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Argosy Gaming Company Reports Q4 and Year End Earnings29 January 2001ALTON, Illinois --(Press Release) -- Jan. 29, 2001 -- Argosy Gaming Company (NYSE: AGY ) today announced its fourth quarter and year-end operating results for the period ended December 31, 2000. The Company reported net income attributable to common shareholders of $12.2 million or $0.42 per diluted share for the fourth quarter ended December 31, 2000, as compared to $9.4 million or $0.32 per diluted share for the fourth quarter ended December 31, 1999, before consideration of the utilization of net operating loss carryforwards, which had not previously been recognized, and after normalization of the income tax provision. After consideration of these items, earnings were $0.86 per diluted share for the fourth quarter of 1999. For the year ended December 31, 2000, the Company reported net income attributable to common shareholders of $50.6 million or $1.73 per diluted share, before giving effect to non-recurring and extraordinary items incurred in the second quarter 2000, as compared to $26.4 million or $0.91 per diluted share before giving effect to non-recurring and extraordinary items and before consideration of the utilization of net operating loss carryforwards in the prior year and after normalization of the income tax provision. After consideration of these items, earnings were $45.4 million or $1.56 per diluted share for the year ended December 31, 2000, as compared to $11.5 million or $0.40 per diluted share the prior year. Casino Revenues -- record fourth quarter and year-end Argosy reported fourth quarter casino revenues of $156.5 million, reflecting an increase of approximately $9.7 million over the fourth quarter of 1999. Casino revenues increased approximately 10% from $68.8 million to $75.5 million at the western properties (Alton, Riverside, Baton Rouge and Sioux City) and increased 4% from $78.0 million to $81.0 million at Lawrenceburg despite increased competition from a new casino that opened in late October 2000. For the year ended December 31, 2000, Argosy reported casino revenues of $658.9 million, reflecting an increase of $99.7 million over 1999. Casino revenues increased 26% from $250.8 million to $314.9 million at the western properties and 12% from $308.3 million to $344.0 million at Lawrenceburg for the year ended December 31, 2000. Argosy attributed its significant growth in casino revenues at the western properties in 2000 primarily to the opening of an expanded entertainment and landing facility in Alton, which included the addition of approximately 130 slot machines in December 1999, as well as the advent of dockside gaming in June 1999 and the advent of open boarding in Riverside in November 1999. In Baton Rouge, the Company introduced a new customer courtesy program in December of 1999 that continues to strengthen its position with customers in this market. This program, in conjunction with the elimination of video poker at non-casino locations throughout much of Baton Rouge in June 1999, has generated significant market share gains. James B. Perry, President and Chief Executive Officer, commenting on the fiscal year results, said, ``Our strong financial performance this year reflects the execution of our strategic plan and continuing focus on business fundamentals. Additionally, the full year impact of facility renovations and favorable regulatory changes in 1999 contributed to double-digit gains in casino revenues at all of our properties for fiscal year 2000.'' EBITDA - record fourth quarter and year-end Argosy reported consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) of $46.6 million for the fourth quarter 2000, as compared to $42.5 million for the fourth quarter ended 1999. EBITDA increased most significantly at the western properties from $17.2 million to $21.0 million, a 22% increase, and increased 2% from $30.7 million to $31.3 million at Lawrenceburg despite new competition in the Cincinnati marketplace. Argosy reported consolidated EBITDA of $194.5 million for the year ended December 31, 2000, as compared to $157.1 million in 1999, an increase of 24% before consideration of non-recurring items in either year. EBITDA increased 49% from $57.8 million to $86.0 million at the western properties and 8% from $123.1 million to $133.0 million at Lawrenceburg. Operating margins for the fourth quarter 2000 increased to 27% from 24% in 1999 at the western properties. For the year ended December 31, 2000, margins at the western properties increased to 26% from 22% in 1999. Lawrenceburg continued to post strong 36% margins for both the fourth quarter and year ended December 31, 2000. Perry commented, ``Our results this year reflect the continued solid performance of the Lawrenceburg property and the steadily improving contribution of the western properties -- each of which posted significant double-digit gains in EBITDA.'' The Company reported that its economic share of EBITDA (after deducting its partners' share in Lawrenceburg) was $35.0 million for the quarter ended December 31, 2000, an increase of 13%, as compared to $31.1 million for the fourth quarter of 1999. For the year ended December 31, 2000, the Company reported that its economic share of EBITDA increased 30% to $145.0 million from $111.3 million in 1999. EBITDA for the year ended December 31, 2000, is presented before giving effect to a non-cash pre-tax charge of $6.8 million related to the write-off of the former Alton landing facility incurred in the second quarter. Discussion and Analysis Tax impact on earnings In 2000, earnings are reported on a fully taxed basis as compared to 1999 when the Company benefited from the utilization of net operating loss carryforwards to offset the income tax effect on earnings. The fourth quarter of 1999 was particularly impacted as the Company recorded a $10.0 million or $0.34 per diluted share tax benefit related to the recognition of net operating loss carryforwards that had previously not been recorded. For these reasons, income tax expense increased to $8.6 million or $0.30 per diluted share for the quarter ended December 31, 2000, as compared to a tax benefit of $9.4 million during the fourth quarter of 1999. For the twelve months ended December 31, 2000, income tax expense increased to $31.2 million or $1.07 per diluted share, as compared to $5.9 million or $0.20 per diluted share for the twelve months ended December 31, 1999. Interest Expense The Company reported that it continues to utilize its free cash flow to delever its balance sheet. Net interest expense decreased $2.5 million to $7.1 million for the fourth quarter ended December 31, 2000, as compared to $9.6 million for the fourth quarter the prior year. For the twelve months ended December 31, 2000, net interest expense decreased $12.3 million to $33.4 million from $45.7 million in 1999. Lawrenceburg Update As previously reported, the Company anticipates acquiring both Conseco's 29% limited partnership interest and Centaur's 13.5% limited partnership interest in the Argosy Casino and Hotel in Lawrenceburg in the first quarter 2001. Upon completion of these transactions, the Company will own 100% of all five of its properties. Argosy said that it expects to host a conference call for all interested parties to discuss the details of this transaction including financing, interest rates and the treatment of goodwill when the final details become available to the Company. Perry, commenting on this opportunity, said, ``We are extremely pleased to be in a position to acquire complete ownership of our flagship property. This provides us the opportunity to further maximize value for our shareholders by increasing our free cash flow by approximately $0.50 per share annually.'' Outlook Competitive Factors in 2001 The Company said that it expects to continue its operating strategy of improving profitability at all of its properties in 2001; however, it anticipates stronger competitive pressures for the following reasons: Lawrenceburg -- The short operating history of the new competition in the Cincinnati market makes it premature to evaluate the impact on the market. Riverside -- Increased competition is expected in the second half of 2001 when two competitors complete significant property renovations. Alton, Sioux City and Baton Rouge -- The competitive landscape is expected to remain stable at these three properties. Comparables Recent dramatic operating improvements will be more difficult to achieve as many of the benefits derived from renovations of properties and regulatory changes in 1999 have already been realized. First quarter operating improvements could be particularly difficult to achieve because 1999 benefited from an unusually mild winter. The first quarter of 2001 will have one less business day than last year, which was a leap year. Other Events: The opening of the new 300-room convention hotel in Baton Rouge is scheduled for February 5, 2001, and approximately $1 million of pre-opening expenses will be incurred in the first quarter. The installation of approximately 100 additional slot machines at the Alton property was completed in mid-January 2001. First quarter results will be impacted by the closing date of the Lawrenceburg acquisitions. Argosy reported that in view of the above factors, it is currently comfortable in estimating operating earnings on a diluted basis of $0.36 to $0.39 for the quarter ended March 31, 2001. For the fiscal year 2001, the Company said that it would provide further guidance upon the closing of the Lawrenceburg acquisitions when further information is available. ``Finally,'' said Perry, ``Our progress, both operational and financial, stands out dramatically against the backdrop of performance benchmarks we established three years ago to assess our accomplishments and to measure our progress year to year. We are a different Company today, and our differences are appreciated by customers, valued by employees and recognized by investors. "This difference translates into great entertainment venues, a great place to work and a corporate culture focused on continued operational and financial achievement. We are now prepared and positioned, operationally and financially, to rise to the next level by taking advantage of growth opportunities at existing properties, as well as other potential locations.'' |