CasinoCityTimes.com

Gurus
News
Newsletter
Search News Subscribe
Stay informed with the
NEW Casino City Times newsletter!
Newsletter Signup
Stay informed with the
NEW Casino City Times newsletter!

Gaming News

 

Argosy Gaming Reports Results Up for Q3

22 October 2002

ALTON, Illinois – (Press Release) --- Argosy Gaming Company (NYSE: AGY) today announced third quarter and nine months operating results.

Third Quarter Results

The Company reported net income of $19.1 million, or $0.65 per diluted share, for the third quarter ended September 30, 2002, as compared to $17.2 million, or $0.58 per diluted share, for the third quarter 2001, after giving effect in the prior year to a $1.9 million pre-tax charge related to an abandoned joint venture project in Kenosha, Wisconsin. Before consideration of the charge, the Company's third quarter 2001 net income would have been $18.3 million, or $0.62 per diluted share. Argosy recently provided earnings guidance of $0.63 to $0.65 per diluted share for the third quarter ended September 30, 2002.

The Company's reported third quarter results reflect the acquisition of the Empress Casino Joliet on July 31, 2001 and reflect three months of ownership in 2002, as compared to two months in the third quarter ended 2001. In addition, the adoption of the Financial Accounting Standards Board Statement No. 142 on January 1, 2002 eliminated goodwill amortization and impacted third quarter comparisons as the Company had recorded goodwill amortization of $1.3 million, or $0.04 per diluted share, after tax, for the quarter ended September 30, 2001.

James B. Perry, Chief Executive Officer, commenting on the third quarter results, said, "During the quarter, we absorbed the impact of increased gaming taxes and significant capital investments by competitors in our markets. Coming out of the quarter, we remain confident that our sound operating disciplines and strong balance sheet will position the Company for future growth. The overwhelming customer response to the new casino barges in the St. Louis and Chicagoland markets has convinced us that our two major projects under development in Joliet and Kansas City will deliver meaningful shareholder value." Perry further stated, "Given the current economic environment, we believe that the potential for expanded gaming opportunities exists in many states. Our proven operating strategies and financial disciplines, combined with our strong balance sheet, will position us to take advantage of these opportunities."

Record third quarter 2002 casino revenues of $239.1 million reflect an increase of $23.0 million over the third quarter 2001. The increase in casino revenues is primarily related to the full quarter casino revenues of $57.9 million generated at the Empress Casino Joliet, as compared to the two month casino revenues of $43.6 million in the third quarter 2001. Casino revenues decreased a combined 3% from $84.9 million to $82.3 million at Alton, Baton Rouge, Riverside and Sioux City primarily due to increased competitive pressures in Alton from an expanded facility opened by a competitor in August and due to construction disruption resulting from a recently completed three- month refurbishment of its Baton Rouge casino. Casino revenues increased 13%, from $87.6 million to $98.9 million at Lawrenceburg, primarily due to dockside gaming that commenced on August 1, 2002.

EBITDA (earnings before interest, taxes, depreciation, and amortization) increased by $4.5 million to $66.8 million, from $62.3 million for the third quarter of 2001, after giving effect to the $1.9 million charge, despite significant increased gaming tax rates in Illinois and Indiana that became effective July 1, 2002. The increase in EBITDA is primarily related to the $16.3 million in EBITDA reported by the Empress Casino Joliet for the third quarter 2002, as compared to $12.7 million for its two months of operations under Argosy ownership in the prior year. EBITDA decreased a combined 14% from $23.2 million to $19.9 million at Alton, Baton Rouge, Riverside and Sioux City due to the significant gaming tax increase recently imposed in Illinois, the competitive effect of a substantial capital investment by a competitor in the St. Louis market and construction disruption at the Company's Baton Rouge casino.

In Lawrenceburg, EBITDA increased $3.0 million, or 9%, from $32.6 million to $35.6 million, primarily due to dockside gaming, tempered by increased gaming taxes in Indiana.

The Company said that operating margins were 27.8%, as compared to 29.6% the prior year, after taking into consideration the impact of the increased gaming taxes and the benefit of dockside gaming in Indiana. The Company said that its effective gaming tax rate will increase by an additional 2 to 3 percentage points in 2003 as it absorbs the new gaming tax rates for the full year. However, Argosy reiterated its goal is to minimize the impact of the gaming taxes on its margins by implementing various cost savings measures, as well as through improved profitability from its expansion projects.

Nine Months Results

The Company reported net income of $55.1 million, or $1.87 per diluted share for the nine months ended September 30, 2002, as compared to $45.4 million, or $1.55 per diluted share in 2001, after giving effect to the $1.9 million charge in the third quarter 2001. Before giving effect to the charge, the Company's net income for the nine months ended September 30, 2001, was $46.5 million, or $1.59 per diluted share. The adoption of SFAS 142 impacted the first nine months comparisons as the Company had recorded goodwill amortization of $3.3 million, or $0.11 per diluted share, after tax, for the nine months ended September 30, 2001.

For the nine months ended September 30, 2002, Argosy reported record casino revenue of $716.4 million, reflecting an increase of $162.0 over the first nine months of 2001. The Empress Casino Joliet reported $182.4 million in casino revenues for the nine months ended September 30, 2002, as compared to $43.6 million for its two months of operations under Argosy ownership in 2001. Casino revenues at Alton, Baton Rouge, Riverside and Sioux City combined, increased modestly from $252.3 million to $253.2 million. Casino revenues at Lawrenceburg increased 9%, from $258.5 million to $280.9 million for the nine months ended September 30, 2002.

For the nine months ended September 30, 2002, EBITDA was $195.7 million, as compared to $160.7 million, after giving effect to the $1.9 million charge the prior year. EBITDA decreased from $69.2 million to $66.2 million combined at Alton, Baton Rouge, Riverside and Sioux City, primarily due to the items discussed above. The Empress Casino Joliet reported EBITDA of $49.7 million for the nine months ended September 30, 2002, as compared to $12.7 million for its two months under Argosy ownership the prior year. In Lawrenceburg, EBITDA decreased $1.3 million to $95.2 million, primarily due to the increased gaming taxes, tempered by dockside gaming.

Argosy reported that debt at the end of the third quarter was $899.4 million, as compared to almost $1.0 billion at the end of December 31, 2001. The Company said that it would utilize its free cash flow primarily for capital expenditures over the next twelve months as it moves forward with the completion of its renovation and expansion projects in Sioux City, Joliet and Riverside. As a result, the Company anticipates that debt levels will remain relatively constant throughout the next year. Argosy stated that depreciation and amortization expenses will increase by approximately $7.0 million in 2003 as it has targeted the Sioux City and Joliet projects to be completed at the end of the first quarter 2003, and its Riverside expansion near the end of 2003.

< Gaming News