agreement and Deutsche Bank Trust Company
Americas, as Administrative Agent.
    
    Incorporated by reference to
Exhibit 4.1 to ACIs Current
Report on Form 8-K filed on
August 24, 2006.*10.1(a)
    
    Employment Agreement dated November 15,
1993 between ACI and Thomas M. Steinbauer
    
    Incorporated by reference to
Exhibit 10.1(a) to ACIs
Annual Report on Form 10-K
for the year ended December
31, 1994.*10.1(b)
    
    Amendment No. 1 to Employment Agreement
dated as of October 5, 2001 between ACI and
Thomas M. Steinbauer
    
    Incorporated by reference to
Exhibit 10.2 to ACIs
Quarterly Report on Form 10-Q
for the quarter ended
September 30, 2001 (the
September 2001 10-Q).*10.1(c)
    
    Amendment No. 2 to Employment Agreement
dated as of August 15, 2002 between ACI and
Thomas M. Steinbauer
    
    Incorporated by reference to
Exhibit 10.2 to ACIs
Quarterly Report on Form 10-Q
for the quarter ended
September 30, 2002 (the
September 2002 10-Q).*10.1(d)
    
    Amended and Restated Executive Employment
Agreement dated as of March 11, 2002
between ACI and Gordon R. Kanofsky
    
    Incorporated by reference to
Exhibit 10.1(c) to ACIs
Annual Report on Form 10-K
for the year ended December
31, 2001 (the 2001 10-K).*10.1(e)
    
    Amendment to Amended and Restated Executive
Employment Agreement dated as of August 16,
2002 between ACI and Gordon R. Kanofsky
    
    Incorporated by reference to
Exhibit 10.3 to the September
2002 10-Q.*10.1(f)
    
    Executive Employment Agreement dated as of
March 13, 2002 between ACI and Peter C.
Walsh
    
    Incorporated by reference to
Exhibit 10.1(d) to the 2001
10-K.*10.1(g)
    
    Amendment to Executive Employment Agreement
dated as of August 16, 2002 between ACI and
Peter C. Walsh
    
    Incorporated by reference to
Exhibit 10.4 to the September
2002 10-Q.*10.1(h)
    
    Executive Employment Agreement dated as of
June 5, 2002 between ACI and Angela R.
Baker (now known as Angela R. Frost)
    
    Incorporated by reference to
Exhibit 10.1(g) to ACIs
Annual Report on Form 10-K
for the year ended December
31, 2002 (the 2002 10-K).*10.1(i)
    
    Executive Employment Agreement, dated as of
July 28, 2006, between ACI and John M.
Boushy
    
    Incorporated by reference to
Exhibit 10.1 to ACIs Current
Report on Form 8-K filed on
August 2, 2006 (the August
2006 8-K).*10.2
    
    Restricted Stock Agreement, dated July 28,
2006, between ACI and John M. Boushy
    
    Incorporated by reference to
Exhibit 10.2 to the August
2006 8-K.*10.3(a)
    
    Ameristar Casinos, Inc. Management Stock
Option Incentive Plan, as amended and
restated
    
    Incorporated by reference to
Exhibit 10.3 to ACIs
Quarterly Report on Form 10-Q
for the quarter ended
September 30, 1996.
 60




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit
    
    Method of Filing*10.3(b)
    
    Amendment to Ameristar Casinos, Inc.
Amended and Restated Management Stock
Option Incentive Plan
    
    Incorporated by reference to
Exhibit 10.3 to the September
2001 10-Q.*10.3(c)
    
    Second Amendment to Ameristar Casinos, Inc.
Amended and Restated Management Stock
Option Incentive Plan
    
    Incorporated by reference to
Exhibit 10.3(c) to the 2002

10-K.*10.4(a)
    
    Ameristar Casinos, Inc. Amended and
Restated 1999 Stock Incentive Plan,
effective as of June 17, 2005
    
    Incorporated by reference to
Exhibit 10.1 to ACIs Current
Report on Form 8-K filed on
June 22, 2005.*10.4(b)
    
    Form of Stock Option Agreement under
Ameristar Casinos, Inc. Amended and
Restated 1999 Stock Incentive Plan
    
    Filed electronically herewith.*10.5
    
    Ameristar Casinos, Inc. 2002 Non-Employee
Directors Stock Election Plan
    
    Incorporated by reference to
Appendix A to the definitive
Proxy Statement filed by ACI
under cover of Schedule 14A
on April 30, 2002 (the 2002
Proxy Statement).*10.6
    
    Ameristar Casinos, Inc. Performance-Based
Bonus Plan for Craig H. Neilsen
    
    Incorporated by reference to
Appendix B to the 2002 Proxy
Statement.*10.7
    
    Form of Indemnification Agreement between
ACI and each of its directors and executive
officers
    
    Incorporated by reference to
Exhibit 10.33 to Amendment
No. 2 to the Form S-1.10.8
    
    Second Amended and Restated Excursion Boat
Sponsorship and Operations Agreement dated
as of November 18, 2004 between Iowa West
Racing Association and ACCBI
    
    Incorporated by reference to
Exhibit 10.9 to ACIs Annual
Report on Form 10-K for the
year ended December 31, 2004.10.9
    
    Settlement, Use and Management Agreement
and DNR Permit, dated May 15, 1995, between
the State of Iowa acting through the Iowa
Department of Natural Resources and ACCBI
as assignee of Koch Fuels, Inc.
    
    Incorporated by reference to
Exhibits 10.12 and 99.1 to
ACIs Annual Report on Form
10-K for the year ended
December 31, 1996.*10.10
    
    Ameristar Casinos, Inc. Deferred
Compensation Plan
    
    Incorporated by reference to
Exhibit 10.14 to ACIs Annual
Report on Form 10-K for the
year ended December 31, 2000.*10.11
    
    Master Trust Agreement for Ameristar
Casinos, Inc. Deferred Compensation Plan,
dated as of April 1, 2001, between ACI and
Wilmington Trust Company
    
    Incorporated by reference to
Exhibit 10.15 to the 2002
10-K.*10.12
    
    Amended and Restated Non-Qualified Stock
Option Agreement, dated as of December 16,
2004, between ACI and Craig H. Neilsen
    
    Incorporated by reference to
Exhibit 10.12 to the 2005
10-K.
 61




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit
    
    Method of Filing*10.13
    
    Performance Criteria for 2006, adopted on
March 30, 2006 for purposes of the
Ameristar Casinos, Inc. Performance-Based
Bonus Plan for Craig H. Neilsen
    
    Incorporated by reference to
Exhibit 10.1 to ACIs Current
Report on Form 8-K filed on
April 4, 2006 (the April
2006 8-K).*10.14
    
    2006 Annual Bonus Program for Corporate
Senior Management, adopted on March 30,
2006
    
    Incorporated by reference to
Exhibit 10.2 to the April
2006 8-K.14
    
    Ameristar Casinos, Inc. Code of Ethics for
the Chief Executive Officer, Chief
Financial Officer and Chief Accounting
Officer
    
    Filed electronically herewith.21
    
    Subsidiaries of ACI
    
    Filed electronically herewith.23.1
    
    Consent of Independent Registered Public
Accounting Firm  Ernst & Young LLP
    
    Filed electronically herewith.23.2
    
    Consent of Independent Registered Public
Accounting Firm  Deloitte & Touche LLP
    
    Filed electronically herewith.31.1
    
    Certification of John M. Boushy, Chief
Executive Officer and President, pursuant
to Rules 13a-14 and 15d-14 under the
Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed electronically herewith.31.2
    
    Certification of Thomas M. Steinbauer,
Senior Vice President of Finance, Chief
Financial Officer and Treasurer, pursuant
to Rules 13a-14 and 15d-14 under the
Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed electronically herewith.32
    
    Certification of Chief Executive Officer
and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002
    
    Filed electronically herewith.99.1
    
    Agreement of ACI, dated as of March 15,
2006, to furnish the Securities and
Exchange Commission certain instruments
defining the rights of holders of certain
long-term debt
    
    Incorporated by reference to
Exhibit 99.1 to the 2005
10-K.99.2
    
    Ameristar Casinos, Inc. Code of Conduct for
Directors, Officers and Team Members
    
    Incorporated by reference to
ACIs Current Report on Form
8-K filed on May 3, 2004.
 
 *
    
    Denotes a management contract or compensatory plan or arrangement. 62




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##### Table of Contents



SIGNATURES
  AMERISTAR CASINOS, INC.(Registrant)March 16, 2007
    
    By:
    
    /s/ John M. BoushyJohn M. BoushyChief Executive Officer and President
  Signature
    
    Name and Title
    
    Date/s/ John M. Boushy
    
    John M. Boushy, Chief Executive
Officer, President and Director
(principal executive officer)
    
    March 16, 2007/s/ Thomas M. Steinbauer
    
    Thomas M. Steinbauer, Senior
Vice President of Finance,
Chief Financial Officer,
Treasurer and Director
(principal financial officer)
    
    March 16, 2007/s/ Thomas L. Malone
    
    Thomas L. Malone, Vice
President of Finance and Chief
Accounting Officer (principal
accounting officer)
    
    March 16, 2007/s/ Ray H. Neilsen
    
    Ray H. Neilsen, Co-Chairman of
the Board
    
    March 16, 2007/s/ Gordon R. Kanofsky
    
    Gordon R. Kanofsky, Co-Chairman
of the Board
    
    March 16, 2007/s/ Larry A. Hodges
    
    Larry A. Hodges, Director
    
    March 16, 2007/s/ Carl Brooks
    
    Carl Brooks, Director
    
    March 16, 2007/s/ Leslie Nathanson Juris
    
    Leslie Nathanson Juris, Director
    
    March 16, 2007/s/ J. William Richardson
    
    J. William Richardson, Director
    
    March 16, 2007/s/ Luther P. Cochrane
    
    Luther P. Cochrane, Director
    
    March 16, 2007
 S-1




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##### Table of Contents



MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
    Internal Control-Integrated Framework
  
 /s/ John M. Boushy
    
    /s/ Thomas M. SteinbauerJohn M. Boushy
    
    Thomas M. SteinbauerChief Executive Officer and President
    
    Senior Vice President of Finance, Chief
Financial Officer and Treasurer
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      .
   
 F-2




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
        
 F-3




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 F-4




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##### Table of Contents



AMERISTAR CASINOS, INC.
 
 CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Share Data)
 December 31,2006
    
    
    2005ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    101,140
    
    
    $
    106,145Restricted cash
    
    
    6,425
    
    
    
    6,474Accounts receivable, net
    
    
    7,325
    
    
    
    5,242Income tax refunds receivable
    
    
    2,164
    
    
    
    Inventories
    
    
    7,241
    
    
    
    6,926Prepaid expenses
    
    
    11,689
    
    
    
    9,184Deferred income taxes
    
    
    3,508
    
    
    
    5,672Total current assets
    
    
    139,492
    
    
    
    139,643Property and Equipment, at cost:Buildings and improvements
    
    
    1,090,777
    
    
    
    1,015,443Furniture, fixtures and equipment
    
    
    404,709
    
    
    
    358,1921,495,486
    
    
    
    1,373,635Less: accumulated depreciation and amortization
    
    
    (477,780
    )
    
    
    (391,014
    )1,017,706
    
    
    
    982,621Land
    
    
    81,481
    
    
    
    75,524Construction in progress
    
    
    186,507
    
    
    
    75,151Total property and equipment, net
    
    
    1,285,694
    
    
    
    1,133,296Excess of purchase price over fair market value of net assets acquired
    
    
    76,988
    
    
    
    78,192Deposits and other assets
    
    
    39,301
    
    
    
    32,855TOTAL ASSETS
    
    $
    1,541,475
    
    
    $
    1,383,986LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    14,443
    
    
    $
    12,627Construction contracts payable
    
    
    25,657
    
    
    
    9,500Income taxes payable
    
    
    
    
    
    
    3,373Accrued liabilities
    
    
    71,462
    
    
    
    83,889Current maturities of long-term debt
    
    
    4,344
    
    
    
    4,374Total current liabilities
    
    
    115,906
    
    
    
    113,763Long-term debt, net of current maturities
    
    
    878,668
    
    
    
    776,029Deferred income taxes
    
    
    91,528
    
    
    
    94,445Deferred compensation and other long-term liabilities
    
    
    21,209
    
    
    
    16,039Commitments
and contingencies (Note 11)Stockholders Equity:Preferred stock, $.01 par value: Authorized - 30,000,000 shares;
Issued  none
    
    
    
    
    
    
    Common stock, $.01 par value: Authorized - 120,000,000 shares;
Issued  56,935,403 and 55,958,358 shares; Outstanding  56,524,567
and 55,958,358 shares
    
    
    569
    
    
    
    560Additional paid-in capital
    
    
    199,951
    
    
    
    179,989Treasury stock, at cost (410,836 shares)
    
    
    (8,014
    )
    
    
    Retained earnings
    
    
    241,658
    
    
    
    203,161Total stockholders equity
    
    
    434,164
    
    
    
    383,710TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,541,475
    
    
    $
    1,383,986
  F-5




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##### Table of Contents



AMERISTAR CASINOS, INC.
 
 CONSOLIDATED
STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
 Years ended December 31,2006
    
    
    2005
    
    
    2004Revenues:Casino
    
    $
    1,008,311
    
    
    $
    974,178
    
    
    $
    856,901Food and beverage
    
    
    131,795
    
    
    
    125,918
    
    
    
    114,010Rooms
    
    
    27,972
    
    
    
    25,355
    
    
    
    26,082Other
    
    
    29,082
    
    
    
    26,041
    
    
    
    23,1661,197,160
    
    
    
    1,151,492
    
    
    
    1,020,159Less: Promotional allowances
    
    
    196,862
    
    
    
    190,134
    
    
    
    165,461Net revenues
    
    
    1,000,298
    
    
    
    961,358
    
    
    
    854,698Operating Expenses:Casino
    
    
    439,101
    
    
    
    431,101
    
    
    
    379,909Food and beverage
    
    
    68,744
    
    
    
    66,299
    
    
    
    63,758Rooms
    
    
    6,780
    
    
    
    6,454
    
    
    
    6,565Other
    
    
    18,749
    
    
    
    16,503
    
    
    
    13,687Selling, general and administrative
    
    
    200,588
    
    
    
    186,050
    
    
    
    157,907Depreciation and amortization
    
    
    93,889
    
    
    
    85,366
    
    
    
    73,236Impairment loss on assets held for sale
    
    
    931
    
    
    
    869
    
    
    
    174Total operating expenses
    
    
    828,782
    
    
    
    792,642
    
    
    
    695,236Income from operations
    
    
    171,516
    
    
    
    168,716
    
    
    
    159,462Other Income (Expense):Interest income
    
    
    2,746
    
    
    
    830
    
    
    
    245Interest expense, net
    
    
    (50,291
    )
    
    
    (60,913
    )
    
    
    (57,003
    )Loss on early retirement of debt
    
    
    (26,264
    )
    
    
    (2,074
    )
    
    
    (923
    )Net gain (loss) on disposition of assets
    
    
    683
    
    
    
    (1,655
    )
    
    
    (904
    )Income Before Income Tax Provision
    
    
    98,390
    
    
    
    104,904
    
    
    
    100,877Income tax provision
    
    
    38,825
    
    
    
    38,619
    
    
    
    38,898Net Income
    
    $
    59,565
    
    
    $
    66,285
    
    
    $
    61,979Earnings Per Share:Basic
    
    $
    1.06
    
    
    $
    1.19
    
    
    $
    1.15Diluted
    
    $
    1.04
    
    
    $
    1.16
    
    
    $
    1.11Cash Dividends Declared Per Share
    
    $
    0.38
    
    
    $
    0.31
    
    
    $
    0.25Weighted Average Shares Outstanding:Basic
    
    
    56,155
    
    
    
    55,664
    
    
    
    54,114Diluted
    
    
    57,327
    
    
    
    57,127
    
    
    
    55,653
  F-6




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##### Table of Contents



AMERISTAR CASINOS, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
(Amounts in Thousands)
 AccumulatedCapital Stock
    
    
    Additional
    
    
    OtherNumber
    
    
    
    
    
    
    Paid-In
    
    
    Comprehensive
    
    
    Treasury
    
    
    Retainedof Shares
    
    
    Amount
    
    
    Capital
    
    
    Loss
    
    
    Stock
    
    
    Earnings
    
    
    TotalBalance, December 31, 2003
    
    
    53,222
    
    
    $
    532
    
    
    $
    150,116
    
    
    $
    (688
    )
    
    $
    
    
    
    $
    105,883
    
    
    $
    255,843Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,979
    
    
    
    61,979Change in fair value of
interest rate swap
agreement, net of deferred
tax of $297
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    688
    
    
    
    
    
    
    
    
    
    
    
    688Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,667Exercise of stock options
    
    
    1,542
    
    
    
    15
    
    
    
    7,653
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,668Tax benefit of stock option
exercises
    
    
    
    
    
    
    
    
    
    
    6,183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,183Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,561
    )
    
    
    (13,561
    )Common stock issued in
connection with the
Mountain High Casino
acquisition
    
    
    118
    
    
    
    2
    
    
    
    2,498
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500Balance, December 31, 2004
    
    
    54,882
    
    
    
    549
    
    
    
    166,450
    
    
    
    
    
    
    
    
    
    
    
    154,301
    
    
    
    321,300Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,285
    
    
    
    66,285Exercise of stock options
    
    
    1,076
    
    
    
    11
    
    
    
    7,114
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,125Tax benefit of stock option
exercises
    
    
    
    
    
    
    
    
    
    
    6,425
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,425Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,425
    )
    
    
    (17,425
    )Balance, December 31, 2005
    
    
    55,958
    
    
    
    560
    
    
    
    179,989
    
    
    
    
    
    
    
    
    
    
    
    203,161
    
    
    
    383,710Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,565
    
    
    
    59,565Exercise of stock options
and issuance of restricted
shares
    
    
    978
    
    
    
    9
    
    
    
    7,885
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,894Tax benefit of stock option
exercises
    
    
    
    
    
    
    
    
    
    
    4,266
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,266Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,068
    )
    
    
    (21,068
    )Stock-based compensation
expense
    
    
    
    
    
    
    
    
    
    
    7,811
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,811Common stock repurchases
    
    
    (411
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,014
    )
    
    
    
    
    
    
    (8,014
    )Balance, December 31, 2006
    
    
    56,525
    
    
    $
    569
    
    
    $
    199,951
    
    
    $
    
    
    
    $
    (8,014
    )
    
    $
    241,658
    
    
    $
    434,164
  F-7




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##### Table of Contents



AMERISTAR CASINOS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
 Years ended December 31,2006
    
    
    2005
    
    
    2004Cash Flows from Operating Activities:Net income
    
    $
    59,565
    
    
    $
    66,285
    
    
    $
    61,979Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    93,889
    
    
    
    85,366
    
    
    
    73,236Amortization of debt issuance costs and debt discounts
    
    
    990
    
    
    
    3,891
    
    
    
    4,418Stock-based compensation expense
    
    
    7,811
    
    
    
    
    
    
    
    Loss on early retirement of debt
    
    
    26,264
    
    
    
    2,074
    
    
    
    923Net change in deferred compensation liability
    
    
    71
    
    
    
    633
    
    
    
    (681
    )Impairment loss on assets held for sale
    
    
    931
    
    
    
    869
    
    
    
    174Net (gain) loss on disposition of assets
    
    
    (683
    )
    
    
    1,576
    
    
    
    717Net change in deferred income taxes
    
    
    1,702
    
    
    
    16,424
    
    
    
    28,688Excess tax benefit from stock option exercises
    
    
    (4,266
    )
    
    
    6,425
    
    
    
    6,183Changes in
operating assets and liabilities:Restricted cash
    
    
    49
    
    
    
    (1,988
    )
    
    
    (1,809
    )Accounts receivable, net
    
    
    (2,083
    )
    
    
    1,212
    
    
    
    471Income tax refunds receivable
    
    
    (2,164
    )
    
    
    
    
    
    
    643Inventories
    
    
    (315
    )
    
    
    1
    
    
    
    (631
    )Prepaid expenses
    
    
    (2,505
    )
    
    
    (420
    )
    
    
    942Assets held for sale
    
    
    
    
    
    
    596
    
    
    
    186Accounts payable
    
    
    1,816
    
    
    
    (277
    )
    
    
    (3,286
    )Income taxes payable
    
    
    893
    
    
    
    1,806
    
    
    
    499Accrued liabilities
    
    
    (12,427
    )
    
    
    12,986
    
    
    
    3,852Net cash provided by operating activities
    
    
    169,538
    
    
    
    197,459
    
    
    
    176,504Cash Flows from Investing Activities:Capital expenditures
    
    
    (249,123
    )
    
    
    (177,789
    )
    
    
    (89,633
    )Net cash paid for acquisition of Mountain High Casino
    
    
    
    
    
    
    
    
    
    
    (114,171
    )Increase (decrease) in construction contracts payable
    
    
    16,157
    
    
    
    4,437
    
    
    
    (5,536
    )Proceeds from sale of assets
    
    
    1,368
    
    
    
    896
    
    
    
    879Increase in deposits and other non-current assets
    
    
    (6,083
    )
    
    
    (3,393
    )
    
    
    (197
    )Net cash used in investing activities
    
    
    (237,681
    )
    
    
    (175,849
    )
    
    
    (208,658
    )Cash Flows from Financing Activities:Debt borrowings
    
    
    485,000
    
    
    
    410,000
    
    
    
    115,000Principal payments of debt
    
    
    (384,346
    )
    
    
    (396,554
    )
    
    
    (68,562
    )Premium on early redemption of senior subordinated notes
    
    
    (20,425
    )
    
    
    
    
    
    
    Cash dividends paid
    
    
    (21,068
    )
    
    
    (17,425
    )
    
    
    (13,561
    )Debt issuance costs
    
    
    (153
    )
    
    
    (5,134
    )
    
    
    (88
    )Excess tax benefit from stock option exercises
    
    
    4,266
    
    
    
    
    
    
    
    Purchases of treasury stock
    
    
    (8,014
    )
    
    
    
    
    
    
    Proceeds from stock option exercises
    
    
    7,878
    
    
    
    7,125
    
    
    
    7,668Net cash provided by (used in) financing activities
    
    
    63,138
    
    
    
    (1,988
    )
    
    
    40,457Net (Decrease) Increase in Cash and Cash Equivalents
    
    
    (5,005
    )
    
    
    19,622
    
    
    
    8,303Cash and Cash Equivalents  Beginning of Year
    
    
    106,145
    
    
    
    86,523
    
    
    
    78,220Cash and Cash Equivalents  End of Year
    
    $
    101,140
    
    
    $
    106,145
    
    
    $
    86,523
  F-8




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##### Table of Contents



AMERISTAR CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in Thousands)
 Years ended December 31,2006
    
    
    2005
    
    
    2004Supplemental Cash Flow Disclosures:Cash paid for interest, net of amounts capitalized
    
    $
    65,675
    
    
    $
    54,015
    
    
    $
    52,640Cash paid for federal and state income taxes (net of refunds received)
    
    $
    38,294
    
    
    $
    14,993
    
    
    $
    3,362Non-cash Investing and Financing Activities:Acquisition of Mountain High CasinoFair value of non-cash assets acquired
    
    $
    
    
    
    $
    
    
    
    $
    120,784Less net cash paid
    
    
    
    
    
    
    
    
    
    
    (114,171
    )Less fair value of common stock issued
    
    
    
    
    
    
    
    
    
    
    (2,500
    )Liabilities assumed
    
    $
    
    
    
    $
    
    
    
    $
    4,113
  F-9




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##### Table of Contents



AMERISTAR CASINOS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Basis of presentation
   Note 2  Summary of significant accounting policies
 Use of estimates
  Cash and cash equivalents
  Restricted cash
  Accounts receivable
  F-10




---



##### Table of Contents



Inventories
  Capitalization and depreciation
   Buildings and improvements
    
    5 to 40 yearsFurniture, fixtures and equipment
    
    2 to 15 years
 Impairment of long-lived assets
  Debt issuance costs
   Derivative instruments and hedging activities
  F-11




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##### Table of Contents



Revenue recognition
   Years ended December 31,2006
    
    
    2005
    
    
    2004(Amounts in Thousands)Food and beverage
    
    $
    53,316
    
    
    $
    52,273
    
    
    $
    38,855Rooms
    
    
    6,427
    
    
    
    5,405
    
    
    
    3,856Entertainment
    
    
    4,871
    
    
    
    4,871
    
    
    
    4,993Other
    
    
    2,468
    
    
    
    2,001
    
    
    
    1,733$
    67,082
    
    
    $
    64,550
    
    
    $
    49,437
 Star Awards Program
  F-12




---



##### Table of Contents



Cash Coupons
  Advertising
  Business development expenses
  Income taxes
  Stock split
  Earnings per share
  F-13




---



##### Table of Contents



Years ended December 31,2006
    
    
    2005
    
    
    2004(Amounts in Thousands)Weighted average number of shares
outstanding-basic earnings per share
    
    
    56,155
    
    
    
    55,664
    
    
    
    54,114Dilutive effect of stock options
    
    
    1,172
    
    
    
    1,463
    
    
    
    1,539Weighted average number of shares
outstanding-diluted earnings per share
    
    
    57,327
    
    
    
    57,127
    
    
    
    55,653
  Accounting for stock-based compensation
  Recently issued accounting pronouncements
    F-14




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##### Table of Contents



Reclassifications
  Note 3  Accrued liabilities
  2006
    
    
    2005(Amounts in Thousands)Compensation and related benefits
    
    $
    28,369
    
    
    $
    26,402Interest
    
    
    2,123
    
    
    
    18,496Taxes other than state and federal
income taxes
    
    
    15,976
    
    
    
    15,242Players club rewards
    
    
    7,730
    
    
    
    8,605Progressive slot machine and related
accruals
    
    
    6,975
    
    
    
    6,252Marketing and other accruals
    
    
    10,289
    
    
    
    8,892$
    71,462
    
    
    $
    83,889
 Note 4  Federal and state income taxes
  Years ended December 31,2006
    
    
    2005
    
    
    2004(Amounts in Thousands)Current:Federal
    
    $
    32,596
    
    
    $
    19,993
    
    
    $
    1,768State
    
    
    4,898
    
    
    
    2,411
    
    
    
    2,999Total current
    
    
    37,494
    
    
    
    22,404
    
    
    
    4,767Deferred:Federal
    
    
    (1,055
    )
    
    
    14,296
    
    
    
    33,288State
    
    
    1,182
    
    
    
    715
    
    
    
    (361
    )Total deferred
    
    
    127
    
    
    
    15,011
    
    
    
    32,927Federal benefit applied to reduce goodwill
    
    
    1,204
    
    
    
    1,204
    
    
    
    1,204Total
    
    $
    38,825
    
    
    $
    38,619
    
    
    $
    38,898
  F-15




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##### Table of Contents



Years ended December 31,2006
    
    
    2005
    
    
    2004Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income tax expense, net of federal benefit
    
    
    4.4
    
    
    
    1.9
    
    
    
    1.7Nondeductible political and lobbying costs
    
    
    0.3
    
    
    
    0.3
    
    
    
    1.5Other
    
    
    (0.2
    )
    
    
    (0.4
    )
    
    
    0.439.5
    %
    
    
    36.8
    %
    
    
    38.6
    %
  December 31,2006
    
    
    2005(Amounts in Thousands)Deferred income tax assets:Net operating loss carryforwards
    
    $
    17,380
    
    
    $
    20,546Deferred compensation
    
    
    6,732
    
    
    
    3,482Accrued expenses
    
    
    4,529
    
    
    
    Share-based compensation
    
    
    2,395
    
    
    
    Accrued vacation
    
    
    2,130
    
    
    
    2,232Project development costs
    
    
    31
    
    
    
    1,737Other
    
    
    
    
    
    
    824Total deferred income tax assets
    
    
    33,197
    
    
    
    28,821Deferred income tax liabilities:Property and equipment
    
    
    (106,614
    )
    
    
    (107,382
    )Goodwill amortization
    
    
    (10,472
    )
    
    
    (8,735
    )Prepaid insurance
    
    
    (1,785
    )
    
    
    (1,477
    )Other
    
    
    (2,346
    )
    
    
    Total deferred income tax liabilities
    
    
    (121,217
    )
    
    
    (117,594
    )Net deferred income tax liability
    
    $
    (88,020
    )
    
    $
    (88,773
    )
  F-16




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##### Table of Contents



Note 5  Long-term debt
  December 31,2006
    
    
    2005(Amounts in Thousands)Senior credit facilities, secured by first priority security interest in
substantially all real and personal property assets of ACI and its
subsidiaries, consisting of the following facilities:Revolving loan facility, at variable interest (6.4% at December
31, 2006); principal due November 10, 2010
    
    $
    485,000
    
    
    $
    Term loan facility, at variable interest (6.9% at December 31,
2006 and 5.9% at December 31, 2005); $1.0 million principal
payments due quarterly through September 30, 2011; $94.3
million principal payments due quarterly from December 31,
2011 through November 10, 2012
    
    
    396,000
    
    
    
    400,000Senior subordinated notes, unsecured, 10.75% fixed interest; redeemed
on February 15, 2006
    
    
    
    
    
    
    378,045Other
    
    
    2,012
    
    
    
    2,358883,012
    
    
    
    780,403Less: Current maturities
    
    
    (4,344
    )
    
    
    (4,374
    )$
    878,668
    
    
    $
    776,029
  Year
    
    Maturities2007
    
    $
    4,3442008
    
    
    4,3372009
    
    
    4,3622010
    
    
    489,3862011
    
    
    97,648Thereafter
    
    
    282,935$
    883,012
 Senior credit facilities
   F-17




---



##### Table of Contents



F-18




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##### Table of Contents



Senior subordinated notes
   Other debt
  Interest rate protection
   Fair value of long-term debt
  F-19




---



##### Table of Contents



Note 6  Leases
 Operating leases
   Year
    
    Payments2007
    
    $
    3,7032008
    
    
    9112009
    
    
    6272010
    
    
    5552011
    
    
    419Thereafter
    
    
    851$
    7,066
 Note 7  Benefit plans
 401(k) plan
  Health benefit plan
  Deferred compensation plan
  F-20




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##### Table of Contents



Stock incentive plans
   Years ended December 31,2006
    
    
    2005
    
    
    2004Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseOptions
    
    
    Price
    
    
    Options
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding at beginning
of year
    
    
    5,782,150
    
    
    $
    15.96
    
    
    
    5,676,048
    
    
    $
    12.05
    
    
    
    5,659,704
    
    
    $
    7.13Granted
    
    
    1,909,830
    
    
    
    27.69
    
    
    
    1,560,470
    
    
    
    23.20
    
    
    
    1,948,000
    
    
    
    19.87Exercised
    
    
    (884,197
    )
    
    
    8.92
    
    
    
    (1,075,648
    )
    
    
    6.55
    
    
    
    (1,539,672
    )
    
    
    4.48Forfeited or expired
    
    
    (574,452
    )
    
    
    17.17
    
    
    
    (378,720
    )
    
    
    13.87
    
    
    
    (391,984
    )
    
    
    9.48Outstanding at end of
year
    
    
    6,233,331
    
    
    $
    20.44
    
    
    
    5,782,150
    
    
    $
    15.96
    
    
    
    5,676,048
    
    
    $
    12.05Options exercisable at
end of year
    
    
    2,169,497
    
    
    $
    15.83
    
    
    
    1,913,114
    
    
    $
    13.18
    
    
    
    1,298,338
    
    
    $
    7.33Options available for
grant at end of year
    
    
    1,507,904
    
    
    
    
    
    
    
    2,939,158
    
    
    
    
    
    
    
    1,120,908
  F-21




---



##### Table of Contents



Outstanding Options
    
    Exercisable OptionsWeightedAverage
    
    Weighted
    
    
    
    
    
    WeightedExercise
    
    
    
    
    
    Remaining
    
    Average
    
    
    
    
    
    AveragePrice Range
    
    Number
    
    Life
    
    Exercise Price
    
    Number
    
    Exercise Price$1.50-$2.75
    
    
    147,222
    
    
    
    3.5
    
    
    $
    2.21
    
    
    
    147,222
    
    
    $
    2.21$3.21-$5.46
    
    
    13,040
    
    
    
    5.8
    
    
    
    4.98
    
    
    
    2,800
    
    
    
    3.21$6.35-$9.28
    
    
    550,932
    
    
    
    5.6
    
    
    
    7.17
    
    
    
    340,148
    
    
    
    7.20$10.08-$12.40
    
    
    495,020
    
    
    
    6.6
    
    
    
    11.31
    
    
    
    261,972
    
    
    
    11.30$13.18-$15.77
    
    
    545,360
    
    
    
    6.0
    
    
    
    13.91
    
    
    
    350,040
    
    
    
    13.76$16.99-$18.59
    
    
    501,092
    
    
    
    6.7
    
    
    
    18.33
    
    
    
    7,740
    
    
    
    17.01$19.36-$21.99
    
    
    1,312,691
    
    
    
    4.5
    
    
    
    21.28
    
    
    
    575,703
    
    
    
    21.30$22.65-$24.59
    
    
    1,246,744
    
    
    
    5.0
    
    
    
    22.89
    
    
    
    410,392
    
    
    
    22.87$25.52-$27.42
    
    
    157,100
    
    
    
    5.1
    
    
    
    26.76
    
    
    
    73,480
    
    
    
    27.28$31.68
    
    
    1,264,130
    
    
    
    7.0
    
    
    
    31.68
    
    
    
    
    
    
    6,233,331
    
    
    
    5.7
    
    
    $
    20.44
    
    
    
    2,169,497
    
    
    $
    15.83
  Years ended December 31,2006
    
    2005
    
    2004Weighted-average fair value per share of options
granted during the year (estimated on grant date
using the Black-Scholes-Merton option pricing
model)
    
    $
    9.54
    
    
    $
    8.21
    
    
    $
    6.92Weighted-average assumptions:Expected stock price volatility
    
    
    39
    %
    
    
    47
    %
    
    
    48
    %Risk-free interest rate
    
    
    4.6
    %
    
    
    4.3
    %
    
    
    3.9
    %Expected option life (years)
    
    
    4
    
    
    
    5
    
    
    
    6Expected annual dividend yield
    
    
    1.5
    %
    
    
    1.4
    %
    
    
    1.5
    %
 F-22




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##### Table of Contents



Year Ended December 31,2005
    
    
    2004(Amounts in Thousands, Except Per Share Data)Net income:As reported
    
    $
    66,285
    
    
    $
    61,979Deduct: compensation expense under fair value-based method (net of tax)
    
    
    (6,945
    )
    
    
    (4,850
    )Pro forma
    
    $
    59,340
    
    
    $
    57,129Basic earnings per share:As reported
    
    $
    1.19
    
    
    $
    1.15Pro forma (net of tax)
    
    $
    1.07
    
    
    $
    1.06Diluted earnings per share:As reported
    
    $
    1.16
    
    
    $
    1.11Pro forma (net of tax)
    
    $
    1.04
    
    
    $
    1.03
    Note 8
 Stock Repurchases
  Note 9  Acquisition of Mountain High Casino
  F-23




---



##### Table of Contents



December 21, 2004(Amounts in Thousands)Current assets, including $3,670 of cash acquired
    
    $
    3,967Property and equipment
    
    
    110,756Net deferred tax assets
    
    
    9,683Other assets
    
    
    92Total assets acquired
    
    
    124,498Current liabilities
    
    
    2,073Long-term debt
    
    
    2,040Total liabilities assumed
    
    
    4,113Net assets acquired
    
    $
    120,385
   Year ended December 31,2004(Amounts in Thousands,Except Per Share Data)Pro FormaNet revenues
    
    $
    911,020Net income
    
    $
    61,396Basic net income per common share
    
    $
    1.13Diluted net income per common share
    
    $
    1.10
  Note 10  Excess of purchase price over fair market value of net assets acquired
  F-24




---



##### Table of Contents



Note 11  Commitments and contingencies
 Litigation
 Self-Insurance Reserves.
 Guarantees.
  F-25




---



##### Table of Contents



Note
12  Selected Quarterly Financial Results (unaudited)
  For the fiscal quarters endedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2006
    
    
    2006
    
    
    2006
    
    
    2006
    
    
    Total(Amounts in Thousands, Except Per Share Data)Net revenues
    
    $
    256,094
    
    
    $
    246,583
    
    
    $
    253,578
    
    
    $
    244,043
    
    
    $
    1,000,298Income from operations (1)
    
    
    43,657
    
    
    
    39,584
    
    
    
    46,253
    
    
    
    42,021
    
    
    
    171,516Income before income tax provision (1)
    
    
    4,589
    
    
    
    28,118
    
    
    
    34,611
    
    
    
    31,071
    
    
    
    98,390Net income (1)
    
    
    2,618
    
    
    
    18,028
    
    
    
    21,085
    
    
    
    17,833
    
    
    
    59,565Basic earnings per share (2)
    
    $
    0.05
    
    
    $
    0.32
    
    
    $
    0.38
    
    
    $
    0.32
    
    
    $
    1.06Diluted earnings per share (2)
    
    $
    0.05
    
    
    $
    0.32
    
    
    $
    0.37
    
    
    $
    0.31
    
    
    $
    1.04For the fiscal quarters endedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2005
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    Total(Amounts in Thousands, Except Per Share Data)Net revenues (1)
    
    $
    240,109
    
    
    $
    238,868
    
    
    $
    238,591
    
    
    $
    243,791
    
    
    $
    961,358Income from operations (1)
    
    
    46,283
    
    
    
    42,230
    
    
    
    40,479
    
    
    
    39,723
    
    
    
    168,716Income before income tax provision (1)
    
    
    30,454
    
    
    
    26,614
    
    
    
    25,406
    
    
    
    22,429
    
    
    
    104,904Net income (1)
    
    
    19,230
    
    
    
    16,654
    
    
    
    16,100
    
    
    
    14,300
    
    
    
    66,285Basic earnings per share (2)
    
    $
    0.35
    
    
    $
    0.30
    
    
    $
    0.29
    
    
    $
    0.26
    
    
    $
    1.19Diluted earnings per share (2)
    
    $
    0.34
    
    
    $
    0.29
    
    
    $
    0.28
    
    
    $
    0.25
    
    
    $
    1.16
 
 (1)
    
    The sum of the amounts for the four quarters does not equal the total for the year due to rounding.(2)
    
    Because earnings per share amounts are calculated using the weighted average number of common and dilutive common
equivalent shares outstanding during each quarter, the sum of the per-share amounts for the four quarters may not equal the
total earnings per share amounts for the year. F-26