2007 Annual Report - Ameristar Casinos, Inc.

The Credit Facility also limits the Company’s aggregate capital expenditures to $1.0 billion during the periodfrom November 10, 2005 to November 10, 2012. As of December 31, 2007, capital expenditures made during theterm of the Credit Facility totaled $523.3 million.As of December 31, 2007 and December 31, 2006, the Company was in compliance with all other applicablecovenants. However, without any change to the Credit Facility or obtaining subordinated debt, the Company mayexceed the maximum permitted senior leverage ratio in 2008. The Company anticipates that any amendment to theCredit Facility would result in an increase in additional costs and/or fees.Certain changes in control of the Company, as defined, could result in the acceleration of the obligations underthe Credit Facility.In connection with obtaining the Credit Facility, each of ACI’s subsidiaries (the “Guarantors”) entered into aguaranty (the “Guaranty”) pursuant to which the Guarantors guaranteed ACI’s obligations under the Credit Facility.The obligations of ACI under the Credit Facility, and of the Guarantors under the Guaranty, are secured bysubstantially all of the assets of ACI and the Guarantors.Senior subordinated notesOn February 15, 2006, the Company redeemed all $380.0 million outstanding principal amount of its 10.75%senior subordinated notes due 2009 at a redemption price of 105.375% of the principal amount, plus $20.4 million inaccrued and unpaid interest to the redemption date. The redemption of the notes was funded through borrowingsunder the revolving loan facility. The retirement of the notes resulted in a one-time charge for loss on earlyretirement of debt in the first quarter of 2006 of approximately $26.3 million on a pre-tax basis.Other debtIn connection with the acquisition of Ameristar Black Hawk in December 2004, the Company assumed debtrelating to proceeds from a municipal bond issue by the Black Hawk Business Improvement District. The bonds arein the form of a $975,000 issue bearing 6.0% interest that matured on December 1, 2005 and a $2,025,000 issuebearing 6.75% interest, which are due on December 1, 2011. These bonds are the obligations of the Black HawkBusiness Improvement District and are payable from property tax assessments levied on Ameristar Black Hawk.The Black Hawk Business Improvement District has notified Ameristar Black Hawk that it will assess 20 semiannualpayments of $211,083, which was calculated by amortizing the $3,000,000 principal amount at 7% over 20equal semi-annual payments. The difference in the interest rate used for the assessment and the interest rate on thebonds relates to estimated administrative costs of the Black Hawk Business Improvement District for the bond issue.The Company has accounted for the liability from this bond offering in accordance with the provisions of EmergingIssues Task Force (“EITF”) Issue 91-10, “Accounting for Special Assessments and Tax Increment FinancingEntities,” and has recorded an obligation for the total tax assessment. The Company has capitalized the cost of theimprovements involved. At December 31, 2007, the outstanding principal balance relating to the municipal bondswas $1.5 million.Fair value of long-term debtThe fair value of the Company’s long-term debt at December 31, 2007 and 2006 approximated its book value. Asignificant portion of the Company’s outstanding debt balance consists of borrowings under the Credit Facility,which carry variable interest rates over short-term interest periods.Note 6 — LeasesOperating leasesThe Company maintains operating leases for certain office facilities, vehicles, office equipment, signage andland. Rent expense under operating leases totaled $3.5 million, $3.7 million and $3.5 million for the years endedDecember 31, 2007, 2006 and 2005, respectively.F-16