AGY Argosy Gaming

Argosy Gaming Company Reports First Quarter 2005 Earnings ALTON, Ill., April 28 /PRNewswire-FirstCall/ -- Argosy Gaming Company (NYSE:AGY) today announced first quarter results for the period ended March 31, 2005. Earnings per diluted share ("EPS") were $0.71 on net income of $21.3 million, as compared to $0.13 per diluted share on net income of $4.0 million for the first quarter of 2004. Included in the results of the first quarter of 2004 are $25.3 million of expenses, or $0.50 per share, associated with the February 2004 refinancing of the Company's outstanding 10 3/4% notes due 2009. Included in the first quarter results of 2005 are $2.7 million of expenses, or $0.05 per share, associated with the proposed merger with Penn National Gaming. Net revenues were $271.0 million for the first quarter of 2005, up $6.9 million from $264.1 million in the first quarter of 2004. Of note, net revenues at Argosy's Baton Rouge property were up 18.0%, from first quarter results of $22.4 million in 2004 to $26.4 million in 2005, in part due to visitors to the city for a bowling congress that runs from February 12th through July 4th of this year. At Argosy Casino - Sioux City, net revenues for the first quarter were up 16.7%, from $11.3 million in 2004 to $13.2 million in 2005, following the addition of the renovated boat formerly used at the Company's Riverside property. Argosy's EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter was $68.6 million for the first quarter 2005, including the expenses related to the Penn merger, compared to $42.0 million for the first quarter 2004, including the expenses for the refinancing mentioned above. Excluding the merger and financing costs, EBITDA increased 6.0%, primarily due to improved performance at the Company's Baton Rouge and Alton properties. The Company's EBITDA margin (EBITDA as a percent of net revenues) for the quarter was 26.3%, up from 25.5% the same quarter last year, excluding merger and refinancing costs. At the property level, the EBITDA margin improved at every Argosy location except for Empress Casino Joliet. The Company is currently accruing for gaming taxes at its Illinois properties using the existing graduated tax tables. Current legislation calls for a rollback to lower rates beginning July 1, 2005. Had the Company accrued the Illinois gaming taxes based on a rollback occurring, EPS for the quarter would have been approximately $0.05 higher. Argosy reported that debt decreased from $814.1 million as of December 31, 2004 to $803.2 million as of March 31, 2005. The Company spent $8.3 million in maintenance capital during the first quarter of 2005. Project capital for the quarter, which was primarily for work on the new $75 million hotel and garage project in Riverside and an expansion at the Company's Lawrenceburg property, was $8.5 million. Based on analysis of the potential for the Cincinnati market, the Company has initiated the approval process to complete a major capital expansion project in Lawrenceburg. The project would include the replacement of the existing three-level boat with a larger single-level boat that would add approximately 1,200 gaming positions to the existing 2,875. The expansion plan would also provide a substantial increase in parking by adding a new, 1,500-space garage as well as surface parking for an additional 350 cars. This nearly doubles the available on-site parking. The total cost of the project is estimated to be approximately $250 million, and would be partially offset by a 10-year, $50 million incentive credit from the City of Lawrenceburg. Pending regulatory approval, the Company expects to begin construction later this year, with completion of the garage near the end of 2006 and of the casino in late 2007. The transaction with Penn National Gaming is on schedule, with an anticipated closing in the third quarter of this year. The Company is assisting Penn in their efforts to divest Argosy's Baton Rouge property to expedite securing necessary approvals. Any agreement between Penn and a potential purchaser of the property would be subject to the closing of the Argosy/Penn merger. Pursuant to the merger agreement between Argosy and Penn, Argosy has agreed not to provide any guidance concerning its expected earnings or other performance. Argosy will host a conference call for interested parties on April 28, 2005, at 11:00 a.m. EDT to review its first quarter 2005 results. Call participants should dial (706) 634-1306 ten to fifteen minutes before the call and reference ID #5541059. The call will be broadcast live via the Internet and may be accessed through our web site at http://www.argosy.com/ . A replay of the call will be available at our web site through May 12, 2005. Argosy Gaming Company is a leading owner and operator of casinos and related entertainment and hotel facilities in the midwestern and southern United States. Argosy owns and operates the Argosy Casino-Alton in Illinois, serving the St. Louis metropolitan market; the Argosy Casino-Riverside in Missouri, serving the greater Kansas City metropolitan market; the Argosy Casino-Baton Rouge in Louisiana; the Argosy Casino-Sioux City in Iowa; the Argosy Casino-Lawrenceburg in Indiana, serving the Cincinnati and Dayton metropolitan markets; and the Empress Casino Joliet in Illinois serving the greater Chicagoland market. This press release contains statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as the Company or its management "believes," "anticipates," "expects," "forecasts," "estimates," "foresees," or other words or phrases of similar import. Similarly, such statements herein that describe the Company's business outlook, objectives, strategy, intentions or goals are also forward-looking statements. All such forward- looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected, including but not limited to: - competitive and general economic conditions in the markets in which the Company operates, including locations of competitors and legalization of gaming in new jurisdictions; - construction factors relating to the Company's expansion projects, including delays, zoning issues, environmental restrictions, weather and other hazards, site access matters and building permit issues; - the ability to effectively implement operational changes at the Company's properties; litigation outcomes, judicial actions and gaming legislative or regulatory agency actions (including obtaining the requisite approval of regulatory authorities for the proposed merger between Argosy and Penn National Gaming); - the effect of economic, credit and capital market conditions on the economy in general, and on gaming companies in particular; - changes in laws (including increased tax rates), regulations or accounting standards; - the effect of future legislation or regulatory changes on the Company's operations (including legalization of gaming in new jurisdictions); - other risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission. -Tables Follow- ARGOSY GAMING COMPANY CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Data) Three Months Ended March 31, March 31, 2005 2004 (unaudited) (unaudited) Revenues: Casino $274,983 $266,007 Admissions 5,529 5,360 Food, beverage and other 28,298 26,460 308,810 297,827 Less promotional allowances (37,793) (33,738) Net revenues 271,017 264,089 Costs and expenses: Gaming and admission taxes 95,826 91,578 Casino 31,531 32,574 Selling, general and administrative 44,166 44,176 Food, beverage and other 20,133 18,601 Other operating expenses 10,738 9,863 Depreciation and amortization 15,626 14,225 Gain on disposition of asset held for sale - - Write down of assets - - 218,020 211,017 Income from operations 52,997 53,072 Other income (expense): Interest income 78 21 Interest expense (14,653) (18,051) Expense on early retirement of debt - (25,277) (14,575) (43,307) Income before income taxes 38,422 9,765 Income tax expense (17,098) (5,805) Net income $21,324 $3,960 Basic income per share $0.72 $0.13 Diluted income per share $0.71 $0.13 Weighted average shares outstanding: Basic 29,556,028 29,345,773 Diluted 29,853,912 29,561,807 - more tables - ARGOSY GAMING COMPANY AND SUBSIDIARIES SELECTED FINANCIAL INFORMATION SUMMARY OPERATING DATA (In Thousands) Three Months Ended March 31, March 31, 2005 2004 (unaudited) (unaudited) Casino Revenues Argosy Casino - Alton $28,306 $27,186 Argosy Casino - Riverside 39,787 38,238 Argosy Casino - Baton Rouge 24,521 21,695 Argosy Casino - Sioux City 13,746 11,686 Argosy Casino - Lawrenceburg 112,371 112,002 Empress Casino Joliet 56,252 55,200 Total $274,983 $266,007 Net Revenues Argosy Casino - Alton $27,209 $26,044 Argosy Casino - Riverside 37,091 37,930 Argosy Casino - Baton Rouge 26,364 22,351 Argosy Casino - Sioux City 13,238 11,346 Argosy Casino - Lawrenceburg 112,695 112,933 Empress Casino Joliet 54,420 53,485 Total $271,017 $264,089 Income (loss) from operations Argosy Casino - Alton $4,574 $3,158 Argosy Casino - Riverside 7,925 9,384 Argosy Casino - Baton Rouge 4,603 2,625 Argosy Casino - Sioux City 3,264 2,419 Argosy Casino - Lawrenceburg 33,212 33,116 Empress Casino Joliet 10,537 10,355 Corporate (11,118) (7,985) Total $52,997 $53,072 - more - ARGOSY GAMING COMPANY AND SUBSIDIARIES SELECTED FINANCIAL INFORMATION RECONCILIATION OF NET INCOME TO EBITDA (1) (In Thousands, unaudited) Three months Three months ended ended March 31, 2005 March 31, 2004 Net income (2) $21,324 $3,960 Income tax expense 17,098 5,805 Interest expense, net 14,575 18,030 Depreciation and amortization expense: Argosy Casino - Alton 1,634 1,552 Argosy Casino - Riverside 3,915 2,461 Argosy Casino - Baton Rouge 2,406 2,266 Argosy Casino - Sioux City 972 1,123 Argosy Casino - Lawrenceburg 3,701 3,412 Empress Casino Joliet 2,346 2,800 Corporate (3) 652 611 Total 15,626 15,626 14,225 14,225 EBITDA (1): Argosy Casino - Alton 6,208 4,710 Argosy Casino - Riverside 11,840 11,845 Argosy Casino - Baton Rouge 7,009 4,891 Argosy Casino - Sioux City 4,236 3,542 Argosy Casino - Lawrenceburg 36,913 36,528 Empress Casino Joliet 12,883 13,155 Corporate (2) (3) (10,466) (32,651) Total $68,623 $68,623 $42,020 $42,020 - more - ARGOSY GAMING COMPANY NOTES TO SELECTED FINANCIAL INFORMATION (in thousands) (1) "EBITDA" represents earnings before interest, taxes, depreciation and amortization. EBITDA is presented solely as a supplemental disclosure because management believes it is 1) a widely used measure of operating performance in the gaming industry, 2) a principal basis for valuation of gaming companies and 3) is used as a basis for determining compliance with our credit facility. Management uses property-level EBITDA (EBITDA before corporate expense) and EBITDA margin (EBITDA as a percent of net revenues) as the primary measures of our properties' performance, including the evaluation and compensation of operating personnel. EBITDA should not be construed as an alternative to GAAP-based financial measures such as operating income, an indicator of our operating performance, or cash flows from operating activities, a measure of our liquidity. We have significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in EBITDA. We believe the performance of our operating units is more appropriately measured before these expenses, since the allocation of our capital is decided by corporate management and is subject to the approval of the board of directors. In addition, we manage cash and finance our operations at the consolidated level and we file a consolidated income tax return. We do not consider EBITDA in isolation. Our calculation of EBITDA may not be comparable to similarly titled measures reported by other companies. (2) Includes $25,277 of pre-tax expense on early retirement of debt for the three months ended March 31, 2004. (3) Because we do not include corporate expense in our computation, property-level EBITDA does not reflect all the costs of operating the properties as if each were a stand-alone business unit. Corporate expense includes significant expenses necessary to manage a multiple casino operation, certain of which, such as corporate executive compensation, development, public company reporting, treasury, accounting, legal and tax expenses, would also be required of a typical stand-alone casino property. ARGOSY GAMING COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Data) March 31, December 31, 2005 2004 Current assets: (unaudited) Cash and cash equivalents $77,434 $80,069 Accounts receivable, net 4,333 3,534 Income taxes receivable - 8,705 Deferred income taxes 14,560 14,224 Other current assets 10,077 10,064 Total current assets 106,404 116,596 Net property and equipment 547,864 544,929 Other assets: Deferred finance costs, net 18,782 19,576 Goodwill, net 727,470 727,470 Intangible assets, net 23,696 24,263 Other 6,880 5,622 Total other assets 776,828 776,931 Total assets $1,431,096 $1,438,456 Current liabilities: Accounts payable $12,131 $10,032 Accrued payroll and related expenses 24,365 25,447 Accrued gaming and admission taxes 21,672 12,424 Other accrued liabilities 49,173 76,317 Accrued interest 7,194 17,627 Income taxes payable 2,722 - Current maturities of long-term debt 2,559 2,512 Total current liabilities 119,816 144,359 Long-term debt 800,622 811,615 Deferred income taxes 113,673 107,794 Other long-term obligations 2,459 1,926 Stockholders' equity: Common stock, $.01 par; 120,000,000 shares authorized; 29,566,639 and 29,553,772 shares issued and outstanding at March 31, 2005 and December 31, 2004, respectively 296 296 Capital in excess of par 99,020 98,580 Retained earnings 295,210 273,886 Total stockholders' equity 394,526 372,762 Total liabilities and stockholders' equity $1,431,096 $1,438,456 DATASOURCE: Argosy Gaming Company CONTACT: Jim Wise, +1-618-474-7476, or Erin Williams, +1-618-474-7465, both of Argosy Gaming Company Web site: http://www.argosycasinos.com/

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