Exhibit 99.1
PRESS RELEASE
For Immediate Release
Contact: Jim Wise (618) 474-7476
Erin Williams (618) 474-7465
ARGOSY GAMING COMPANY
REPORTS SECOND QUARTER 2005 EARNINGS
Alton, IL August 2, 2005 — Argosy Gaming Company (NYSE:AGY) today announced results for the three months ended June 30, 2005. Diluted earnings per share (“EPS”) were $0.73 on net income of $21.7 million, as compared to EPS of $0.63 on net income of $18.6 million for the second quarter of 2004. In the second quarter of 2004, Argosy and the City of Lawrenceburg entered into an agreement whereby by making a substantial capital investment at its Lawrenceburg property, Argosy would receive a reduction in its payments to the city by five million dollars annually for ten years. In addition to reflecting the impact of this credit for the relevant quarter, the second quarter of 2004 also includes a $1.25 million credit, or $0.02 per share, for the first quarter of 2004. The results of the second quarter of 2004 also include expenses of approximately $0.02 per share associated with the refinancing of the Company’s 10 ¾% notes due 2009. On November 3, 2004, Argosy entered into a definitive merger agreement with Penn National Gaming, Inc. under which all outstanding shares of Argosy are to be acquired for $47 per share. Included in the results of the second quarter of 2005 are $0.02 per share of expenses associated with the proposed merger.
Net revenues for the second quarter of 2005 were $270.9 million, up 6.4% from second quarter 2004 net revenues of $254.6 million. EBITDA (earnings before interest, taxes, depreciation and amortization) increased to $68.7 million for the second quarter 2005, as compared to $66.2 million for the second quarter 2004. At Argosy Casino Baton Rouge, net revenues increased 21%, from $21.5 million to $26.1 million, and EBITDA increased 35%, from $5.0 million to $6.8 million, in the second quarters of 2004 and 2005 respectively, in part due to visitors to the city for a bowling conference that concluded July 4. In Sioux City, net revenues improved 24% and EBITDA increased 27% from the second quarter of 2004 to the same period of 2005 due to the addition of the renovated boat formally used at the Company’s Riverside property. Net revenues for the property were $13.7 million and EBITDA was $4.3 million in the second quarter of 2005, up from net revenues of $11.0 million and
EBITDA of $3.4 million in the second quarter of 2004. The Company’s EBITDA margin (EBITDA as a percent of net revenues) was 25.4% for the second quarter of 2005, as compared to 26.0% for the same quarter in 2004.
Interest expense for the second quarter of 2005 was $14.3 million as compared to $16.6 million for the second quarter of 2004. The reduction in interest expense was predominantly the result of a lower effective interest rate for the Company following a refinancing of the Company’s $675 million Revolving Credit Facility and Term Loan B in September of 2004 and a lower outstanding balance on the Term Loan B.
For the six months ended June 30, 2005, net income was $43.0 million ($1.44 EPS) on net revenues of $541.9 million, compared to net income of $22.5 million ($0.76 EPS) on net revenues of $518.7 million for the same period in 2004. For the six-month period ended June 30, 2004, results were negatively impacted by $0.52 per share in expenses related to the refinancing of the Company’s 10 ¾% notes. Included in the six-month period ended June 30, 2005 were expenses related to the merger with Penn that negatively impacted results for the six months by $0.07.
Argosy reported that debt decreased from $803.2 million as of March 31, 2005 to $764.6 million as of June 30, 2005. The Company spent $9.4 million in maintenance capital in the second quarter of 2005, for a total of $17.7 million for the first six months of the year. Project capital for the second quarter of 2005 was $13.5 million, predominantly for the work on the replacement garage and new hotel at the Company’s Riverside property.
Pursuant to the merger agreement between Argosy and Penn, Argosy has agreed not to provide any guidance concerning its expected earnings or other performance. The transaction is still subject to certain regulatory approvals, and is expected to close in the third quarter of 2005.
Argosy Gaming Company is a leading owner and operator of casinos and related entertainment and hotel facilities in the mid-western 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 Chicago-land 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 |
| Six Months Ended |
| ||||||||
|
| June 30, |
| June 30, |
| June 30, |
| June 30, |
| ||||
|
| 2005 |
| 2004 |
| 2005 |
| 2004 |
| ||||
|
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
| ||||
Casino |
| $ | 274,192 |
| $ | 258,213 |
| $ | 549,175 |
| $ | 524,220 |
|
Admissions |
| 5,113 |
| 5,351 |
| 10,642 |
| 10,711 |
| ||||
Food, beverage and other |
| 28,590 |
| 25,958 |
| 56,888 |
| 52,418 |
| ||||
|
| 307,895 |
| 289,522 |
| 616,705 |
| 587,349 |
| ||||
Less promotional allowances |
| (37,002 | ) | (34,958 | ) | (74,795 | ) | (68,696 | ) | ||||
Net revenues |
| 270,893 |
| 254,564 |
| 541,910 |
| 518,653 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Costs and expenses: |
|
|
|
|
|
|
|
|
| ||||
Gaming and admission taxes |
| 96,007 |
| 90,013 |
| 191,833 |
| 181,591 |
| ||||
Casino |
| 30,875 |
| 31,179 |
| 62,406 |
| 63,753 |
| ||||
Selling, general and administrative |
| 44,438 |
| 37,925 |
| 88,604 |
| 82,101 |
| ||||
Food, beverage and other |
| 20,528 |
| 18,721 |
| 40,661 |
| 37,322 |
| ||||
Other operating expenses |
| 10,317 |
| 9,735 |
| 21,055 |
| 19,598 |
| ||||
Depreciation and amortization |
| 14,783 |
| 14,848 |
| 30,409 |
| 29,073 |
| ||||
|
| 216,948 |
| 202,421 |
| 434,968 |
| 413,438 |
| ||||
Income from operations |
| 53,945 |
| 52,143 |
| 106,942 |
| 105,215 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Interest income |
| 99 |
| 18 |
| 177 |
| 39 |
| ||||
Interest expense |
| (14,298 | ) | (16,594 | ) | (28,951 | ) | (34,645 | ) | ||||
Expense on early retirement of debt |
| — |
| (763 | ) | — |
| (26,040 | ) | ||||
|
| (14,199 | ) | (17,339 | ) | (28,774 | ) | (60,646 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income taxes |
| 39,746 |
| 34,804 |
| 78,168 |
| 44,569 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income tax expense |
| (18,087 | ) | (16,221 | ) | (35,185 | ) | (22,026 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 21,659 |
| $ | 18,583 |
| $ | 42,983 |
| $ | 22,543 |
|
|
|
|
|
|
|
|
|
|
| ||||
Basic income per share |
| $ | 0.73 |
| $ | 0.63 |
| $ | 1.45 |
| $ | 0.77 |
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted income per share |
| $ | 0.73 |
| $ | 0.63 |
| $ | 1.44 |
| $ | 0.76 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Basic |
| 29,582,119 |
| 29,442,736 |
| 29,569,146 |
| 29,394,255 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Diluted |
| 29,873,947 |
| 29,666,772 |
| 29,865,111 |
| 29,629,305 |
| ||||
- more tables -
ARGOSY GAMING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
SUMMARY OPERATING DATA
(In Thousands)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| June 30, |
| June 30, |
| June 30, |
| June 30, |
| ||||
|
| 2005 |
| 2004 |
| 2005 |
| 2004 |
| ||||
|
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| ||||
Casino Revenues |
|
|
|
|
|
|
|
|
| ||||
Argosy Casino - Alton |
| $ | 28,022 |
| $ | 25,901 |
| $ | 56,328 |
| $ | 53,087 |
|
Argosy Casino - Riverside |
| 38,229 |
| 36,963 |
| 78,016 |
| 75,201 |
| ||||
Argosy Casino - Baton Rouge |
| 23,506 |
| 20,939 |
| 48,027 |
| 42,634 |
| ||||
Argosy Casino - Sioux City |
| 14,241 |
| 11,397 |
| 27,987 |
| 23,083 |
| ||||
Argosy Casino - Lawrenceburg |
| 112,000 |
| 107,671 |
| 224,371 |
| 219,673 |
| ||||
Empress Casino Joliet |
| 58,194 |
| 55,342 |
| 114,446 |
| 110,542 |
| ||||
Total |
| $ | 274,192 |
| $ | 258,213 |
| $ | 549,175 |
| $ | 524,220 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net Revenues |
|
|
|
|
|
|
|
|
| ||||
Argosy Casino - Alton |
| $ | 26,621 |
| $ | 24,590 |
| $ | 53,830 |
| $ | 50,634 |
|
Argosy Casino - Riverside |
| 35,661 |
| 35,826 |
| 72,752 |
| 73,756 |
| ||||
Argosy Casino - Baton Rouge |
| 26,071 |
| 21,505 |
| 52,435 |
| 43,856 |
| ||||
Argosy Casino - Sioux City |
| 13,700 |
| 11,035 |
| 26,938 |
| 22,381 |
| ||||
Argosy Casino - Lawrenceburg |
| 111,932 |
| 108,049 |
| 224,627 |
| 220,982 |
| ||||
Empress Casino Joliet |
| 56,908 |
| 53,559 |
| 111,328 |
| 107,044 |
| ||||
Total |
| $ | 270,893 |
| $ | 254,564 |
| $ | 541,910 |
| $ | 518,653 |
|
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) from operations |
|
|
|
|
|
|
|
|
| ||||
Argosy Casino - Alton |
| $ | 3,469 |
| $ | 2,426 |
| $ | 8,043 |
| $ | 5,584 |
|
Argosy Casino - Riverside |
| 7,099 |
| 8,121 |
| 15,024 |
| 17,505 |
| ||||
Argosy Casino - Baton Rouge |
| 4,266 |
| 2,805 |
| 8,869 |
| 5,430 |
| ||||
Argosy Casino - Sioux City |
| 3,323 |
| 2,793 |
| 6,587 |
| 5,212 |
| ||||
Argosy Casino - Lawrenceburg |
| 33,182 |
| 33,722 |
| 66,394 |
| 66,838 |
| ||||
Empress Casino Joliet |
| 11,823 |
| 9,058 |
| 22,360 |
| 19,413 |
| ||||
Corporate |
| (9,217 | ) | (6,782 | ) | (20,335 | ) | (14,767 | ) | ||||
Total |
| $ | 53,945 |
| $ | 52,143 |
| $ | 106,942 |
| $ | 105,215 |
|
- more -
ARGOSY GAMING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
RECONCILIATION OF NET INCOME TO EBITDA (1)
(In Thousands, unaudited)
|
| Three months ended |
| Three months ended |
| ||||||||
|
| June 30, 2005 |
| June 30, 2004 |
| ||||||||
Net income (2) |
|
|
| $ | 21,659 |
|
|
| $ | 18,583 |
| ||
Income tax expense |
|
|
| 18,087 |
|
|
| 16,221 |
| ||||
Interest expense, net |
|
|
| 14,199 |
|
|
| 16,576 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization expense: |
|
|
|
|
|
|
|
|
| ||||
Argosy Casino - Alton |
| $ | 1,661 |
|
|
| $ | 1,608 |
|
|
| ||
Argosy Casino - Riverside |
| 2,888 |
|
|
| 2,588 |
|
|
| ||||
Argosy Casino - Baton Rouge |
| 2,516 |
|
|
| 2,239 |
|
|
| ||||
Argosy Casino - Sioux City |
| 974 |
|
|
| 597 |
|
|
| ||||
Argosy Casino - Lawrenceburg |
| 3,680 |
|
|
| 3,583 |
|
|
| ||||
Empress Casino Joliet |
| 2,403 |
|
|
| 3,587 |
|
|
| ||||
Corporate (3) |
| 661 |
|
|
| 646 |
|
|
| ||||
Total |
| 14,783 |
| 14,783 |
| 14,848 |
| 14,848 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
EBITDA (1): |
|
|
|
|
|
|
|
|
| ||||
Argosy Casino - Alton |
| 5,130 |
|
|
| 4,034 |
|
|
| ||||
Argosy Casino - Riverside |
| 9,987 |
|
|
| 10,709 |
|
|
| ||||
Argosy Casino - Baton Rouge |
| 6,782 |
|
|
| 5,044 |
|
|
| ||||
Argosy Casino - Sioux City |
| 4,297 |
|
|
| 3,390 |
|
|
| ||||
Argosy Casino - Lawrenceburg |
| 36,862 |
|
|
| 37,305 |
|
|
| ||||
Empress Casino Joliet |
| 14,226 |
|
|
| 12,645 |
|
|
| ||||
Corporate (2) (3) |
| (8,556 | ) |
|
| (6,899 | ) |
|
| ||||
Total |
| $ | 68,728 |
| $ | 68,728 |
| $ | 66,228 |
| $ | 66,228 |
|
- more -
ARGOSY GAMING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
RECONCILIATION OF NET INCOME TO EBITDA (1)
(In Thousands)
|
| Six months ended |
| Six months ended |
| ||||||||
|
| June 30, 2005 |
| June 30, 2004 |
| ||||||||
Net income (2) |
|
|
| $ | 42,983 |
|
|
| $ | 22,543 |
| ||
Income tax expense |
|
|
| 35,185 |
|
|
| 22,026 |
| ||||
Interest expense, net |
|
|
| 28,774 |
|
|
| 34,606 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization expense: |
|
|
|
|
|
|
|
|
| ||||
Argosy Casino - Alton |
| $ | 3,295 |
|
|
| $ | 3,160 |
|
|
| ||
Argosy Casino - Riverside |
| 6,803 |
|
|
| 5,049 |
|
|
| ||||
Argosy Casino - Baton Rouge |
| 4,922 |
|
|
| 4,505 |
|
|
| ||||
Argosy Casino - Sioux City |
| 1,946 |
|
|
| 1,720 |
|
|
| ||||
Argosy Casino - Lawrenceburg |
| 7,381 |
|
|
| 6,995 |
|
|
| ||||
Empress Casino Joliet |
| 4,749 |
|
|
| 6,387 |
|
|
| ||||
Corporate (3) |
| 1,313 |
|
|
| 1,257 |
|
|
| ||||
Total |
| 30,409 |
| 30,409 |
| 29,073 |
| 29,073 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
EBITDA (1): |
|
|
|
|
|
|
|
|
| ||||
Argosy Casino - Alton |
| 11,338 |
|
|
| 8,744 |
|
|
| ||||
Argosy Casino - Riverside |
| 21,827 |
|
|
| 22,554 |
|
|
| ||||
Argosy Casino - Baton Rouge |
| 13,791 |
|
|
| 9,935 |
|
|
| ||||
Argosy Casino - Sioux City |
| 8,533 |
|
|
| 6,932 |
|
|
| ||||
Argosy Casino - Lawrenceburg |
| 73,775 |
|
|
| 73,833 |
|
|
| ||||
Empress Casino Joliet |
| 27,109 |
|
|
| 25,800 |
|
|
| ||||
Corporate (2) (3) |
| (19,022 | ) |
|
| (39,550 | ) |
|
| ||||
Total |
| $ | 137,351 |
| $ | 137,351 |
| $ | 108,248 |
| $ | 108,248 |
|
- 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 $763 and $26,040 of pre-tax expense on early retirement of debt for the three and six months ended June 30, 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)
|
| June 30, |
| December 31, |
| ||
|
| 2005 |
| 2004 |
| ||
|
| (unaudited) |
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 74,751 |
| $ | 80,069 |
|
Accounts receivable, net |
| 3,733 |
| 3,534 |
| ||
Income taxes receivable |
| 1,029 |
| 8,705 |
| ||
Deferred income taxes |
| 14,560 |
| 14,224 |
| ||
Other current assets |
| 9,717 |
| 10,064 |
| ||
Total current assets |
| 103,790 |
| 116,596 |
| ||
|
|
|
|
|
| ||
Net property and equipment |
| 556,123 |
| 544,929 |
| ||
Other assets: |
|
|
|
|
| ||
Deferred finance costs, net |
| 18,010 |
| 19,576 |
| ||
Goodwill, net |
| 727,470 |
| 727,470 |
| ||
Intangible assets, net |
| 23,134 |
| 24,263 |
| ||
Other |
| 9,066 |
| 5,622 |
| ||
Total other assets |
| 777,680 |
| 776,931 |
| ||
Total assets |
| $ | 1,437,593 |
| $ | 1,438,456 |
|
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 12,437 |
| $ | 10,032 |
|
Accrued payroll and related expenses |
| 26,734 |
| 25,447 |
| ||
Accrued gaming and admission taxes |
| 17,324 |
| 12,424 |
| ||
Other accrued liabilities |
| 58,800 |
| 76,317 |
| ||
Accrued interest |
| 17,458 |
| 17,627 |
| ||
Current maturities of long-term debt |
| 2,607 |
| 2,512 |
| ||
Total current liabilities |
| 135,360 |
| 144,359 |
| ||
|
|
|
|
|
| ||
Long-term debt |
| 762,034 |
| 811,615 |
| ||
Deferred income taxes |
| 120,015 |
| 107,794 |
| ||
Other long-term obligations |
| 3,056 |
| 1,926 |
| ||
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
| ||
Common stock, $.01 par; 120,000,000 shares authorized; 29,590,702 and 29,553,772 shares issued and outstanding at June 30, 2005 and December 31, 2004, respectively |
| 296 |
| 296 |
| ||
Capital in excess of par |
| 99,963 |
| 98,580 |
| ||
Retained earnings |
| 316,869 |
| 273,886 |
| ||
Total stockholders’ equity |
| 417,128 |
| 372,762 |
| ||
Total liabilities and stockholders’ equity |
| $ | 1,437,593 |
| $ | 1,438,456 |
|