Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT:
JON S. BENNETT
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
MAJESTIC STAR CASINO
(702) 388-2224
THE MAJESTIC STAR CASINO, LLC
ANNOUNCES THIRD QUARTER 2004 RESULTS
NOVEMBER 2, 2004, LAS VEGAS, NV - The Majestic Star Casino, LLC ("MSC") today
announced financial results for the three-month and nine-month periods ended
September 30, 2004. MSC is a multi-jurisdictional gaming company that directly
owns and operates one dockside gaming facility located in Gary, Indiana
("Majestic Star"), and through its wholly owned subsidiary, Majestic Investor
Holdings, LLC ("MIH"), two Fitzgeralds brand casinos located in Tunica,
Mississippi ("Fitzgeralds Tunica" or with respect to the operating subsidiary
"Barden Mississippi Gaming, LLC") and Black Hawk, Colorado ("Fitzgeralds Black
Hawk" or with respect to the operating subsidiary "Barden Colorado Gaming,
LLC"). MSC also provides management services to Barden Nevada Gaming, LLC
("BNG"or "Fitzgeralds Las Vegas") for a fee. BNG is owned by Barden Development,
Inc. ("BDI"), the parent of MSC. Unless indicated otherwise, the "Company"
refers to The Majestic Star Casino, LLC and all of its direct and indirect
subsidiaries.
On July 12, 2004, the Company entered into an agreement to sell substantially
all the assets and certain liabilities of Fitzgeralds Black Hawk for $66.0
million, subject to certain working capital and capital expenditure adjustments.
The Company anticipates the transaction closing on or before May 1, 2005. The
results of Fitzgeralds Black Hawk are reflected in discontinued operations in
the accompanying Consolidated Statement of Operations for the three- and
nine-month periods presented and in the discussion of our Consolidated Results.
In addition, BNG, which was spun-off to BDI on December 31, 2003, is reflected
in discontinued operations in the accompanying Consolidated Statement of
Operations in the three- and nine-month periods ended September 30, 2003 and in
the discussion of our Consolidated Results.
Consolidated Results-Three Month Period Ended September 30, 2004
Net revenues for the three-month period ended September 30, 2004 were $59.4
million, compared to $57.6 million in the same three-month period last year, an
increase of $1.8 million or 3.1%. The Company's improved net revenues were
principally the result of growth at Majestic Star. Casino revenues increased to
$58.2 million from $55.6 million in the year ago period.
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 2
For the three-month period ended September 30, 2004, the Company had a loss from
continuing operations of $1.9 million compared to a loss from continuing
operations of $2.2 million for the comparable quarter in 2003, an improvement of
$0.3 million. Higher expenses primarily from casino operations, promotional
activities, gaming and property taxes, marketing and depreciation offset our net
revenue improvements.
Including discontinued operations, the Company expects to report net income of
$1.0 million compared to a net loss of $1.3 million for the same period in 2003.
Discontinued operations for the 2004 period reflect the results of the Company's
Black Hawk operation which is held for sale, while discontinued operations for
the 2003 period reflect the results of both the Black Hawk operation and BNG
prior to the spin off.
For the three-month period ended September 30, 2004 adjusted EBITDA from
continuing operations was $10.1 million, compared to $10.4 million in the same
period last year, a decrease of $0.3 million or 2.2%. Including discontinued
operations, the Company's adjusted EBITDA was $13.1 million, compared to $13.2
million in the same period last year, a decrease of less than $20,000 or 0.1%.
Adjusted EBITDA is defined as EBITDA (earnings before interest, taxes,
depreciation, amortization, and other non-operating expenses (primarily
non-usage fees on the credit facility)), adjusted for loss on investment in
Buffington Harbor Riverboats, LLC (which is depreciation) and other
non-recurring charges as identified in the table at the end of this press
release reconciling net income (loss) to EBITDA and adjusted EBITDA. See note 1
for a detailed explanation as to the usefulness and limitations of using EBITDA
and adjusted EBITDA as a financial measure.
Consolidated Results-Nine Month Period Ended September 30, 2004
Net revenues for the nine-month period ended September 30, 2004 were $184.5
million, compared to $173.5 million in the same nine-month period last year, an
increase of $11.0 million or 6.3%. Majestic Star contributed $10.3 million of
the increase. Greater promotional and complimentary efforts, along with
acceptance of our capital improvements, contributed to net revenue growth.
Casino revenues increased to $180.5 million from $167.7 million in the year ago
period.
For the nine-month period ended September 30, 2004, the Company had a loss from
continuing operations of approximately $3.4 million compared to a loss from
continuing operations of $3.8 million for the comparable nine-month period in
2003, an improvement of approximately $0.4 million. Increasing our loss from
continuing operations in the nine-month period ended September 30, 2004 is a
non-recurring charge at Majestic Star for retroactive property taxes. The charge
of $2.2 million was taken in the first quarter of this year but was subsequently
adjusted downward by $0.1 million in the current quarter as the Company has
changed its estimate for the retroactive tax liability for the year 2003.
Increasing our loss from continuing operations in the nine-month period ended
September 30, 2003 is a non-recurring $2.1 million charge for retroactive gaming
taxes.
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 3
As a result of higher casino revenues in 2004, the Company's gaming and
admission tax expense was $40.5 million for the nine-month period, an increase
of $4.4 million over the nine-month period ended September 30, 2003 (exclusive
of retroactive gaming taxes in 2003). Casino costs increased by $3.4 million to
$58.5 million. Higher costs relate to greater levels of promotional activities
and greater operating costs associated with the Company's higher casino
revenues. General and administrative expenses increased $4.7 million principally
due to the $2.2 million retroactive property tax charge as previously discussed,
increased payroll and benefits, greater current year property taxes, principally
at Majestic Star, and insurance and regulatory costs.
Interest expense declined by $2.5 million or approximately 10.5% in the
nine-month period ended September 30, 2004 as compared to the same period in
2003. The reduced interest expense is the result of refinancing substantially
all of the Company's outstanding debt in October 2003.
Including discontinued operations, the Company expects to report net income of
$4.4 million compared to net income of $0.1 million for the same period in 2003.
Discontinued operations for the 2004 period reflect the results of the Company's
Black Hawk operation which is held for sale, while discontinued operations for
the 2003 period reflect the results of both the Black Hawk operation and BNG
prior to the spin off.
For the nine-month period ended September 30, 2004, adjusted EBITDA from
continuing operations was $34.7 million, compared to $36.0 million in the same
period last year, a decrease of $1.3 million. Including discontinued operations,
the Company's adjusted EBITDA was $43.5 million, compared to $42.7 million in
the same period last year, an increase of $0.8 million. See note 1 for a
detailed explanation as to the usefulness and limitations of using EBITDA and
adjusted EBITDA as a financial measure.
The Company ended the nine-month period with $17.9 million of available cash, as
compared to approximately $22.1 million at December 31, 2004. The Company also
had approximately $44.4 million in available borrowing capacity under its credit
facility at September 30, 2004.
Total debt outstanding at September 30, 2004 was $311.5 million as compared to
$301.7 million at December 31, 2003, an increase of $9.8 million. Total debt
outstanding at September 30, 2004 consisted of $260.0 million of 9 1/2% senior
secured notes, $15.9 million (net of original issue discount) of 11.653% notes
and $35.6 million drawn on the Company's $80.0 million credit facility. The
Company spent $33.5 million on capital expenditures during the nine-month period
ended September 30, 2004 for the purchase of 170 acres of property adjacent to
Majestic Star and the Buffington Harbor facility, the construction of a new
administration building at Majestic Star, the installation of new slot player
tracking and marketing software at Fitzgeralds Tunica, a partial expansion and
remodel of our casino floor at Fitzgeralds Tunica, and gaming and related
equipment at all of our properties. The Company plans on spending up to an
additional $6.4 million on capital expenditures in 2004, which is the remaining
maximum amount allowed for the 2004 fiscal year under the covenants of the $80.0
million credit facility.
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 4
The Company continues to evaluate its options for reinvesting the proceeds from
the sale of Fitzgeralds Black Hawk. Available options include investing in the
Company's remaining properties, investing in a new project in an emerging
jurisdiction, making a strategic acquisition of an existing casino operation or
some combination of the above. Should the Company ultimately not find a suitable
use for such funds, it will be obligated to use the net proceeds to reduce
outstanding indebtedness. The Company will provide an update when its best
re-investment alternative has been determined.
Majestic Star (property operations only)
Net revenues were $36.5 million for the three-month period ended September 30,
2004, an increase of $1.4 million or 3.9% over the same three-month period in
2003. Property management believes that net revenue growth may have been
negatively impacted in the quarter due to the July payment by northwest Indiana
residents of their remaining 2002 real property tax obligations. Because of high
real property assessments, due to a statewide reassessment of real property,
coupled with high tax rates, these tax payments were significantly higher than
normal for many residents and may have negatively impacted the gambling budgets
of many of the property's customers. In addition, the opening of the new 2,000
space parking garage at Horseshoe in Hammond and the completion of the $27.0
million renovation project, designed to enhance the amenities and update the
facilities, at Harrah's East Chicago may have contributed to slower growth in
revenue than experienced in earlier quarters of this fiscal year. Net revenues
were $115.7 million for the nine-month period ended September 30, 2004 an
increase of $10.3 million or 9.8% over the same period in the prior year. Year
to date net revenues improved as a result of our advertising campaign using
former Chicago Bears player and coach Mike Ditka as the property's celebrity
spokesperson, the re-branding of the property as the "Winning Place to Play
(tm)", the establishment of a new players club loyalty program, the remodeling
of the Monte Carlo VIP lounge, and the opening of Don and Mike's Sports Bar in
May. The property also expanded the entertainment provided to its casino guests
by offering nightly acts on the Star Stage.
Casino revenues at Majestic Star increased to $36.2 million and $114.1 million
for the three- and nine-month periods ended September 30, 2004 from $34.5
million and $103.5 million in the same periods in 2003. For the three- and
nine-month periods ended September 30, 2004, table game revenues increased 16.5%
and 25.2%, respectively, and slot revenues increased 2.5% and 7.4%,
respectively. Table games handle increased 20.5% and 16.5%, respectively, during
the third quarter and nine-month period, and the table games win percentage
decreased to 15.9% in the third quarter from 16.5% in the same period last year.
However, year to date table games win percentage increased to 16.9% from 15.7%
in the same nine-month period in the prior year. Slot coin-in increased 6.6%
during the third quarter of 2004 from the third quarter of 2003, and 8.3% for
the nine-month period ended September 30, 2004 from the similar prior year
period.
Net loss for the three- and nine-month periods ended September 30, 2004 was $3.1
million and $8.5 million, respectively, compared to a net income of $1.1 million
for the
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 5
three-months ended September 30, 2003 and a net income of $3.6 million for the
nine-months ended September 30, 2003. Contributing to Majestic Star's net loss
during the three- and nine-month periods ended September 30, 2004 is $3.1
million and $9.3 million, respectively, of additional interest expense as
substantially all of the Company's $311.5 million of debt now is issued by
Majestic Star and then lent to other operations as non-interest bearing
advances. In the comparable periods, there was $151.8 million of debt on MIH's
balance sheet, of which all but $16.3 million was purchased and retired by the
Company in October 2003. Also, as explained under our consolidated results,
Majestic Star's net income (loss) was impacted for the nine-month period ended
September 30, 2004 by a non-recurring charge of $2.2 million for retroactive
property taxes, of which the property made an adjustment of less than $0.1
million in the current quarter to its remaining 2003 retroactive property tax
accrual, and in the nine-month period ended September 30, 2003 by a
non-recurring charge of $2.1 million for retroactive gaming taxes.
Adjusted EBITDA at Majestic Star was $6.1 million and $21.4 million for the
three- and nine-month periods ended September 30, 2004, compared to $6.7 million
and $22.3 million for the three- and nine-month periods ended September 30,
2003. Property management continues to review and implement cost reduction
strategies. However, higher gaming taxes, as a result of our increased casino
revenues, and increases in benefit costs, current year property taxes, operating
costs and services used at the Buffington Harbor facility, promotional and
marketing efforts, and new festival park expenses all impacted our adjusted
EBITDA. Property adjusted EBITDA margins (defined as adjusted EBITDA divided by
net revenues) decreased to 16.8% in the third quarter of 2004 from 19.0% in the
third quarter of 2003. For the nine-month period ended September 30, 2004, the
property's adjusted EBITDA margin was 18.5% compared to 21.2% in the prior year
nine-month period. Adjusted EBITDA reflects property operations only, is
exclusive of corporate overhead, and is adjusted for retroactive property taxes
in both the three- and nine-month periods ended September 30, 2004, and
retroactive gaming taxes in the nine-month period ended September, 30 2003 (see
the accompanying table).
Majestic Star continues to add more ticket in ticket out ("TITO") slot machines
to its casino floor. At this time the casino floor has over 940 TITO slot
machines or approximately 57.6% of slot machines are equipped with this
technology. The property anticipates having approximately 1,180 or 72% of its
slot machines with TITO capabilities by year-end.
In late September, the Indiana Supreme Court denied Aztar Indiana Gaming
Corporation's ("Aztar") petition to review the Indiana Tax Court's decision
disallowing Aztar's state income tax deduction for taxes paid on its adjusted
gross gaming revenues. Majestic Star's member faces a similar situation. To
date, the Indiana Department of Revenue has assessed Majestic Star $2.6 million,
plus interest for the period 1996 to June 18, 2001 and has assessed the
Company's member, BDI, $1.3 million, plus penalties and interest, for the
remainder of 2001 and 2002. Neither Majestic Star nor BDI have received an
assessment for 2003. Since Majestic Star is a limited liability company and a
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 6
pass through entity for federal and state income tax purposes, all taxable
income and expenses pass through to BDI. Consequently, Majestic Star has
reflected no accrual for income taxes, penalties and interest in its financial
statements relating to this matter. The Company and its member are evaluating
various strategies for contesting the assessments. The Company will make
permitted distributions to its member to pay any taxes that may ultimately be
required.
Fitzgeralds Tunica (property only)
Net revenues were $22.9 million for the three-month period ended September 30,
2004, an increase of $0.4 million or 1.8% over the same period in 2003. Net
revenues were $68.8 million for the nine-month period ended September 30, 2004,
an increase of $0.6 million or 0.9% over the same period in the prior year. The
market continues to display minimal growth and competition remains intense.
Casino revenues at Fitzgeralds Tunica increased to $22.0 million and $66.4
million, respectively, for the three- and nine-month periods ended September 30,
2004 from $21.0 million and $64.3 million in the same periods in 2003. For the
three- and nine-month periods ended September 30, 2004, table game revenues
decreased 8.6% to $1.8 million and 6.0% to $5.8 million, respectively. Slot
revenues increased to $20.2 million and $60.6 million, respectively for the
three- and nine-month periods ended September 30, 2004 from $19.0 million and
$58.1 million, respectively, in the same periods in 2003.
During the third quarter, property management completed an expansion and remodel
of a portion of the second floor gaming and public areas. The second floor now
has a new guest services booth and cashiers cage, enlarged restrooms and
additional casino square footage. The expansion project has allowed property
management to add 90 new slot machines to the casino floor. In addition, during
the quarter, the property fully integrated the new ACSC slot player tracking and
accounting system. This will now allow the property to begin conversion to TITO.
It is anticipated that the property will have 140 TITO slot machines on its
casino floor by year-end.
Net income for the three- and nine-month periods ended September 30, 2004 was
$2.6 million and $9.7 million, respectively. This compares to net income of $2.8
million and $10.6 million for the three- and nine-month periods ended September
30, 2003.
EBITDA at Fitzgeralds Tunica was $4.9 million and $16.2 million for the three-
and nine-month periods ended September 30, 2004, compared to $4.8 million and
$16.4 million for the three- and nine-month periods ended September 30, 2003.
EBITDA margins (defined as EBITDA divided by net revenues) improved slightly to
21.3% in the third quarter of 2004 from 21.2% in the third quarter of 2003.
Improved margins are the result of a nominal increase in net revenues and
continued focus on cost containment. The year to date EBITDA margin declined to
23.5% in the nine-month period ended September 30, 2004 from 24.0% in the same
period last year. Reduced margins are the result of higher complimentary and
promotional costs from earlier in the year as the property strived to maintain
its competitive position in the market. EBITDA reflects property operations
only and is exclusive of corporate overhead. There were no
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 7
adjustments to EBITDA in the three- and nine-month periods ended September 30,
2004 or the same periods in 2003.
Fitzgeralds Black Hawk-Discontinued Operation of Property Held for Sale
Net revenues were $9.8 million for the three-month period ended September 30,
2004 an increase of $1.0 million or 10.6% over the same period in 2003. Net
revenues were $28.7 million for the nine-month period ended September 30, 2004,
an increase of $3.4 million or 13.6% over the same prior year period. The
significant increase in net revenues is attributable to expanded marketing
programs and management's continued focus on maximizing yield on marketing and
promotional activities, displacement of customers from a competitor that is
undergoing remodeling and construction, which is anticipated to continue until
the spring of 2005, and enhancements to our slot product. Also, the property
experienced minimal impact from the closure of the primary highway leading to
Black Hawk. The property actually realized higher year over year casino
revenues during the nine days in September in which the road was closed.
Casino revenues at Fitzgeralds Black Hawk increased to $9.9 million and $29.2
million, respectively, for the three- and nine-month periods ended September 30,
2004 from $9.0 million and $25.9 million, respectively, in the same periods in
2003. For the three- and nine-month periods ended September 30, 2004, slot
revenues increased 10.0% and 12.7%, respectively. Slot coin-in increased 7.9%
and 9.1%, respectively, during the third quarter and nine-month period.
During the past nine months, property management has installed a new exterior
sign package and has enhanced its slot machine offerings by introducing new
penny and multi-denominational slots, and relocated the high limit room to a
more favorable area of the casino floor.
Net income for the three- and nine-month periods ended September 30, 2004 was
$2.9 million and $7.8 million, respectively. This compares to net income of $2.3
million and $5.4 million for the three- and nine-month periods ended September
30, 2003. During the quarter the property capitalized approximately $0.2 million
of selling expenses related to the previously discussed sale of the property.
EBITDA at Fitzgeralds Black Hawk was $3.0 million and $8.8 million for the
three- and nine-month periods ended September 30, 2004, compared to $2.8 million
and $6.7 million for the three- and nine-month periods ended September 30, 2003.
EBITDA margins continue to be strong, coming in at 30.6% and 30.5%,
respectively, compared to 31.4% and 26.5% in the three- and nine-month periods
ended September 30, 2003. EBITDA reflects property operations only and is
exclusive of corporate overhead. There were no adjustments to EBITDA in the
three- and nine-month periods ended September 30, 2004 or the same periods in
2003.
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 8
Forward Looking Statements
This press release contains forward-looking statements. Forward-looking
statements include the words, "may," "will," "would," "could," "likely,"
"estimate," "intend," "plan," "continue," "believe," "expect" or "anticipate"
and other similar words and include all discussions about our acquisition and
development plans. We do not guarantee that the transactions and events
described in this press release will happen as described or that any positive
trends noted in this press release will continue. The forward-looking statements
contained in this press release generally relate to our plans, objectives and
expectations for future operations and are based upon management's reasonable
estimates of future results or trends. Although we believe that our plans and
objectives reflected in or suggested by such forward-looking statements are
reasonable, we may not achieve such plans or objectives. You should read this
press release completely and with the understanding that actual future results
may be materially different from what we expect. We will not update
forward-looking statements even though our situation may change in the future.
Specific factors that might cause actual results to differ from our
expectations, or may cause us to modify our plans and objectives, include, but
are not limited to; the availability and adequacy of our cash flow to meet our
requirements, including payment of amounts due under our $80.0 million credit
facility and our 9 1/2% notes; changes in our financial condition that may cause
us to not be in compliance with the covenants contained within the indenture
governing the 9 1/2% notes or the loan and security agreement governing the
$80.0 million credit facility, and thus causing us to be in default with the
trustee for the 9 1/2% notes and the lenders to the $80.0 million credit
facility, requiring a payment acceleration on the debt obligations outstanding;
changes or developments in laws, regulations or taxes in the casino and gaming
industry, including increases in or new taxes imposed on gaming revenues and
gaming devices, or admission taxes; increased competition in existing markets or
the opening of new gaming jurisdictions; our failure to obtain, delays in
obtaining or the loss of any licenses, permits or approvals, including gaming
and liquor licenses, permits or approvals, or our failure to obtain an
unconditional renewal of any such licenses, permits or approvals on a timely
basis; adverse determinations of issues related to disputed taxes, particularly
in Indiana, as evidenced by the charge in the first quarter of 2004 for
retroactive property taxes and the recent denial by the Indiana Supreme Court to
review the matter of Aztar Indiana Gaming Corporation vs. Indiana Department of
State Revenue, a case which denied Aztar's deductions of taxes paid on its
casino revenue on its Indiana state income tax return for which the Company's
member faces similar issues; other adverse conditions, such as adverse economic
conditions in the Company's markets, changes in general customer confidence or
spending, increased fuel and transportation costs, or travel concerns that may
adversely affect the economy in general and/or the casino and gaming industry in
particular; the ability to fund capital improvements and development needs from
existing operations, available credit, or new financing; the risk of our joint
venture partner, Trump Indiana, Inc., not making its lease payments when due in
connection with
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 9
the parking facility in Gary, Indiana or to fund the joint venture; factors
relating to the current state of world affairs and any further acts of terrorism
or any other destabilizing events in the United States or elsewhere; and other
factors disclosed from time to time in filings we make with the Securities and
Exchange Commission or otherwise.
For more information on these and other factors, see our most recently filed
Form 10-K, Form 10-Q and Form 8-K.
All future written and verbal forward-looking statements attributable to us or
any person acting on our behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to in this press release and in our
reports filed with the Securities and Exchange Commission. In light of these
risks, uncertainties and assumptions, the forward-looking events discussed in
this press release might not occur.
The Company makes available free of charge its annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments
to those reports as soon as reasonably practicable after such material is
electronically filed with or furnished to the Securities and Exchange
Commission. In addition, you may obtain a copy of such filings at www.sec.gov or
from the applicable web site, www.majesticstar.com or www.fitzgeralds.com.
The Company has scheduled a conference call for November 3, 2004 at 10:00 a.m.
(Eastern Time) to discuss the three- and nine-month periods ended September 30,
2004 results. The dial-in number is (800) 219-6110. The moderator will be Jon S.
Bennett, Vice President and Chief Financial Officer for the Company. A replay
number will be available at (800) 405-2236, pass code 11014230. Inquiries for
additional information should be directed to Jon S. Bennett at (702) 388-2224.
Financial/Statistical Tables, Consolidated Statement of Operations and
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA by Property
and in Total.
The following tables reflect operating income, net revenues, casino revenues,
gaming devices, win per gaming device and hotel statistical information
(Fitzgeralds Tunica only), for the three- and nine-month periods ended September
30, 2004 and September 30, 2003 at the Company's properties. Percentage increase
(decrease) calculations are derived using the whole numbers rather than the
rounded numbers.
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 10
($ in millions, except for win per gaming unit)
THREE MONTHS ENDED
SEPTEMBER 30, INCREASE % INCREASE
MAJESTIC STAR (PROPERTY ONLY) 2004 2003 (DECREASE) (DECREASE)
---------- ---------- ---------- ----------
Operating income $ 3.5 $ 4.7 $ (1.2) -24.7%
Net revenues $ 36.5 $ 35.1 $ 1.4 3.9%
Casino revenues $ 36.2 $ 34.5 $ 1.7 4.7%
Slot revenues $ 29.8 $ 29.1 $ 0.7 2.5%
Table game revenues $ 6.4 $ 5.5 $ 0.9 16.5%
Average number of slot machines 1,628 1,504 124 8.2%
Average win per slot machine per day $ 199.0 $ 210.1 $ (11.1) -5.3%
Average number of table games 48 50 (2) -4.6%
Average win per table game per day $ 1,450.4 $ 1,187.0 $ 263.4 22.2%
NINE MONTHS ENDED
SEPTEMBER 30, INCREASE % INCREASE
MAJESTIC STAR (PROPERTY ONLY) 2004 2003 (DECREASE) (DECREASE)
---------- ---------- ---------- ----------
Operating income $ 11.6 $ 14.3 $ (2.7) -18.7%
Net revenues $ 115.7 $ 105.4 $ 10.3 9.8%
Casino revenues $ 114.1 $ 103.5 $ 10.6 10.2%
Slot revenues $ 93.2 $ 86.8 $ 6.4 7.4%
Table game revenues $ 20.9 $ 16.7 $ 4.2 25.2%
Average number of slot machines 1,566 1,530 36 2.4%
Average win per slot machine per day $ 217.2 $ 207.8 $ 9.4 4.5%
Average number of table games 49 53 (4) -7.5%
Average win per table game per day $ 1,547.4 $ 1,146.8 $ 400.6 34.9%
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 11
($ in millions, except for win per gaming unit and hotel average daily rate)
THREE MONTHS ENDED
SEPTEMBER 30, INCREASE % INCREASE
FITZGERALDS TUNICA (PROPERTY ONLY) 2004 2003 (DECREASE) (DECREASE)
------- ------- -------- --------
Operating income $ 2.6 $ 2.8 $ (0.2) -5.8%
Net revenues $ 22.9 $ 22.5 $ 0.4 1.8%
Casino revenues $ 22.0 $ 21.0 $ 1.0 4.7%
Slot revenues $ 20.2 $ 19.0 $ 1.2 6.1%
Table game revenues $ 1.8 $ 2.0 $ (0.2) -8.6%
Average number of slot machines 1,388 1,355 33 2.4%
Average win per slot machine per day $ 158.0 $ 152.6 $ 5.4 3.5%
Average number of table games 34 34 -- 0.0%
Average win per table game per day $ 583.3 $ 638.5 $ (55.2) -8.6%
Hotel occupancy 97.0% 97.3% -0.3% -0.3%
Hotel average daily rate $ 45.05 $ 49.44 $ (4.39) -8.9%
($ in millions, except for win per gaming unit and hotel average daily rate)
NINE MONTHS ENDED
SEPTEMBER 30, INCREASE % INCREASE
FITZGERALDS TUNICA (PROPERTY ONLY) 2004 2003 (DECREASE) (DECREASE)
------- ------- -------- --------
Operating income $ 9.7 $ 10.6 $ (0.9) -8.3%
Net revenues $ 68.8 $ 68.2 $ 0.6 0.9%
Casino revenues $ 66.4 $ 64.3 $ 2.1 3.4%
Slot revenues $ 60.6 $ 58.1 $ 2.5 4.4%
Table game revenues $ 5.8 $ 6.2 $ (0.4) -6.0%
Average number of slot machines 1,356 1,351 5 0.4%
Average win per slot machine per day $ 163.1 $ 157.5 $ 5.6 3.6%
Average number of table games 34 34 -- 0.0%
Average win per table game per day $ 623.0 $ 665.4 $ (42.4) -6.4%
Hotel occupancy 96.2% 93.3% 2.9% 3.1%
Hotel average daily rate $ 44.26 $ 47.63 $ (3.37) -7.1%
($ in millions, except for win per gaming unit)
THREE MONTHS ENDED
FITZGERALDS BLACK HAWK (PROPERTY ONLY) SEPTEMBER 30,
2004 2003 INCREASE % INCREASE
------- ------- -------- ----------
Operating income $ 2.9 $ 2.3 $ 0.6 25.5%
Net revenues $ 9.8 $ 8.8 $ 1.0 10.6%
Casino revenues $ 9.9 $ 9.0 $ 0.9 9.7%
Slot revenues $ 9.7 $ 8.8 $ 0.9 10.0%
Table game revenues $ 0.2 $ 0.2 $ -- -3.4%
Average number of slot machines 595 594 1 0.2%
Average win per slot machine per day $ 177.2 $ 161.3 $ 15.9 9.8%
Average number of table games 6 6 -- 0.0%
Average win per table game per day $ 362.2 $ 375.1 $ (12.9) -3.4%
-more-
MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 12
($ in millions, except for win per gaming unit)
NINE MONTHS ENDED
SEPTEMBER 30,
FITZGERALDS BLACK HAWK (PROPERTY ONLY) 2004 2003 INCREASE % INCREASE
-------- -------- -------- ----------
Operating income $ 7.8 $ 5.4 $ 2.4 42.7%
Net revenues $ 28.7 $ 25.3 $ 3.4 13.6%
Casino revenues $ 29.2 $ 25.9 $ 3.3 12.8%
Slot revenues $ 28.6 $ 25.4 $ 3.2 12.7%
Table game revenues $ 0.6 $ 0.5 $ 0.1 20.4%
Average number of slot machines 595 594 1 0.2%
Average win per slot machine per day $ 175.4 $ 156.6 $ 18.8 12.1%
Average number of table games 6 6 -- 0.0%
Average win per table game per day $ 380.5 $ 317.1 $ 63.4 20.0%
-more-
MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 13
THE MAJESTIC STAR CASINO, LLC
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ---------------------------------
2004 2003 2004 2003
------------- ------------- ------------- -------------
REVENUES
Casino $ 58,158,742 $ 55,554,104 $ 180,481,342 $ 167,725,235
Rooms 2,026,708 2,155,546 5,820,214 6,042,051
Food and beverage 3,032,634 2,736,494 8,414,932 8,109,231
Other 1,095,844 903,583 3,112,955 2,761,378
------------- ------------- ------------- -------------
Total 64,313,928 61,349,727 197,829,443 184,637,895
Less promotional allowances 4,894,277 3,718,136 13,340,508 11,125,915
------------- ------------- ------------- -------------
Net 59,419,651 57,631,591 184,488,935 173,511,980
------------- ------------- ------------- -------------
COSTS AND EXPENSES
Casino 19,037,940 18,671,522 58,512,217 55,136,249
Rooms 449,177 658,404 1,381,473 1,921,639
Food and beverage 1,432,422 1,181,910 3,813,858 3,312,812
Other 583,091 144,705 784,955 335,906
Gaming taxes 13,033,727 12,113,632 40,529,945 38,209,407
Advertising and promotion 3,677,204 3,161,818 10,462,947 9,088,629
General and administrative 9,076,049 9,401,567 30,536,975 25,863,016
Corporate expenses 825,766 874,000 2,506,052 2,535,030
Economic Incentive-City of Gary 1,087,049 1,035,573 3,423,286 3,106,984
Depreciation and amortization 4,365,733 4,043,481 12,531,588 12,017,044
Loss on investment in Buffington
Harbor Riverboats, LLC 616,058 594,718 1,854,406 1,793,898
(Gain) loss on sale of assets (2,704) 4,671 (6,266) 109,890
------------- ------------- ------------- -------------
Total 54,181,512 51,886,001 166,331,436 153,430,504
------------- ------------- ------------- -------------
Operating income 5,238,139 5,745,590 18,157,499 20,081,476
------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)
Interest income 13,834 18,135 24,237 80,143
Interest expense (7,117,213) (7,956,269) (21,371,498) (23,867,957)
Other expense (44,656) (47,348) (168,504) (141,802)
------------- ------------- ------------- -------------
Total other expense (7,148,035) (7,985,482) (21,515,765) (23,929,616)
------------- ------------- ------------- -------------
Loss from continuing
operations (1,909,896) (2,239,892) (3,358,266) (3,848,140)
DISCONTINUED OPERATIONS (NOTE 1)
Income from discontinued operations 2,930,076 913,944 7,772,962 3,927,912
------------- ------------- ------------- -------------
NET INCOME (LOSS) $ 1,020,180 $ (1,325,948) $ 4,414,696 $ 79,772
============= ============= ============= =============
Note 1: Discontinued operations includes the operating activities for
Fitzgeralds Black Hawk for all periods presented. Discontinued operations also
includes the operating activities for Fitzgeralds Las Vegas in both the three-
and nine-months ended September 30, 2003.
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MAJESTIC STAR ANNOUNCES EARNINGS RESULTS 14
Note 1: EBITDA and adjusted EBITDA are presented solely as a supplemental
disclosure because management believes that they are widely used measures of
operating performance in the gaming industry, and a principal basis for
valuation of gaming companies. Management uses EBITDA and adjusted EBITDA
measures to compare operating results among properties and between accounting
periods. The use of EBITDA and adjusted EBITDA is specifically relevant in
evaluating large, long lived hotel and casino projects because the measure
provides a perspective on the current effects of operating decisions separate
from substantial, non-operating depreciation, financing costs and other
non-routine charges of such projects. Additionally, management believes that
some investors and lenders consider EBITDA and adjusted EBITDA to be a useful
measure in determining the Company's ability to service or incur debt and for
estimating the Company's underlying financial performance before capital costs,
taxes, capital expenditures and other non-routine costs such as the charge at
Majestic Star for retroactive property and gaming taxes. The Loan and Security
Agreement governing the Company's $80.0 million credit facility requires that
the Company maintain certain minimum EBITDA and adjusted EBITDA levels. Other
companies may calculate EBITDA and adjusted EBITDA differently. EBITDA and
adjusted EBITDA should not be construed as an alternative to operating income,
as an indicator of the Company's operating performance, or as an alternative to
cash flow from operating activities, as a measure of liquidity, or as any other
measure determined in accordance with generally accepted accounting principles
of the United States of America. The Company has significant uses of cash
including capital expenditures, interest payments, taxes and debt principal
repayments, which are not reflected in EBITDA and adjusted EBITDA. A
reconciliation of net income (loss) to EBITDA and adjusted EBITDA is presented
below.
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MAJESTIC STAR ANNOUNCES EARNINGS RESULTS 15
THE MAJESTIC STAR CASINO, LLC
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------------- -------------------------------
CONTINUING OPERATIONS 2004 2003 2004 2003
------------ ------------ ------------ ------------
MAJESTIC STAR
Net (loss) income $ (3,134,784) $ 1,146,463 $ (8,498,624) $ 3,603,198
Interest expense, net 6,632,539 3,522,178 19,933,153 10,560,975
Depreciation and amortization 2,038,075 1,388,381 5,830,605 4,197,083
Other non-operating expenses (1) 44,656 37,766 168,504 113,320
------------ ------------ ------------ ------------
EBITDA $ 5,580,486 $ 6,094,788 $ 17,433,638 $ 18,474,576
Loss on investment in BHR (2) 616,058 594,718 1,854,406 1,793,898
Retroactive Gaming Tax Charge (3) -- -- -- 2,071,850
Retroactive Property Tax Charge (4) (76,794) -- 2,157,709 --
------------ ------------ ------------ ------------
Adjusted EBITDA $ 6,119,750 $ 6,689,506 $ 21,445,753 $ 22,340,324
------------ ------------ ------------ ------------
FITZGERALDS TUNICA
Net income $ 2,624,092 $ 2,783,293 $ 9,695,635 $ 10,570,012
Interest income, net (3,175) (1,775) (7,899) (8,420)
Depreciation and amortization 2,258,319 1,989,281 6,492,525 5,822,585
------------ ------------ ------------ ------------
EBITDA $ 4,879,236 $ 4,770,799 $ 16,180,261 $ 16,384,177
------------ ------------ ------------ ------------
MAJESTIC INVESTOR HOLDINGS
Net loss $ (573,438) $ (5,295,648) $ (2,049,225) $(15,486,320)
Interest expense, net 474,015 4,417,731 1,422,007 13,235,259
Depreciation and amortization 69,339 665,819 208,458 1,997,376
Other non-operating expenses (1) -- 9,582 -- 28,482
------------ ------------ ------------ ------------
EBITDA $ (30,084) $ (202,516) $ (418,760) $ (225,203)
------------ ------------ ------------ ------------
TOTAL FROM CONTINUING OPERATIONS
Net income (loss) - property operations $ (1,084,130) $ (1,365,892) $ (852,214) $ (1,313,110)
Corporate allocation (825,766) (874,000) (2,506,052) (2,535,030)
------------ ------------ ------------ ------------
Net (loss) - Continuing Operations $ (1,909,896) $ (2,239,892) $ (3,358,266) $ (3,848,140)
Interest expense, net 7,103,379 7,938,134 21,347,261 23,787,814
Depreciation and amortization 4,365,733 4,043,481 12,531,588 12,017,044
Other non-operating expenses (1) 44,656 47,348 168,504 141,802
------------ ------------ ------------ ------------
EBITDA - Continuing Operations $ 9,603,872 $ 9,789,071 $ 30,689,087 $ 32,098,520
Loss on investment in BHR (2) 616,058 594,718 1,854,406 1,793,898
Retroactive gaming tax charge (3) -- -- -- 2,071,850
Retroactive property tax charge (4) (76,794) -- 2,157,709 --
------------ ------------ ------------ ------------
Adjusted EBITDA -Continuing Operations $ 10,143,136 $ 10,383,789 $ 34,701,202 $ 35,964,268
============ ============ ============ ============
MAJESTIC STAR ANNOUNCES EARNINGS RESULTS 16
THE MAJESTIC STAR CASINO, LLC
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA (CONTINUED)
(UNAUDITED)
For the Three Months For the Nine Months
DISCONTINUED OPERATIONS Ended September 30, Ended September 30,
FITZGERALDS BLACK HAWK 2004 2003 2004 2003
------------ ------------ ------------ ------------
Net income $ 2,930,076 $ 2,331,924 $ 7,772,962 $ 5,445,287
Interest income, net (4,028) -- (4,028) --
Depreciation and amortization 64,857 437,855 994,332 1,261,257
------------ ------------ ------------ ------------
EBITDA $ 2,990,905 $ 2,769,779 $ 8,763,266 $ 6,706,544
------------ ------------ ------------ ------------
FITZGERALDS LAS VEGAS
Net Loss $ -- $ (1,417,980) $ -- $ (1,517,375)
Interest expense, net -- 4,494 -- 14,551
Depreciation and amortization -- 721,225 -- 2,094,976
------------ ------------ ------------ ------------
EBITDA $ -- $ (692,261) $ -- $ 592,152
------------ ------------ ------------ ------------
TOTAL DISCONTINUED OPERATIONS
Net income (loss) $ 2,930,076 $ 913,944 $ 7,772,962 $ 3,927,912
Interest (income) expense, net (4,028) 4,494 (4,028) 14,551
Depreciation and amortization 64,857 1,159,080 994,332 3,356,233
------------ ------------ ------------ ------------
Adjusted EBITDA -Discontinued Operations $ 2,990,905 $ 2,077,518 $ 8,763,266 $ 7,298,696
============ ============ ============ ============
TOTAL COMBINED
Net income (loss) - property operations $ 1,845,946 $ (451,948) $ 6,920,748 $ 2,614,802
Corporate allocation (825,766) (874,000) (2,506,052) (2,535,030)
------------ ------------ ------------ ------------
Net income (loss) - Total Combined $ 1,020,180 $ (1,325,948) $ 4,414,696 $ 79,772
Interest expense, net 7,099,351 7,942,628 21,343,233 23,802,365
Depreciation and amortization 4,430,590 5,202,561 13,525,920 15,373,277
Other non-operating expenses (1) 44,656 47,348 168,504 141,802
------------ ------------ ------------ ------------
EBITDA - Total Combined $ 12,594,777 $ 11,866,589 $ 39,452,353 $ 39,397,216
Loss on investment in BHR (2) 616,058 594,718 1,854,406 1,793,898
Retroactive gaming tax charge (3) -- -- -- 2,071,850
Retroactive property tax charge (4) (76,794) -- 2,157,709 --
------------ ------------ ------------ ------------
Adjusted EBITDA - Total Combined $ 13,134,041 $ 12,461,307 $ 43,464,468 $ 43,262,964
EBITDA contribution from Fitzgeralds Las Vegas -- 692,261 -- (592,152)
------------ ------------ ------------ ------------
Adjusted EBITDA - Total Combined After
Fitzgeralds Las Vegas $ 13,134,041 $ 13,153,568 $ 43,464,468 $ 42,670,812
============ ============ ============ ============
Notes:
(1) Non-usage fees on the Company's Credit Facilities.
(2) Represents depreciation expense from Buffington Harbor Riverboats, LLC.
(3) Non-recurring gaming tax assessment in June 2003.
(4) Non-recurring property tax liabilities related to 2002 and 2003.
Non-recurring property tax liability accrued in the first quarter of
2004 at $2,234,503 and adjusted by $76,794 in the third quarter of
2004.