**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

### **Washington, D.C., 20549**

 

**FORM 10-Q**

 

| **ý**                          | **Quarterly  Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**  |
|-------------------------------------|-----------------------------------------------------------------------------------------------|
|                                |
|                                | **For  the quarterly period ended March 31, 2003.**                                           |
|                                |
| **or**                              |
|                                |
| **o**                               | **Transition  Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934** |
|                                |
| **Commission  File Number 1-11853** |

 

**ARGOSY GAMING COMPANY**

(Exact name of Registrant as Specified in itsCharter)

 

| State of Incorporation:**Delaware**                                                                                          |   | I.R.S. Employer Identification No.: **37-1304247** |
|------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|
|                                                                                                                         |
| **219  Piasa Street  Alton, Illinois 62002  (618) 474-7500**                                                                 |
| (Address, including zip  code, and telephone number, including  area code, of Registrant’s principal executive offices) |

 

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90days.     Yes ý    No o

 

Indicate by check mark whether the registrant is anaccelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý     No o

 

**APPLICABLEONLY TO CORPORATE ISSUERS:**

 

Indicate the number of shares outstanding of each ofthe issuer’s classes of common stock as of the latest practicable date:  29,096,229 shares of Common Stock, $.01 parvalue per share, as of May 7, 2003.

 

 

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**ARGOSY GAMING COMPANY**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

(In Thousands,Except Share and Per Share Data)

 
|                                                                                                                                                    |   | **March 31,  2003** |      | **December  31,  2002** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-----------|-------------------------|--------|
|                                                                                                                                                    |   | **(unaudited)**     |      |                    |   |
| **Current  assets:**                                                                                                                                    |   |                |      |                    |   |
| Cash  and cash equivalents                                                                                                                              |   | $                   | 61,303    |                    | $      | 59,720 |   |
| Accounts  receivable, net                                                                                                                               |   | 3,845               |      | 3,833                   |   |
| Income  taxes receivable                                                                                                                                |   | 972                 |      | 7,944                   |   |
| Deferred  income taxes                                                                                                                                  |   | 7,324               |      | 7,324                   |   |
| Other  current assets                                                                                                                                   |   | 5,681               |      | 5,433                   |   |
| Total  current assets                                                                                                                                   |   | 79,125              |      | 84,254                  |   |
|                                                                                                                                                    |   |                |      |                    |   |
| **Net  property and equipment**                                                                                                                         |   | 485,475             |      | 455,894                 |   |
|                                                                                                                                                    |   |                |      |                    |   |
| **Other  assets:**                                                                                                                                      |   |                |      |                    |   |
| Deferred  finance costs, net                                                                                                                            |   | 18,943              |      | 20,143                  |   |
| Goodwill,  net                                                                                                                                          |   | 727,470             |      | 727,470                 |   |
| Intangible  assets, net                                                                                                                                 |   | 27,860              |      | 28,451                  |   |
| Other,  net                                                                                                                                             |   | 2,402               |      | 2,353                   |   |
| Total  other assets                                                                                                                                     |   | 776,675             |      | 778,417                 |   |
| **Total  assets**                                                                                                                                       |   | $                   | 1,341,275 |                    | $      | 1,318,565 |   |
|                                                                                                                                                    |   |                |      |                    |   |
| **Current  liabilities:**                                                                                                                               |   |                |      |                    |   |
| Accounts  payable                                                                                                                                       |   | $                   | 23,486    |                    | $      | 17,459 |   |
| Accrued  payroll and related expenses                                                                                                                   |   | 19,720              |      | 24,279                  |   |
| Accrued  gaming and admission taxes                                                                                                                     |   | 28,328              |      | 36,996                  |   |
| Other  accrued liabilities                                                                                                                              |   | 35,314              |      | 32,299                  |   |
| Accrued  interest                                                                                                                                       |   | 14,308              |      | 9,427                   |   |
| Current  maturities of long-term debt                                                                                                                   |   | 4,513               |      | 4,469                   |   |
| Total  current liabilities                                                                                                                              |   | 125,669             |      | 124,929                 |   |
|                                                                                                                                                    |   |                |      |                    |   |
| **Long-term  debt**                                                                                                                                     |   | 888,571             |      | 886,315                 |   |
| **Deferred  income taxes**                                                                                                                              |   | 60,113              |      | 55,073                  |   |
| **Other  long-term obligations**                                                                                                                        |   | 6,210               |      | 6,248                   |   |
|                                                                                                                                                    |   |                |      |                    |   |
| **Stockholders’  equity:**                                                                                                                         |   |                |      |                    |   |
| Common  stock, $.01 par; 120,000,000 shares authorized; 28,946,229 shares issued and  outstanding at March 31, 2003 and December 31, 2002, respectively |   | 289                 |      | 289                     |   |
| Capital  in excess of par                                                                                                                               |   | 88,710              |      | 88,686                  |   |
| Accumulated  other comprehensive (loss)                                                                                                                 |   | (3,556              | )         | (3,583                  | )      |
| Retained  earnings                                                                                                                                      |   | 175,269             |      | 160,608                 |   |
| Total  stockholders’ equity                                                                                                                        |   | 260,712             |      | 246,000                 |   |
| **Total  liabilities and stockholders’ equity**                                                                                                    |   | $                   | 1,341,275 |                    | $      | 1,318,565 |   |

 

1

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**ARGOSY GAMING COMPANY**

**CONDENSED CONSOLIDATED STATEMENTS OFINCOME**

(In Thousands,Except Share and Per Share Data)

 
|                                 |   | **Three  Months Ended** |    |
|--------------------------------------|--------|-------------------------|---------|
|                                 |   | **March 31,  2003**     |    | **March 31,  2002** |   |
|                                 |   | **(unaudited)**         |    | **(unaudited)** |   |
| **Revenues:**                        |   |                    |    |   |   |
| Casino                               |   | $                       | 240,857 |   | $ | 242,090 |   |
| Admissions                           |   | 3,005                   |    | 2,792 |   |
| Food,  beverage and other            |   | 24,760                  |    | 24,732 |   |
|                                 |   | 268,622                 |    | 269,614 |   |
| Less  promotional allowances         |   | (32,290                 | )       | (27,903 | ) |
| Net  revenues                        |   | 236,332                 |    | 241,711 |   |
|                                 |   |                    |    |   |   |
| **Costs  and expenses:**             |   |                    |    |   |   |
| Casino                               |   | 114,003                 |    | 104,528 |   |
| Selling,  general and administrative |   | 35,789                  |    | 33,319 |   |
| Food,  beverage and other            |   | 17,798                  |    | 18,737 |   |
| Other  operating expenses            |   | 10,506                  |    | 10,494 |   |
| Depreciation  and amortization       |   | 12,683                  |    | 11,614 |   |
|                                 |   | 190,779                 |    | 178,692 |   |
| Income  from operations              |   | 45,553                  |    | 63,019 |   |
|                                 |   |                    |    |   |   |
| **Other  income (expense):**         |   |                    |    |   |   |
| Interest  income                     |   | 51                      |    | 50 |   |
| Interest  expense                    |   | (18,947                 | )       | (20,846 | ) |
|                                 |   | (18,896                 | )       | (20,796 | ) |
|                                 |   |                    |    |   |   |
| Income  before income taxes          |   | 26,657                  |    | 42,223 |   |
|                                 |   |                    |    |   |   |
| Income  tax expense                  |   | (11,996                 | )       | (17,523 | ) |
|                                 |   |                    |    |   |   |
| **Net  income**                      |   | $                       | 14,661  |   | $ | 24,700 |   |
|                                 |   |                    |    |   |   |
| **Basic  income per share**          |   | $                       | 0.51    |   | $ | 0.86 |   |
|                                 |   |                    |    |   |   |
| **Diluted  income per share**        |   | $                       | 0.50    |   | $ | 0.84 |   |

 

See accompanyingnotes to condensed consolidated financial statements.

 

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**ARGOSY GAMING COMPANY**

**CONDENSED CONSOLIDATED STATEMENTS OFCASH FLOWS**

(In Thousands, ExceptShare and Per Share Data)

 
|                                                                               |   | **Three  Months Ended** |   |
|------------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                               |   | **March 31,  2003**     |   | **March 31,  2002** |   |
|                                                                               |   | **(unaudited)**         |   | **(unaudited)** |   |
| **Cash  flows from operating activities:**                                         |   |                    |   |   |   |
| Net  income                                                                        |   | $                       | 14,661 |   | $ | 24,700 |   |
| Adjustments  to reconcile net income to net cash provided by operating activities: |   |                    |   |   |   |
| Depreciation                                                                       |   | 12,092                  |   | 11,027 |   |
| Amortization                                                                       |   | 1,577                   |   | 1,591 |   |
| Loss  on sale of fixed assets                                                      |   | 48                      |   | 355 |   |
| Compensation  expense recognized on issuance of stock                              |   | 24                      |   | — |   |
| Deferred  income taxes                                                             |   | 5,023                   |   | 2,962 |   |
| Changes  in operating assets and liabilities, net of effect from acquisitions:     |   |                    |   |   |   |
| Accounts  receivable and other current assets                                      |   | 6,663                   |   | 7,360 |   |
| Accounts  payable and other current liabilities                                    |   | (8,277                  | )      | 3,020 |   |
| Net  cash provided by operating activities                                         |   | 31,811                  |   | 51,015 |   |
|                                                                               |   |                    |   |   |   |
| **Cash  flows from investing activities:**                                         |   |                    |   |   |   |
| Purchases  of property and equipment                                               |   | (32,834                 | )      | (8,138 | ) |
| Other                                                                              |   | 92                      |   | 458 |   |
| Net  cash used in investing activities                                             |   | (32,742                 | )      | (7,680 | ) |
|                                                                               |   |                    |   |   |   |
| **Cash  flows from financing activities:**                                         |   |                    |   |   |   |
| Proceeds  from (repayment of) line of credit, net                                  |   | 3,400                   |   | (40,500 | ) |
| Payments  on long-term debt                                                        |   | (886                    | )      | (908 | ) |
| Proceeds  from stock option exercises                                              |   | —                  |   | 211 |   |
| Net  cash provided by (used in) financing activities                               |   | 2,514                   |   | (41,197 | ) |
| Net  increase in cash and cash equivalents                                         |   | 1,583                   |   | 2,138 |   |
| Cash  and cash equivalents, beginning of period                                    |   | 59,720                  |   | 57,221 |   |
| Cash  and cash equivalents, end of period                                          |   | $                       | 61,303 |   | $ | 59,359 |   |

 

See accompanyingnotes to condensed consolidated financial statements.

 

3

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**ARGOSY GAMING COMPANY**

**CONDENSED CONSOLIDATED STATEMENTS OFSTOCKHOLDERS’ EQUITY**

(Unaudited - InThousands, Except Share and Per Share Data)

 
|                                                  |   | **Shares** |       | **Common  Stock** |       | **Capital in  Excess of Par** |       | **Accumulated  Other  Comprehensive  (Loss) Income** |       | **Retained  Earnings** |       | **Total  Stockholders’  Equity** |       |
|-------------------------------------------------------|--------|------------|------------|-------------------|------------|-------------------------------|------------|------------------------------------------------------|------------|------------------------|------------|---------------------------------------|------------|
|                                                  |   |       | ** ** |              | ** ** |                          | ** ** |                                                 | ** ** |                   | ** ** |                                  | ** ** |
| Balance,  December 31, 2002                           |   | 28,946,229 |       | $                 | 289        |                          | $          | 88,686                                               |       | $                      | (3,583     | )                                     | $          | 160,608 |   | $ | 246,000 |   |
| Exercise  of stock options, including tax benefit     |   |       |       |              |       |                          |       |                                                 |       |                   |       | —                                |       |
| Restricted  stock compensation expense                |   |       |       |              |       | 24                            |       |                                                 |       |                   |       | 24                                    |       |
| Comprehensive  income:                                |   |       |       |              |       |                          |       |                                                 |       |                   |       |                                  |       |
| Other  comprehensive income - interest rate swaps     |   |       |       |              |       |                          |       | 27                                                   |       |                   |       | 27                                    |       |
| Net  income for the three months ended March 31, 2003 |   |       |       |              |       |                          |       |                                                 |       | 14,661                 |       | 14,661                                |       |
| Comprehensive  income                                 |   |       |       |              |       |                          |       |                                                 |       |                   |       | 14,688                                |       |
|                                                  |   |       |       |              |       |                          |       |                                                 |       |                   |       |                                  |       |
| Balance,  March 31, 2003                              |   | 28,946,229 |       | $                 | 289        |                          | $          | 88,710                                               |       | $                      | (3,556     | )                                     | $          | 175,269 |   | $ | 260,712 |   |

 

See accompanyingnotes to condensed consolidated financial statements.

 

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**ARGOSY GAMING COMPANY**

**NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

(In Thousands, Except Share and Per Share Data)

 

**1.     Basis of Presentation**

 

Argosy Gaming Company provides casino-style gaming andrelated entertainment to the public and, through it’s subsidiaries, operatescasinos in Alton and Joliet, Illinois; Lawrenceburg, Indiana; Riverside,Missouri; Baton Rouge, Louisiana; and Sioux City, Iowa.  Except where otherwise noted, the words“we”, “us”, “our” and similar terms, as well as “Argosy” or the “Company”,refer to Argosy Gaming Company and all of its subsidiaries.

 

The accompanying unaudited condensed consolidatedfinancial statements have been prepared in accordance with the instructions toForm 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotesrequired by generally accepted accounting principles for complete financialstatements.  Interim results may notnecessarily be indicative of results which may be expected for any otherinterim period or for the year as a whole. For further information, refer to the financial statements and footnotesthereto for the year ended December 31, 2002, included in our Annual Report onForm 10-K (File No. 1-11853).  Theaccompanying unaudited condensed consolidated financial statements contain alladjustments, which are, in the opinion of management, necessary to presentfairly the financial position and the results of operations for the periodsindicated.  Such adjustments includeonly normal recurring accruals.  Certain2002 amounts have been reclassified to conform to the 2003 financial statementpresentation.

 

**2.****              Long-TermDebt**

 

Long-term debt consists of the following:

 
|                                                                                                                                        |   | **March 31,  2003** |    | **December  31,  2002** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|---------|-------------------------|--------|
| Senior  secured line of credit, expires July 31, 2006, interest payable at least  quarterly at either LIBOR or prime plus a margin          |   | $                   | 61,700  |                    | $      | 58,300 |   |
|                                                                                                                                        |   |                |    |                    |   |
| Term  loan, matures July 31, 2008, principal and interest payments due quarterly at  either LIBOR and/or prime plus a margin                |   | 270,187             |    | 270,875                 |   |
|                                                                                                                                        |   |                |    |                    |   |
| Subordinated  notes, including unamortized premium of $7,303 at March 31, 2003, due June 1,  2009, interest payable semi-annually at 10.75% |   | 357,303             |    | 357,517                 |   |
|                                                                                                                                        |   |                |    |                    |   |
| Subordinated  notes, due September 2011, interest payable semi-annually at 9.0%                                                             |   | 200,000             |    | 200,000                 |   |
|                                                                                                                                        |   |                |    |                    |   |
| Notes  payable, principal and interest payments due quarterly through September  2015, discounted at 10.5%                                  |   | 3,894               |    | 4,092                   |   |
|                                                                                                                                        |   | 893,084             |    | 890,784                 |   |
| Less:  current maturities                                                                                                              |   | 4,513               |    | 4,469                   |   |
| Long-term  debt, less current maturities                                                                                                    |   | $                   | 888,571 |                    | $      | 886,315 |   |

 

On July 26, 2001, we issued $200,000 of 9.0%subordinated notes due 2011.  OnFebruary 1, 2001, we issued $150,000 of additional 103⁄4% subordinated notes due2009. Prior to this issuance, we had $200,000 of outstanding 103⁄4% subordinatednotes (all “subordinated notes”). On July 31, 2001, we entered into an amendedand restated senior secured line of credit, maintaining our available line ofcredit at $400,000 and adding a term loan of $275,000 (“credit facility”).  On April 18, 2003, we entered into the FirstAmendment to the credit facility, which updated and extended certain capitalexpenditure limitations, financial ratios and other items of the creditfacility while maintaining our current available line of credit and termloan.  The credit facility is secured byliens on substantially all of our assets and our subsidiaries are co-borrowers.Substantially all of our subsidiaries fully and unconditionally guarantee the subordinatednotes on a joint and several basis. The subordinated notes rank junior to allof our senior indebtedness, including borrowings under the credit facility.

 

The subordinated notes and the credit facility containcertain restrictions on the payment of dividends on our common stock and theincurrence of additional indebtedness, as well as other customary debtcovenants.   In addition, the creditfacility requires us to maintain certain financial ratios as of March 31, 2003,as follows: (1) Total Funded Debt to EBITDA Ratio of a maximum of 4.25 to 1.0;(2) Senior Leverage Ratio of a maximum of 2.50 to 1.0; and (3) Fixed ChargeRatio of a minimum of 1.50 to 1.0.  Asof March 31, 2003, we are in compliance with these ratios.

 

5

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**3.****              Stock-basedCompensation**

 

In December 2002, theFinancial Accounting Standards Board issued FAS 148, “Accounting forStock-Based Compensation – Transition and Disclosure”.  We have a stock-based employee compensationplan and a stock-based director compensation plan.  As we continue to follow APB 25 for stock options granted toemployees and directors, no stock-based compensation cost is reflected in netincome, as all options granted under those plans had an exercise price equal tothe market value of the underlying common stock on the date of grant.  The effect on net income and earnings pershare if we had applied the fair value recognition provisions of FAS 123 tostock-based employee compensation would be a decrease in net income of $199 and$99 and a decrease in diluted earnings per share of $0.01 and $0.00 for thethree months ended March 31, 2003 and 2002, respectively.

 

**4.****              EarningsPer Share**

 

Thefollowing table sets forth the computation of basic and diluted earnings per share:

 
|                                                                                                    |   | **Three  Months Ended** |   |
|---------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                                                    |   | **March 31,  2003**     |   | **March 31,  2002** |   |
|                                                                                                    |   | **(unaudited)**         |   | **(unaudited)** |   |
| **Numerator:**                                                                                          |   |                    |   |   |   |
| Numerator  for basic and diluted earnings per share - Net Income                                        |   | $                       | 14,661 |   | $ | 24,700 |   |
|                                                                                                    |   |                    |   |   |   |
| **Denominator:**                                                                                        |   |                    |   |   |   |
| Denominator  for basic earnings per share - weighted average shares outstanding                         |   | 28,946,229              |   | 28,834,559 |   |
|                                                                                                    |   |                    |   |   |   |
| Effect  of dilutive securities (computed using the treasury stock method):                              |   |                    |   |   |   |
| Employee  and directors stock options and warrants                                                      |   | 251,849                 |   | 563,153 |   |
| Restricted  stock                                                                                       |   | 1,306                   |   | — |   |
| Dilutive  potential common shares                                                                       |   | 253,155                 |   | 563,153 |   |
| Denominator  for diluted earnings per share - adjusted weighted-average shares and assumed  conversions |   | 29,199,384              |   | 29,397,712 |   |
|                                                                                                    |   |                    |   |   |   |
| Basic  earnings per share                                                                               |   | $                       | 0.51   |   | $ | 0.86 |   |
|                                                                                                    |   |                    |   |   |   |
| Diluted  earnings per share                                                                             |   | $                       | 0.50   |   | $ | 0.84 |   |

 

At March 31, 2003, employee options to purchase409,773 shares of common stock priced at a range from $18.00 - $35.18 per shareand director options to purchase 20,500 shares of common stock priced at arange from $22.30 - $39.99 per share, were not included in the computation ofdiluted earnings per share because the option exercise price was greater thanthe average market price of the underlying common shares and, therefore, theeffect would be anti-dilutive.

 

In February 2003, we issued 25,000 shares ofrestricted common stock to a new employee. These shares will vest 50% in February 2004 and 50% in February2005.  Compensation expense of $409 isbeing amortized over the vesting period.

 

**5.     Commitments and Contingent Liabilities**

 

We are subject to, from time to time, various legaland regulatory proceedings in the ordinary course of our business.  We believe that current proceedings will nothave a material effect on our financial condition or the results of ouroperations.

 

**6.     SubsequentEvent**

** **

In May 2003, the state of Indiana enacted legislationrequiring Indiana casino operators to accrue gaming taxes at the highergraduated rates related to dockside gaming effective as of July 1, 2002and not at the time of start up of dockside operations on August 1, 2002.We will record approximately $4 million in additional gaming tax expensein the second quarter of 2003. This additional tax is payable over two years.

 

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**ARGOSYGAMING COMPANY**

**MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITIONAND RESULTS OF OPERATIONS**

 

*Exceptwhere otherwise noted, the words, “we,” “us,” “our” and similar terms, as wellas references to “Argosy” or the “Company” refer to Argosy Gaming Company andall of its subsidiaries.*

 

**Cautionary Statements for Purposes ofthe “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of1995**

 

*ThisReport contains forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. When used in this document, the words “anticipate”, “believe”,“estimate” and “expect” and similar expressions are generally intended toidentify forward-looking statements. Investors are cautioned that any forward-looking statements, includingthose regarding the intent, belief or current expectations of the Company orits management, are not guarantees of future performance and involve risks anduncertainties, and that actual results may differ materially from those in theforward-looking statements as a result of various factors including, but notlimited to, (i) construction delays related to the Company’s expansionprojects, (ii) competitive and general economic conditions in the markets inwhich the Company operates, (iii) the effect of future legislation orregulatory changes on the Company’s operations, including but not limited togaming tax increases, issuances of additional gaming licenses and the approvalof cashless slots and (iv) other risks detailed from time to time in theCompany’s Securities and Exchange Commission filings.  The Company does not intend to update these forward-lookingstatements.*

 

**Overview**

 

We own and operate the Alton Belle Casino, in Alton,Illinois; the Empress Casino Joliet in Joliet, Illinois; the Argosy Casino inRiverside, Missouri; the Argosy Casino in Baton Rouge, Louisiana; the ArgosyCasino in Sioux City, Iowa; and the Argosy Casino in Lawrenceburg, Indiana.

 

In 2002, many factors affected our casinos’operations.  Effective August 1, 2002,our Lawrenceburg casino commenced dockside gaming.  This has had a positive impact on casino revenues in the lasthalf of 2002.  During the second quarter2002, Illinois and Indiana enacted legislation increasing gaming tax rates.  Also, in late 2001 and 2002, threecompetitors made significant renovations, which, coupled with the increasedgaming tax rates, have negatively impacted our Alton and Joliet, Illinoiscasino operations.  In addition,dockside gaming in Indiana has negatively impacted our Joliet, Illinois casinooperations.

 

All of these factors continue to impact our 2003operations and results.  Dockside gaminghas continued to positively impact our Lawrenceburg casino revenues, however,not enough to offset the increase in gaming taxes. In Illinois, the increasedtaxes, competitor renovations and dockside gaming in Indiana have continued tonegatively impact our Illinois casinos. 

 

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**ARGOSYGAMING COMPANY AND SUBSIDIARIES**

**SELECTEDFINANCIAL INFORMATION**

**CASINOAND NET REVENUES**

**(InThousands)**

 

 
|                               |   | **Three  Months Ended** |    |
|------------------------------------|--------|-------------------------|---------|
|                               |   | **Mar 31,  2003**       |    | **Mar 31,  2002** |   |
|                               |   | **(unaudited)**         |    | **(unaudited)** |   |
| **Casino  Revenues**               |   |                    |    |   |   |
| Alton  Belle Casino                |   | $                       | 29,387  |   | $ | 31,070 |   |
| Argosy  Casino - Riverside         |   | 24,458                  |    | 25,798 |   |
| Argosy  Casino -  Baton Rouge |   | 20,059                  |    | 20,164 |   |
| Argosy  Casino - Sioux City        |   | 10,389                  |    | 9,778 |   |
| Argosy  Casino - Lawrenceburg      |   | 97,061                  |    | 93,042 |   |
| Empress  Casino Joliet             |   | 59,503                  |    | 62,238 |   |
| Total                              |   | $                       | 240,857 |   | $ | 242,090 |   |
|                               |   |                    |    |   |   |
| **Net  Revenues**                  |   |                    |    |   |   |
| Alton  Belle Casino                |   | $                       | 28,225  |   | $ | 30,006 |   |
| Argosy  Casino - Riverside         |   | 23,364                  |    | 24,786 |   |
| Argosy  Casino -  Baton Rouge |   | 20,835                  |    | 20,613 |   |
| Argosy  Casino - Sioux City        |   | 10,100                  |    | 9,636 |   |
| Argosy  Casino - Lawrenceburg      |   | 98,338                  |    | 95,095 |   |
| Empress  Casino Joliet             |   | 55,470                  |    | 61,575 |   |
| Total                              |   | $                       | 236,332 |   | $ | 241,711 |   |

 

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**ARGOSYGAMING COMPANY AND SUBSIDIARIES**

**SELECTEDFINANCIAL INFORMATION**

**RECONCILIATIONOF INCOME FROM OPERATIONS TO EBITDA**

**(InThousands)**

 
|                                       |   | **Three  Months Ended** |   |
|--------------------------------------------|--------|-------------------------|--------|
|                                       |   | **Mar 31,  2003**       |   | **Mar 31,  2002** |   |
|                                       |   | **(unaudited)**         |   | **(unaudited)** |   |
| **Income  (loss) from Operations**         |   |                    |   |   |   |
| Alton  Belle Casino                        |   | $                       | 6,714  |   | $ | 8,489 |   |
| Argosy  Casino - Riverside                 |   | 3,994                   |   | 5,949 |   |
| Argosy  Casino - Baton Rouge (1)           |   | 1,789                   |   | 2,616 |   |
| Argosy  Casino - Sioux City                |   | 1,759                   |   | 1,920 |   |
| Argosy  Casino - Lawrenceburg              |   | 26,066                  |   | 32,609 |   |
| Empress  Casino Joliet                     |   | 10,708                  |   | 17,077 |   |
| Corporate                                  |   | (5,477                  | )      | (5,641 | ) |
| Total                                      |   | $                       | 45,553 |   | $ | 63,019 |   |
|                                       |   |                    |   |   |   |
| **Depreciation  and Amortization Expense** |   |                    |   |   |   |
| Alton  Belle Casino                        |   | $                       | 1,771  |   | $ | 1,606 |   |
| Argosy  Casino - Riverside                 |   | 1,445                   |   | 1,083 |   |
| Argosy  Casino - Baton Rouge (1)           |   | 2,062                   |   | 1,974 |   |
| Argosy  Casino - Sioux City                |   | 1,046                   |   | 789 |   |
| Argosy  Casino - Lawrenceburg              |   | 3,237                   |   | 3,537 |   |
| Empress  Casino Joliet                     |   | 2,610                   |   | 2,402 |   |
| Corporate                                  |   | 512                     |   | 223 |   |
| Total                                      |   | $                       | 12,683 |   | $ | 11,614 |   |
|                                       |   |                    |   |   |   |
| **EBITDA(2)**                              |   |                    |   |   |   |
| Alton  Belle Casino                        |   | $                       | 8,485  |   | $ | 10,095 |   |
| Argosy  Casino - Riverside                 |   | 5,439                   |   | 7,032 |   |
| Argosy  Casino - Baton Rouge (1)           |   | 3,851                   |   | 4,590 |   |
| Argosy  Casino - Sioux City                |   | 2,805                   |   | 2,709 |   |
| Argosy  Casino - Lawrenceburg              |   | 29,303                  |   | 36,146 |   |
| Empress  Casino Joliet                     |   | 13,318                  |   | 19,479 |   |
| Corporate                                  |   | (4,965                  | )      | (5,418 | ) |
| Total                                      |   | $                       | 58,236 |   | $ | 74,633 |   |

 

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(1)          Baton Rouge includes ourCentroplex Centre Hotel and Jazz Enterprises, Inc., a wholly owned subsidiarythat owns and operates the Catfish Town real estate development adjacent to ourBaton Rouge casino.

 

(2)          “EBITDA” is defined asearnings before interest, taxes, depreciation and amortization.  EBITDA should not be construed as analternative to financial measures determined in accordance with generallyaccepted accounting principles, such as income from operations, net income orcash flows generated by operating, investing and financing activities. EBITDAis presented solely as a supplemental disclosure because management believesthat it is a widely used measure of operating performance in the gamingindustry and for companies with a significant amount of depreciation andamortization.  EBITDA may not be comparableto similarly titled measures reported by other companies.  We have other significant uses of cashflows, including debt service and capital expenditures, which are not reflectedin EBITDA.

 

9

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**Three months ended March 31, 2003compared to three months ended March 31, 2002**

 

*CasinoRevenues -*Casino revenues for the three months ended March31, 2003, decreased $1.2 million, or 0.5% to $240.9 million from $242.1 millionfor the three months ended March 31, 2002. Lawrenceburg casino revenues increased $4.1 million, or 4.3%, to $97.1million for the three months ended March 31, 2003, from $93.0 million for thethree months ended March 31, 2002, reflecting the commencement of docksidegaming effective August 1, 2002.  OurJoliet casino recorded $59.5 million in casino revenues for the three monthsended March 31, 2003, a decrease of $2.7 million from the three months endedMarch 31, 2002.  Facility renovations bytwo competitors and the commencement of dockside gaming in Indiana havenegatively impacted the results at our Joliet casino.  Alton, Riverside, Sioux City and Baton Rouge reported aggregatecasino revenues of $84.3 million for the three months ended March 31, 2003, adecrease of $2.5 million or 2.9%, from $86.8 million for the three months endedMarch 31, 2002.  This decrease isprimarily at our Alton and Riverside casinos. Alton has been negatively impacted by increased capacity in the marketfrom substantial capital investments by a competitor in August 2002 andRiverside’s casino revenues have been lower due to construction disruptionrelated to our ongoing renovation.

 

*Admissions*- Admissions revenues (net of complimentary admissions) increased to $0.5million for the three months ended March 31, 2003, from $0.4 million for thethree months ended March 31, 2002, due primarily to an increase in the numberof admissions at Lawrenceburg following the commencement of dockside gamingeffective August 1, 2002.

 

*Food,Beverage and Other* - Food, beverage and other revenuesremained constant at $24.8 million for both the three months ended March 31,2003 and the three months ended March 31, 2002.  Food, beverage and other net profit increased $1.0 million to$7.0 million for the three months ended March 31, 2003, from $6.0 million forthe three months ended March 31, 2002. Joliet’s food, beverage and other net profit increased $1.1 millionoffset slightly by a decrease in revenues and net profits at Riverside relatedto disruptions with our current renovation project.

 

*PromotionalAllowances* – Promotional allowances for the three monthsended March 31, 2003, were $32.3 million compared to $27.9 million for thethree months ended March 31, 2002, an increase of $4.4 million or 15.7%.  The majority of this increase, $3.8 million,is at our Joliet facility.  We haveincreased our marketing costs at our Joliet facility in anticipation of theopening of our new barge-based casino in May 2003.

 

*CasinoExpenses -*Casino expenses increased $9.5 million to $114.0million for the three months ended March 31, 2003, from $104.5 million for thethree months ended March 31, 2002.  Dueto the increases in gaming and admission tax rates instituted in Indiana andIllinois in the second quarter 2002, gaming and admission taxes for the threemonths ended March 31, 2003 compared to the three months ended March 31, 2002,increased at Lawrenceburg by $8.7 million, at Joliet by $3.5 million and atAlton by $0.3 million.  These taxincreases were partially offset by reductions in payroll and other casinooperating expenses.

 

In order to understand the impact of tax rateincreases in Illinois and Indiana on our casino expenses, if the Illinois andIndiana tax rate increases had not been enacted, our casino expenses for thethree months ended March 31, 2003, would have been $12.6 million lower, or$101.4 million, which would have been a decline of $3.1 million compared to thethree months ended March 31, 2002.  Atlast year’s tax rates applied to this quarter’s casino revenues, our Lawrenceburg,Joliet and Alton gaming and admission taxes would have been lower by $7.4million, $4.4 million and $0.8 million, respectively.

 

*Selling,General and Administrative*—Selling, general andadministrative expenses increased $2.5 million to $35.8 million for the threemonths ended March 31, 2003, from $33.3 million for the three months endedMarch 31, 2002, due primarily to a $1.0 million increase in city developmentfees at Lawrenceburg due to the increase in revenues related to the switch todockside gaming effective August 1, 2002. The remaining increase is spread throughout our other properties.

 

*OtherOperating Expenses*—Other operating expenses remained constantat $10.5 million for both the three months ended March 31, 2003 and March 31,2002.

 

*Depreciationand Amortization*—Depreciation and amortization increased $1.1million from $11.6 million for the three months ended March 31, 2002, to $12.7million for the three months ended March 31, 2003.  The majority of the increase is due to accelerated depreciationon planned asset retirements and depreciation for our new data warehouse placedin service during the third quarter 2002.

 

*InterestExpense*—Net interest expense decreased $1.9 million to $18.9million for the three months ended March 31, 2003, from $20.8 million for thethree months ended March 31, 2002.  Thisdecrease is primarily attributable to reduced 

 

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borrowings on our revolving line of credit due to debt repayments withfree cash flow, lower interest rates on our variable debt and an increase incapitalized interest.  We capitalized$0.8 million of interest related to our casino construction projects for thethree months ended March 31, 2003 compared to $0.1 million for the three monthsended March 31, 2002.

 

*IncomeTax Expense –*Income tax expense decreased by $5.5 million to$12.0 million for the three months ended March 31, 2003, from $17.5 million forthe three months ended March 31, 2002, due to reduced pre-tax earnings offsetby an increase in our effective tax rate from 41.5% for the three months endedMarch 31, 2002 to 45% for the three months ended March 31, 2003 due to thelarger permanent tax differences and to an increase in Indiana tax ratesenacted in July, 2002.

 

*NetIncome –*Net income was $14.7 million for the three monthsended March 31, 2003, compared to $24.7 million for the three months endedMarch 31, 2002, due primarily to the factors discussed above.  Our net income decreased approximately $0.03per share due to the change in the effective income tax rate discussed inIncome Tax Expense above.

 

**Competition**

 

Our Alton Casino faces competition from four otherriverboat casino operators in the St. Louis area.  One of these competitors completed a major casino and facilityrenovation in early August 2002. Another competitor plans to open a $75 million hotel expansionmid-to-late 2004.  Our Riverside Casinofaces competition from three barge-based casinos in the Kansas City area.  Our Baton Rouge Casino faces competitionfrom one casino located in downtown Baton Rouge, a nearby Native Americancasino and multiple casinos throughout Louisiana. We face competition in SiouxCity, Iowa from video gaming devices in nearby South Dakota, from twoland-based Native American casinos and, to a lesser extent, from slot machinesat a pari-mutuel racetrack in Council Bluffs, Iowa and from two riverboatcasinos in the Council Bluffs, Iowa/Omaha, Nebraska market.  The Lawrenceburg casino faces competitionfrom two riverboat casinos in the Cincinnati market.  Our Joliet casino faces competition from eight other riverboatcasino operators in the Chicago area. One of these competitors has opened a major expansion project within thelast twelve months.  Additionally, fourcompetitors in Indiana were allowed to begin dockside gaming in August2002.  

 

There could be further unanticipated competition inany market in which we operate as a result of legislative changes or otherevents.  For instance, several stateshave discussed adopting or expanding gaming in various forms which could causeincreased competition in our markets. We expect each market, in which weparticipate, both current and prospective, to be highly competitive.

 

**Liquidity and Capital Resources**

 

In the three months ended March 31, 2003, we generatedcash flows from operating activities of $31.8 million compared to $51.0 millionfor the three months ended March 31, 2002. This decrease is due primarily to a decrease in our operating income of$17.4 million, a decrease in our cash flow from working capital of $2.8 millionthroughout our properties, offset by a decrease in our interest expense of $1.9million.

 

In the three months ended March 31, 2003, we used cashflows for investing activities of $32.7 million compared to $7.7 million forthe three months ended March 31, 2002. During the three months ended March 31, 2003, our investing activitiesincluded purchases of property and equipment of $32.8 million, a $24.7 millionincrease over property and equipment purchases for the three months ended March31, 2002.  This increase is dueprimarily to construction and expansion projects at our Joliet, Riverside andSioux City facilities.

 

During the three months ended March 31, 2003, cash of$2.5 million was provided by financing activities compared to $41.2 millionused in financing activities for the three months ended March 31, 2002.  The primary source of funds in 2003 wasborrowings on our revolving line of credit of $3.4 million.  For the three months ended March 31, 2002,we used $40.1 million for repayments on our line of credit.

 

At March 31, 2003, we had approximately $61.3 millionof cash and cash equivalents.  At March31, 2003, we had outstanding $331.9 million on our senior secured creditfacility ($61.7 million on our revolving credit facility and $270.2 million onour term loan) and $557.3 million of subordinated notes (due in June 2009 andSeptember 2011), including $7.3 million of unamortized premium.  As of March 31, 2003, we had outstandingletters of credit of $7.5 million and availability under the credit facilitywas approximately $124.1 million.  Wehave no off-balance sheet debt.

 

During October 2001, we effectively fixed the interestrate on approximately $200.0 million of our term loan through three interestrate swap agreements expiring on September 30, 2004.  For each swap agreement, we agree to receive a floating rate ofinterest on the notional principal amount based upon a three month LIBOR rate(plus a 2.75% spread) in exchange for fixed rates ranging from 6.19% to6.27%.  As of March 31, 2003, the notionalprincipal amounts were $198.8 million. These notional amounts do not represent amounts exchanged by the partiesand, thus, are not a

 

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measure of our exposure to credit loss.  In accordance with SFAS 133, “Accounting for DerivativeInstruments and Hedging Activities,” we recorded, as of March 31, 2003, thefair value of these interest rate swap agreements in the consolidated balancesheet in other long-term obligations ($5.9 million pretax) and the relatedchange in fair value of these agreements is deferred in stockholders’ equity asa component of accumulated other comprehensive income ($3.5 million net ofdeferred taxes of $2.4 million).

 

On April 18, 2003, we entered into the first amendmentto our second amended and restated credit agreement dated July 31, 2001.  This amendment extends certain capitalexpenditure limitations and financial ratios while maintaining our currentavailable line of credit of $400 million and our term loan.  The subordinated notes and the creditfacility contain certain restrictions on the payment of dividends on our commonstock and the occurrence of additional indebtedness, as well as other typicaldebt covenants.  In addition, the creditfacility requires us to maintain certain financial ratios as of March 31, 2003,as follows:  (1) Total Funded Debt toEBITDA Ratio of a maximum of 4.25 to 1.0; (2) Senior Leverage Ratio of amaximum of 2.50 to 1.0; and (3) Fixed Charge Ratio of a minimum of 1.50 to1.0.  As of March 31, 2003, we are incompliance with these ratios.

 

During May 2003, we announced Board of Directorsapproval of a stock repurchase program authorizing us to repurchase up to $30million of our common stock.  Therepurchases will be made at management’s discretion without prior notice fromtime to time in the open market or through privately negotiated third partytransactions in compliance with applicable laws and depending on marketconditions.

 

We have made a significant investment in property andequipment and plan to make significant additional investments at our existingproperties.  As of March 31, 2003,construction continues on major expansion projects at our Riverside and Jolietproperties.  Our Sioux City renovationwas completed in February 2003.  Duringthe remainder of 2003, we expect to spend approximately $115 million to $130million in capital expenditures, the majority of which will be to complete ourRiverside and Joliet projects.  We planon opening our Joliet barge facility in May 2003 and our Riverside bargefacility by the end of 2003.  We expectto fund these expenditures from internally generated cash and availabilityunder our credit facility.

 

Consistent with gaming industry practice, we conductour operations with a net working capital deficit.  Unlike traditional industrial companies, a gaming company’sbalance sheet has limited accounts receivable and inventories.  In addition, casinos generate significant cashon a daily basis.  We generally applyour daily cash flows to fund capital expenditures or pay down debt under ourrevolving credit facility and pay our current liabilities pursuant to theirnormal cycles.  Given the significantdaily cash flows generated by our operations and the financial flexibilityprovided by our credit facility, the existence of a working capital deficit hasno impact on our ability to operate our business or meet our obligations asthey become due.  We believe that cashon hand, operating cash flows, and funds available under our credit facilitywill be sufficient to fund our current operating, capital expenditure and debtservice obligations for the next 12 months.

 

Our long-term debt, as of March 31, 2003, matures asfollows:

 
| One  year and less |   | $       | 4,513   |   |
|--------------------|--------|---------|---------|--------|
| 1 -  3 years       |   | 8,936   |    |
| 4 -  5 years       |   | 70,175  |    |
| After  5 years     |   | 809,460 |    |
| Total              |   | $       | 893,084 |   |

 

# **Critical Accounting Estimates**

 

Our consolidated financial statements are prepared inaccordance with accounting principles generally accepted in the United States,which requires our management to make estimates and assumptions about theeffects of matters that are inherently uncertain.  Of our accounting policies, we believe the following may involvea higher degree of judgment and complexity.

 

*Goodwill–*We have approximately $727 million of goodwill recorded onour balance sheet at March 31, 2003, related to acquisitions.  We regularly evaluate our acquiredbusinesses for potential impairment indicators.  Additionally, we adopted the provisions of SFAS No. 142,“Goodwill and Other Intangible Assets,” on January 1, 2002, that requires us toperform impairment testing at least annually. Our judgments regarding the existence of impairment indicators are basedon, among other things, the regulatory and competitive status and operationalperformance of each of our acquired businesses.

 

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Future events could significantly impact our judgments and anyresulting impairment loss could have a material adverse impact on our financialcondition and results of operations.

 

*Propertyand Equipment –*Our operations are capital intensive and wehave made significant capital investments in each of our properties.  At March 31, 2003, we have approximately$485 million of net property and equipment recorded on our balance sheet.  We depreciate our assets on a straight-linebasis over their estimated useful lives. The estimates of the useful lives are based on the nature of the assetsas well as our current operating strategy. Future events, such as property expansions, new competition and newregulations, could result in a change in the manner in which we are usingcertain assets requiring a change in the estimated useful lives of suchassets.  In assessing the recoverabilityof the carrying value of property and equipment, we must make assumptionsregarding estimated future cash flows and other factors.  If these estimates or the relatedassumptions change in the future, we may be required to record impairmentcharges for these assets.

 

*InsuranceAccruals –*Our insurance policies for employee health,workers’ compensation and general patron liability have significant deductiblelevels on an individual claim basis.  Weaccrue a liability for known workers’ compensation and general patron liabilitybased upon claims reserves established by the third party administratorprocessing our claims.  Additionally, weaccrue an amount for incurred but not reported claims based on our historicalexperience and other factors.  Ouremployee health insurance benefit accrual is based on our historical claimsexperience rate including an estimated lag factor.  These accruals involve complex estimates and could besignificantly affected should current claims vary from historical levels.  Management reviews our insurance accrualsfor adequacy at the end of each reporting period.

 

*Effective Gaming Tax Rates –* We recordgaming taxes based upon effective gaming tax rates for each of ourcasinos.  These effective rates arebased upon statutory gaming tax rates and estimates of annual casino revenues.  Increases or decreases in our actual orestimated casino revenues or changes in statutory gaming tax rates couldrequire changes to our effective gaming tax rates.  Management reviews our effective gaming tax rates at the end ofeach reporting period.

 

**Controls and Procedures**

 

(a)**          ***Evaluationof disclosure controls and procedures:*

 

We maintain disclosure controls and procedures thatare designed to ensure that information required to be disclosed in ourExchange Act reports is recorded, processed, summarized and reported within thetime periods specified in the Commission’s rules and forms, and that suchinformation is accumulated and communicated to our management including ourPresident and Chief Executive Officer and Senior Vice President and ChiefFinancial Officer, as appropriate, to allow timely decisions regarding requireddisclosure.

 

Within the 90 days prior to the filing date of thisReport (the “Evaluation Date”), we carried out an evaluation, under thesupervision and with the participation of the Company’s management, includingRichard J. Glasier, our President and Chief Executive Officer and Dale R.Black, our Senior Vice President and Chief Financial Officer, of theeffectiveness of the design and operation of our disclosure controls andprocedures.  Based upon that evaluation,the President and Chief Executive Officer and the Senior Vice President andChief Financial Officer concluded that our disclosure controls and procedureswere effective as of the Evaluation Date.

 

(b)**  ***Changes ininternal controls:*

 

There have been no significant changes in theCompany’s internal controls or in other factors that could significantly affectthese internal controls subsequent to the evaluation date.

 

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**ARGOSYGAMING COMPANY**

**OTHERINFORMATION**

 

**PART II.        Other Information**

 

Item1.    *Legal Proceedings –*

 

The Company is from time to time a party to legalproceedings arising in the ordinary course of business.  No material changes have occurred since ourlast filing.

 

Item2.    *Changes in Securities and Use of Proceeds –*None

 

Item3.    *Defaults Upon Senior Securities –* None

 

Item4.    *Submission of Matters to a Vote of Security Holders –*None

 

Item5.    *Other Information –*None

 

Item6.    *Exhibits and reports on Form 8-K*

 
| (a)    |   | *Exhibits*                         |
|--------|--------|------------------------------------|
|   |   |                               |
|   |   | Exhibit  10                        | First  Amendment to Second Amended and Restated Credit Agreement dated April 18,  2003 |
|   |   |                               |   |
|   |   | Exhibit  99.1                      | Certifications  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 |
|   |   |                               |
| (b)    |   | *Reports on Form 8-K –*  None |

 

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**ARGOSYGAMING COMPANY**

**SIGNATURES**

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 
|   | Argosy Gaming  Company                           |   |
|--------|--------------------------------------------------|--------|
|   | Registrant                                       |   |
|   |                                             |
| Date:  | May 14, 2003                                     |   | /s/ Dale R. Black |   |
|   | Dale R. Black                                    |
|   | Senior Vice  President - Chief Financial Officer |
|        |                                                  |        |  |  |  |

 

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**CERTIFICATIONPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

 

I, Richard J. Glasier, President and Chief ExecutiveOfficer, certify that:

 

1.     Ihave reviewed this quarterly report on Form 10-Q of Argosy Gaming Company;

2.     Basedon my knowledge, this quarterly report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this quarterlyreport;

3.     Basedon my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report;

4.     Theregistrant’s other certifying officers and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

a)     designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

b)    evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

c)     presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

5.     Theregistrant’s other certifying officers and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

a)     allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

b)    anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

6.     Theregistrant’s other certifying officers and I have indicated in this quarterlyreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 
| Date:                                    | May 14, 2003 |   |
|------------------------------------------|--------------|--------|
|                                     |
|                                     |
|    /s/ Richard J. Glasier |         |
|                                     |
| Richard J.  Glasier                      |
| President and  Chief Executive Officer   |
|                                          |              |        |  |

 

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**CERTIFICATIONPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

 

I, Dale R. Black, Senior Vice President and ChiefFinancial Officer, certify that:

 

1.     Ihave reviewed this quarterly report on Form 10-Q of Argosy Gaming Company;

2.     Basedon my knowledge, this quarterly report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this quarterlyreport;

3.     Basedon my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report;

4.     Theregistrant’s other certifying officers and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

a)     designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

b)    evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

c)     presentedin this quarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

5.     Theregistrant’s other certifying officers and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

a)     allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

b)    anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

6.     Theregistrant’s other certifying officers and I have indicated in this quarterlyreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 
| Date:                                              | May 14, 2003 |   |
|----------------------------------------------------|--------------|--------|
|                                               |
|                                               |
|    /s/ Dale R. Black                |         |
|                                               |
| Dale R. Black                                      |
| Senior Vice  President and Chief Financial Officer |
|                                                    |              |        |  |

 

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