July 27, 10:15 am Eastern Time
Company Press Release
SOURCE: Argosy Gaming Company
Argosy Gaming Company Reports Record Second Quarter Operating Results
-- Argosy posts record revenues and cash flows -- Argosy completes financial restructuring -- Argosy commences dockside operations in Alton
ALTON, Ill., July 27 /PRNewswire/ -- Argosy Gaming Company (NYSE: AGY - news) announced record results for its second quarter ended June 30, 1999, before giving effect to an extraordinary loss related to debt extinguished as part of the Company's recent refinancing.
Record revenues and cash flow
The Company reported net income attributable to common shareholders of $7.7 million or $0.27 per diluted share for the second quarter ended June 30, 1999, before giving effect to the extraordinary item, as compared to net income attributable to common shareholders of $0.2 million or $0.01 per diluted share for the second quarter ended June 30, 1998.
For the six months ended June 30, 1999, the Company reported net income attributable to common shareholders of $10.6 million or $0.38 per diluted share, before giving effect to the second quarter extraordinary item, as compared to a net loss of $2.3 million or $0.09 per diluted share for the first half of 1998. Net income for the six months ended June 30, 1999, also reflects a $0.06 per diluted share one-time charge that the Company incurred in the first quarter of this year.
After giving effect to the extraordinary item, the Company incurred a net loss attributable to common shareholders of $(27.1) million or $(0.94) per dilated share and $(24.2) million or $(0.84) per diluted share, respectively, for the second quarter and six months ended June 30, 1999.
Quarter Ended June 30th Six Months Ended June 30th
1999 1998 1999 1998
(unaudited) (unaudited) (unaudited) (unaudited)
Casino Revenues
Western Properties $58,985 $52,055 $115,034 $104,808
Lawrenceburg 76,935 64,495 150,014 120,065
Total $135,920 $116,550 $265,048 $224,873
Casino EBITDA
(Excluding corporate)
Western Properties $13,039 $8,623 $23,930 $15,425
Lawrenceburg 30,777 23,928 59,976 45,157
Total $43,816 $32,551 $83,906 $60,582
The Company reported record second quarter casino revenues of $135.9 million reflecting an increase of $19.4 million over the second quarter 1998. Casino revenues increased 13% from $52.1 million to $59.0 million at the western properties (Alton, Riverside, Baton Rouge and Sioux City) and 19% from $64.5 million to $76.9 million at Lawrenceburg over 1998 amounts.
For the six months ended June 30, 1999, Argosy reported record casino revenues of $265.0 million reflecting an increase of $40.2 million over the first six months of 1998. Casino revenues increased 10% from $104.8 million to $115.0 million at the western properties and 25% from $120.1 million to $150.0 million at Lawrenceburg for the six months ended June 30, 1999.
The Company reported record consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter 1999 of $38.3 million as compared to $27.7 million in 1998. EBITDA for the second quarter of 1999 increased 51% at the Western properties and 29% at Lawrenceburg.
Argosy reported record consolidated EBITDA for the first six months of 1999 of $71.4 million, as compared to $51.4 million in 1998. EBITDA for the six months ended 1999 increased 55% at the Western properties and 33% at Lawrenceburg.
Margins increased from 15.6% to 21.1% at the western properties and from 34.6% to 37.2% at Lawrenceburg for the second quarter 1999. For the first half 1999, margins at the western properties increased from 13.9% to 19.9% and from 35.1% to 37.2% at Lawrenceburg. Argosy attributes growth in EBITDA and margins to its new gaming product, disciplined data base marketing programs, and maintenance of its cost control measures, which were implemented as part of the Company's strategic plan.
James B. Perry, President and Chief Executive Officer, commenting on the results of the second quarter and six months ended June 30, 1999, said, ''The positive operating results we are achieving, while clearly demonstrating the effectiveness of our strategic plan, also reflect the results of many changes we implemented as the result of a customer focus survey we conducted last year. By updating our gaming product, focusing on customer service and better utilizing our data base, we were able to increase revenues and cash flows while maintaining the same number of employees on a year-over-year basis and maintaining steady marketing costs as a percentage of revenues.''
Financial restructuring completed
Argosy recently completed a financial restructuring when it issued $200 million of 10 3/4% Senior Subordinated Notes due 2009 and entered into a new five year $200 million senior secured revolving credit facility. In connection with the refinancing, the Company purchased or escrowed funds for all of its outstanding $235 million 13 1/4% First Mortgage Notes due 2004 and, on July 8, 1999, redeemed all of its outstanding $115 million 12% Convertible Subordinated Notes due 2001. The Company has drawn down $130 million from its credit facility in conjunction with its debt restructuring. Interest on borrowings under the credit facility is at a floating rate based upon certain financial ratios. Perry, commenting on the restructuring, said, ''Our recently completed financial restructuring has dramatically improved our capital structure and reduced our cost of capital while providing the flexibility to further deliver our Company and continue to enhance shareholder value. The second quarter results do not reflect the positive impact of this financial restructuring which we anticipate will produce interest savings at current borrowing levels of approximately $12 million annually.''
Alton commences dockside operations
Argosy also announced that recent amendments to Illinois Gaming Law provided for permanent dockside operations at its Alton casino effective June 26, 1999. Commenting on the Alton operations and other capital projects at the western properties, Perry stated, ''We are very encouraged by the initial results which we are seeing now that we are operating dockside in Alton, Illinois, and we are on target to open our newly renovated Alton facilities in the fourth quarter. Additionally, we are encouraged by the initial results in Baton Rouge where we recently completed a three-month long re-theming and renovation of the newly named Argosy Casino Baton Rouge. Our sales and marketing programs in Baton Rouge are now also focused on the video poker market since approximately $80.0 million of video poker competition was eliminated on July 1st.'' ''Finally,'' said Perry, ''we continue to aggressively pursue the planned Centroplex Centre Convention Hotel for our Baton Rouge property, and we are awaiting final Baton Rouge metropolitan council approval in order to commence construction in early August. The 300 room convention hotel will create further long term value for this site and, upon groundbreaking, will immediately increase cash flow by approximately $3 million through the elimination of a special head tax.'' The Company said that it has expended approximately $12 million on capital improvement and expansion projects so far this year, and it expects to spend approximately $22 million for the balance of the year which includes $11 million for the completion of the renovation of the Alton facility and $5 million related to the Baton Rouge hotel.
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. Actual results may differ materially from those projected as a result of any number of risks and uncertainties, including but not limited to, competitive and general economic conditions in the markets in which the Company operates, significant changes in interest rates, construction delays related to the Alton renovation project, final approval of the Baton Rouge metropolitan council related to the construction of the Baton Rouge hotel, and the effect of future legislation or regulatory changes on the Company's operation as well as other risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings.
Argosy is a leading multi-jurisdictional owner and operator of riverboat casinos and related entertainment and hotel facilities in the Midwestern and southern United States. Argosy, through its subsidiaries and joint ventures, owns and operates the Alton Belle Casino in Alton, Illinois, serving the St. Louis metropolitan market; the Argosy Casino in Riverside, Missouri, serving the greater Kansas City metropolitan market; and the Argosy Casino Baton Rouge in Baton Rouge, Louisiana. Argosy is also a majority partner and operator of the Belle of Sioux City in Sioux City, Iowa, and the Argosy Casino & Hotel in Lawrenceburg, Indiana, serving the Cincinnati and Dayton metropolitan markets.
ARGOSY GAMING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
(unaudited) (unaudited)(unaudited) (unaudited)
Revenues:
Casino $135,920 $116,550 $265,048 $224,873
Admissions 4,678 4,009 8,956 7,200
food, beverage and other 14,079 12,432 27,672 23,565
154,677 132,991 301,676 255,638
Less promotional allowances (10,076) (8,534) (19,684) (15,481)
Net revenues 144,601 124,457 281,992 240,157
Costs and expenses:
casino 60,984 54,749 120,434 107,372
Food, beverage and other 10,242 10,361 19,879 19,710
Other operating expenses 6,663 6,685 13,251 13,303
Selling, general and
administrative 28,400 24,969 55,252 48,360
Depreciation and
amortization 8,618 8,303 17,091 16,371
Settlement expenses -- -- 1,800 --
114,907 105,067 227,707 205,116
Income from operations 29,694 19,390 54,285 35,041
Other income (expense):
Interest income 796 832 1,703 1,642
Interest expense (13,652) (14,195) (27,786) (28,487)
(12,856) (13,363) (26,083) (26,845)
Income before minority interest,
income taxes and
extraordinary item 16,838 6,027 29,202 8,196
Minority interests (8,547) (5,618) (16,390) (10,224)
Income tax expense (600) (150) (1,200) (250)
Net income (loss) before
extraordinary item 7,691 259 10,612 (2,278)
Extraordinary loss on
extinguishment of debt (34,760) -- (34,760) --
Net (loss) income (27,069) 259 (24,148) (2,278)
Preferred Stock dividends
and accretion -- (15) (27) (15)
Net (loss) income attributable
to Common Shareholders ($27,069) $244 ($24,175) ($2,293)
Basic income (loss) per
share - prior to extraordinary
loss $0.27 $0.01 $0.38 $(0.09)
Basic low per share
- extraordinary loss $(1.24) -- (1.26) --
Basic (loss) income per share
- after extraordinary loss $(0.97) $0.01 $(0.88) $(0.09)
Diluted income (loss) per share
- prior to extraordinary loss $0.27 $0.01 $0.38 $(0.09)
Diluted loss per share
- extraordinary loss $(1.21) -- (1.22) --
Diluted (loss) income per share
- after extraordinary loss $(0.94) $0.01 $(0.84) $(0.09)
ARGOSY GAMING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(in Thousands)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
(unaudited) (unaudited) (unaudited) (unaudited)
Casino Revenues
Alton Belle Casino $19,910 $17,288 $38,019 $34,317
Argosy Casino
Riverside 20,797 16,996 39,995 35,355
Argosy Casino -
Baton Rouge 11,736 12,181 24,315 24,285
Belle of Sioux
City Casino 6,542 5,590 12,705 10,851
Argosy Casino &
Hotel in Lawrenceburg 76,935 64,495 150,014 120,065
Total $135,920 $116,550 $265,048 $224,873
Net Revenues
Alton Belle Casino $20,777 $18,390 $39,770 $36,448
Argosy Casino
Riverside 22,008 18,246 42,423 37,860
Argosy Casino -
Baton Rouge 12,174 12,839 25,200 25,543
Belle of Sioux
City Casino 6,761 5,829 13,130 11,306
Argosy Casino &
Hotel in Lawrenceburg 82,820 69,060 161,289 l28,811
Other 61 93 180 189
Total $144,601 $124,457 $281,992 $240,157
Income (loss) from
Operations(a)
Alton Belle Casino $5,304 $3,686 $9,286 $7,079
Argosy Casino
Riverside 3,221 761 5,256 1,375
Argosy Casino -
Baton Rouge (637) (458) (744) (1,915)
Belle of Sioux
City Casino 960 528 1,805 792
Argosy Casino &
Hotel in Lawrenceburg 25,818 19,775 50,242 37,062
Corporate(c) (3,326) (2,220) (8,352) (5,083)
Jazz (1,315) (2,312) (2,546) (3,533)
Other (331) (370) (662) (736)
Total $29,694 $19,390 $54,285 $35,041
EBITDA(a)(b)
Alton Belle Casino $6,325 $4,665 $11,333 9,022
Argosy Casino Riverside 4,666 2,315 8,160 4,406
Argosy Casino -
Baton Rouge 782 855 2,046 691
Belle of Sioux
City Casino 1,266 788 2,391 1,306
Argosy Casino &
Hotel in Lawrenceburg 30,777 23,928 59,976 45,157
Lawrenceburg financial
advisory fee (d) (1,539) (1,115) (2,999) (2,176)
Corporate(c) (3,334) (2,013) (8,353) (4,670)
Jazz (640) (1,698) (1,196) (2,267)
Other 9 (32) 18 (57)
Total $38,312 $27,693 $71,376 $51,412
ARGOSY GAMING COMPANY
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(continued)
(a) Income from operations and EBITDA are presented before
consideration of any management fee paid to the Company and in the
case of Sioux City and Lawrenceburg before the 30% and 42.5%
minority interests, respectively.
(b) "EBITDA" is defined as earnings before interest, taxes,
depreciation and amortization and is presented before any
management fees paid. EBITDA should not be construed as an
alternative to operating income, or net income (as determined in
accordance with generally accepted accounting principles) as an
indicator of the Company's operating performance, or as an
alternative to cash flows generated by operating, investing and
financing activities (as an indicator of cash flow or a measure of
liquidity). EBITDA is presented solely as a supplemental
disclosure because management believes that it is a widely used
measure of operating performance in the gaming industry and for
companies with a significant amount of depreciation and
amortization. EBITDA may not be comparable to similarly titled
measures reported by other companies. The Company has other
significant uses of cash flows, including capital expenditures,
which are not reflected in EBITDA.
(c) Includes expenses related to a severance package and a settlement
agreement of $1.8 million for the six months ended June 30,1999.
(d) The Lawrenceburg partnership pays a financial advisory fee equal
to 5.0% of its EBITDA to a minority partner.
SOURCE: Argosy Gaming Company
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