Argosy Gaming (AGY) 8-K Current report

QuickLinks -- Click here to rapidly navigate through this document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):April 12, 2001

ARGOSY GAMING COMPANY
(Exact name of Registrant as specified in its charter)

Delaware	1-11853	37-1304247
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)
219 Piasa Street, Alton, Illinois		62002
(Address of principal executive offices)		(Zip Code)

(618) 474-7500
(Registrant's telephone number, including area code)

N/A
(Former name or former address, if changed since last report)

ITEM 5.  OTHER EVENTS

    On April 12, 2001, Argosy Gaming Company (the "Company") signed an agreement to acquire all of the outstanding stock of Empress Casino Joliet Corporation (the "Acquisition") located in Joliet, Illinois from Horseshoe Gaming Holding Corp. ("Horseshoe"). Under the terms of the agreement, the Company agreed to pay Horseshoe $465 million. The Company has obtained a commitment from its senior lenders allowing it to increase its borrowings under its senior credit facility to provide the $465 million in funding for the Acquisition. In addition, the Company may fund a portion of the Acquisition with proceeds from an issuance of debt securities under its recently filed shelf registration statement. The Acquisition is subject to customary conditions precedent, including approval from the Illinois Gaming Board. The gaming regulatory authorities in the five states in which the Company operate must also approve the additional financing necessary to complete the Acquisition. The Company anticipates closing the Acquisition, subject to receiving all required approvals, in the third quarter of 2001.

ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

Item 7a.  Financial statements of businesses acquired.

    Below are the financial statements of Empress Casino Joliet Corporation required by Item 7(a) of this Form 8-K.

2

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Management of Empress Casino Joliet Corporation:

    We have audited the accompanying balance sheets of EMPRESS CASINO JOLIET CORPORATION (the "Company") (an Illinois corporation) as of December 31, 2000 and 1999, and the related statements of operations, stockholder's equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Empress Casino Joliet Corporation as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.

/s/ Arthur Andersen, LLP

Memphis, Tennessee,
February 16, 2001 (except with respect to the
matter discussed in Note 9, as to which the
date is April 12, 2001).

3

REPORT OF INDEPENDENT AUDITORS

Management
Empress Casino Joliet Corporation

    We have audited the accompanying statements of operations, stockholders' equity, and cash flows of Empress Casino Joliet Corporation for the year ended December 31, 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

    We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

    In our opinion, the financial statements of Empress Casino Joliet Corporation referred to above present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 1998, in conformity with generally accepted accounting principles.

	/s/ Ernst & Young LLP
March 26, 1999

4

EMPRESS CASINO JOLIET CORPORATION
BALANCE SHEETS
AS OF DECEMBER 31
(in thousands, except share data)

			2000			1999
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	12,417		$	14,006
	Accounts receivable, net of allowance for doubtful accounts of $1,952 and $1,795			1,551			1,364
	Due from affiliates			440			5,406
	Inventories			386			653
	Prepaid expenses and other			538			467
		Total current assets		15,332			21,896
PROPERTY AND EQUIPMENT
	Land			10,067			9,772
	Buildings, boats and improvements			37,386			37,090
	Furniture, fixtures and equipment			16,325			11,318
				63,778			58,180
Less: accumulated depreciation				(7,767	)		(602	)
		Net property and equipment		56,011			57,578
GOODWILL AND OTHER ASSETS,net				233,152			245,470
			$	304,495		$	324,944
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
	Accounts payable		$	2,579		$	2,281
	Due to affiliates			751			3,111
	Accrued expenses and other			11,330			8,646
		Total current liabilities		14,660			14,038
LONG-TERM DEBT				273,615			309,181
COMMITMENTS AND CONTINGENCIES (NOTE 8)
STOCKHOLDER'S EQUITY
	Common stock; no par value; 2,000 shares authorized; 1,000 shares issued and outstanding			—			—
	Retained earnings			16,220			1,725
		Total stockholder's equity		16,220			1,725
			$	304,495		$	324,944

The accompanying notes are an integral part of these financial statements.

5

EMPRESS CASINO JOLIET CORPORATION
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31
(in thousands)

			2000			1999			1998
REVENUES
	Casino		$	235,436		$	192,991		$	152,913
	Food and beverage			17,191			16,636			11,298
	Hotel			1,886			1,784			1,641
	Retail			1,584			1,199			871
	Miscellaneous:
		Affiliates		1,664			1,739			4,389
		Other		1,847			2,139			1,359
				259,608			216,488			172,471
	Promotional allowances			(17,640	)		(13,535	)		(8,941	)
		Net revenues		241,968			202,953			163,530
EXPENSES
	Casino			130,219			104,367			75,193
	Food and beverage			10,245			11,697			11,356
	Hotel			779			911			983
	Retail			376			571			665
	General and administrative			27,199			23,706			30,980
	Loss on disposal of assets			2			23			42
	Depreciation and amortization			18,861			8,169			8,291
	Preopening expenses			—			1,669			—
		Total expenses		187,681			151,113			127,510
OPERATING PROFIT BEFORE CORPORATE EXPENSES				54,287			51,840			36,020
CORPORATE EXPENSES				(11,301	)		(3,181	)		(4,492	)
OPERATING INCOME				42,986			48,659			31,528
OTHER INCOME (EXPENSE)
	Interest expense			(27,750	)		(4,891	)		(8,988	)
	Interest income			81			154			4,882
INCOME BEFORE STATE INCOME TAXES				15,317			43,922			27,422
PROVISION FOR STATE INCOME TAXES				822			606			433
INCOME BEFORE EXTRAORDINARY ITEMS				14,495			43,316			26,989
EXTRAORDINARY LOSS
	Premium on early extinguishment of debt			—			—			(5,499	)
	Write-off of deferred financing costs			—			—			(2,690	)
NET INCOME			$	14,495		$	43,316		$	18,800

The accompanying notes are an integral part of these financial statements.

6

EMPRESS CASINO JOLIET CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(in thousands)

				2000			1999			1998
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income			$	14,495		$	43,316		$	18,800
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			18,861			8,169			8,708
		Premium on early extinguishment of debt			—			—			5,499
		Write-off of deferred financing costs			—			—			2,690
		Loss on disposal of assets			2			23			42
		Provision for doubtful accounts			1,004			964			357
		Net change in assets and liabilities			3,071			(620	)		(1,819	)
			Net cash provided by operating activities		37,433			51,852			34,277
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchase of investments				—			—			(20,960	)
	Proceeds from sale of investments				—			—			30,970
	Proceeds from sale of property and equipment				55			34			—
	Purchases of property and equipment				(6,116	)		(6,962	)		(10,474	)
			Net cash used in investing activities		(6,061	)		(6,928	)		(464	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from long-term debt				—			—			34,610
	Payment on premium on early extinguishment of debt				—			—			(5,499	)
	Payments on long-term debt				(35,566	)		—			(150,000	)
	Capital distributions				—			(43,300	)		(24,848	)
	Increase in net due to/from affiliates				2,605			1,321			69,000
	Debt issue costs and commitment fees				—			—			(1,330	)
			Net cash used in financing activities		(32,961	)		(41,979	)		(78,067	)
NET CHANGE IN CASH AND CASH EQUIVALENTS					(1,589	)		2,945			(44,254	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					14,006			11,061			55,315
CASH AND CASH EQUIVALENTS, END OF PERIOD				$	12,417		$	14,006		$	11,061

The accompanying notes are an integral part of these financial statements.

7

EMPRESS CASINO JOLIET CORPORATION
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(in thousands)

	Common Stock			Additional Paid-In Capital			Retained Earnings			Total Stockholder's Equity
BALANCE AT DECEMBER 31, 1997	$	11,500		$	270		$	32,206		$	43,976
Common stock cancelled		(11,500	)		11,500			—			—
Common stock issued		10,000			(10,000	)		—			—
Cash distributions		—			—			(24,848	)		(24,848	)
Net income		—			—			18,800			18,800
BALANCE AT DECEMBER 31, 1998		10,000			1,770			26,158			37,928
Land contribution		—			971			—			971
Cash distributions to stockholders		—			—			(43,300	)		(43,300	)
Net income		—			—			41,591			41,591
BALANCE AT DECEMBER 1, 1999		10,000			2,741			24,449			37,190
Equity conversion as a result of acquisition by HGHC		(10,000	)		(2,741	)		(24,449	)		(37,190	)
Net income		—			—			1,725			1,725
BALANCE AT DECEMBER 31, 1999		—			—			1,725			1,725
Net income		—			—			14,495			14,495
BALANCE AT DECEMBER 31, 2000	$	—		$	—		$	16,220		$	16,220

The accompanying notes are an integral part of these financial statements.

8

EMPRESS CASINO JOLIET CORPORATION

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2000

1. ORGANIZATION AND BASIS OF PRESENTATION

    Empress Casino Joliet Corporation (the "Company"), an Illinois corporation, was incorporated on December 26, 1990, to provide riverboat gaming and related entertainment to the public. The Company owns and operates the Empress I and Empress II riverboat casinos located on the Des Plaines River in Joliet, Illinois.

    On December 1, 1999, Horseshoe Gaming Holding Corp. ("HGHC") acquired from Empress Entertainment, Inc. ("Entertainment"), all of the outstanding stock of two of Entertainment's operating subsidiaries, Empress Casino Hammond Corporation ("Empress Hammond") and the Company in a transaction (the "Merger") accounted for as a purchase. In connection with this acquisition, the accounts of the Company have been restated to reflect the allocation of the purchase price to the respective net assets acquired during 1999 based upon their estimated fair values. These values were determined based on independent appraisals, discounted cash flows and estimates made by management. The excess of the purchase price over the adjusted basis of the net assets acquired was recorded as goodwill. Previous financial statements issued to the Illinois Gaming Board ("IGB") have been presented without these pushdown adjustments.

    On November 30, 1999, the IGB approved the Merger, placing certain conditions on its decision. One of the conditions was the completion of the investigation and approval of all key persons of the Company and HGHC. On March 13, 2000, the Company filed its renewal application for its owner's license with the IGB and on June 30, 2000, the IGB issued the Company's initial decision and directed the Administrator to issue a Notice of Denial to the Company, denying its application for renewal of its owner's license. On July 19, 2000, the Company received the Notice of Denial of License Renewal from the IGB. In response to the denial, HGHC timely filed an appeal and submitted a Verified Request for Hearing of the IGB decision.

    Effective January 31, 2001, the IGB approved a settlement agreement between the IGB, HGHC, the Company and Jack Binion ("Binion"), Chairman of the Board and CEO of HGHC. Pursuant to the pertinent parts of the agreement: (i) HGHC agreed to sell the Company to a suitable purchaser within the time frames established in the settlement agreement; (ii) Binion will withdraw his key person application; and (iii) upon the closing of the sale of the Company, the Company will withdraw its Verified Request for Hearing and, upon acceptance by the IGB of the withdrawal, the previous denial of the Company's renewal application will be moot.

    Certain reclassifications have been made to the financial statements as previously presented to conform to current year presentations, which have no effect on previously reported net income.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

    Cash equivalents are highly liquid investments with an original maturity of three months or less and are stated at the lower of cost or market.

Inventories

    Inventories, which consist of food, beverage, gift shop, and promotional items are recorded at the lower of cost (determined by the first-in, first-out method) or market.

9

Property and Equipment

    Property and equipment are stated at cost. The cost of normal repairs and maintenance are expensed as incurred while major expenditures that extend the useful lives of assets are capitalized. Depreciation is computed using the straight-line method over the following estimated useful lives:

Building, boats and improvements	5 to 31.5 years
Furniture, fixtures and equipment	3 to 10 years

Goodwill

    Costs in excess of the fair value of tangible assets acquired in the Merger, which totaled approximately $223,163,000, are included in goodwill and other assets in the accompanying balance sheets and are being amoritized over 25 years using the straight-line method. The accumulated amortization was approximately $9,671,000 and $744,000 at December 31, 2000 and 1999, respectively.

Intangibles

    In connection with the Merger, HGHC allocated to the Company its portion of other acquired intangibles included in goodwill and other assets, net in the accompanying Balance Sheets which consist of $10.0 million for trademarks and $2.5 million for customer lists to be amortized over five years.

Casino Revenue

    Casino revenue is the aggregate of gaming wins and losses.

Casino Promotional Allowances

    The retail value of food, beverage, gift shop and other services, which were provided to customers without charge, has been included in the respective revenue classifications and then deducted as a promotional allowance. The estimated direct costs of providing such complimentary services, which are substantially included in casino department expenses, are as follows (in thousands):

	Years Ended December 31,
	2000		1999		1998
Food and beverage	$	9,463	$	5,951	$	3,800
Hotel		738		338		230
Other operating expenses		675		357		139
	$	10,876	$	6,646	$	4,169

    In February 2001, the EITF reached a partial consensus on EITF 00-22, "Accounting for 'Points' and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Free Products or Services to be Delivered in the Future." The consensus requires that vendors recognize the cash rebate or refund obligation associated with time- or volume-based cash rebates as a reduction of revenue based on a "systematic and rational allocation of the cost of honoring rebates or refunds earned and claimed to each of the underlying revenue transactions that result in progress by the

10

customer toward earning the rebate or refund." The liability for such obligations should be based on the estimated amount of rebates or refunds to be ultimately earned, including an estimation of "breakage" if it can be reasonably estimated. The Company's players' clubs allow customers to earn certain complimentary services and/or cash rebates based on the volume of the customers' gaming activity. The accompanying statements of operations have been presented in accordance with EITF 00-22. The amounts reclassified from casino department expense to promotional allowance were approximately $7,305,000, $6,908,000 and $5,100,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

Advertising Costs

    The Company expenses all costs associated with advertising as incurred, and such amounts are included in general and administrative expenses in the accompanying statements of operations.

Preopening Expenses

    The Company expenses as incurred all preopening costs related to new construction in accordance with Statement of Position 98-5 "Reporting on the Costs of Start-up Activities." Preopening expenses were approximately $1,669,000 for the year ended December 31, 1999. There were no preopening expenses in the years ended December 31, 2000 and 1998.

Income Taxes

    The stockholders of HGHC have elected, under Subchapter S of the Internal Revenue Code, to include the Company's income in their income tax returns. Accordingly, the Company is not subject to Federal income taxes. The Company continues to be subject to certain state income taxes. The tax bases in the Company's assets and liabilities were higher than the amounts reported in the accompanying financial statements by approximately $1,795,000 and $0 at December 31, 2000 and 1999, respectively.

Corporate Expenses

    Entertainment (pre-Merger) and HGHC (post-Merger) charges the Company for its share of expenses incurred associated with the management of Entertainment, HGHC and related entities. Included in corporate expenses are normal operating costs as well as the deferred compensation expense relating to ownership interests in HGHC and stock appreciation rights issued to employees.

Impairment of Long-Lived Assets

    In accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," management continually evaluates whether events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable. Based on management's evaluations, no significant impairments of long-lived assets occurred during the years ended December 31, 2000, 1999 and 1998.

11

Use of Estimates

    The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates.

3. STATEMENTS OF CASH FLOWS

    Cash payments for interest for the years ended December 31, 2000, 1999 and 1998 were approximately $28,889,000, $1,406,000 and $13,023,000, respectively.

    Cash payments for taxes for the years ended December 31, 1999 and 1998 were approximately $594,000 and $800,000, respectively. HGHC paid taxes on behalf of the Company for the year ended December 31, 2000.

    The Company received a land contribution of approximately $971,000 from Entertainment in 1999.

    The Company converted long-term debt and accrued interest, net of loan acquisition costs valued at approximately $34,691,000, and a net intercompany receivable of approximately $86,000, to equity as a result of the acquisition by HGHC in 1999.

    The net change in operating assets and liabilities consists of the following as of December 31 (in thousands):

		2000			1999			1998
(Increase) decrease in assets:
	Accounts receivable	$	(1,191	)	$	(633	)	$	2,048
	Inventories		267			(188	)		300
	Prepaid expenses and other		(71	)		549			53
Increase (decrease) in liabilities:
	Accounts payable		298			366			197
	Accrued expenses and other		3,768			(714	)		(4,417	)
		$	3,071		$	(620	)	$	(1,819	)

12

4. ACCRUED EXPENSES AND OTHER

    Accrued expenses and other consists of the following as of December 31 (in thousands):

	2000		1999
Payroll and related expenses	$	5,386	$	3,427
Slot club liabilities		923		1,015
Gaming, admission and property taxes		1,764		1,211
Progressive jackpots		853		844
Outstanding chip and token liabilities		545		535
Other		1,859		1,614
	$	11,330	$	8,646

5. LONG-TERM DEBT

    In May 1999, HGHC completed a private placement offering of $600,000,000 of 8.625% Senior Subordinated Notes due 2009. In connection with the Merger, HGHC allocated to the Company its portion of debt and related finance charges of approximately $309,181,000 at December 1, 1999. The Company makes periodic cash payments to HGHC to fund debt payments which are reflected as a reduction of debt on the accompanying balance sheets.

    Substantially all of the assets of the Company serve as collateral for the repayment of the debt obligations of HGHC. The Company guarantees such debt, which totaled approximately $986,372,000 including accrued interest, at December 31, 2000.

    HGHC's debt agreements contain covenants that, among other things, (i) limit the amount of distributions HGHC can pay to its stockholders; (ii) limit the amount of additional indebtedness which may be incurred by HGHC and its subsidiaries; (iii) prohibit any consolidation or merger of HGHC or its subsidiaries with an affiliate or third party, any sale of substantially all of HGHC or its subsidiaries' assets, or any payment of subordinated indebtedness prior to its scheduled maturity; and (iv) limit the amount of restricted payments, as defined, HGHC may make.

    In 1998, Entertainment entered into a refinancing agreement and issued a promissory note (the "Promissory Note") in the amount of approximately $34,610,000 to the Company, which was due and payable in 2006. Interest on the Promissory Note was payable semiannually on June 30 and December 31 of each year. As a result of the Merger, the Promissory Note and related loan acquisition costs were reclassified as additional paid-in capital.

6. TRANSACTIONS WITH RELATED PARTIES

    The Company receives a fixed rate royalty payment from Empress Hammond based on an estimated fair market value and usage charge for the use of the Empress Casino trademarks, which are owned by the Company. The annual royalty payment over five years, which commenced in June 1996, is approximately $1,200,000. This agreement will be canceled in May 2001. In addition, the Company charged Empress Hammond approximately $464,000 in the years ended December 31, 2000, 1999 and 1998, for Empress Hammond's use of the Company's database, which was based on the estimated fair market value.

13

    During 1999 and 1998, the Company engaged businesses owned by certain stockholders of Entertainment (prior to the Merger) to perform various functions including construction services, transportation and fuel purchases, and insurance brokerage and consulting services. The total amount paid was approximately $500,000 and $800,000 for the years ended December 31, 1999 and 1998, respectively.

7. 401(k) SAVINGS PLAN

    In 1993, the Company adopted a 401(k) savings plan covering substantially all of its employees. Effective April 2000, the Company began participating in the HGHC 401(k) savings plan and rolled the assets of the prior plan into the HGHC plan. The Company matches 100% of the first 2%, and 50% of the next 4% of the eligible employee's contributions. Employees vest in the matching contribution over four years. The Company's contribution to the plan is discretionary. The Company's matching contributions were $905,000, $424,000 and $341,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

8. COMMITMENTS AND CONTINGENCIES

    On June 26, 1999, legislation was passed in the state of Illinois that allowed all riverboat casinos to become permanently moored. This legislation is currently being challenged as unconstitutional.

    The Company, during the normal course of operating its business, becomes engaged in various litigation. In the opinion of the Company's management, the ultimate disposition of such litigation will not have a material impact on the Company's financial position or results of operations.

9. SUBSEQUENT EVENT

    On April 12, 2001, HGHC entered into an Agreement and Plan of Merger (the "Merger Agreement") with Argosy Gaming Company ("Argosy"). Under the terms of the Merger Agreement, HGHC has agreed to sell the stock of the Company to Argosy for cash consideration of approximately $465,000,000. The transaction is subject to the satisfaction of certain conditions, including the receipt of necessary regulatory approvals of the IGB and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

14

EMPRESS CASINO JOLIET CORPORATION

CONDENSED BALANCE SHEET

(in thousands, except share data)

			March 31, 2001
			(Unaudited)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	10,526
	Accounts receivable, net of allowance for doubtful accounts of $2,125			1,496
	Due from affiliates			226
	Inventories			440
	Prepaid expenses and other			464
		Total current assets		13,152
PROPERTY AND EQUIPMENT
	Land			10,081
	Buildings, boats and improvements			38,088
	Furniture, fixtures and equipment			16,902
				65,071
	Less: accumulated depreciation			(9,697	)
		Net property and equipment		55,374
GOODWILL AND OTHER ASSETS, net				230,072
			$	298,598
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
	Accounts payable		$	2,007
	Due to affiliates			1,599
	Accrued expenses and other			17,941
		Total current liabilities		21,547
LONG-TERM DEBT				251,765
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY
	Common stock, no par value, 2,000 shares authorized; 1,000 shares issued and outstanding			—
	Retained earnings			25,286
		Total stockholder's equity		25,286
			$	298,598

The accompanying notes are an integral part of these condensed financial statements.

15

EMPRESS CASINO JOLIET CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31

(Unaudited)

(in thousands)

			2001			2000
REVENUES
	Casino		$	65,956		$	59,703
	Food and beverage			4,591			4,623
	Hotel			439			423
	Retail			395			326
	Miscellaneous:
		Affiliates		304			416
		Other		468			447
				72,153			65,938
	Promotional allowances			(4,233	)		(4,468	)
		Net revenues		67,920			61,470
Expenses
	Casino			36,688			32,477
	Food and beverage			2,037			3,062
	Hotel			114			202
	Retail			103			88
	General and administrative			7,668			6,524
	Gain on disposal of assets			(24	)		—
	Depreciation and amortization			4,876			4,591
		Total expenses		51,462			46,944
OPERATING PROFIT BEFORE CORPORATE EXPENSES				16,458			14,526
CORPORATE EXPENSES				(1,398	)		(3,971	)
OPERATING INCOME				15,060			10,555
OTHER INCOME (EXPENSE)
	Interest expense			(6,171	)		(6,938	)
	Interest income			34			33
		Total other income (expense)		(6,137	)		(6,905	)
INCOME BEFORE STATE INCOME TAXES				8,923			3,650
(BENEFIT) PROVISION FOR STATE INCOME TAXES				(144	)		—
NET INCOME			$	9,067		$	3,650

The accompanying notes are an integral part of these condensed financial statements.

16

EMPRESS CASINO JOLIET CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31

(Unaudited)

(in thousands)

				2001			2000
CASH PROVIDED BY OPERATING ACTIVITIES
	Net income			$	9,067		$	3,650
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			4,876			4,591
		Provision for doubtful accounts			299			—
		Gain on disposal of assets			(24	)		—
		Net change in assets and liabilities			5,814			5,624
			Net cash provided by operating activities		20,032			13,865
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchases of property and equipment				(1,406	)		(641	)
			Net cash used in investing activities		(1,406	)		(641	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Capital distributions				(21,850	)		(15,111	)
	Increase in net due to/from affiliates				1,333			3,277
			Net cash used in financing activities		(20,517	)		(11,834	)
NET CHANGE IN CASH AND CASH EQUIVALENTS					(1,891	)		1,390
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					12,417			14,006
CASH AND CASH EQUIVALENTS, END OF PERIOD				$	10,526		$	15,396
Supplemental cash flow disclosure:
	Interest paid			$	5,900		$	8,889

The accompanying notes are an integral part of these condensed financial statements.

17

EMPRESS CASINO JOLIET CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Basis of Presentation

    The accompanying unaudited consolidated condensed financial statements of Empress Casino Joliet Corporation, an Illinois corporation (the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations. It is suggested that these condensed financial statements be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2000. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows of all periods presented have been made. The results of operations for the three months ended March 31, 2001, are not necessarily indicative of the operating results for the full year. Certain reclassifications have been made to the financial statements as previously presented to conform to current classifications.

Note 2 — Recently Adopted Accounting Pronouncements

    In January 2001, the Emerging Issues Task Force of the Financial Accounting Standards Board reached a consensus on Issue 3 of Issue 00-22 ("EITF 00-22"), "Accounting for Points and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Free Products or Services to Be Delivered in the Future". EITF 00-22 requires that incentives to induce casino play ("Points") be recorded as a reduction of revenue. The Company had historically classified Points as operating expenses. In accordance with the transition rules, the Company adopted EITF 00-22 in the first quarter of 2001. Points of $1.2 million and $2.0 million were recorded for the three months ended March 31, 2001 and 2000, respectively, and are included as promotional allowances in the accompanying Condensed Statements of Operations. The adoption of EITF 00-22 had no effect on the Company's operating income.

Note 3 — Settlement Agreement

    On November 30, 1999, the Illinois Gaming Board ("IGB") approved the acquisition of the Company by Horseshoe Gaming Holding Corp. ("HGHC"), placing certain conditions on its decision. One of the conditions was the completion of the investigation and approval of all key persons of the Company and HGHC. On March 13, 2000, the Company filed its renewal application with the IGB and on June 30, 2000, the IGB issued its initial decision and directed the Administrator to issue a Notice of Denial to the Company, denying its application for renewal of its riverboat owner's license and preliminarily found Jack Binion ("Binion"), HGHC's Chairman of the Board and CEO, unsuitable to be licensed as a key person. On July 19, 2000, the Company received the Notice of Denial of License Renewal from the IGB. In response to the denial, the Company timely filed a Verified Request for Hearing of the IGB's decision.

    Effective January 31, 2001, the IGB approved a settlement agreement ("Settlement Agreement") between the IGB, the Company, HGHC and Binion. Pursuant to the pertinent parts of the Settlement Agreement: (a) HGHC agreed to sell the Company to a suitable purchaser within the time frames established in the Settlement Agreement; (b) Binion will withdraw his key person application; and (c) upon the closing of the sale of Joliet, the Company will withdraw its Verified Request for Hearing and, upon acceptance by the IGB of the withdrawal, the previous denial of the Company's renewal application will be moot.

18

Note 4 — Subsequent Event

    On April 12, 2001, HGHC entered into an Agreement and Plan of Merger (the "Merger Agreement") with Argosy Gaming Company ("Argosy"). Under the terms of the Merger Agreement, HGHC has agreed to sell the stock of the Company to Argosy for cash consideration of approximately $465 million. The transaction is subject to the satisfaction of certain conditions, including the receipt of necessary regulatory approvals of the IGB and the expiration of termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

19

Item 7b. Pro forma financial information.

    Below is the pro forma financial information required by Item 7(b) of this Form 8-K relating to the acquisition of the Empress Casino Joliet Corporation described above.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA

    Our historical consolidated financial data for the year ended December 31, 2000, which have been audited by Ernst & Young LLP, independent auditors, and for the three months ended March 31, 2001 are derived from our consolidated financial statements. The historical financial statements for these periods include the results for the Lawrenceburg partnership on a consolidated basis with a deduction for the 42.5% minority interests in this partnership until the acquisition of these minority interests during the first quarter of 2001. The historical balance sheet and income statement data as of and for the three months ended March 31, 2001 have been derived from our unaudited condensed consolidated financial statements and include all adjustments, consisting of normal recurring accruals, that we consider necessary for a fair presentation of our consolidated financial position and results of operations for such periods.

    Thepro forma adjustments for the Lawrenceburg acquisition reflect thepro forma adjustments resulting from our acquisition of the minority interests in the Lawrenceburg partnership, including the issuance of $150,000,000 of additional senior subordinated notes and additional borrowings under our amended and restated credit agreement necessary to acquire these minority interests. The acquisition of these minority interests and additional borrowings occurred during the first quarter of 2001 and are reflected in our March 31, 2001 unaudited historical consolidated balance sheet.

    On April 12, 2001, we entered into an agreement to acquire, subject to regulatory approvals, Empress Casino Joliet Corporation. The Empress Casino Joliet Corporation historical financial data for the year ended December 31, 2000, which have been audited by Arthur Andersen, LLP, independent auditors, and for the three months ended March 31, 2001 are derived from Empress Casino Joliet Corporation's financial statements included in Item 7. We have obtained a commitment from our senior lenders allowing us to increase our borrowings under our senior credit facility to provide the $465 million in funding for the proposed acquisition. In addition we may fund a portion of the acquisition with proceeds from an issuance of debt securities under our recently filed shelf registration statement.

    Thepro forma adjustments for the Empress Casino Joliet Corporation acquisition reflect thepro forma adjustments under the purchase method of accounting, adjustments to record additional borrowings by us to complete the purchase and other adjustments to eliminate certain nonrecurring revenues and expenses.

    Thepro forma data assumes that these transactions occurred on January 1, 2000, in the case of the Unaudited Pro Forma Consolidated Income Statements for the year ended December 31, 2000 and for the three months ended March 31, 2001. In the case of the Unaudited Pro Forma Consolidated Balance Sheet, thepro forma data assumes that the acquisition of the Empress Casino Joliet Corporation occurred as of March 31, 2001.

    Thepro forma financial information should be read in conjunction with our historical financial statements for the year ended December 31, 2000 and our unaudited consolidated historical financial statements for the three months ended March 31, 2001. The audited historical financial information for Empress Casino Joliet Corporation for the year ended December 31, 2000 and the unaudited historical financial statements as of and for the three months ended March 31, 2001 are included in Item 7 and should be read in conjunction with these historical financial statements. Thepro forma information is not necessarily indicative of future earnings or earnings that would have been reported for the periods presented had these transactions been completed at the beginning of the earliest period presented. Further, the unauditedpro forma consolidated income statement for the three months ended March 31, 2001 should not necessarily be taken as an indication of earnings for a full year.

20

UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENTS

		Year Ended December 31, 2000
		Argosy Gaming Company Historical			Pro Forma Adjustments for Lawrenceburg Acquisition			Empress Casino Historical			Pro Forma Adjustments for Empress Casino Acquisition			As Adjusted Pro Forma
		(in thousands, except per share data and ratios)
Revenues:
Casino		$	658,883		$	—		$	235,436		$	—		$	894,319
Admissions			18,998			—			—			—			18,998
Food, beverage and other			66,146			—			24,172			(1,664)	(f)		88,654
			744,027			—			259,608			(1,664	)		1,001,971
Less: promotional allowances			(93,394	)		—			(17,640	)		—			(111,034	)
	Net revenues		650,633			—			241,968			(1,664	)		890,937
Costs and expenses:
Casino			243,559			—			130,219			—			373,778
Food, beverage and other			46,575			—			11,400			—			57,975
Other operating expenses			30,230			—			11,301			(10,901)	(f)		30,630
Selling, general and administrative			135,819			(6,652)	(a)		27,199			—			156,366
Depreciation and amortization			36,094			7,330	(b)		18,861			1,373	(g)		63,658
Write-down of assets held for sale			6,800			—			2			—			6,802
	Income from operations		151,556			(678	)		42,986			7,864			201,728
Interest expense, net			(33,400	)		(34,456)	(c)		(27,669	)		(12,468)	(h)		(107,993	)
Income before minority interests, income taxes and extraordinary item			118,156			(35,134	)		15,317			(4,604	)		93,735
Minority interests			(40,466	)		39,789	(d)		—			—			(677	)
Income tax expense			(31,161	)		(1,862)	(e)		(822	)		(3,463)	(e)		(37,308	)
Extraordinary loss on extinguishment of debt (net of income tax benefit of $770)			(1,154	)		—			—			—			(1,154	)
Net income		$	45,375		$	2,793		$	14,495		$	(8,067	)	$	54,596
Diluted income per share		$	1.56		$	0.09		$	0.50		$	(0.28	)	$	1.87
Diluted shares outstanding			29,144			—			—			—			29,144
Ratio of earnings to fixed charges			3.9x			—			—			—			1.8x

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

21

UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENTS

		Three Months Ended March 31, 2001
		Argosy Gaming Company Historical			Pro Forma Adjustments for Lawrenceburg Acquisition			Empress Casino Historical			Pro Forma Adjustments for Empress Casino Acquisition			As Adjusted Pro Forma
		(in thousands, except per share data and ratios)
Revenues:
Casino		$	171,780		$	—		$	65,956		$	—		$	237,736
Admissions			4,639			—			—			—			4,639
Food, beverage and other			17,167			—			6,197			(304)	(f)		23,060
			193,586			—			72,153			(304	)		265,435
Less: promotional allowances			(22,851	)		—			(4,233	)		—			(27,084	)
	Net revenues		170,735			—			67,920			(304	)		238,351
Costs and expenses:
Casino			64,530			—			36,688			—			101,218
Food, beverage and other			12,578			—			2,254			—			14,832
Other operating expenses			8,052			—			1,398			(1,298)	(f)		8,152
Selling, general and administrative			35,314			(927)	(a)		7,668			—			42,055
Depreciation and amortization			10,073			801	(b)		4,876			183	(g)		15,933
Write-down of assets held for sale			—			—			(24	)		—			(24	)
	Income from operations		40,188			126			15,060			811			56,185
Interest expense, net			(11,396	)		(4,455)	(c)		(6,137	)		(3,883)	(h)		(25,871	)
Income before minority interests and income taxes			28,792			(4,329	)		8,923			(3,072	)		30,314
Minority interests			(4,086	)		4,086	(d)		—			—			—
Income tax (expense) benefit			(10,123	)		100	(e)		144			(2,484)	(e)		(12,363	)
Net income		$	14,583		$	(143	)	$	9,067		$	(5,556	)	$	17,951
Diluted income per share		$	0.50		$	0.00		$	0.31		$	(0.20	)	$	0.61
Diluted shares outstanding			29,249			—			—			—			29,249
Ratio of earnings to fixed charges			3.2x			—			—			—			2.1x

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

22

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

			March 31, 2001
			Argosy Gaming Company Historical		Empress Casino Historical		Pro Forma Adjustments for Empress Casino Acquisition			As Adjusted Pro Forma
			(in thousands, except share data)
Assets:
Cash and cash equivalents			$	44,661	$	10,526	$	—		$	55,187
Other current assets				13,508		2,626		—			16,134
		Total current assets		58,169		13,152		—			71,321
Net property and equipment				397,439		55,374		(374)	(g)		452,439
Other assets:
	Deferred finance costs, net			13,288		9,647		353			23,288
	Goodwill and other intangible assets, net			352,075		220,425		191,575	(g)		764,075
	Other, net			2,597		—		—			2,597
		Total other assets		367,960		230,072		191,928			789,960
Total assets			$	823,568	$	298,598	$	191,554		$	1,313,720
Current liabilities:
	Accounts payable		$	12,595	$	2,007	$	—		$	14,602
	Other current liabilities			72,645		19,540		—			92,185
	Current maturities of long-term debt			1,430		—		—			1,430
		Total current liabilities		86,670		21,547		—			108,217
Long-term debt				605,906		251,765		216,840	(h)		1,074,511
Deferred income taxes				11,876		—		—			11,876
Other long-term obligations				241		—		—			241
Stockholders' equity:
	Common stock $.01 par; 60,000,000 shares authorized; 28,501,089 issued and outstanding at March 31, 2001			285		—		—			285
	Capital in excess of par			81,032		—		—			81,032
	Retained earnings			37,558		25,286		(25,286)	(i)		37,558
		Total stockholders' equity		118,875		25,286		(25,286	)		118,875
Total liabilities and stockholders' equity			$	823,568	$	298,598	$	191,554		$	1,313,720

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

23

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)

(a)

Reflects the reduction in financial advisory fee equal to 5.0% of the Indiana Gaming Partnership's EBITDA paid to Conseco. This financial advisory fee is no longer paid as a result of our purchase of Conseco's minority interest.

(b)

Reflects estimated adjustments to record and amortize goodwill and acquisition costs due to the acquisition of Conseco's 29% and Centaur's 13.5% minority interests in the Indiana Gaming Partnership. Goodwill resulting from the acquisition is being amortized over 40 years.

As we were the majority owner of the Lawrenceburg partnership prior to the acquisition of the Conseco and Centaur minority interests, our historical financial statements include the assets, liabilities and results of operations for the Lawrenceburg partnership on a fully consolidated basis. We have allocated during the first quarter of 2001 the excess purchase price over the book value of the minority interests of approximately $294,000 to goodwill.

Assuming that we purchased the minority interest in the Lawrenceburg partnership as of January 1, 2000, and using a 40 year amortization period, goodwill amortization would have been $7,330 and $1,832 for the year ended December 31, 2000 and the three months ended March 31, 2001, respectively.

(c)

During the quarter ended March 31, 2001, we issued $159,000 in additional senior subordinated notes, including unamortized premium of $9,000, and borrowed approximately $210,000 under our credit facility to complete the purchase of the Lawrenceburg partnership minority interests.

Pro forma adjustments to interest expense to reflect these additional issuances and borrowings are as follows:

	Year Ended December 31, 2000			Three Months Ended March 31, 2001
Interest on additional senior subordinated notes at 103/4%	$	16,125		$	2,374
Less amortization of premium on additional senior subordinated notes		(734	)		(87	)
Interest on additional line of credit borrowings		19,478			2,061
Deferred finance cost amortization		835			107
Reduction in partner loan interest rate		(1,186	)		(145	)
Other, net		(62	)		145
	$	34,456		$	4,455

The pro forma interest expense assumes an effective net interest rate of 9.68% on the additional senior subordinated notes and 9.12% on the additional line of credit borrowings.

(d)

Reflects the elimination of minority interest expense attributable to the Indiana Gaming Partnership as a result of the acquisition of the Conseco and Centaur minority interests.

(e)

Reflects adjustment to tax expense resulting in a tax rate of 40% and 41% for the year ended December 31, 2000 and the three months ended March 31, 2001, respectively.

24

The following table sets forth the total pro forma adjustment to income tax expense.

		Year Ended December 31, 2000			Three Months Ended March 31, 2001
Tax effect of Lawrenceburg pro forma adjustments		$	(1,862	)	$	100
Tax effect of Empress Casino Joliet pro forma adjustments		$	1,841			1,260
Tax effect to record Empress Casino Joliet as a "C" corporation from a "S" corporation			(5,304	)		(3,744	)
	Total pro forma adjustments to tax expense Empress Casino Joliet	$	(3,463	)	$	(2,484	)

(f)

Represents adjustment to eliminate revenues received from an affiliate for trademark and database usage and the elimination of corporate office expense allocations which will not be recurring after the acquisition of the Empress Casino Joliet.

(g)

Represents adjustments to record the acquired assets of Empress Casino Joliet at their preliminary assigned values reflecting their estimated fair market values or net realizable values and the allocation of the excess purchase price over the fair market values as goodwill in accordance with the purchase method of accounting.

The following table sets forth the purchase price for Empress Casino Joliet as of March 31, 2001.

Purchase price		$	465,000
Less: Net working capital deficit adjustment			(8,395	)
Net purchase price			456,605
Adjust for:
	Net working capital acquired		8,395
	Fair market value of property acquired		(55,000	)
	Acquisition costs		2,000
	Goodwill		412,000
	Less goodwill and other intangibles recorded by Empress Casino Joliet		(220,425	)
	Pro forma adjustment to goodwill and other intangibles	$	191,575

Assuming that we purchased Empress Casino Joliet as of January 1, 2000, and using a 40 year amortization period, goodwill amortization would have been $10,300 and $2,575 for the year ended December 31, 2000 and three months ended March 31, 2001, respectively.

Pro forma adjustments to depreciation and amortization are expense follows:

	Year Ended December 31, 2000			Three Months Ended March 31, 2001
Goodwill amortization at a 40 year life	$	10,300		$	2,575
Amortization of other intangibles		2,500			625
Depreciation expense on property and equipment acquired		7,434			1,859
Less depreciation and amortization expense recorded by Empress Casino Joliet		(18,861	)		(4,876	)
Pro forma adjustment to depreciation and amortization	$	1,373		$	183

25

For purposes of preliminary purchase price allocations, the fair market value of the property and equipment acquired are assumed to approximate book value at $55,000. The final purchase price allocation is subject to revision based upon appraisal of the property and equipment and the intangibles acquired as well as final agreement as to the working capital acquired.

(h)

Following are the estimated sources and uses of funds necessary to acquire Empress Casino Joliet as if it were acquired as of March 31, 2001.

		March 31, 2001
Sources of Funds: Proceeds from additional long-term debt		$	468,605
Uses of Funds:
	Purchase of Empress Casino Joliet	$	(456,605	)
	Acquisition costs		(2,000	)
	Deferred finance costs		(10,000	)
	Total uses of funds	$	(468,605	)

    The overall estimated change in long-term debt including current maturities at March 31, 2001 is as follows:

Proceeds from additional long-term debt		$	468,605
Less Empress Casino Joliet debt not assumed			(251,765	)
	Pro forma adjustment to debt as of March 31, 2001	$	216,840

Pro forma adjustment to deferred finance costs at March 31, 2001 is as follows:

Deferred finance costs estimated to be incurred		$	10,000
Less Empress Casino Joliet deferred finance costs not assumed			(9,647	)
	Pro forma adjustment to deferred finance costs as of March 31, 2001	$	353

Pro forma adjustments to interest expense are as follows:

	Year Ended December 31, 2000			Three Months Ended March 31, 2001
Interest on additional long-term debt at 8.0%	$	38,789		$	9,697
Deferred finance cost amortization new long-term debt borrowings over an average seven year term		1,429			357
Less interest on Empress Casino Joliet debt not assumed		(27,750	)		(6,171	)
Pro forma adjustment to interest expense	$	12,468		$	3,883

(i)

Eliminates retained earnings of Empress Casino Joliet Corporation.

26

Exhibit No.	Description
23.1	Consent of Ernst & Young LLP
23.2	Consent of Arthur Andersen LLP

27

SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	ARGOSY GAMING COMPANY, a Delaware corporation
Date: June 21, 2001	By:	/s/ Dale R. BlackName: Dale R. Black Title:  Senior Vice President and Chief Financial Officer

28

QuickLinks

ITEM 5. OTHER EVENTS
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT AUDITORS
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENTS OF CASH FLOWS
STATEMENTS OF STOCKHOLDER'S EQUITY
NOTES TO FINANCIAL STATEMENTS
CONDENSED BALANCE SHEET
CONDENSED STATEMENTS OF OPERATIONS
CONDENSED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENTS
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENTS
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
SIGNATURES