Exhibit 99.1
PRESS RELEASE
For Immediate Release
Contact: Jim Wise (618) 474-7476
Erin Williams (618) 474-7465
ARGOSY GAMING COMPANY
REPORTS THIRD QUARTER 2003 EARNINGS
Alton, IL, October 28, 2003 – Argosy Gaming Company (NYSE:AGY) today announced third quarter results for the period ended September 30, 2003. Diluted earnings per share (“Diluted EPS”) were $0.56 on net income of $16.5 million, as compared to Diluted EPS of $0.65 on net income of $19.1 million for the third quarter of 2002. The Company attributes much of the decrease in net income to increased gaming and admissions taxes in Illinois and Indiana.
Net revenues for the third quarter of 2003 were $242.9 million, up $6.4 million from third quarter 2002 net revenues of $236.5 million. Argosy Casino-Lawrenceburg achieved a 7.4% increase in net revenues versus the same quarter in 2002, primarily due to the implementation of dockside gaming in August 2002, and the enhancement of certain marketing programs.
In Illinois, the Empress Casino Joliet completed its first full quarter of operations on its new barge facility. Net revenues at the property were essentially unchanged from the third quarter of 2002 despite a reduction in hours of operation, the implementation of an admission fee and changes in marketing efforts following the increase in the Illinois tax rates in July. The Empress was the only casino in Illinois that did not experience a year over year decline in state-reported casino revenues for the quarter. The Alton Belle Casino experienced a 10.4% drop in net revenues, as a result of both increased competitive pressures from other operators in the St. Louis market and operational changes following the Illinois tax increase.
The Argosy Casino – Riverside was in the height of its construction disruption during the quarter as it undergoes a $105 million casino expansion. The project includes construction of a new casino barge facility that will increase the property’s gaming capacity by 50%, renovation of the pavilion and increased parking facilities. When the property opens, the slot machines will be completely ‘cashless’, utilizing Ticket In/Ticket Out (“TITO”) technology. During the quarter, construction work caused the main entrance to the casino to be diverted to a side entrance and reduced the number of parking spaces available. As a result, the property experienced a 4.0% decline in net revenues, which was within the range expected by management. Construction work is on budget and on schedule, and the Company plans to open the expanded facility on December 11, 2003, pending regulatory approval.
“We are very excited about the opening for our Kansas City property,” said Richard J. Glasier, President and Chief Executive Officer. “The new technology we’ve incorporated to float the casino floor of our ‘boat-in-a-moat’ is working well, and the design of the new facility will make it the most attractive and exciting in the market. We saw the immediate response our guests had to our new casino in Joliet this past May, and we think the impact in Kansas City will be even more positive.”
Argosy’s two other properties, at Baton Rouge and Sioux City, performed well in the quarter, reporting year over year increases in net revenues of 11.1% and 8.2% respectively. Both properties underwent renovations within the last year; Baton Rouge in the third quarter of 2002, making for an easier comparison this quarter, and Sioux City in the first quarter of 2003.
The Company reported EBITDA (earnings before interest, taxes, depreciation and amortization) of $63.1 million for the third quarter 2003, as compared to $66.8 million for the third quarter 2002. The $3.7 million decrease is primarily related to a $9.6 million year-over-year increase in gaming and admission taxes, partially offset by the increase in revenues mentioned above. The EBITDA margin (EBITDA as a percent of net revenues) for the quarter was 26.0%, down from 28.2% for the same quarter last year. Gaming and admission taxes for the Company for the quarter were 33.8% of net revenues, up from 30.7% in the third quarter of 2002. Both the Baton Rouge and Sioux City properties saw strong improvement in their EBITDA margins from their revenue growth, each increasing by more than two percentage points. The Riverside property experienced a drop in EBITDA similar to its drop in revenues from construction disruption. In Lawrenceburg, the increase in revenues was not sufficient to offset the full-year impact of the tax increase that was implemented in Indiana in July of 2002. As a result, the property saw a drop in its EBITDA margin. Both of the Illinois properties also experienced a drop in EBITDA margin, as the year over year comparison includes both the full-year impact of the tax increase in July 2002, as well as the half-year impact of the tax increase in July 2003.
“We continue to be challenged by the new tax environment in Illinois,” said Glasier. “The essential operational changes we said we would make at the Empress and the Alton Belle are now in place. These changes include a reduction in hours of operation both in the casinos and at our restaurants, a modification of our marketing programs, a shift to fewer table games and more slots at both our properties and the implementation of an admission fee in Joliet. We are just starting to see the full impact of these initiatives. We will be monitoring the situation closely over the next several months, making additional operational changes as necessary.”
Financial Position
The Company reported that debt was reduced from $876.7 million as of June 30, 2003, to $850.3 million as of September 30, 2003. Capital spending during the quarter ended September 30, 2003, was approximately $28.1 million, and was primarily used for construction of the expansion project in Riverside. Argosy expects to spend approximately $40 million to $50 million in capital in the last quarter of the year, primarily on the Riverside project, as well as on continuing the transition to ‘cashless’, or “TITO”, slot machines at its properties. Full-year 2003 capital spending is expected to be $135 million to $145 million. The full-year number is lower than originally anticipated due to the timing of payments for construction at Riverside, lower than anticipated expenditures at the corporate level and favorable pricing on purchases of “TITO” slot machines. All Argosy properties, with the exception of those in Illinois, are currently operating “TITO” slot machines. In Illinois, the rules governing “TITO” have recently been adopted by the Illinois Gaming Board and, pending regulatory approval, the Joliet and Alton properties expect to be partially “TITO” operational by the end of the
year. Approximately one third of the Company’s total slot machines are currently “TITO” operational, with an additional one third “TITO”-ready. The Company said that, pending the timing of approval in Illinois, it still expects to meet its goal of being 100% “TITO” operational by the end of 2004.
Argosy will host a conference call for interested parties on October 28, 2003, at 11:00 a.m. EST to review its third quarter financial results. For those interested in participating in the call, please dial (706) 634-1306 and reference conference ID #3207685 ten to fifteen minutes prior to the call start time. A telephonic replay of the conference call will be made available through November 3, 2003 and can be accessed by dialing (706) 645-9291. The call will also be broadcast live via the Internet and may be accessed through our web site at www.argosycasinos.com or through www.prnewswire.com. A simulcast of the web cast will be made available through November 3, 2003 and can be accessed through our web site: www.argosycasinos.com.
Argosy Gaming Company is a leading owner and operator of riverboat casinos and related entertainment and hotel facilities in the midwestern and southern United States. Argosy owns and operates the Alton Belle Casino in Alton, 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, construction delays related to the Company’s expansion projects, the timing of the transition to cashless slots at the Company’s properties, the ability to effectively implement operational changes at the Company’s Illinois properties, the effect of future legislation or regulatory changes on the Company’s operations, as well as other risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission filings.
-Tables Follow-
ARGOSY GAMING COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
| | Three Months Ended | | Nine Months Ended | |
| | Sept 30,
2003 | | Sept 30,
2002 | | Sept 30,
2003 | | Sept 30,
2002 | |
| | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | |
Revenues: | | | | | | | | | |
Casino | | $ | 245,928 | | $ | 239,121 | | $ | 738,938 | | $ | 716,409 | |
Admissions | | 4,594 | | 3,068 | | 10,761 | | 8,482 | |
Food, beverage and other | | 24,270 | | 24,422 | | 74,023 | | 73,315 | |
| | 274,792 | | 266,611 | | 823,722 | | 798,206 | |
Less promotional allowances | | (31,854 | ) | (30,111 | ) | (96,107 | ) | (86,630 | ) |
Net revenues | | 242,938 | | 236,500 | | 727,615 | | 711,576 | |
| | | | | | | | | |
Costs and expenses: | | | | | | | | | |
Gaming and admission taxes | | 82,125 | | 72,571 | | 257,448 | | 222,595 | |
Casino | | 32,499 | | 35,328 | | 99,873 | | 107,392 | |
Selling, general and administrative | | 37,412 | | 33,665 | | 112,682 | | 99,688 | |
Food, beverage and other | | 17,394 | | 17,849 | | 52,953 | | 54,905 | |
Other operating expenses | | 10,420 | | 10,331 | | 31,305 | | 31,287 | |
Depreciation and amortization | | 13,235 | | 12,134 | | 38,757 | | 35,038 | |
Write down of assets | | — | | — | | 6,500 | | — | |
| | 193,085 | | 181,878 | | 599,518 | | 550,905 | |
Income from operations | | 49,853 | | 54,622 | | 128,097 | | 160,671 | |
| | | | | | | | | |
Other income (expense): | | | | | | | | | |
Interest income | | 20 | | 13 | | 106 | | 115 | |
Interest expense | | (19,054 | ) | (20,170 | ) | (56,990 | ) | (61,517 | ) |
| | (19,034 | ) | (20,157 | ) | (56,884 | ) | (61,402 | ) |
| | | | | | | | | |
Income before income taxes | | 30,819 | | 34,465 | | 71,213 | | 99,269 | |
| | | | | | | | | |
Income tax expense | | (14,330 | ) | (15,337 | ) | (33,114 | ) | (44,175 | ) |
| | | | | | | | | |
Net income | | $ | 16,489 | | $ | 19,128 | | $ | 38,099 | | $ | 55,094 | |
| | | | | | | | | |
Basic income per share | | $ | 0.56 | | $ | 0.66 | | $ | 1.31 | | $ | 1.91 | |
| | | | | | | | | |
Diluted income per share | | $ | 0.56 | | $ | 0.65 | | $ | 1.30 | | $ | 1.87 | |
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ARGOSY GAMING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
CASINO AND NET REVENUES
(In Thousands)
| | Three Months Ended | | Nine Months Ended | |
| | Sept 30,
2003 | | Sept 30,
2002 | | Sept 30,
2003 | | Sept 30,
2002 | |
| | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | |
Casino Revenues | | | | | | | | | |
Alton Belle Casino | | $ | 26,778 | | $ | 29,718 | | $ | 85,364 | | $ | 91,025 | |
Argosy Casino - Riverside | | 23,453 | | 24,665 | | 71,569 | | 75,296 | |
Argosy Casino - Baton Rouge | | 20,109 | | 18,147 | | 60,598 | | 57,783 | |
Argosy Casino - Sioux City | | 10,515 | | 9,779 | | 31,684 | | 29,055 | |
Argosy Casino - Lawrenceburg | | 106,817 | | 98,878 | | 307,014 | | 280,860 | |
Empress Casino Joliet | | 58,256 | | 57,934 | | 182,709 | | 182,390 | |
Total | | $ | 245,928 | | $ | 239,121 | | $ | 738,938 | | $ | 716,409 | |
| | | | | | | | | |
Net Revenues | | | | | | | | | |
Alton Belle Casino | | $ | 25,583 | | $ | 28,539 | | $ | 81,718 | | $ | 87,673 | |
Argosy Casino - Riverside | | 22,724 | | 23,665 | | 68,738 | | 72,304 | |
Argosy Casino - Baton Rouge (1) | | 20,358 | | 18,324 | | 62,160 | | 59,001 | |
Argosy Casino - Sioux City | | 10,190 | | 9,420 | | 30,765 | | 28,208 | |
Argosy Casino - Lawrenceburg | | 107,805 | | 100,364 | | 310,228 | | 285,957 | |
Empress Casino Joliet | | 56,278 | | 56,188 | | 174,006 | | 178,433 | |
Total | | $ | 242,938 | | $ | 236,500 | | $ | 727,615 | | $ | 711,576 | |
See accompanying notes to selected financial information
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ARGOSY GAMING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
RECONCILIATION OF INCOME FROM OPERATIONS TO EBITDA
(In Thousands)
| | Three Months Ended | | Nine Months Ended | |
| | Sept 30,
2003 | | Sept 30,
2002 | | Sept 30,
2003 | | Sept 30,
2002 | |
| | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | |
Income (loss) from Operations | | | | | | | | | |
Alton Belle Casino | | $ | 3,694 | | $ | 6,469 | | $ | 13,027 | | $ | 22,189 | |
Argosy Casino - Riverside | | 3,814 | | 5,168 | | 11,216 | | 16,075 | |
Argosy Casino - Baton Rouge (1) | | 1,226 | | 693 | | 4,215 | | 5,205 | |
Argosy Casino - Sioux City | | 1,748 | | 1,295 | | 5,338 | | 4,860 | |
Argosy Casino - Lawrenceburg | | 32,302 | | 32,222 | | 82,733 | | 85,077 | |
Empress Casino Joliet (2) | | 12,802 | | 13,829 | | 29,020 | | 42,398 | |
Corporate | | (5,733 | ) | (5,054 | ) | (17,452 | ) | (15,133 | ) |
Total | | $ | 49,853 | | $ | 54,622 | | $ | 128,097 | | $ | 160,671 | |
Depreciation and Amortization Expense | | | | | | | | | |
Alton Belle Casino | | $ | 1,598 | | $ | 1,644 | | $ | 5,009 | | $ | 4,891 | |
Argosy Casino - Riverside | | 1,479 | | 1,086 | | 4,297 | | 3,215 | |
Argosy Casino - Baton Rouge (1) | | 2,282 | | 2,059 | | 6,514 | | 6,006 | |
Argosy Casino - Sioux City | | 1,119 | | 1,092 | | 3,306 | | 2,657 | |
Argosy Casino - Lawrenceburg | | 3,216 | | 3,354 | | 9,710 | | 10,098 | |
Empress Casino Joliet | | 2,986 | | 2,441 | | 8,319 | | 7,263 | |
Corporate | | 555 | | 458 | | 1,602 | | 908 | |
Total | | $ | 13,235 | | $ | 12,134 | | $ | 38,757 | | $ | 35,038 | |
EBITDA(3) | | | | | | | | | |
Alton Belle Casino | | $ | 5,292 | | $ | 8,113 | | $ | 18,036 | | $ | 27,080 | |
Argosy Casino - Riverside | | 5,293 | | 6,254 | | 15,513 | | 19,290 | |
Argosy Casino - Baton Rouge (1) | | 3,508 | | 2,752 | | 10,729 | | 11,211 | |
Argosy Casino - Sioux City | | 2,867 | | 2,387 | | 8,644 | | 7,517 | |
Argosy Casino - Lawrenceburg | | 35,518 | | 35,576 | | 92,443 | | 95,175 | |
Empress Casino Joliet (2) | | 15,788 | | 16,270 | | 37,339 | | 49,661 | |
Corporate | | (5,178 | ) | (4,596 | ) | (15,850 | ) | (14,225 | ) |
Total | | $ | 63,088 | | $ | 66,756 | | $ | 166,854 | | $ | 195,709 | |
See accompanying notes to selected financial information
ARGOSY GAMING COMPANY
NOTES TO SELECTED FINANCIAL INFORMATION
(1) Baton Rouge includes our Centroplex Centre Hotel and Jazz Enterprises, Inc., a wholly owned subsidiary that owns and operates the Catfish Town real estate development adjacent to our Baton Rouge casino in addition to the casino operations.
(2) Joliet includes a $6.5 million write down of assets (recorded in the second quarter 2003) related to the original planned expansion.
(3) “EBITDA” is defined as 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, and 2) a principal basis for valuation of gaming companies. Management uses property-level EBITDA (EBITDA before corporate expense) as the primary measure of our properties’ performance, including the evaluation of operating personnel. EBITDA should not be construed as an alternative to operating income, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, as a measure of liquidity, or as any other measure determined in accordance with generally accepted accounting principles. 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.
ARGOSY GAMING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
| | Sept 30,
2003 | | December 31,
2002 | |
| | (unaudited) | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 56,401 | | $ | 59,720 | |
Accounts receivable, net | | 3,000 | | 3,833 | |
Income taxes receivable | | — | | 7,944 | |
Deferred income taxes | | 7,324 | | 7,324 | |
Other current assets | | 8,272 | | 5,433 | |
Total current assets | | 74,997 | | 84,254 | |
| | | | | |
Net property and equipment | | 525,460 | | 455,894 | |
Other assets: | | | | | |
Deferred finance costs, net | | 17,697 | | 20,143 | |
Goodwill, net | | 727,470 | | 727,470 | |
Intangible assets, net | | 26,681 | | 28,451 | |
Other, net | | 2,335 | | 2,353 | |
Total other assets | | 774,183 | | 778,417 | |
Total assets | | $ | 1,374,640 | | $ | 1,318,565 | |
| | | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 34,197 | | $ | 17,459 | |
Accrued payroll and related expenses | | 20,777 | | 24,279 | |
Accrued gaming and admission taxes | | 48,000 | | 36,996 | |
Income taxes payable | | 4,727 | | — | |
Other accrued liabilities | | 39,735 | | 32,299 | |
Accrued interest | | 14,166 | | 9,427 | |
Current maturities of long-term debt | | 4,602 | | 4,469 | |
Total current liabilities | | 166,204 | | 124,929 | |
| | | | | |
Long-term debt | | 845,712 | | 886,315 | |
Deferred income taxes | | 69,408 | | 55,073 | |
Other long-term obligations | | 4,922 | | 6,248 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock, $.01 par; 120,000,000 shares authorized; 29,283,896 and 28,946,229 shares issued and outstanding at September 30, 2003 and December 31, 2002, respectively | | 293 | | 289 | |
Capital in excess of par | | 92,094 | | 88,686 | |
Accumulated other comprehensive (loss) | | (2,700 | ) | (3,583 | ) |
Retained earnings | | 198,707 | | 160,608 | |
Total stockholders’ equity | | 288,394 | | 246,000 | |
Total liabilities and stockholders’ equity | | $ | 1,374,640 | | $ | 1,318,565 | |
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