Diamond Jo 10-K/A 2003 FY Annual report (amended)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-K/A

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2003
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from               to

Commission File Number 333-88829

Diamond Jo, LLC/Peninsula Gaming Corp.
(Exact name of registrant as specified in its charter)
Delaware	42-1483875
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3rd  Street Ice Harbor, PO Box 1750, Dubuque, Iowa	52001-1750
(Address of principal executive offices)	(Zip Code)
(563) 583-7005
(Registrant’s telephone number including area code)
Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC)
(Former name, former address and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12 (g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes o  No ý

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

All of the common equity interests of Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC) (the “Company”) are held by Peninsula Gaming Partners, LLC, and all of the common stock of Peninsula Gaming Corp. is held by Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC).

Explanatory Note

On March 30, 2004, Diamond Jo, LLC and Peninsula Gaming Corp. filed with the Securities and Exchange Commission their Annual Report on Form 10-K for the year ended December 31, 2003 (the “Initial 10-K”).  Subsequent to the filing of the Initial 10-K, omissions were discovered in the exhibit list in Item 15 of the Initial 10-K and errors were discovered in footnote 2 of the table contained in Item 6 and in the Overview and Results of Operations sections in Item 7 of the Initial 10-K.  This Amendment No. 1 corrects those omissions and errors.  No other changes are included in this Amendment No. 1.

2

ITEM 6.SELECTED FINANCIAL DATA

The following table represents selected financial data of the Company or its predecessor companies, Greater Dubuque Riverboat Entertainment Company and Harbor Community Investment, L.C., for the five years ended December 31, 2003.

The selected historical financial data for the five years ended December 31, 2003 are derived from audited financial statements of the Company or its predecessor combined companies.  The Company acquired the operations of the predecessor companies on July 15, 1999.  The selected financial data set forth below should be read in conjunction with, and is qualified in its entirety by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the Company’s financial statements and the related notes included elsewhere in this document.

As set forth in the table below, the amount of non-recurring expenses consists of non-recurring charges related to sale of business and litigation involving the prior owners of the Diamond Jo and Greater Dubuque Riverboat Entertainment Company as well as organizational costs and severance expenses incurred by the Company during the period July 15, 1999 (date of inception) to December 31, 1999.  For purposes of determining the ratio of earnings to fixed charges, earnings are defined as income before income taxes plus fixed charges.  Fixed charges include interest expense on all indebtedness, amortization of deferred financing costs and bond discount, preferred member distributions and minority interest.  The Company’s ratio of earnings to fixed charges for the period from July 15, 1999 (date of inception) to December 31, 1999 would have been 1.1x if the start-up and organizational costs expensed during this period were excluded.

3

	Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC)												Pro Forma			Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC			Predecessor Companies
	2003			2002			2001			2000			1999			Period from July 15, 1999 to December 31,1999			Period from January 1, 1999 to July 14, 1999
	(Dollars in thousands)
Statement of Operations Data
Revenues:
Casino	$	56,795		$	48,262		$	47,710		$	45,519		$	44,916		$	21,153		$	23,763
Racing	17,774			15,510
Food and beverage	4,565			3,886			2,745			2,663			2,643			1,235			1,408
Other	589			145			132			169			243			122			121
Less:  Promotional allowances	(3,221		)	(2,615		)	(2,470		)	(2,599		)	(1,927		)	(1,017		)	(910		)
Net revenues	76,502			65,188			48,117			45,752			45,875			21,493			24,382
Expenses:
Casino	23,533			20,555			20,375			19,517			18,399			8,599			9,800
Racing	14,646			12,651
Food and beverage	4,282			3,820			2,857			2,856			2,808			1,328			1,480
Boat operations	2,322			2,296			2,259			2,242			2,100			991			1,109
Other	443			27			22			37			37			16			21
Selling, general and administrative	12,343			8,740			6,681			6,459			7,383			3,736			3,647
Depreciation and amortization	3,324			2,950			3,963			3,571			2,698			1,541			1,157
Pre-opening expense	3,257
Development costs	102
Litigation settlement				1,600
Referendum				771
State of Wisconsin government relations				55			147
Non-recurring expenses													5,005			3,134			1,871
Total expenses	64,252			53,465			36,304			34,682			38,430			19,345			19,085
Income From Operations	12,250			11,723			11,813			11,070			7,445			2,148			5,297
Other Income (Expense)
Interest income	490			46			184			434			231			155			76
Interest expense, net of amounts capitalized	(25,072		)	(11,888		)	(9,640		)	(9,507		)	(4,714		)	(4,383		)	(331		)
Interest expense related to preferred members’ interest, redeemable	(180		)
Loss on sale of assets	(50		)	(8		)	(152		)	(122		)	(166		)	(68		)	(98		)
Total other expense	(24,812		)	(11,850		)	(9,608		)	(9,195		)	(4,649		)	(4,296		)	(353		)
Preferred member distributions	(180		)	(373		)	(386		)	(630		)	(289		)	(289		)
Minority interest				(232		)
Net income (loss) to common interests	$	(12,742	)	$	(732	)	$	1,819		$	1,245		$	2,507		$	(2,437	)	$	4,944
Ratio of earnings to fixed charges	0.5		x	0.9		x	1.2		x	1.1		x				.4		x	13.5		x
Other Data
Cash flows from operating activities	$	769		$	11,784		$	7,250		$	4,951					$	2,475		$	6,134
Cash flows from investing activities	(94,695		)	(37,790		)	(2,816		)	(2,409		)				(68,611		)	80
Cash flows from financing activities	104,575			28,993			(5,273		)	(2,099		)				74,055			(8,277		)
Distributions to common members	1,557			1,260			1,761			1,918						286			5,258

Balance Sheet Data:	2003			2002		2001		2000		1999
Current assets	$	40,227		$	12,160	$	8,034	$	9,134	$	8,765
Total assets	261,519			126,448		84,374		86,788		88,175
Current liabilities	46,321			35,358		3,964		3,533		4,370
Total debt (1)	228,825			102,944		70,860		70,764		70,680
Preferred member interest, redeemable (1)	—			4,000		4,000		7,000		7,000
Total members’ equity (deficit)	(10,629		)	3,671		5,663		5,604		6,277

(1)In May 2003, the FASB issued Statement No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires the issuer to classify a financial instrument that is within the scope of the standard as a liability if such financial instrument embodies an obligation of the issuer. As a result of the adoption of SFAS No. 150 on July 1, 2003, we reclassified our $4 million mandatory redeemable preferred members’ interest from the mezzanine section of the consolidated balance sheet to long-term debt. Further, preferred member distributions paid or accrued subsequent to

4

adoption of SFAS No. 150 are required to be presented as interest expense separately from interest due to other creditors. We are precluded from reclassifying prior period amounts pursuant to this standard.

(2)For purposes of determining the ratio of earnings to fixed charges, earnings are defined as income before income taxes plus fixed charges. Fixed charges include interest expense on all indebtedness and amortization of deferred financing costs. Earnings were insufficient to cover fixed charges for the period from July 15, 1999 to December 31, 1999 and for the fiscal years ended December 31, 2002 and 2003 by $2.4 million, $0.7 million and $12.7 million, respectively.

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, our “Selected Financial Data” and the financial statements and the related notes thereto appearing elsewhere in this report.

Forward Looking Statements

Some statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” or “anticipate” and other similar words.  These forward-looking statements generally relate to plans and objectives for future operations and are based upon management’s reasonable estimates of future results or trends.  Although we believe that the plans and objectives reflected in or suggested by such forward-looking statements are reasonable, such plans or objectives may not be achieved.  Actual results may differ from projected results due, but not limited, to unforeseen developments, including developments relating to the following:

•the availability and adequacy of our cash flow to satisfy our obligations, including payment of the Peninsula Notes and additional funds required to support capital improvements and development,

•economic, competitive, demographic, business and other conditions in our local and regional markets,

•changes or developments in the laws, regulations or taxes in the gaming and horse racing industry,

•actions taken or omitted to be taken by third parties, including customers, suppliers, competitors, members and shareholders, as well as legislative, regulatory, judicial and other governmental authorities,

•changes in business strategy, capital improvements, development plans, including those due to environmental remediation concerns, or changes in personnel or their compensation, including federal, state and local minimum wage requirements,

•the loss of any license or permit, including the failure to obtain an unconditional renewal of a required gaming license on a timely basis,

•the termination of our operating agreement with the Dubuque Racing Association, Ltd. or the failure of the Dubuque Racing Association, Ltd. to continue as our “qualified sponsoring organization,”

5

•the loss of our riverboat casino or land-based facilities due to casualty, weather, mechanical failure or any extended or extraordinary maintenance or inspection that may be required,

•potential exposure to environmental liabilities, changes or developments in the laws, regulations or taxes in the gaming or horse racing industry or a decline in the public acceptance of gaming or horse racing and other unforeseen difficulties associated with a new venture,

•adverse circumstances, changes, developments or events relating to or resulting from our ownership and control of OED,

•other factors discussed in our other filings with the Securities and Exchange Commission.

Overview

We own and operate (1) the Diamond Jo riverboat casino in Dubuque, Iowa with 749 slot machines and 17 table games, (2) the new Evangeline Downs racino development with 1,627 slot machines in Opelousas, Louisiana, (3) two OTBs, one in Port Allen, Louisiana and one in New Iberia, Louisiana, and (4) an existing horse racetrack near Lafayette, Louisiana. In December 2003 we began casino operations at the new racino and expect to begin racing operations in the second half of 2004 upon completion of the horse racing facilities for remaining capital expenditures of approximately $17.5 million as of December 31, 2003. Upon completion of such horse racing facilities at the new racino, we will close operations at the existing horse racetrack. During 2003, we also renovated our Port Allen OTB and began offering 100 video poker machines in May 2003. Through December 2003, these video poker machines were operated by a third-party until we received a license to operate them ourselves.

Our operations began with the acquisition of the Diamond Jo in 1999 for $77.0 million. The Diamond Jo opened in May 1994 and was doubled in size by the replacement of the original smaller riverboat casino with the current riverboat casino in October 1995.

During 2002, through a series of related transactions, we acquired OED for approximately $30.5 million. At that time, OED’s operations consisted of the existing horse racetrack near Lafayette and the two OTBs. We situated the racino in Opelousas, which is in St. Landry Parish, because St. Landry Parish permits slot machines while Lafayette Parish, where the existing horse racetrack is located, does not permit slot machines.

From 2000 to 2003 our net revenues have grown from $45.8 million to $76.5 million and our Adjusted EBITDA has grown from $14.6 million to $19.3 million. During 2003, $22.5 million and $0.9 million of net revenues and Adjusted EBITDA, respectively, were derived from our operations in Louisiana. Such operations were comprised largely of racing operations at the existing horse racetrack near Lafayette and the two OTBs. We attribute the remaining increase at the Diamond Jo to, among other things, our successful operating strategies that focus on maintaining a loyal customer base, maximizing game play and profitability through targeted marketing, and attracting new customers. In addition, during 2003 the City of Dubuque substantially completed its $188 million redevelopment project in the Port of Dubuque, where the Diamond Jo is located. We expect our operations to continue to benefit from this redevelopment project, which was designed to enhance the attractiveness of the Port of Dubuque as a convention center and tourist destination, by generating increased foot traffic around the site of, and increased admissions to, the Diamond Jo.

We are experiencing substantial growth. The Diamond Jo’s net revenues grew 11.1% to $54.0 million and Adjusted EBITDA grew 18.0% to $18.4 million for 2003 compared to 2002. We attribute this growth principally to the completion of the $188 million America’s River Project in the Port of Dubuque where the Diamond Jo is located. We believe this project, along with our marketing efforts, will continue to foster growth at the Diamond Jo. In December 2003, we began casino operations at Evangeline Downs which currently has 1,627 slot machines. In January 2004 Evangeline Downs generated casino gaming revenues of $6.0 million, or approximately $193,500 per day. In February 2004 these figures increased to $6.3 million and $217,000 per day, representing a per day increase of 11.6%. Evangeline Downs’ database of players increased nearly 100% in January, from approximately 14,400 to approximately 28,500, and over 20% in February, to approximately 35,100. There currently are over 40,000 players in Evangeline Downs’ database. We believe our casino gaming revenues at Evangeline Downs will continue to grow as

6

we further develop our database of players and switch our focus from awareness to target marketing. In addition, in December 2003 we began operating 100 video poker machines at our OTB in Port Allen, Louisiana.

Results of Operations

Our results of operations discussed below include the combined results of operations of the Diamond Jo riverboat casino in Dubuque, Iowa for the years ended December 31, 2003, 2002 and 2001 and the results of operations of Evangeline Downs racino in Opelousas and near Lafayette, Louisiana for the year ended December 31, 2003 and the period February 15, 2002 (the date OED was acquired) through December 31, 2002.

Statement of Operations Data

	Diamond Jo									Evangeline Downs
	Years Ended December 31,
	2003			2002			2001			Year Ended December 31, 2003			Period from February 15, 2002 to December 31, 2002
Revenues:
Casino	$	53,567,052		$	48,262,485		$	47,710,208		$	3,227,477		—
Racing										17,773,481			$	15,509,989
Food and beverage	3,027,064			2,806,118			2,745,333			1,538,374			1,080,208
Other	421,907			144,817			131,916			167,361			—
Less promotional allowances	(3,011,987		)	(2,615,355		)	(2,470,310		)	(209,147		)	—
Net revenues	54,004,036			48,598,065			48,117,147			22,497,546			16,590,197
Expenses:
Casino	21,624,237			20,554,920			20,375,265			1,908,730			—
Racing										14,646,351			12,650,996
Food and beverage	2,781,945			2,822,160			2,856,568			1,500,065			998,205
Boat operations	2,322,126			2,295,771			2,259,314			—			—
Other	383,030			27,471			21,801			59,934			—
Selling, general and administrative	8,890,080			7,285,166			6,680,581			3,452,507			1,454,476
Depreciation and amortization	2,499,597			2,766,543			3,963,350			823,944			183,826
Pre-opening expense	—			—			—			3,256,963			—
Development costs	102,272			—			—			—			—
Litigation settlement	—			—			—			—			1,600,000
Referendum	—			771,111			—			—			—
State of Wisconsin government relations	—			55,000			147,163			—			—
Total expenses	38,603,287			36,578,142			36,304,042			25,648,494			16,887,503
Income from operations	$	15,400,749		$	12,019,923		$	11,813,105		$	(3,150,948	)	$	(297,306	)

2003 Compared to 2002

Net revenues increased 17.4% to $76.5 million for the year ended December 31, 2003 from $65.2 million for the year ended December 31, 2002. The majority of this increase is due to an increase in the Diamond Jo’s slot revenue of 10.7%, or $4.5 million, for the year ended December 31, 2003 compared to the year ended December 31, 2002, primarily due to an increase in coin-in of 9.5% over the same period. We believe this increase in slot revenue was largely attributable to the recent economic development in the Port of Dubuque known as the America’s River Project, where the Diamond Jo is located, which includes the opening of a new riverwalk and related amenities, a new riverfront hotel, which includes an indoor water park and the National Mississippi River Museum and Aquarium. The increase in slot revenue was also attributable to (i) the construction of our new outdoor entertainment venue featuring nationally recognized musicians weekly from June through September, (ii) a decrease in competition in the Eastern Iowa market due to the temporary closing of a Native American casino approximately 125 miles southwest of the Diamond Jo and (iii) internal factors such as targeted promotions to capitalize on opportunities related to the Port of Dubuque development and reduced competition noted above as well as our continued focus on targeted players club

7

promotions and maintenance of our slot mix, which includes the addition of 47 nickel slot machines. In addition, our table game revenue at the Diamond Jo increased 13.3%, or $0.8 million, for the year ended December 31, 2003 compared to the year ended December 31, 2002, primarily due to an increase in the total table game drop of 6.0% and a 1.3 percentage point increase in our table game hold percentage over the same period. The majority of the remaining increase in our net revenues was due to an increase in net revenues at OED. Net revenues at OED increased due primarily to an increase in casino revenue of $3.2 million derived from OED’s new racino which opened its doors to the public on December 19, 2003 and an increase in racing revenues of $2.3 million due primarily to the fact that we did not acquire a 50% interest in OED until February 15, 2002, as well as an increase in video poker revenues of approximately $0.6 million at OED’s renovated OTB in Port Allen, Louisiana. Our results of operations during the period ended December 31, 2002 only include ten and one-half months of OED operations compared to a full twelve months of operations during the year ended December 31, 2003.

Casino gaming win in the Dubuque market increased 9.6% to $97.2 million for the year ended December 31, 2003 from $88.7 million for the year ended December 31, 2002. We believe this increase was primarily due to our ability to capitalize on the recent economic development in the Port of Dubuque, a decrease in competition in the Eastern Iowa market, strategic use of targeted players club promotions and a continued focus on maintenance of our slot mix as noted above combined with a continued focus by operators at the DGP on maintenance of their slot mix during such periods as well as benefiting from the reduced competition in the Eastern Iowa market as noted above. Our share of the Dubuque market casino gaming win increased to 55.1% for the year ended December 31, 2003 from 54.4% for the year ended December 31, 2002. Our casino revenues at the Diamond Jo increased 11.0% to $53.6 million for the year ended December 31, 2003 from $48.3 million for the year ended December 31, 2002. This percentage increase was the third highest percentage increase in casino revenues for all thirteen casinos in the State of Iowa as reported to the Iowa Gaming Commission for the year ended December 31, 2003 compared to the year ended December 31, 2002. This increase was due to a 10.7% increase in slot revenues and a 13.3% increase in table game revenues as discussed above. Casino revenues at the Diamond Jo were derived 87.6% from slot machines and 12.4% from table games for the year ended December 31, 2003 compared to 87.8% from slot machines and 12.2% from table games for the year ended December 31, 2002. Consistent with an increase in casino revenue, our casino win per gaming position per day at the Diamond Jo increased 9.1% to $171 for the year ended December 31, 2003 from $157 for the year ended December 31, 2002. Admissions to the casinos in the Dubuque market increased 6.1% to 2,080,000 for the year ended December 31, 2003 from 1,960,000 for the year ended December 31, 2002. For the year ended December 31, 2003, our share of the Dubuque market casino admissions increased to 50.7% from 50.5% for the year ended December 31, 2002. Our admissions at the Diamond Jo for the year ended December 31, 2003 increased 6.5% to 1,054,000 from 990,000 for the year ended December 31, 2002. For the year ended December 31, 2003 our casino win per admission at the Diamond Jo increased 4.2% to $50.81 from $48.76 for the year ended December 31, 2002. Casino revenues of $3.2 million at OED consisted solely of revenues from slot machines at OED’s recently opened racino. Casino win per position at OED was $236 for the year ended December 31, 2003.

Racing revenues at OED for the year ended December 31, 2003 were $17.8 million compared to $15.5 million for the period February 15, 2002 (the date OED was acquired) to December 31, 2003. The increase in racing revenues was directly related to the timing of the acquisition of OED as discussed above and an increase in video poker revenues of $0.6 million resulting from OED’s Port Allen OTB facility renovation and the installation of 100 video poker machines during the second quarter of 2003.

Net food and beverage revenues, other revenues and promotional allowances increased $0.5 million during the year ended December 31, 2003 compared to the year ended December 31, 2002 due primarily to food & beverage revenues generated from OED’s new racino and revenues from the Diamond Jo’s new outdoor entertainment venue as discussed above.

Casino operating expenses increased 14.5%, or $3.0 million, to $23.5 million for the year ended December 31, 2003 from $20.6 million for the year ended December 31, 2002 due primarily to (i) casino expenses at OED of $1.9 million primarily related to purse supplements and gaming taxes which are based on net casino revenues and casino related payroll and (ii) an increase in gaming taxes at the Diamond Jo of $1.1 million associated with our increased casino revenues. Racing expenses increased 15.8% to $14.6 million for the year ended December 31, 2003 from $12.7 million for the period ended December 31, 2002 due primarily to (i) timing of the acquisition of OED in 2002 as discussed above and (ii) an increase in operating expenses of $0.6 million related to the addition of 100 new video gaming devices at OED’s renovated OTB in Port Allen, Louisiana. Food and beverage expenses increased

8

12.1%, or $0.5 million, to $4.3 million for the year ended December 31, 2003 from $3.8 million for the year ended December 31, 2002 due primarily to food and beverage expenses at OED related to the opening of OED’s new racino. Boat operation expenses at the Diamond Jo were substantially unchanged at $2.3 million for the year ended December 31, 2003 and 2002. Other expenses increased $0.4 million primarily due to costs associated with the Diamond Jo’s new outdoor entertainment venue as discussed above.

Selling, general and administrative expenses increased 41.2% to $12.3 million for the year ended December 31, 2003 from $8.7 million for the year ended December 31, 2002. This increase was due to (i) an increase in general and administrative expenses at OED of $2.0 million due primarily to payroll, marketing and other general and administrative expenses associated with the new racino and the timing of the acquisition of OED (as discussed above), including an increase in professional fees at OED of approximately $0.2 million and an increase in insurance expense at OED of approximately $0.2 million, and (ii) an increase in general and administrative expenses at the Diamond Jo of approximately $1.6 million due primarily to an increase in management compensation at the Diamond Jo of $0.6 million, an increase in donations of $0.3 million related to a charitable giving agreement with an Iowa non-for-profit organization and an increase in insurance expense at the Diamond Jo of $0.1 million.

Pre-opening expenses of $3.3 million for the year ended December 31, 2003 relate to payroll and other expenses incurred by OED with respect to start-up activities surrounding the racino project. Development costs of approximately $0.1 million related to expenses incurred relative to us entering into an exclusive agreement with the Worth County Development Authority pursuant to which the parties agreed to jointly submit an application for a license to operate a gaming facility in Worth County, Iowa. Under this agreement, we have agreed to design, construct, operate and manage a casino with no less than 700 gaming positions, a waterway, if necessary, a recreational vehicle park with a minimum capacity of 200 spaces, and, upon reaching a targeted rate of return on invested capital, a 100-room hotel development. Litigation settlement of $1.6 million for the year ended December 31, 2002 relates to OED’s settlement with the Louisiana Horsemen’s Benevolent and Protective Association 1993, Inc. (the “LHBPA”) in February 2003. Referendum costs of $0.8 million during the year ended December 31, 2002 relate to various advertising and promotional expenses to promote the approval of continued gaming on riverboats in Dubuque County in 2002. During 2002, we incurred expenses of $55,000 related to a governmental relations services agreement with respect to gaming issues and developments in the State of Wisconsin which might affect us and our gaming operations.

Depreciation and amortization expenses increased 12.6% to $3.3 million for the year ended December 31, 2003 from $3.0 million for the year ended December 31, 2002 due primarily to depreciation of property and equipment at OED’s racino of approximately $0.3 million during the period December 19, 2003 (date at which the racino was opened to the public) through December 31, 2003. During the first quarter of 2002, we performed a transitional impairment test on goodwill in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and Other Intangible Assets” and determined the estimated fair value of the Company exceeded its carrying value as of that date. During the first quarter of 2003, we performed its annual impairment test on goodwill in accordance with SFAS No. 142 and determined that the estimated fair value the Company exceeded its carrying value as of that date. Based on that review, management determined that there was no impairment of goodwill.

Net interest expense, including interest expense related to our redeemable preferred member interests, increased 109.1% to $24.8 million for the year ended December 31, 2003 from $11.8 million for the year ended December 31, 2002. This increase is due to (i) an increase in net interest expense at OED of $12.7 million primarily associated with interest on the OED Notes and on OED’s senior credit facilities with Wells Fargo Foothill, the amortization and write-off of deferred financing costs associated with OED’s term loan with Wells Fargo Foothill, the PGP Note (as defined below) and the WET2 Note (as defined below) (all of which were repaid in February 2003 with the proceeds of the offering of the OED Notes) and timing of the OED acquisition as discussed above, (ii) our adoption of FASB Statement No. 150 on July 1, 2003 which requires that interest expense associated with our redeemable preferred members interest be included in interest expense (prior to July 1, 2003, this amount was included as a separate line item above “Net income for common members’ interest” and not included in “Total other expenses” with interest expense) and (iii) interest associated with our senior secured credit facility with Wells Fargo Foothill dated February 23, 2001 (the “DJL Credit Facility”), $12.0 million of which was drawn down by DJL on February 15, 2002 to consummate the acquisition of OED, resulting in twelve months of interest during the year ended December 31, 2003 compared to only ten and one-half months of interest during the year ended December 31, 2002. Interest expense

9

of approximately $2.2 million and $0.1 million was capitalized as part of our construction of the racino during 2003 and 2002, respectively. The “PGP Note” means the note payable to PGP, issued by OEDA, bearing interest at a rate of 7% until January 31, 2003, thereafter at 8% until February 28, 2003, thereafter at 9% until March 31, 2003, and thereafter at the greater of 12% or the fixed rate on the OED Notes, and maturing on June 30, 2003. The “WET2 Note” means the note payable to WET2, bearing interest at a rate of 7% until March 31, 2003, and thereafter at the greater of 12% or the fixed rate on the OED Notes, and maturing on June 30, 2003.

2002 Compared to 2001

Net revenues increased 35.5% to $65.2 million for 2002 from $48.1 million for 2001 primarily due to net revenues from OED of $16.6 million and an increase in the Diamond Jo’s casino revenues of $0.6 million. This increase in casino revenue was due to an increase in slot revenue of 3.8%, or $1.6 million for 2002 compared to 2001. This increase in slot revenues was a result of an increased marketing focus on the addition of new players club members as well as on targeting players club promotions towards more profitable market segments and an increase in the number of slot machines on the gaming floor. This increase in slot revenues was offset by a decrease in table games revenue at the Diamond Jo of $1.0 million. This decrease was a direct result of a 0.9 percentage point decrease in our table game hold percentage and a 10.4% decrease in table game drop.

Casino gaming win in the Dubuque market increased 2.8% to $88.7 million for 2002 from $86.3 million for 2001. We believe this increase was primarily due to targeted players club promotions and a continued focus on maintenance of our slot mix as well as a continued focus by operators at the DGP on maintenance of their slot mix during such period. Our share of the Dubuque market casino gaming win decreased slightly to 54.4% for 2002 from 55.3% for 2001. This decrease was attributed to a decrease in our table game revenue as discussed above. Our casino revenues increased 1.2% to $48.3 million for 2002 from $47.7 million for 2001. This increase was due to an increase in slot revenue offset by a decrease in table game revenues as discussed above. Casino revenues were derived 87.8% from slot machines and 12.2% from table games for 2002 compared to 85.6% from slot machines and 14.4% from table games for 2001. Consistent with an increase in casino revenue, our casino win per gaming position per day at the Diamond Jo increased 4.0% to $157 for 2002 from $151 for 2001. Admissions to the casinos in the Dubuque market increased slightly to 1,959,709 for 2002 from 1,946,326 for 2001. For 2002, our share of the Dubuque market casino admissions decreased to 50.5% from 51.7% for 2001. We believe this decrease was primarily attributable to our targeted use of marketing dollars directed primarily towards more profitable market segments during 2002 compared to 2001. Our admissions at the Diamond Jo for 2002 decreased slightly to 989,865 for 2002 from 1,006,237 for 2001. For 2002 our casino win per admission at the Diamond Jo increased 2.8% to $48.76 from $47.41 for 2001.

Racing revenues of $15.5 million related solely to revenues at OED for the period February 15, 2002 (the date OED was acquired) to December 31, 2002. Net food and beverage revenues, other revenues and promotional allowances increased to $1.4 million for 2002 from $0.4 million for 2001 due to food and beverage revenues at OED of $1.0 million.

Casino operating expenses at the Diamond Jo increased slightly to $20.6 million for 2002 from $20.4 million for 2001 due mainly to an increase in gaming taxes paid, as a result of an increase in gaming revenues, of $0.1 million and an increase in the state admission fee imposed by the State of Iowa of $0.1 million. Racing expenses at OED were $12.7 million for the period February 15, 2002 (the date OED was acquired) to December 31, 2002. Food and beverage expenses increased to $3.8 million for 2002 from $2.9 million for 2001 due primarily to food and beverage expenses from OED of $0.9 million. Boat operation expenses and other expenses were $2.3 million for 2002 and 2001. Selling, general and administrative expenses increased to $8.7 million for 2002 from $6.7 million for 2001. This increase in such expenses resulted from selling, general and administrative expenses at OED of $1.5 million, an increase in legal expenses of approximately $0.3 million (resulting primarily from a credit of $0.2 million in legal expense during the prior year), and an increase in management bonuses of $0.2 million. Depreciation and amortization expenses decreased 25.6% to $3.0 million for 2002 from $4.0 million for 2001. This decrease was due to adoption of SFAS 142 which provides that goodwill and certain indefinite lived intangible assets will no longer be amortized but will be reviewed at least annually for impairment and written down and charged to income when their recorded value exceeds their estimated fair value. Goodwill amortization during 2001 was approximately $1.4 million. This decrease was offset by an increase in depreciation at the Diamond Jo of $0.2 million and at OED of $0.2 million. Litigation settlement of $1.6 million relates to OED’s settlement with the LHBPA in February 2003. Although the settlement occurred after the date of the financial statements, Statement of Financial Accounting Standards No. 5 “Accounting for Contingencies”

10

requires DJL to accrue the loss contingency during 2002. During 2002, DJL incurred various advertising, promotional and other referendum related expenses totaling $0.8 million to promote the approval of continued gaming on riverboats in Dubuque County. During 2002 and 2001, DJL incurred expenses of $55,000 and $147,163, respectively, related to a governmental relations services agreement with respect to gaming issues and developments in the State of Wisconsin which might affect DJL and its gaming operations.

Net interest expense increased 25.2% to $11.8 million for 2002 from $9.5 million for 2001. This increase was due to an increase in interest expense of $1.2 million associated with our senior credit facility with Wells Fargo Foothill providing for commitments of up to $12.5 million which terminate in 2005, $12.0 million of which was drawn down by DJL on February 15, 2002 to consummate an investment in OED and net interest expense at OED of $1.1 million. Interest expense of approximately $0.1 million was capitalized as part of our construction of the racino during 2002.

Liquidity and Capital Resources

Cash Flows from Operating, Investing and Financing Activities

Our cash balance increased $10.6 million during the year ended December 31, 2003 to $21.2 million from $10.5 million at December 31, 2002.

Cash flows used in operating activities of $0.8 million for the year ended December 31, 2003 consisted of a net loss of $12.7 million increased by non-cash charges of $6.7 million, principally depreciation and amortization and write-off and amortization of deferred financing costs and an increase in working capital of $6.8 million. The change in working capital is primarily due to an increase in accrued interest of approximately $5.3 million related to the OED Notes and an increase in accrued payroll of $1.5 million primarily related to the opening of OED’s racino in December 2003.

Cash flows used in investing activities for the year ended December 31, 2003 was $94.7 million consisting of (i) an increase in restricted cash—racino project and restricted investments of $43.9 million related to the investment of unused proceeds from the OED Notes into interest bearing cash equivalents and investments whose distribution is restricted as outlined in the Cash Collateral and Disbursement Agreement, (ii) approximately $55.3 million for construction, architecture fees and other development costs associated with the racino project and the purchase of land at St. Landry Parish where the racino is being developed, (iii) approximately $1.8 million in development costs related to the OED acquisition and OED’s racing and gaming licenses and (iv) cash outflows of approximately $2.2 million used for capital expenditures mainly related to the purchase of new slot machines at the Diamond Jo and video poker machines at OED’s Port Allen OTB, the construction of our concert area adjacent to the Diamond Jo which hosts weekly concerts throughout the summer months and the renovation of OED’s Port Allen OTB to accommodate the purchase and installation of 100 video poker machines. These cash outflows were offset by (i) cash proceeds from the maturity of restricted investments of $8.1 million, the proceeds of which were used to make the first interest payment on the OED Notes due September 1, 2003 and (ii) cash proceeds from the sale of assets of $0.4 million. We expect additional capital expenditures at the Diamond Jo and OED (other than the capital expenditures related to the racino project) to be approximately $2.0 million and $1.5 million, respectively, for the year ended December 31, 2004.

Cash flows from financing activities for the year ended December 31, 2003 of $104.6 million reflects the net proceeds from the offering of the OED Notes of $120.7 million, proceeds from OED’s draws under its $15.0 million senior secured credit facility with Wells Fargo Foothill dated June 24, 2003, as amended September 22, 2003, December 10, 2003 and December 24, 2003 (the “OED Credit Facility”) and its $16.0 million FF&E credit facility with Wells Fargo Foothill dated September 22, 2003 (the “OED FF&E Facility”) of $17.6 million. These proceeds were offset by (i) principal payments to extinguish OED’s obligations under OED’s term loan with Wells Fargo Foothill, the PGP Note and the WET2 Note totaling $20.1 million, (ii) deferred financing costs paid of $11.5 million associated with the issuance of the OED Notes, the OED Credit Facility and the OED FF&E Credit Facility, (iii) member distributions of $1.6 million and (iv) aggregate principal payments on borrowings under the DJL Credit Facility of $0.6 million.

As of December 31, 2003, DJL had $11.3 million outstanding under the DJL Credit Facility and OED had $5.1 million and $12.5 million outstanding under the OED Credit Facility and the OED FF&E Facility, respectively. Approximately $24.2 million of the net proceeds from the sale of the OED Notes were deposited into an interest

11

reserve account in order to pay the first three payments of fixed interest on the OED Notes. Although OED’s earnings for the year ended December 31, 2003 are not sufficient to cover their current fixed charges (which consist of interest on the OED Notes, including capitalized interest), OED does have sufficient funds deposited in the interest reserve account to satisfy its obligations under the OED Notes until March 1, 2005, after which, OED anticipates satisfying its interest obligations out of earnings from operations. In September 2003, $8.1 million of the initial proceeds deposited into the interest reserve account, along with interest earned on those proceeds, were used to pay the first fixed interest payment on the OED Notes.

Financing Activities

The obligations of DJL under the DJL Credit Facility are senior to our obligations under the DJL Notes. The DJL Credit Facility contains, among other things, covenants, representations and warranties and events of default customary for loans of this type. The most significant covenants include a minimum “EBITDA” (as defined therein) requirement and the maintenance of certain financial ratios that limit our ability to make distributions and incur debt. At December 31, 2003 and 2002, DJL was in compliance with all such covenants. At December 31, 2003, DJL had outstanding borrowings of $11.3 million under the DJL Credit Facility.

On March 19, 2004, we amended the DJL Credit Facility (the “DJL Credit Facility Amendment”).  Under the terms of the DJL Credit Facility Amendment, the minimum interest rate on all outstanding borrowings under DJL Credit Facility less than $10.0 million was reduced to 5.5% and the term of the DJL Credit Facility was extended by one year to March 12, 2006.

OED’s obligations under the OED Credit Facility are secured by a lien on substantially all of its and its subsidiaries’ current and future assets, other than the construction disbursement, interest reserve, completion reserve and excess cash flow accounts and certain other excluded assets as well as a pledge by OEDA of the capital stock of OED. Pursuant to the intercreditor agreement described below, the lien on the collateral securing the OED Credit Facility is senior to the lien on such collateral securing the OED Notes.

The OED Credit Facility consists of a revolving credit facility which permits OED to request advances and letters of credit to finance working capital and other general corporate needs. Pursuant to the OED Credit Facility Amendments, OED had the ability to borrow up to $8.5 million (less amounts outstanding under letters of credit) at any one time outstanding during the period before the date that the casino portion of the racino has been completed and, among other things, is open for business to the general public and construction costs for the casino have been paid in full or, if such payments are not yet due on such date, that sufficient funds remain in the construction disbursement account to satisfy such payments in full (the “Phase I Completion Date”). All requirements under the definition of the Phase I Completion Date were met on January 9, 2004. For the period after the Phase I Completion Date but before the second anniversary of the Phase I Completion Date (the “Second Anniversary”), the total amount of credit that will be available to OED will be the lesser of $15.0 million and a specified borrowing base (the “Borrowing Base”). For the purposes of the OED Credit Facility, the Borrowing Base is the lesser of 30% of the amount of certain costs incurred by OED in connection with the construction of the racino project and 20% of the amount of the distressed-sale valuation of its and its subsidiaries’ operations and assets. After the Second Anniversary, the total amount of credit that will be available to OED will be the greater of (i) the lesser of $10.0 million and the Borrowing Base or (ii) the aggregate principal amount of all advances outstanding as of the Second Anniversary. At December 31, 2003, OED had outstanding borrowings of $5.1 million and outstanding letters of credit of $3.2 million under the OED Credit Facility.

All revolving loans and letters of credit issued under the OED Credit Facility will mature on June 24, 2006. Prior to the maturity date, funds borrowed under the OED Credit Facility may be borrowed, repaid and reborrowed, without premium or penalty. OED’s borrowings under the OED Credit Facility will bear interest at a base rate (a Wells Fargo prime rate) plus a margin of 2.50%. The interest rate payable under the OED Credit Facility will increase by 2% per annum during the continuance of an event of default. Under the OED Credit Facility, OED is also required to pay to the lender a letter of credit fee equal to 2% per annum on the daily balance of the undrawn amount of all outstanding letters of credit and to the institution issuing a letter of credit a fronting fee, in each case payable in arrears on a monthly basis.

The OED Credit Facility contains, among other things, covenants, representations and warranties and events of default customary for loans of this type. The most significant covenants include a minimum “EBITDA” (as defined therein) requirement and a maximum capital expenditure requirement. At December 31, 2003, OED was in compliance with all such covenants.

12

Concurrently with the closing of the OED Credit Facility, the trustee under the indenture for the OED Notes (as secured party) entered into an intercreditor agreement with Wells Fargo Foothill as the lender under such credit facility, providing, among other things, that the lien securing the indebtedness under the OED Credit Facility is senior to the lien securing the indebtedness under the OED Notes (except that the construction disbursement, interest reserve, completion reserve and excess cash flow accounts are security only for the OED Notes).

On September 22, 2003, OED entered into the OED FF&E Facility. Under the OED FF&E Facility, the lender agrees to make a series of term loans, up to a maximum amount of $16.0 million, to finance the purchase of gaming equipment and other furniture, fixtures and equipment. OED’s obligations under the OED FF&E Facility are, subject to certain limitations, secured by a first priority lien on all of the furniture, fixtures and equipment, and all proceeds and products thereof. At December 31, 2003, OED had outstanding borrowings of $12.5 million under the OED FF&E Facility.

Loans under the OED FF&E Facility are repayable in 48 equal monthly installments of principal, commencing on March 1, 2004, and continuing on the first day of each month thereafter until the unpaid balance of all loans are paid in full. The outstanding principal balance and all accrued and unpaid interest under all loans shall also be due and payable in full on March 1, 2008. Once borrowed, all loans may be prepaid in whole or in part without penalty or premium at any time during the term of this agreement. Amounts borrowed and repaid may not be reborrowed. OED’s borrowings under the OED FF&E Facility bear interest at a base rate (a Wells Fargo prime rate) plus a margin of 2.50%, but at no time shall the interest rate be less than 6%. The interest rate payable under the OED FF&E Facility will increase by 2% per annum during the continuance of an event of default.

The OED FF&E Facility contains, among other things, covenants, representations and warranties and events of default customary for loans of this type. The most significant covenants include a minimum “EBITDA” (as defined therein) requirement and a maximum capital expenditure requirement. At December 31, 2003 OED was in compliance with all such covenants.

In October 2003, OED entered into purchase agreement to acquire 93 acres of land, divided into seven approximately equal parcels, for a total purchase price of $3,850,000. The purchase price under this second purchase agreement was financed by the seller with OED issuing a $3,850,000 note payable to the seller. The note is payable in seven equal annual installments of $550,000 beginning October 24, 2004 and bears interest at a rate of 4.75% of the unpaid balance due monthly in arrears on the fifth day of each month beginning on December 5, 2003. The note is collateralized by a mortgage on the property. Simultaneously with the payment of each $550,000 annual installment discussed above, the seller agrees to release one of the remaining parcels from the mortgage.

In March 2003, OED entered into a participation agreement with a third party operator to own and operate 100 video poker machines at OED’s OTB in Port Allen, Louisiana. In December 2003, OED obtained its license to own and operate video poker machines. In accordance with the participation agreement, OED assumed the remaining balance of an original $663,700 promissory note payable in exchange for ownership of the 100 video poker machines. The note bears interest at 9.5% and is payable in monthly installments of principal and interest of $31,250 with the last payment due July 1, 2005. The note is collateralized by a security interest in the machines.

On July 15, 1999, DJL authorized and issued $7.0 million of preferred membership units. The holders of all of our preferred membership interests are entitled to receive, subject to certain restrictions contained in the indenture governing the DJL Notes, out of funds legally available therefor, cumulative preferred distributions payable semiannually at an annual rate of 9% of the original face amount thereof. Other than certain limited consent rights and as required by law, holders of our preferred membership interests have no voting rights.

DJL redeemed $3.0 million in original face amount of its preferred membership interests on January 19, 2001 at a redemption price of $3.0 million, plus a portion of accrued and unpaid distributions thereon of $170,000, the balance of which, in an amount equal to $145,000 plus accrued interest on such amount (the “Accrued Preferred Distribution”), was agreed to be paid by DJL at such time that such payment is permitted to be made pursuant to our existing financing arrangements, but in no event later than January 15, 2003. The Accrued Preferred Distribution totaling $171,100 was paid on January 15, 2003. The balance of preferred membership interests not redeemed by DJL must be redeemed by DJL on or prior to October 13, 2006 at a redemption price of $4.0 million, plus any accrued and

13

unpaid preferred distributions through the date of redemption. At December 31, 2003, accrued distributions related to the preferred membership interests was approximately $1.1 million.

General

On March 11, 2004, we, along with OED, announced that we intend to refinance the Peninsula Notes and the OED Notes with a proposed offering of $230 million (which subsequently has been increased to $233 million) of senior secured notes due 2012 (the “Notes”) and a new credit facility.  As part of the Note offering, we are also seeking requisite regulatory approvals to effect a series of corporate transactions (the “Corporate Transactions”), including the creation of a new holding company to be our and OED’s new direct parent and a co-issuer of the Notes.  In the event regulatory approval of the Corporate Transactions is not obtained, we will still consummate the Note offering and use the proceeds of the offering to repurchase and redeem the OED Notes and DJL Notes, respectively, and pay accrued dividends on our preferred membership interests.  In such event, however, we will not at such time effect the Corporate Transactions or enter into the new credit facility.

After the offering of the Notes, we will have the following sources of funds for our business: (i) cash flows from OED’s existing racetrack operations and casino operations, (ii) cash flows from our existing casino operations, and (iii) available borrowings under the OED Credit Facility and the DJL Credity Facility or, our new senior credit facility, if entered into in connection with the refinancing of our existing senior secured credit facilities.

As part of the Corporate Transactions, we and OED intend to enter into a new senior secured credit facility in the amount of $35.0 million.  We expect our obligations under the new senior secured credit facility will be (a) guaranteed by all of our and OED’s domestic subsidiaries, and (b) secured by a security interest in all of our and OED’s tangible and intangible assets and those of our parent’s domestic subsidiaries (including, without limitation, all of the shares of the capital stock of these subsidiaries) but excluding contracts, agreements, licenses (including gaming, and liquor licenses) and other rights that by their express terms prohibit the assignment thereof or the grant of a security interest therein.

All of the net proceeds from the offering of the Notes and, if the new senior secured credity facility has been entered into, $15.0 million of borrowings under such new senior secured credit facility will be used, together with cash on hand, to consummate the above transactions and pay related fees and expenses.  We believe that cash generated from operations, together with remaining amounts available under existing credit facilities or the new senior secured credit facility, as applicable, will be sufficient to satisfy our working capital and capital expenditure requirements and satisfy our current debt service requirements, including interest payments on the Notes.  No assurances can be given, however, that our cash or equivalents on-hand or our ability to generate or borrow cash will be sufficient to meet our obligations.  In such event, we may have to refinance our debt, including the Notes, or sell some or all of our assets (within the restrictions contained in the indenture governing our outstanding notes) to meet our obligations.

Contractual Obligations and Contingent Liabilities and Commitments

Our future contractual obligations related to long-term debt, capital leases and operating leases at December 31, 2003 were as follows (in millions of dollars):

	Payments due by Period
Contractual Obligations	Total		Less Than 1 Year		1-3 Years		4-5 Years		Thereafter
Long-Term Debt	$	231.5	$	4.1	$	98.3	$	4.8	$	124.3
Operating Leases	1.2		0.6		0.6		—		—
Litigation Settlement	1.2		0.4		0.8		—		—
Total Contractual Cash Obligations	$	233.9	$	5.1	$	99.7	$	4.8	$	124.3

The following shows our other contingent obligations at December 31, 2003 based on expiration dates (in millions):

	Less Than 1 Year	1-3 Years		4-5 Years	Thereafter
Standby letters of credit	—	$	3.7	—	—

14

Off-Balance Sheet Transactions

DJL and OED do not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonable likely to have a material current or future effect on our or OED’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Seasonality and Inflation

Our operations are subject to seasonal fluctuations. Our Iowa operations are typically weaker from November through February as a result of adverse weather conditions, and are typically stronger from March through October. Our Louisiana operations are also subject to seasonal fluctuations. Our Louisiana operations are usually stronger during live racing season which runs from April through October. In general, our payroll and general and administrative expenses are affected by inflation. Although inflation has not had a material effect on our business to date, we could experience more significant effects of inflation in future periods.

Recent Accounting Pronouncements

In October 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” This new pronouncement also amends ARB No. 51 “Consolidated Financials Statements,” to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. SFAS No. 144 requires that one accounting model be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired and also broadens the presentation of discontinued operations to include more disposal transactions. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years. Adoption of SFAS No. 144 on January 1, 2002, did not have any impact on our financial position or results of operations for the years ended December 31, 2003 and 2002.

In July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. This statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies the previous guidance on the subject. This statement requires, among other things, that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The provisions for this statement are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material effect on DJL results of operations or financial position for the year ended December 31, 2003.

In November 2002, the Financial Accounting Standards Board (FASB) issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 expands the disclosure requirements related to certain guarantees, including product warranties, and requires DJL to recognize a liability for the fair value of all guarantees issued or modified after December 31, 2002. FIN 45 did not impact our financial position or net income.

In May 2003, the FASB issued Statement No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires the issuer to classify a financial instrument that is within the scope of the standard as a liability if such financial instrument embodies an obligation of the issuer. As a result of the adoption of SFAS No. 150 on July 1, 2003, DJL reclassified its $4 million mandatorily redeemable preferred members’ interest from the mezzanine section of the Condensed Consolidated Balance Sheet to long-term debt. Further, preferred member distributions paid or accrued subsequent to adoption of SFAS No. 150 are required to be presented as interest expense separately from interest due to other creditors. DJL was not required to record a cumulative effect of change in an accounting principle as the redeemable preferred members’

15

interest was recorded at fair value prior to July 1, 2003. We are precluded from reclassifying prior period amounts pursuant to this standard.

In 2003, the FASB issued Interpretation (FIN) No. 46, Consolidation of Variable Interest Entities, which addresses the consolidation and related disclosures of these entities by business enterprises. These are entities in which either the equity investment at risk is not sufficient to absorb the probable loss without additional subordinated financial support from other parties, or the investors with equity at risk lack certain essential characteristics of a controlling interest. Under the Interpretation, DJL must consolidate any variable interest entities (VIEs) in which DJL holds variable interests and DJL is deemed the primary beneficiary. The effective date for the adoption of FIN 46 for interests in VIEs created prior to February 1, 2003 was July 1, 2003 and applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which DJL obtains an interest after that date. The adoption of FIN 46 did not impact our financial position or net loss available to common members’ interest.

Critical Accounting Policies

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We periodically evaluate our policies and the estimates and assumptions related to such policies. We also periodically evaluate the carrying value of our assets in accordance with generally accepted accounting principles. We and our subsidiaries operate in a highly regulated industry and are subject to regulations that describe and regulate operating and internal control procedures. The majority of our revenues are in the form of cash, which by its nature, does not require complex estimations. In addition, we made certain estimates surrounding our application of purchase accounting related to the acquisition and the related assignment of costs to goodwill and other intangible assets.

In addition, contingencies are accounted for in accordance with SFAS No. 5, “Accounting for Contingencies.” SFAS No. 5 requires that we record an estimated loss from a loss contingency when information available prior to issuance of our financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Accounting for contingencies such as legal matters requires us to use judgment. Many of these legal contingencies can take years to be resolved. Generally, as the time period increases over which the uncertainties are resolved, the likelihood of changes to the estimate of the ultimate outcome increases. However, an adverse outcome could have a material impact on our financial condition and operating results.

16

PART IV

ITEM 15.              EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)The following documents are filed as a part of this report:

(1)Financial Statements — see Index to Financial Statements appearing on page F-1.

(2)Exhibits:

Exhibit Number	Description
3.1A	Certificate of Formation of Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 3.1A of the Company’s Form S-4 filed October 12, 1999. (With regard to applicable cross references in this report, the Company’s Current, Quarterly and Annual Reports are filed with the SEC under File No. 333-88829.)
3.1B	Amendment to Certificate of Formation of Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 3.1B of the Company’s Form S-4 filed October 12, 1999.
3.2	Operating Agreement of Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 3.2 of the Company’s Form S-4 filed October 12, 1999.
3.3	Articles of Incorporation of Peninsula Gaming Corp.— incorporated herein by reference to Exhibit 3.3 of the Company’s FormS-4 filed October 12, 1999.
3.4	By-laws of Peninsula Gaming Corp.—incorporated herein by reference to Exhibit 3.4 of the Company’s Form S-4 filed October 12, 1999.
4.1	Specimen Certificate of Common Stock of Peninsula Gaming Corp. —incorporated herein by reference to Exhibit 4.1 of the Company’s Form S-4 filed October 12, 1999.
4.2A	Indenture, dated July 15, 1999, by and among Peninsula Gaming Company, LLC, Peninsula Gaming Corp. and Firstar Bank of Minnesota, N.A., as trustee—incorporated herein by reference to Exhibit 4.2 of the Company’s Form S-4 filed October 12, 1999.
4.2B	First Supplemental Indenture, dated January 15, 2002, by and among Peninsula Gaming Company, LLC and Peninsula Gaming Corp., as Issuers, the Subsidiary Guarantors referred to therein and U.S. Bank National Association, as trustee—incorporated herein by reference to Exhibit 4.3 of the Company’s Form 8-K Current Report filed March 4, 2002.
10.1	Employment Agreement, dated April 1, 2000, by and among Natalie Schramm and Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 10.1 of the Company’s Form 10-K Annual Report for the year ended December 31, 2002.
10.2	Indemnification Agreement, dated June 7, 1999, by and among Natalie Schramm and AB Capital, L.L.C. and Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 10.2 of the Company’s Form S-4 filed October 12, 1999.
10.3A	Operating Agreement, dated February 22, 1993, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. —incorporated herein by reference to

17

Exhibit Number	Description
	Exhibit 10.9A of the Company’s Form S-4 filed October 12, 1999.
10.3B	Amendment to Operating Agreement, dated February 22, 1993, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. —incorporated herein by reference to Exhibit 10.9B of the Company’s Form S-4 filed October 12, 1999.
10.3C	Amendment to Operating Agreement, dated March 4, 1993, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. —incorporated herein by reference to Exhibit 10.9C of the Company’s Form S-4 filed October 12, 1999.
10.3D	Third Amendment to Operating Agreement, dated March 11, 1993, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. —incorporated herein by reference to Exhibit 10.9D of the Company’s Form S-4 filed October 12, 1999.
10.3E	Fourth Amendment to Operating Agreement, dated March 11, 1993, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. —incorporated herein by reference to Exhibit 10.9E of the Company’s Form S-4 filed October 12, 1999.
10.3F	Fifth Amendment to Operating Agreement, dated April 9, 1993, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. —incorporated herein by reference to Exhibit 10.9F of the Company’s Form S-4 filed October 12, 1999.
10.3G	Sixth Amendment to Operating Agreement, dated November 29, 1993, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. — incorporated herein by reference to Exhibit 10.9G of the Company’s Form S-4 filed October 12, 1999.
10.3H	Seventh Amendment to Operating Agreement, dated April 6, 1994, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. —incorporated herein by reference to Exhibit 10.9H of the Company’s Form S-4 filed October 12, 1999.
10.3I	Eighth Amendment to Operating Agreement, dated April 29, 1994, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. —incorporated herein by reference to Exhibit 10.91 of the Company’s Form S-4 filed October 12, 1999.
10.3J	Ninth Amendment to Operating Agreement, dated July 11, 1995, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. —incorporated herein by reference to Exhibit 10.9J of the Company’s Form S-4 filed October 12, 1999.
10.3K	Tenth Amendment to Operating Agreement, dated July 15, 1999, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. —incorporated herein by reference to Exhibit 10.9K of the Company’s Form S-4 filed October 12, 1999.
10.4	Operating Agreement Assignment, dated July 15, 1999, by and among Greater Dubuque Riverboat Entertainment Company, L.C. and Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 10.10 of the Company’s Form S-4 filed October 12, 1999.
10.5	First Preferred Ship Mortgage, dated July 15, 1999, by Peninsula Gaming Company, LLC in favor of Firstar Bank of Minnesota, N.A., as trustee—incorporated herein by reference to Exhibit 10.11 of the Company’s Form S-4 filed October 12, 1999.

18

Exhibit Number	Description
10.6	Mortgage, Leasehold Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement dated July 15, 1999, by Peninsula Gaming Company, LLC in favor of Firstar Bank of Minnesota, N.A., as trustee—incorporated herein by reference to Exhibit 10.12 of the Company’s Form S-4 filed October 12, 1999.
10.7	Ice Harbor Parking Agreement Assignment, dated July 15, 1999, by and among Greater Dubuque Riverboat Entertainment Company, L.C. and Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 10.13 of the Company’s Form S-4 filed October 12, 1999.
10.8	First Amendment to Sublease Agreement, dated July 15,1999, by and among Dubuque Racing Association, Ltd. and Greater Dubuque Riverboat Entertainment Company, L.C. —incorporated herein by reference to Exhibit 10.14 of the Company’s Form S-4 filed October 12, 1999.
10.9	Sublease Assignment, dated July 15, 1999, by and among Greater Dubuque Entertainment Company, L.C. and Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 10.15 of the Company’s Form S-4 filed October 12, 1999.
10.10	Iowa Racing and Gaming Commission Gaming License, dated July 15, 1999—incorporated herein by reference to Exhibit 10.16 of the Company’s Form S-4 filed October 12, 1999.
10.11	Assignment of Iowa IGT Declaration and Agreement of Trust, dated July 15, 1999 by and among Greater Dubuque Riverboat Entertainment Company, L.C. and Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 10.17 of the Company’s Form S-4 filed October 12, 1999.
10.12	Agreement of Sale, dated August 30, 2002, by and among Peninsula Gaming Partners, LLC, OED Acquisition, LLC, William E. Trotter II and William E. Trotter II Family, LLC—incorporated herein by reference to Exhibit 10.3 of the Company’s Form 10-Q Quarterly Report for the quarter ended September 30, 2002.
10.13A	Loan and Security Agreement, dated February 23, 2001, by and between Foothill Capital Corporation and Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 10.13 of the Company’s Form 10-K Annual Report for the year ended December 31, 2002.
10.13B	Amendment Number One to Loan and Security Agreement, dated February 15, 2002, by and between Foothill Capital Corporation and Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 10.1 of the Company’s Form 10-Q Quarterly Report for the quarter ended September 30, 2002.
10.13C	Amendment Number Two to Loan and Security Agreement, dated October 16, 2002, by and between Foothill Capital Corporation and Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 10.2 of the Company’s Form 10-Q Quarterly Report for the quarter ended September 30, 2002.
10.13D	Amendment Number Three to Loan and Security Agreement, dated February 14, 2003, by and between Foothill Capital Corporation and Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 10.14 of the Company’s Form 10-Q Quarterly Report for the quarter ended September 30, 2003.
10.13E	Amendment Number Four to Loan and Security Agreement dated November 6, 2003, by and between Peninsula Gaming Company, LLC and Wells Fargo Foothill, Inc.—incorporated herein by reference to Exhibit 10.19 of the Company’s Form 10-Q Quarterly Report for the quarter ended September 30, 2003.

19

Exhibit Number	Description
10.14	Purchase Agreement, dated June 27, 2002, by and among Peninsula Gaming Partners, LLC, a Delaware limited liability company, The Old Evangeline Downs, L.C., a Louisiana limited company and BIM3 Investments, a Louisiana partnership—incorporated herein by reference to Exhibit 1.1 of the Company’s Form 8-K Current Report filed March 4, 2002.
10.15	First Amendment to Purchase Agreement, dated January 1, 2002, by and among BIM3 Investments, a Louisiana partnership, The Old Evangeline Downs, L.C., a Louisiana limited company and OED Acquisition, LLC, a Delaware limited liability company—incorporated herein by reference to Exhibit 1.3 of the Company’s Form 8-K Current Report filed March 4, 2002.
10.16	Assignment Agreement, dated October 23, 2001, by and between Peninsula Gaming Partners and OED Acquisition, LLC—incorporated herein by reference to Exhibit 1.2 of the Company’s Form 8-K Current Report filed March 4, 2002.
10.17	Amended and Restated Management Services Agreement, dated as of February 25, 2003, by and among The Old Evangeline Downs, L.L.C., OED Acquisition, LLC and Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 10.15 of the Company’s Form 10-Q Quarterly Report for the quarter ended September 30, 2003.
10.18A	Loan and Security Agreement, dated June 24, 2003, by and among The Old Evangeline Downs, L.L.C., The Old Evangeline Downs Capital Corp., and Wells Fargo Foothill, Inc.—incorporated herein by reference to Exhibit 10.16 of the Company’s Form 10-Q Quarterly Report for the quarter ended September 30, 2003.
10.18B	First Amendment, dated September 22, 2003, to Loan and Security Agreement, dated June 24, 2003, by and among The Old Evangeline Downs, L.L.C., The Old Evangeline Downs Capital Corp., and Wells Fargo Foothill, Inc.—incorporated herein by reference to Exhibit 10.18 of the Company’s Form 10-Q Quarterly Report for the quarter ended September 30, 2003.
10.19	Loan and Security Agreement, dated September 22, 2003, by and among The Old Evangeline Downs, L.L.C., The Old Evangeline Downs Capital Corp., and Wells Fargo Foothill, Inc. — incorporated herein by reference to Exhibit 10.17 of the Company’s Form 10-Q Quarterly Report for the quarter ended September 30, 2003.
12.1	Computation of ratio of earnings to fixed charges.
14.1	Code of Ethics of Chief Executive Officer and Senior Financial Officers of Peninsula Gaming Company, LLC—incorporated herein by reference to Exhibit 14.1 of the Company’s Form 10-K Annual Report for the year ended December 31, 2002.
21.1	Subsidiaries of the Registrant.
31.1	Certification of M. Brent Stevens, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 15d-l4 of the Securities Exchange Act, as amended.
31.2	Certification of Natalie A. Schramm, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 15d-14 of the Securities Exchange Act, as amended.

20

(b)           Reports on Form 8-K.

None.

21

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dubuque, State of Iowa on April 1, 2004.

DIAMOND JO, LLC (FORMERLY KNOWN AS PENINSULA GAMING COMPANY, LLC)
By:	/s/ M. Brent Stevens
	M. Brent Stevens
	Chief Executive Officer
By:	/s/ Natalie A. Schramm
	Natalie A. Schramm
	Chief Financial Officer
PENINSULA GAMING CORP.
By:	/s/ M. Brent Stevens
	M. Brent Stevens
	President and Treasurer
By:	/s/ Michael S. Luzich
	Michael S. Luzich
	Vice President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated.

	PENINSULA GAMING PARTNERS, LLC
	Managing Member of Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC)
Date: April 1, 2004	By:	/s/ M. Brent Stevens
		M. Brent Stevens
		Chief Executive Officer and Manager
Date: April 1, 2004	By:	/s/ Michael S. Luzich
		Michael S. Luzich
		President, Secretary and Manager
Date: April 1, 2004	By:	/s/ Terrance W. Oliver
		Terrance W. Oliver
		Manager of Peninsula Gaming Partners
Date: April 1, 2004	By:	/s/ Andrew R. Whittaker
		Andrew R. Whittaker
		Manager of Peninsula Gaming Partners

22