EXHIBIT 99.1
PRO FORMA CONSOLIDATED FINANCIAL DATA
Our historical consolidated financial data for the year ended December
31, 1999 and for the nine months ended September 30, 2000 are derived from
our consolidated financial statements. The historical financial statements
for these periods include the results for the Lawrenceburg partnership on a
consolidated basis with a deduction for the 42.5% minority interest in this
partnership. The historical balance sheet data at September 30, 2000 have
been derived from our unaudited condensed consolidated financial statements
and include all adjustments, consisting of normal recurring accruals, that we
consider necessary for a fair presentation of our consolidated financial
position and results of operations for such periods.
The pro forma consolidated financial data have been prepared by applying
certain pro forma adjustments resulting from our expected acquisitions of the
minority interests in the Lawrenceburg partnership, the issuance of an
additional $150 million of our 10 3/4% senior subordinated notes due 2009
(the "Additional Notes") and anticipated borrowings of $213.6 million under
our proposed amended and restated senior credit facility. The pro forma data
assume that these transactions occurred on January 1, 1999, in the case of
the Unaudited Pro Forma Consolidated Statements of Operations for the year
ended December 31, 1999 and the nine months ended September 30, 2000, and as
of September 30, 2000, in the case of the Unaudited Pro Forma Consolidated
Balance Sheet. The pro forma consolidated financial data are presented for
informational purposes only and have been derived from, and should be read in
conjunction with, our historical consolidated financial statements including
the notes thereto. The pro forma adjustments, as described in the notes to
the pro forma consolidated financial statements, are based on currently
available information and certain adjustments that we believe are reasonable.
They are not necessarily indicative of our financial position or results of
operations that would have occurred had the transactions described above
taken place on the dates indicated, nor are they necessarily indicative of
future financial position or results of operations.
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UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999 NINE MONTHS ENDED SEPTEMBER 30, 2000
----------------------------------------- -----------------------------------------
PRO FORMA AS ADJUSTED PRO FORMA AS ADJUSTED
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------- ---------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
REVENUES:
Casino.................... $559,147 $ -- $559,147 $502,428 $ -- $502,428
Admissions................ 18,893 -- 18,893 14,772 -- 14,772
Food, beverage and
other................... 57,998 -- 57,998 50,348 -- 50,348
-------- ------- -------- -------- ------- --------
636,038 -- 636,038 567,548 -- 567,548
Less: promotional
allowances.............. (41,484) -- (41,484) (37,633) -- (37,633)
-------- ------- -------- -------- ------- --------
Net revenues............ 594,554 -- 594,554 529,915 -- 529,915
COSTS AND EXPENSES:
Casino.................... 250,559 -- 250,559 218,988 -- 218,988
Food, beverage and
other................... 41,528 -- 41,528 35,151 -- 35,151
Other operating
expenses................ 27,866 -- 27,866 22,615 -- 22,615
Selling, general and
administrative.......... 117,003 (6,154)(a) 110,849 105,344 (5,089)(a) 100,255
Depreciation and
amortization............ 34,058 7,300 (b) 41,358 26,923 5,475 (b) 32,398
Development and
preopening.............. 515 -- 515 -- -- --
Other..................... -- -- -- 6,800 -- 6,800
-------- ------- -------- -------- ------- --------
Income (loss) from
operations............ 123,025 (1,146) 121,879 114,094 (386) 113,708
-------- ------- -------- -------- ------- --------
Interest expense, net..... (45,724) (30,940)(c) (76,664) (26,257) (25,694)(c) (51,951)
-------- ------- -------- -------- ------- --------
Income (loss) before
minority interests,
income taxes and
extraordinary item...... 77,301 (32,086) 45,215 87,837 (26,080) 61,757
Minority interests........ (34,975) 34,061 (d) (914) (30,994) 30,317 (d) (677)
Income tax expense........ (5,900) (790)(e) (6,690) (22,538) (1,695)(e) (24,233)
Extraordinary loss on
extinguishment of
debt.................... (24,920) -- (24,920) (1,154) -- (1,154)
-------- ------- -------- -------- ------- --------
Net income................ 11,506 1,185 12,691 33,151 2,542 35,693
======== ======= ======== ======== ======= ========
Diluted income per
share................... $ 0.40 $ 0.04 $ 0.44 $ 1.14 $ 0.08 $ 1.22
Shares outstanding........ 28,325 -- 28,325 28,393 -- 28,393
Ratio of earnings to fixed
charges................. 2.5x -- 1.6x 3.9x -- 2.1x
SEE NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.
2
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
--------------------------------------------
PRO FORMA AS ADJUSTED
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
(IN THOUSANDS)
Cash and cash equivalents............................... $ 49,585 $ -- $ 49,585
Other current assets.................................... 7,828 602 (f) 8,430
-------- -------- --------
Total current assets.............................. 57,413 602 58,015
Net property and equipment.............................. 395,861 -- 395,861
Other assets:
Deferred finance costs, net........................... 7,324 5,643 (c) 12,967
Goodwill and other intangible assets, net............. 56,445 297,689 (b) 354,134
Other, net............................................ 2,732 -- 2,732
-------- -------- --------
Total other assets................................ 66,501 303,332 369,833
-------- -------- --------
Total assets............................................ $519,775 $303,934 $823,709
======== ======== ========
CURRENT LIABILITIES:
Accounts payable...................................... $ 12,766 $ -- $ 12,766
Other current liabilities............................. 75,654 -- 75,654
Current maturities of long-term debt.................. 10,426 (5,782)(c) 4,644
-------- -------- --------
Total current liabilities......................... 98,846 (5,782) 93,064
Long-term debt.......................................... 263,525 366,049 (c) 629,574
Deferred income taxes................................... 7,402 1,722 (f) 9,124
Other long-term obligations............................. 231 -- 231
Minority interests in equity of consolidated
subsidiaries.......................................... 58,055 (58,055)(d) --
STOCKHOLDERS' EQUITY:
Common stock $.01 par; 60,000,000 shares authorized;
28,392,757 issued and outstanding at September 30,
2000................................................ 284 -- 284
Capital in excess of par.............................. 80,681 -- 80,681
Retained earnings..................................... 10,751 -- 10,751
-------- -------- --------
Total stockholders' equity........................ 91,716 -- 91,716
-------- -------- --------
Total liabilities and stockholders' equity.............. $519,775 $303,934 $823,709
======== ======== ========
SEE NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.
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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(a) Reflects the reduction in financial advisory fee equal to 5.0% of the
Lawrenceburg casino's EBITDA paid to Conseco. Following the purchase of
Conseco's minority interest, this financial advisory fee will no longer be
paid.
(b) Reflects estimated adjustments to record and amortize goodwill and
acquisition costs due to the acquisition of Conseco's 29% and Centaur's
13.5% minority interests in the Lawrenceburg partnership. Goodwill resulting
from the acquisition is being amortized over 40 years.
Because we currently are the majority owner of the Lawrenceburg partnership,
our historical financial statements include the assets, liabilities and
results of operations for the Lawrenceburg partnership on a fully
consolidated basis. As a result, we have allocated the entire purchase price
on a preliminary basis to goodwill. The final purchase price allocation will
be based on the fair market value of the tangible and intangible assets
acquired and liabilities assumed as compared to the historical balances of
such assets and liabilities on the respective transaction dates.
The following table sets forth the purchase price of these minority
interests as if they were acquired on September 30, 2000:
PURCHASE PRICE: (IN THOUSANDS)
Conseco minority interest................................. $260,000
Centaur minority interest................................. 105,000
Acquisition costs......................................... 2,000
Deferred income taxes on minority interest................ 1,120
Less Conseco partner loan................................. (12,376)
Less net book value of minority interest.................. (58,055)
--------
Purchase price allocated to goodwill.................... $297,689
========
Assuming that we purchased the minority interests in the Lawrenceburg
partnership as of January 1, 1999 and using a 40 year amortization period,
goodwill amortization would have been $7,300 and $5,475 for the year ended
December 31, 1999 and for the nine months ended September 30, 2000,
respectively.
(c) Following are the estimated sources and uses of funds necessary to acquire
the minority interests as if they were acquired on January 1, 1999:
SOURCES OF FUNDS: (IN THOUSANDS)
Proceeds from Additional Notes, including unamortized
premium of $9.0 million................................. $ 159,000
Additional credit facility borrowings..................... 213,643
---------
Total sources of funds.................................. $ 372,643
=========
USES OF FUNDS:
Purchase of minority interests............................ $(365,000)
Acquisition costs......................................... (2,000)
Financing costs........................................... (5,643)
---------
Total uses of funds..................................... $(372,643)
=========
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The overall estimated change in long-term debt including current maturities
at September 30, 2000 is as follows:
(IN THOUSANDS)
Proceeds from Additional Notes.............................. $159,000
Additional credit facility borrowings....................... 213,643
Less Lawrenceburg partnership loan to Conseco repaid as a
part of the minority interest purchase price.............. (12,376)
--------
Pro forma adjustment to debt as of September 30, 2000....... $360,267
========
Pro forma adjustment to interest expense is as follows:
YEAR NINE MONTHS
ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------
(IN THOUSANDS)
Interest on Additional Notes at 10 3/4%............. $16,125 $12,094
Less amortization of premium on Additional Notes.... (1,082) (812)
Interest on additional line of credit borrowings.... 17,213 14,618
Deferred finance cost amortization.................. 715 536
Reduction in partner loan interest rate............. (2,164) (1,030)
Other, net.......................................... 133 288
------- -------
$30,940 $25,694
======= =======
The pro forma interest expense assumes an effective net interest rate of
9.461% on the Additional Notes and 8.1% and 9.1% on the additional line of
credit borrowings for the year ended December 31, 1999 and for the nine
months ended September 30, 2000, respectively.
(d) Reflects the elimination of minority interest and minority interest expense
attributable to the Lawrenceburg partnership as a result of the acquisition
of these minority interests.
(e) Reflects increase in tax expense to result in an effective tax rate of 40%
on the incremental pro forma as adjusted income from continuing operations.
(f) Reflects estimated deferred income tax benefit and liability from
acquisition of minority partnership interests.
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SUMMARY OTHER DATA
The following summary other data has been derived from our consolidated
financial statements. The summary pro forma other data have been prepared by
applying certain pro forma adjustments resulting from the offering of the
Additional Notes, anticipated borrowings of $213.6 million under our proposed
amended and restated senior credit facility and the expected purchases of the
minority interests in the Lawrenceburg casino for $365 million. The pro forma
other data assumes that these transactions occurred on January 1, 1999. The
pro forma other data are presented for information purposes only and have
been derived from our consolidated financial statements, including the notes
thereto.
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
-------------------- -------------------
PRO PRO
FORMA FORMA
1999 1999 2000 2000
--------- -------- -------- --------
(IN THOUSANDS, EXCEPT RATIO DATA)
OTHER DATA:
EBITDA(a)......................................... $ 157,083 163,237 $147,817 152,906
Adjusted EBITDA(b)................................ 111,312 163,237 109,970 152,906
Depreciation and amortization..................... 34,058 41,358 26,923 32,398
Capital expenditures.............................. 37,162 37,162 22,465 22,465
Ratio of EBITDA to interest expense............... 3.2x 2.1x 5.4x 2.9x
Ratio of total debt to LTM EBITDA................. 2.4x 4.4x 1.4x 3.2x
Ratio of Adjusted EBITDA to Adjusted Interest
Expense(b)...................................... 2.6x 2.1x 4.5x 2.9x
Ratio of Adjusted Total Debt to Adjusted LTM
EBITDA(b)....................................... 3.1x 4.4x 1.8x 3.2x
Ratio of earnings to fixed charges(c)............. 2.5x 1.6x 3.9x 2.1x
- ------------
(a) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization. EBITDA should not be construed as an alternative to operating
income or net income (as determined in accordance with generally accepted
accounting principles) as an indicator of the Company's operating
performance, or as an alternative to cash flows generated by operating,
investing and financing activities (as an indicator of cash flow or a
measure of liquidity). EBITDA is presented solely as a supplemental
disclosure because management believes that it is a widely used measure of
operating performance in the gaming industry and for companies with a
significant amount of depreciation and amortization. EBITDA may not be
comparable to similarly titled measures reported by other companies. The
Company has other significant uses of cash flows, including debt service and
capital expenditures, which are not reflected in EBITDA.
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(b) The following table reflects adjustments necessary to calculate Adjusted
EBITDA, Adjusted Total Debt and Adjusted Interest Expense after
consideration of the Lawrenceburg minority interests. Adjusted EBITDA is
presented to reflect the elimination of that portion of EBITDA that is
attributable to the minority partners of the Lawrenceburg casino. Similarly,
Adjusted Total Debt and total interest expense eliminate that portion of
total debt and total interest expense owed or attributable to the minority
partners of the Lawrenceburg casino. The pro forma other data reflects no
adjustments as we will own 100% of the Lawrenceburg casino.
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -----------------
(IN THOUSANDS)
EBITDA
As reported............................................... $157,083 $147,817
Deduct EBITDA attributable to Lawrenceburg minority
interests............................................... (45,771) (37,847)
-------- --------
Adjusted EBITDA......................................... $111,312 $109,970
======== ========
TOTAL DEBT
As reported............................................... $379,373 $273,951
Deduct Lawrenceburg partner loans......................... (28,911) (12,376)
Deduct 42.5% Lawrenceburg vessel loan..................... (7,622) (6,191)
-------- --------
Adjusted Total Debt..................................... $342,840 $255,384
======== ========
TOTAL INTEREST EXPENSE
As reported............................................... $ 48,594 $ 27,417
Deduct interest on Lawrenceburg partner loans............. (5,121) (2,534)
Deduct 42.5% of interest on Lawrenceburg vessel loan...... (807) (507)
-------- --------
Adjusted Total Interest Expense......................... $ 42,666 $ 24,376
======== ========
(c) The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (income before income taxes plus fixed
charges less capitalized interest and preferred equity return to
Lawrenceburg partner) by fixed charges (interest expense plus capitalized
interest plus preferred equity return to Lawrenceburg partner and one third
of rental expense (the portion deemed representative of the interest
factor)).
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