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Argosy Gaming Company Reports Record Q1 Earnings

23 April 2002

ALTON, Illinois – (Press Release) -- Argosy Gaming Company (NYSE: AGY) today announced record first quarter operating results for the period ended March 31, 2002.

Record Earnings and Revenues

The Company reported first quarter 2002 earnings per diluted share of $0.84 on net income of $24.7 million, as compared to $0.50 per diluted share on net income of $14.6 million for the first quarter of 2001. The Company attributed the increase in earnings to the acquisition of the Empress Casino Joliet on July 31, 2001 and continued growth in markets where the Company operates. In addition, the adoption of the Financial Accounting Standards Board Statement No. 142 eliminated goodwill amortization and impacted first quarter comparisons as the Company had recorded goodwill amortization of $1.3 million, or $0.03 per diluted share, after tax, for the quarter ended March 31, 2001.

The Company reported a $70.3 million or 41% increase in casino revenues to $242.1 million for the first quarter 2002 from $171.8 million for the prior year. The increase in casino revenues is primarily related to the $62.2 million generated at the Empress Casino Joliet which the Company acquired on July 31, 2001. Casino revenues at Lawrenceburg increased 6% or $5.6 million to $93.0 million for the first quarter 2002 from $87.4 million the prior year. First quarter 2002 casino revenues at Alton, Baton Rouge, Riverside and Sioux City increased a combined 3% or $2.4 million to $86.8 million from $84.4 million for the first quarter 2001.


The Company reported EBITDA, (earnings before interest, taxes, depreciation and amortization) increased by $24.3 million to $74.6 million for the first quarter 2002, as compared to $50.3 million for the first quarter 2001. The increase is primarily related to the Empress Casino Joliet that reported $19.5 million in EBITDA for the first quarter 2002. EBITDA at Lawrenceburg, increased 9% or $3.0 million, to $36.2 million from $33.2 million, and the four other properties increased a combined 6% to $24.8 million from $23.5 million the prior year.

The Company said that as it has continued to focus on operational enhancements and cost controls, operating margins for the first quarter 2002 increased from 37% to 38% at Lawrenceburg. At the combined Alton, Baton Rouge, Riverside and Sioux City properties, margins remained level at 29%, and the Empress Casino Joliet reported 31% operating margins for the quarter.

James B. Perry, President and Chief Executive Officer, commenting on the first quarter results, said, ``First quarter operating results once again exceeded our expectations and previous guidance as we continued to benefit from the strong trends in the Midwestern gaming markets. Our results were achieved despite increased competitive pressure in the Chicago and Kansas City markets.''

Several of the Company's Alton, Riverside and Joliet competitors have either recently opened or will soon open newly constructed barge-based gaming facilities.

Mr. Perry further stated, ``The continued growth of gaming revenues in the Kansas City and Chicago markets underscores our belief that the previously announced expansion projects we plan for these markets will provide our shareholders with excellent growth potential.''

Argosy has received approval from the Missouri Gaming Commission for its barge-based expansion project in Riverside, Missouri. However, the Company is awaiting the conclusion of the Missouri legislative session on May 30, 2002 to determine what impact, if any, gaming legislation may have on the expected returns of its proposed project. Argosy said that it has placed an order for a barge for its Empress Casino Joliet property and plans to commence construction upon approval by the Illinois Gaming Board.

Legislative Update

The Company continues to closely monitor the potential risks and rewards associated with gaming related regulatory activity in its markets. In response to budget shortfalls, many state legislatures have begun to explore the possibility of generating new or additional gaming revenues. Indiana, Iowa, Kansas, Kentucky and Nebraska have already concluded their regularly scheduled legislative sessions without passing any significant gaming related initiatives. However, the Governor of Indiana announced he would call a special legislative session beginning May 14, 2002 to address the state's budget deficit.

In addition, the Governor of Kentucky has stated that he would call a special session because the Kentucky legislature did not complete the state's budget in their regular session. There is no indication whether or not gaming initiatives will be part of these sessions. The Illinois and Missouri legislative sessions are scheduled to end in the month of May. In Missouri, the Company continues to monitor separate House and Senate bills that propose to increase the state gaming taxes. The Company said that in Ohio, where the legislative session does not end until late June, no gaming related initiatives have been passed to date.


The Company said that it continues to believe that its markets will grow at a 3% to 5% overall growth rate this year and that EBITDA will grow consistent with the revenue growth. In view of this and the other factors mentioned above, the Company states that it is currently comfortable in estimating earnings on a diluted basis of $0.74 to $0.78 for the quarter ending June 30, 2002, up approximately 62% over $0.47 per diluted share reported for the second quarter 2001.

For fiscal year 2002, assuming no material changes in economic conditions, legislative changes, or other events not contemplated above, the Company remains comfortable in estimating earnings per diluted share of $3.10 to $3.25, representing growth of approximately 40% over 2001. If the Company achieves its estimated earnings per share growth in 2002, free cash flow before expansion project capital requirements would grow by approximately 31% to a range of $4.21 to $4.30 per diluted share.

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