Argosy Gaming Company Reports Higher Second Quarter 2004 Earnings

Argosy Gaming Company Reports Higher Second Quarter 2004 Earnings



Alton, Ill., July 29  /PRNewswire-FirstCall/ -- Argosy Gaming Company
(NYSE:AGY) today announced results for the three months ended June 30, 2004.
Diluted earnings per share ("EPS") were $0.63 on net income of $18.6 million,
as compared to EPS of $0.24 on net income of $6.9 million for the second
quarter of 2003.  Improved performance at the Company's Lawrenceburg and
Riverside properties contributed to the year-over-year increase in earnings.
Earnings in the second quarter of 2003 were impacted by a $5.9 million charge
due to new legislation regarding the calculation of the 2002 increase in
Indiana gaming tax rates and a $6.5 million write-down of barge platforms
originally intended for use at the Company's Joliet property.  The combination
of these two items reduced second quarter 2003 EPS by $0.26 per share. Included
in the results of the second quarter of 2004 are after-tax expenses of
approximately $0.02 per share, associated with the refinancing of the Company's
10 3/4% notes due 2009.  Results for the second quarter of 2004 were also
positively impacted by approximately $0.05 per share by the recent agreement
reached with the City of Lawrenceburg, Indiana to reduce the annual payments to
the city in return for additional capital investment at the Company's
Lawrenceburg property.

Net revenues for the second quarter of 2004 were $254.6 million, up 2.5% from
second quarter 2003 net revenues of $248.3 million.  Net revenues at the
Company's Riverside property continue to benefit from the opening of the new
casino, and were 58.2% higher in the quarter than in the second quarter of
2003.  In Illinois, operational actions taken to mitigate the impact of
increased gaming and admission taxes caused year-over-year revenues to fall.
Net revenues at the Company's Alton property and Joliet property were down
11.9% and 14.0%, respectively in the second quarter of 2004.

The Company reported EBITDA (earnings before interest, taxes, depreciation and
amortization) of $66.2 million for the second quarter 2004, as compared to
$45.5 million for the second quarter 2003.  At Argosy Casino Riverside, EBITDA
increased from $4.8 million in the second quarter of 2003 to $10.7 million in
the second quarter of 2004, or 124%.  The EBITDA margin (EBITDA as a percent of
Net Revenues) for the Company in the second quarter of 2003 was 18.3%, but was
negatively impacted by approximately 5 percentage points due to the Indiana tax
charge and write down in Joliet mentioned earlier. Even after giving effect to
these items, the EBITDA margin for the second quarter of 2004 improved by
approximately 3 percentage points, at 26.0%.  The EBITDA margin at every one of
the Company's properties was higher in the second quarter of 2004 than in the
same quarter of 2003.

Net income for the six months ended June 30, 2004, was $22.5 million ($0.76
EPS) on net revenues of $518.7 million, compared to net income of $21.6 million
($0.74 EPS) on net revenues of $484.7 million for the same period in 2003.  For
the six-month period ended June 30, 2003, the Indiana tax rate increase and the
asset write-down reduced the EPS by $0.26 per share. For the six-month period
ended June 30, 2004, results were positively impacted by the Lawrenceburg
agreement by $0.05 per share, but were negatively impacted by $0.52 per share
in expenses related to the refinancing of the Company's 10 3/4% notes.

"The year started out with exceptional results.  The second quarter results
were on track with our expectations of improved year-over-year results," said
Richard J. Glasier, President and Chief Executive Officer. "Operationally,
Argosy is well situated to grow from a strong base.  We're particularly pleased
to see the strong return on investment on our project in Riverside, which gives
us additional confidence in our announced expansion projects."

Capital spending during the quarter ending June 30, 2004, was approximately
$15.2 million, and was primarily maintenance capital, including conversion of
the Company's slot machines to Ticket-in, Ticket-out ("TITO") technology.  As
of the end of the quarter, approximately 90% of the Company's slot machines
were TITO-operational.  The Company continues to expect to be essentially 100%
TITO-operational by the end of the year.

The Company is spending approximately $8 million in project capital to renovate
and move the boat formerly used at its Riverside property to Sioux City.  The
boat is expected to arrive in Sioux City this week, and should be operational
at its new location by the end of August.  The project includes an increase in
the number of slot machines from 482 to 625 and an increase in the number of
gaming tables from 14 to 18.  The boat will also enhance customer comfort by
increasing the square footage of the property's gaming space by approximately
60%.

Construction at the Company's Riverside expansion project, which includes
construction of a new state-of-the-art parking garage and the addition of a
premier hotel, is expected to commence in early August.  When completed, the
$75 million project will provide for over a 20% increase in the number of guest
parking spaces, with enclosed parking for 1,400, and 250 rooms at a property
that currently does not have a hotel.

Argosy is in the process of evaluating several different options for expansion
at its Lawrenceburg property, and expects to finalize details on a project
during the third quarter.  The expansion is expected to include a combination
of increased gaming positions, incremental parking and additional hotel rooms. 
The Company is preliminarily estimating a project cost in the area of $150
million.  Argosy expects to recover approximately $50 million of the project
cost through credits against future annual development fee payments to the City
of Lawrenceburg.

Based on these projects and anticipated maintenance capital expenditures,
Argosy believes it will spend approximately $50 million to $60 million on
capital in the second half of the year, for a full year total of $95 million to
$100 million.

Due to the cash flow from its properties' operating performance, the Company
reported that debt was down from $894.6 million as of March 31, 2004, to $847.1
million as of June 30, 2004.  Of that amount,  $27.6 million was outstanding
under the revolving portion of its senior secured credit facility, as compared
to $53.1 million at March 31, 2004.  The Company recently initiated
negotiations to refinance its existing senior secured credit facility, and
anticipates closing the transaction before the end of the third quarter.  From
the initial terms and conditions discussed, Argosy expects to be able to reduce
its interest expense on the outstanding balances of the existing facility.  In
conjunction with the refinancing, the Company expects to write off deferred
financing costs associated with the existing facility of approximately $5.4
million, reducing third quarter 2004 EPS by $0.11.

"The strength of the bond and commercial bank markets has given us the chance
to both lower our interest costs and gain flexibility for our development
plans," said Glasier.  "We think there may be some attractive new investment
opportunities in the market in the coming quarters, and we look forward to
using our strong balance sheet to take advantage of them."

Based on the year-to-date performance and the Company's forecast for the rest
of the year, Argosy expects reported full-year 2004 EPS to be in the range of
$1.73 - $1.83.  Included in this estimate is a $0.09 impact to EPS from the $5
million credit from the City of Lawrenceburg for full-year 2004 and $0.63 in
costs associated with refinancing the Company's senior subordinated notes in
February and the senior secured credit facility now being negotiated.

Argosy will host a conference call for interested parties on July 29, 2004, at
11:00 a.m. EDT to review its second quarter financial results.  The call will
be broadcast live via the Internet and may be accessed through our web site at
http://www.argosycasinos.com/ .  For those interested in participating in the
call, please dial [phone] and reference conference ID #8816637 five to
ten minutes prior to the call start time.  A replay of the call will be made
available through August 5, 2004 and can be accessed through our web site at
http://www.argosycasinos.com/ .

Argosy Gaming Company is a leading owner and operator of casinos and related
entertainment and hotel facilities in the midwestern and southern United
States. Argosy owns and operates the Alton Belle Casino in Alton, 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 Chicagoland 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 and judicial actions, including gaming legislative
     action, referenda and taxation;
  -- 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..


                          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,
                                    2004       2003       2004       2003
                                (unaudited)(unaudited)(unaudited)(unaudited)
     Revenues:
          Casino                  $258,213   $252,153   $524,220   $493,010
          Admissions                 5,351      3,162     10,711      6,167
          Food, beverage and other  25,958     24,993     52,418     49,753
                                   289,522    280,308    587,349    548,930
          Less promotional
           allowances              (34,958)   (31,963)   (68,696)   (64,253)
     Net revenues                  254,564    248,345    518,653    484,677

     Costs and expenses:
          Gaming and admission
           taxes                    90,013     95,466    181,591    175,323
          Casino                    31,179     33,228     63,753     67,374
          Selling, general and
           administrative           37,925     39,481     82,101     75,270
          Food, beverage and other  18,721     17,761     37,322     35,559
          Other operating expenses   9,735     10,379     19,598     20,885
          Depreciation and
           amortization             14,848     12,839     29,073     25,522
          Write down of assets         -        6,500        -        6,500
                                   202,421    215,654    413,438    406,433
     Income from operations         52,143     32,691    105,215     78,244

     Other income (expense):
          Interest income               18         35         39         86
          Interest expense         (16,594)   (18,989)   (34,645)   (37,936)
          Expense on early
           retirement of debt         (763)       -      (26,040)       -
                                   (17,339)   (18,954)   (60,646)   (37,850)

     Income before income taxes     34,804     13,737     44,569     40,394

     Income tax expense            (16,221)    (6,788)   (22,026)   (18,784)

     Net income                    $18,583     $6,949    $22,543    $21,610

     Basic income per share          $0.63      $0.24      $0.77      $0.75

     Diluted income per share        $0.63      $0.24      $0.76      $0.74


                  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,
                                    2004       2003       2004       2003
                                (unaudited)(unaudited)(unaudited)(unaudited)
  Casino Revenues
    Alton Belle Casino             $25,901    $29,199    $53,087    $58,586
    Argosy Casino - Riverside       36,963     23,658     75,201     48,116
    Argosy Casino -  Baton Rouge    20,939     20,430     42,634     40,489
    Argosy Casino - Sioux City      11,397     10,780     23,083     21,169
    Argosy Casino - Lawrenceburg   107,671    103,136    219,673    200,197
    Empress Casino Joliet           55,342     64,950    110,542    124,453
              Total               $258,213   $252,153   $524,220   $493,010

  Net Revenues
    Alton Belle Casino             $24,590    $27,910    $50,634    $56,135
    Argosy Casino - Riverside       35,826     22,650     73,756     46,014
    Argosy Casino -  Baton Rouge    21,505     20,967     43,856     41,802
    Argosy Casino - Sioux City      11,035     10,475     22,381     20,575
    Argosy Casino - Lawrenceburg   108,049    104,085    220,982    202,423
    Empress Casino Joliet           53,559     62,258    107,044    117,728
              Total               $254,564   $248,345   $518,653   $484,677

  Income (loss) from operations
    Alton Belle Casino              $2,426     $2,619     $5,584     $9,333
    Argosy Casino - Riverside        8,121      3,408     17,505      7,402
    Argosy Casino -  Baton Rouge     2,805      1,200      5,430      2,989
    Argosy Casino - Sioux City       2,793      1,831      5,212      3,590
    Argosy Casino - Lawrenceburg    33,722     24,365     66,838     50,431
    Empress Casino Joliet            9,058      5,510     19,413     16,218
    Corporate                       (6,782)    (6,242)   (14,767)   (11,719)
              Total                $52,143    $32,691   $105,215    $78,244


                  ARGOSY GAMING COMPANY AND SUBSIDIARIES
                      SELECTED FINANCIAL INFORMATION
                RECONCILIATION OF NET INCOME TO EBITDA (a)
                        (In Thousands, unaudited)

                                      Three months ended  Three months ended
                                         June 30, 2004       June 30, 2003
  Net income (b)                                 $18,583             $6,949
  Income tax expense                              16,221              6,788
  Interest expense, net                           16,576             18,954

  Depreciation and amortization expense:
  Alton Belle Casino                      1,608              1,640
  Argosy Casino - Riverside               2,588              1,373
  Argosy Casino - Baton Rouge             2,239              2,170
  Argosy Casino - Sioux City                597              1,141
  Argosy Casino - Lawrenceburg            3,583              3,257
  Empress Casino Joliet                   3,587              2,723
  Corporate (c)                             646                535
            Total                        14,848   14,848    12,839   12,839

  EBITDA (a):
  Alton Belle Casino                      4,034              4,259
  Argosy Casino - Riverside              10,709              4,781
  Argosy Casino - Baton Rouge             5,044              3,370
  Argosy Casino - Sioux City              3,390              2,972
  Argosy Casino - Lawrenceburg           37,305             27,622
  Empress Casino Joliet                  12,645              8,233
  Corporate (c)                          (6,899)            (5,707)
            Total                       $66,228  $66,228   $45,530  $45,530


                  ARGOSY GAMING COMPANY AND SUBSIDIARIES
                      SELECTED FINANCIAL INFORMATION
                RECONCILIATION OF NET INCOME TO EBITDA (a)
                        (In Thousands, unaudited)

                                        Six months ended    Six months ended
                                         June 30, 2004       June 30, 2003
  Net income (b)                                 $22,543            $21,610
  Income tax expense                              22,026             18,784
  Interest expense, net                           34,606             37,850

  Depreciation and amortization expense:
  Alton Belle Casino                      3,160              3,411
  Argosy Casino - Riverside               5,049              2,818
  Argosy Casino - Baton Rouge             4,505              4,232
  Argosy Casino - Sioux City              1,720              2,187
  Argosy Casino - Lawrenceburg            6,995              6,494
  Empress Casino Joliet                   6,387              5,333
  Corporate (c)                           1,257              1,047
            Total                        29,073   29,073    25,522    25,522

  EBITDA (a):
  Alton Belle Casino                      8,744             12,744
  Argosy Casino - Riverside              22,554             10,220
  Argosy Casino - Baton Rouge             9,935              7,221
  Argosy Casino - Sioux City              6,932              5,777
  Argosy Casino - Lawrenceburg           73,833             56,925
  Empress Casino Joliet                  25,800             21,551
  Corporate (c)                         (39,550)           (10,672)
            Total                      $108,248 $108,248  $103,766  $103,766


                          ARGOSY GAMING COMPANY
                 NOTES TO SELECTED FINANCIAL INFORMATION
                              (in thousands)

  (a) "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.

  (b) Net income includes $763 and $26,040 of expense on early retirement of
      debt for the three months and six months ended June 30, 2004,
      respectively.

  (c) 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,
                                                   2004             2003
                                               (unaudited)
  Current assets:
       Cash and cash equivalents                 $69,754          $67,205
       Accounts receivable, net                    4,136            4,292
       Income taxes receivable                       -              1,015
       Deferred income taxes                      12,377           13,295
       Other current assets                        6,860            7,196
            Total current assets                  93,127           93,003

  Net property and equipment                     551,611          548,120
  Other assets:
       Deferred finance costs, net                16,562           16,748
       Goodwill, net                             727,470          727,470
       Intangible assets, net                     24,917           26,092
       Other                                       3,157              439
            Total other assets                   772,106          770,749
  Total assets                                $1,416,844       $1,411,872
  Current liabilities:
       Accounts payable                          $11,861          $26,955
       Accrued payroll and related expenses       25,540           24,125
       Accrued gaming and admission taxes         17,693           14,486
       Other accrued liabilities                  56,946           70,070
       Accrued interest                           15,400            9,296
       Income taxes payable                        5,411              -
       Current maturities of long-term debt        3,713            4,648
            Total current liabilities            136,564          149,580

  Long-term debt                                 843,396          865,510
  Deferred income taxes                          105,803           93,119
  Other long-term obligations                        711              419

  Stockholders' equity:
       Common stock, $.01 par; 120,000,000
        shares authorized; 29,474,783 and
        29,314,542 shares issued and outstanding
        at June 30, 2004 and December 31, 2003,
        respectively                                 295              293
       Capital in excess of par                   95,754           92,551
       Accumulated other comprehensive loss         (563)          (1,941)
       Retained earnings                         234,884          212,341
            Total stockholders' equity           330,370          303,244
  Total liabilities and stockholders' equity  $1,416,844       $1,411,872


DATASOURCE: Argosy Gaming Company



CONTACT:  Jim Wise, [phone], or Erin Williams, [phone],

both of Argosy Gaming Company



Web site:  http://www.argosycasinos.com/ 

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