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
SECOND QUARTER 2005 RESULTS
AUGUST 11, 2005, LAS VEGAS, NV - The Majestic Star Casino, LLC ("MSC") today
announced financial results for the three- and six-month periods ended June 30,
2005. 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 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.
Consolidated Results: Three-Month Period Ended June 30, 2005
The Company's net revenues were $63.1 million, a decline of $3.9 million or 5.9%
from the same period in 2004. Contributing to the decline in net revenues was a
decrease in casino revenues, the primary revenue source for the Company, by $2.3
million or 3.3% to $68.3 million and an increase in promotional allowances of
$2.2 million or 22.2% to $12.0 million. Promotional allowances are deducted from
gross revenues to compute net revenues. The Company spent more in promotional
allowances to offset marketing programs from competitors and to create
incremental customer visits to its casinos.
The Company expects to report a net loss of $4.0 million compared to net income
of $2.9 million for the same period in 2004. Contributing to the net loss in the
current quarter was the decline in net revenues, a $2.3 million charge related
to the mutual termination of the sale of our Black Hawk property and related
catch-up depreciation and amortization of $1.4 million (for the period July 12,
2004 to March 31, 2005) (see discussion below), $0.3 million related to
preparation for Sarbanes-Oxley 404 compliance, and expenses of $0.2 million
incurred as the Company evaluated certain casino investment opportunities.
For the three-month period ended June 30, 2005, adjusted EBITDA was $13.0
million, compared to $15.4 million in the same period last year, a decrease of
$2.4 million or
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 2
15.6%. 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 expense) and certain
non-recurring charges as identified in the table at the end of this press
release, which reconciles 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.
Don H. Barden, the Company's Chairman and Chief Executive Officer stated, "The
Company's second quarter did not achieve the financial result we expected as
many of the marketing programs and promotions implemented by the Company,
particularly at our Majestic Star facility, were unsuccessful in generating
anticipated increases in casino revenues and EBITDA. Our enhanced promotional
efforts were undertaken to address the marketing programs and promotions of our
competitors. We have modified our programs for the third quarter. While
preliminary, EBITDA at both Majestic Star and Fitzgeralds Tunica are up in July
2005 over July 2004 and early indicators for August are positive. At Fitzgeralds
Black Hawk, preliminary July 2005 EBITDA numbers are lower due to the closure of
the primary access road into Black Hawk and competitive pressures."
Consolidated Results: Six-Month Period Ended June 30, 2005
The Company's net revenues were $129.9 million, compared to $134.4 million in
the same six-month period last year, a decrease of $4.5 million or 3.4%. Casino
revenues decreased to $139.4 million from $141.7 million in the year ago period.
In addition, promotional allowances increased $2.9 million to $22.6 million. The
Company has increased its promotional allowances to remain competitive in its
markets.
The Company expects to report a net loss of $0.6 million compared to net income
of $3.4 million for the same period last year. The Company's net loss was
impacted by the decline in net revenues, charges and additional depreciation and
amortization of $0.9 million (for the period July 12, 2004 through December 31,
2004) related to the mutual termination of the sale of Fitzgeralds Black Hawk
(see discussion below), $0.6 million related to preparation for Sarbanes-Oxley
404 compliance, and expenses of $0.2 million incurred in evaluating certain
casino investment opportunities. Included in net income in the 2004 period is a
$2.2 million charge related to retroactive 2002 and 2003 real property taxes at
Majestic Star.
Adjusted EBITDA was $28.9 million compared to $30.3 million in the same period
last year, a decrease of $1.4 million, or 4.8%.
At June 30, 2005, the Company had $16.4 million of cash, compared to $16.7
million at December 31, 2004. The Company had $29.6 million of available
borrowing capacity under its credit facility at June 30, 2005.
Total debt outstanding at June 30, 2005 was $326.3 million compared to $316.9
million at December 31, 2004. Total debt outstanding at June 30, 2005 consisted
of $260.0
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 3
million of 9 1/2% senior secured notes ("the 9 1/2% notes"), $16.0 million (net
of original issue discount) of 11.653% notes ("the 11.653% notes") and $50.3
million drawn on the Company's $80.0 million credit facility. The second quarter
is typically a period in which the Company's net cash outflow from operations is
due to the seasonality of the business and thus requires the Company to use its
line of credit as a funding source. During the quarter, the Company was required
to pay the scheduled semi-annual interest on both the 9 1/2% notes and 11.653%
notes. In addition, due to the timing of the respective fiscal years of the
states of Indiana and Colorado, the Majestic Star Casino and Fitzgeralds Black
Hawk are paying gaming taxes at the highest marginal tax rates during the
quarter for their gaming revenues. Both Indiana and Colorado have tiered tax
structures with the tax year starting on July 1 and ending on June 30. As casino
revenues increase throughout the tax year, the marginal tax rates also increase,
resulting in increased taxes paid in the latter months of the tax year. During
the quarter, the Company also made distributions of $2.3 million to BDI for
income taxes and paid $2.7 million to the purchaser of Fitzgeralds Black Hawk
upon the mutual termination of the transaction to sell the property (see
discussion below).
Through the first six months of 2005, the Company spent $8.0 million on
property, plant and equipment. The most significant purchases have been for slot
machines, installation of a new slot player tracking and marketing system at
Fitzgeralds Black Hawk and costs incurred in re-routing a storm sewer pipe below
grade at Fitzgeralds Black Hawk (see discussion below).
Majestic Star (property operations only)
Net revenues were $34.1 million for the three-month period ended June 30, 2005,
a decrease of $2.5 million or 6.8% over the same three-month period in 2004. Net
revenues declined due to lower casino revenues of $1.3 million and higher
promotional allowances of $1.4 million. Property management believes that casino
revenues have suffered due to travel delays caused by construction to roads and
highways, which provide access to the property, aggressive marketing and
promotional activities by competitors, and payment of high property tax bills by
local residents and higher gas prices, impacting the gaming budgets of its
customers. Management was very aggressive with its cash based promotional
activities during the quarter in order to offset the promotional efforts by
competitors and increase incremental customer visits to the property.
Net loss for the three-month period ended June 30, 2005 was $3.0 million
compared to a net loss of $1.6 million in the three months ended June 30, 2004.
The prime contributor to Majestic Star's increased net loss was the decline in
net revenues. Adjusted EBITDA at Majestic Star was $6.8 million for the
three-month period ended June 30, 2005, compared to $7.8 million in the same
period last year. Property adjusted EBITDA margin (defined as adjusted EBITDA
divided by net revenues) declined to 19.8% in the second quarter of 2005 from
21.2% in the second quarter of 2004. Adjusted EBITDA
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 4
reflects property operations only and is exclusive of corporate overhead (see
the accompanying table).
Net revenues were $70.3 million for the six-month period ended June 30, 2005, a
decrease of $3.3 million or 4.5% over the same period in the prior year. In
addition to the explanation above, a lower win percentage in table games during
the first quarter of 2005 and nominal casino revenue growth in the northwest
Indiana market contributed to our lower net revenues.
Net loss for the six-month period ended June 30, 2005 was $4.2 million, compared
to a net loss of $5.4 million for the six months ended June 30, 2004. Included
in Majestic Star's net loss in the six months ended June 30, 2004 is a $2.2
million charge for retroactive real property taxes. Adjusting for the
retroactive real property tax charge, Majestic Star's net loss would have been
$3.1 million. The prime contributor to Majestic Star's increased net loss was
the decline in net revenues.
Adjusted EBITDA at Majestic Star was $15.1 million for the six-month period
ended June 30, 2005, compared to $15.3 million for the six-month period ended
June 30, 2004. The property's adjusted EBITDA margin for the six-month period
ended June 30, 2005 was 21.4%, compared to 20.8% in the prior year six-month
period. Adjusted EBITDA reflects property operations only, is exclusive of
corporate overhead, and is adjusted for retroactive real property taxes in the
six-month period ended June 30, 2004 (see the accompanying table).
Mr. Barden stated, "The property was more aggressive with promotions in an
effort to stimulate casino volumes during the traditionally slow June month and
to address competitive pressures in its marketplace. Unfortunately, our
promotional efforts did not provide the gaming activity we had anticipated. In
addition, events beyond our control may have impacted our customers propensity
to visit and gamble at our facility. These events include significant delays
experienced by our customer on roads and highways under construction near our
facility, and the payment of high property tax bills by local residents during
the quarter and generally higher gas prices, which impact the discretionary
income of our customers."
"In addition, slot coin-in and table game drop volumes declined in the northwest
Indiana market in the second quarter, indicating soft market conditions,"
continued Mr. Barden. "It was the higher win percentages of our competitors that
contributed to a 4.9% overall increase in gaming revenues in the market."
"We continue to enhance the property and strive to meet the needs of our
customers. We recently received five awards from the Midwest Gaming and Travels
Readers' Choice Awards including Best Video Poker, Best Selection of Table
Games, Most Friendly Employees, Most Knowledgeable/Helpful Employees and
Friendliest Dealers. In addition, we have made improvements to our facility,
including a recently opened new access road, which bypasses many of the
hindrances encountered when accessing our property and drops people directly
into the third level of our parking garage, the creation
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 5
of 'the retro-room,' which allows our casino guests to enjoy token operated slot
machines in a nostalgic atmosphere, a remodeled cage and ticket in ticket out
("TITO") redemption area on the third deck of our casino, which will improve
service to our guests while making our operation more efficient, and remodeling
of the first and second floor bars" added Mr. Barden.
Fitzgeralds Tunica (property operations only)
Net revenues declined $0.2 million, or 1.0%, to $20.5 million for the
three-month period ended June 30, 2005. Casino revenues were $21.7 million for
the three-month period ended June 30, 2005, an increase of 0.3% over the same
quarter last year. Net revenues were $42.0 million for the six-month period
ended June 30, 2005, a decrease of $0.7 million or 1.6% over the same period in
the prior year. Casino revenues were $44.3 million for the six-month period
ended June 30, 2005, a decrease of 0.3% from the same 2004 period. Flat market
conditions have impacted our net revenues and casino revenues. Gross gaming
revenues in Mississippi River counties were down 0.5% and 0.8%, respectively, in
the three and six months ended June 30, 2005 from the same periods in 2004.
Net income for the three- and six-month periods ended June 30, 2005 was $2.8
million and $6.1 million, respectively. This compares to net income of $3.1
million and $7.1 million for the three- and six-month periods ended June 30,
2004. Our net income for both the three- and six-month periods ended June 30,
2005 was negatively impacted by higher promotional costs and increased
depreciation expense due to capital expenditures made during 2004 and the first
half of 2005 for casino expansion, the implementation of a new slot player
tracking and marketing system, new slot machines and conversion of existing slot
machines to TITO.
EBITDA at Fitzgeralds Tunica was $5.3 million and $11.1 million for the three-
and six-month periods ended June 30, 2005, compared to $5.2 million and $11.3
million for the three- and six-month periods ended June 30, 2004. EBITDA margin
improved to 25.9% in the second quarter of 2005 from 25.2% in the second quarter
of 2004. The property's year to date EBITDA margin was 26.4%, flat with the
six-month period ended June 30, 2004. EBITDA reflects property operations only
and is exclusive of corporate overhead. There were no adjustments to EBITDA in
the three- and six-month periods ended June 30, 2005 or the same periods in
2004.
Mr. Barden, commenting on the Fitzgeralds Tunica operation, stated, "We are
pleased that Fitzgeralds Tunica showed improved EBITDA in the second quarter of
this year when compared to the same quarter last year, particularly given that
gross gaming revenues in Mississippi counties along the Mississippi River are
declining. Also, we continue to move forward with the installation of TITO on
slot machines at the property. We currently have over 700 slot machines
operating with TITO, or over 50% of the casino floor. We are already seeing
acceptance of our TITO product by our customers, plus it is enhancing the
efficiency of our operation. In addition, at the end of June we relocated our
high limit
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 6
slot room to the first floor of the casino. The new high limit slot room allows
easier access for our casino guests in an improved environment."
Fitzgeralds Black Hawk
Net revenues declined to $8.4 million in the three-month period ended June 30,
2005 from $9.7 million in the same three-month period last year. Casino revenues
decreased to $9.1 million in the second quarter of 2005, from $10.3 million last
year. Slot revenues, which comprise the majority of casino revenues, decreased
11.3%, as slot coin-in decreased 4.9% and the slot win percentage declined 0.4%.
Net income for the three-month period ended June 30, 2005 was $0.7 million,
compared to $2.8 million in the three-month period ended June 30, 2004. The
decline in net revenues and charges related to the mutual termination of the
sale of Fitzgeralds Black Hawk (see discussion below) contributed to the decline
in net income.
Net revenues were $17.6 million for the six-month period ended June 30, 2005 and
$18.1 million for the same period in 2004. Casino revenues at Fitzgeralds Black
Hawk decreased to $18.9 million for the six-month period ended June 30, 2005
from $19.3 million in the same period in 2004. For the six-month period ended
June 30, 2005, slot revenues decreased 2.1%. Slot coin-in decreased 1.7% during
the six-month period. Net income for the six-month period ended June 30, 2005
was $3.7 million. This compares to net income of $4.8 million for the six-month
period ended June 30, 2004. Again, our lower net revenues and charges related to
the mutual termination of the sale of Fitzgeralds Black Hawk contributed to our
reduced net income.
EBITDA at Fitzgeralds Black Hawk was $2.7 million for the three-month period
ended June 30, 2005, compared to $3.3 million for the three-month period ended
June 30, 2004. EBITDA margins were 31.6% compared to 33.8%. EBITDA was $5.6
million for the six-month period ended June 30, 2005, a decline from the $5.8
million recorded in the same six-month period last year. EBITDA margin for the
six-month period ended June 30, 2005 was 32.1% compared to 31.9% last year.
EBITDA reflects property operations only and is exclusive of corporate overhead.
There were no adjustments to EBITDA in the three- and six-month periods ended
June 30, 2005 or the same periods in 2004.
During the second quarter, Fitzgeralds Black Hawk and Legends Gaming, LLC
("Legends") mutually terminated the transaction in which Fitzgeralds Black Hawk
was to sell substantially all of its assets to Legends for $66.0 million.
Pursuant to the agreement to sell Fitzgeralds Black Hawk, the Company was
required to pay Legends $2.0 million as a termination fee, reimburse Legends for
certain transaction costs and return the $2.0 million deposit placed in escrow
by Legends. The Company paid Legends $2.0 million for the mutual termination of
the agreement and certain reimbursable transaction costs, which amount is
reflected in corporate expense in the quarter ended June 30, 2005. In addition,
money was being withdrawn from the escrow to finance the burying of a storm
sewer pipe running across the Fitzgeralds Black Hawk property. The pipe was
being buried in order to allow future expansion at the property. At the time the
transaction was mutually terminated, $0.7 million of the escrow had been
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 7
used to finance the burying of the storm sewer pipe. The Company had to
reimburse the escrow for the amount drawn. The Company is also recognizing
approximately $0.3 million in charges related to the write-off of transaction
costs it previously incurred, and Fitzgeralds Black Hawk is recognizing
depreciation and amortization expense of $1.5 million for depreciation and
amortization that was suspended when the related assets were classified as held
for sale (for the period July 12, 2004 through the date of mutual termination on
April 14, 2005).
"Fitzgeralds Black Hawk's net revenues were impacted by soft market conditions,"
stated Mr. Barden. "In addition, a rockslide that occurred on June 21 on the
main road into Black Hawk will most likely impact the third quarter revenues in
the market as it is anticipated that this road will not be re-opened until
mid-September 2005. We continue to address our ability to remain competitive in
the market. We implemented a new slot marketing and player tracking system
during the second quarter and have recently started to implement TITO at the
property. We currently have 56 machines operational with TITO and will expand
the implementation of TITO to the property's nearly 600 slot machines."
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
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 8
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 real property taxes and the
requirement that deductions previously taken for taxes paid on gross gaming
receipts are disallowed on our member's Indiana state income tax return for
which the Company may be required to make distributions to reimburse its member
for any tax liabilities that may result; 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 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 and Form 10-Q.
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 August 12, 2005 at 11:00 a.m.
(Eastern Time) to discuss the three- and six-month periods ended June 30, 2005
results. The dial-in number is (866) 847-7860. The moderator will be Jon S.
Bennett, Vice President and Chief Financial Officer for the Company. A replay
number will be available at (888) 266-2081, pass code 756275. Inquiries for
additional information should be directed to Jon S. Bennett, Vice President and
Chief Financial Officer, at (702) 388-2224.
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 9
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,
slot and table game revenues, average number of slot machines and table games,
average win per slot machine and table game and hotel statistical information
(Fitzgeralds Tunica only), for the three- and six-month periods ended June 30,
2005 and June 30, 2004 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
JUNE 30, INCREASE % INCREASE
MAJESTIC STAR (PROPERTY ONLY) 2005 2004 (DECREASE) (DECREASE)
-------------------------------------------------------
Operating income $ 4.0 $ 5.3 $ (1.3) -24.6%
Net revenues $ 34.1 $ 36.6 $ (2.5) -6.8%
Casino revenues $ 37.4 $ 38.7 $ (1.3) -3.2%
Slot revenues $ 31.5 $ 31.8 $ (0.3) -1.0%
Table game revenues $ 6.0 $ 6.9 $ (0.9) -13.7%
Average number of slot machines 1,606 1,564 42 2.7%
Average win per slot machine per day $ 215.47 $ 223.00 $ (7.53) -3.4%
Average number of table games 47 50 (3) -5.4%
Average win per table game per day $ 1,392.78 $ 1,518.00 $ (125.22) -8.2%
SIX MONTHS ENDED
JUNE 30, INCREASE % INCREASE
MAJESTIC STAR (PROPERTY ONLY) 2005 2004 (DECREASE) (DECREASE)
-------------------------------------------------------
Operating income $ 9.6 $ 8.1 $ 1.5 18.7%
Net revenues $ 70.3 $ 73.6 $ (3.3) -4.5%
Casino revenues $ 76.1 $ 77.9 $ (1.8) -2.3%
Slot revenues $ 63.2 $ 63.4 $ (0.2) -0.3%
Table game revenues $ 12.9 $ 14.5 $ (1.6) -11.0%
Average number of slot machines 1,604 1,535 69 4.5%
Average win per slot machine per day $ 217.77 $ 227.00 $ (9.23) -4.1%
Average number of table games 47 50 (3) -6.2%
Average win per table game per day $ 1,513.00 $ 1,593.00 $ (80.00) -5.0%
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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
JUNE 30, INCREASE % INCREASE
FITZGERALDS TUNICA (PROPERTY ONLY) 2005 2004 (DECREASE) (DECREASE)
----------------------------------------------------------------
Operating income $ 2.8 $ 3.1 $ (0.3) -8.6%
Net revenues $ 20.5 $ 20.7 $ (0.2) -1.0%
Casino revenues $ 21.7 $ 21.6 $ 0.1 0.3%
Slot revenues $ 19.9 $ 19.6 $ 0.3 1.4%
Table game revenues $ 1.8 $ 2.0 $ (0.2) -11.4%
Average number of slot machines 1,361 1,335 26 1.9%
Average win per slot machine per day $ 160.97 $ 161.78 $ (0.81) -0.5%
Average number of table games 35 34 1 2.9%
Average win per table game per day $ 555.84 $ 639.73 $ (83.89) -13.1%
Hotel occupancy 94.0% 96.8% -1.8% -1.9%
Hotel average daily rate $ 44.75 $ 43.22 $ 1.53 3.5%
SIX MONTHS ENDED
JUNE 30, INCREASE % INCREASE
FITZGERALDS TUNICA (PROPERTY ONLY) 2005 2004 (DECREASE) (DECREASE)
----------------------------------------------------------------
Operating income $ 6.1 $ 7.1 $ (1.0) -13.8%
Net revenues $ 42.0 $ 42.7 $ (0.7) -1.6%
Casino revenues $ 44.3 $ 44.4 $ (0.1) -0.3%
Slot revenues $ 40.2 $ 40.4 $ (0.2) -0.6%
Table game revenues $ 4.1 $ 4.0 $ 0.1 2.9%
Average number of slot machines 1,367 1,341 26 1.9%
Average win per slot machine per day $ 162.39 $ 165.69 $ (3.30) -2.0%
Average number of table games 34 34 - 0.0%
Average win per table game per day $ 659.05 $ 643.08 $ 15.97 2.5%
Hotel occupancy 92.6% 95.2% -2.6% -2.7%
Hotel average daily rate $ 44.64 $ 43.85 $ 0.79 1.8%
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 12
($ in millions, except for win per gaming unit)
THREE MONTHS ENDED
JUNE 30, INCREASE % INCREASE
FITZGERALDS BLACK HAWK (PROPERTY ONLY) 2005 2004 (DECREASE) (DECREASE)
---------------------------------------------------------------
Operating income $ 0.7 $ 2.8 $ (2.1) -75.0%
Net revenues $ 8.4 $ 9.7 $ (1.3) -13.1%
Casino revenues $ 9.1 $ 10.3 $ (1.2) -11.0%
Slot revenues $ 8.9 $ 10.1 $ (1.2) -11.3%
Table game revenues $ 0.2 $ 0.2 $ 0.0 2.7%
Average number of slot machines 588 600 (12) -2.0%
Average win per slot machine per day $ 166.98 $ 184.20 $ (17.22) -9.3%
Average number of table games 6 6 - 0.0%
Average win per table game per day $ 382.87 $ 372.80 $ 10.07 2.7%
SIX MONTHS ENDED
JUNE 30, INCREASE % INCREASE
FITZGERALDS BLACK HAWK (PROPERTY ONLY) 2005 2004 (DECREASE) (DECREASE)
---------------------------------------------------------------
Operating income $ 3.7 $ 4.8 $ (1.2) -24.2%
Net revenues $ 17.6 $ 18.1 $ (0.5) -2.9%
Casino revenues $ 18.9 $ 19.3 $ (0.4) -2.0%
Slot revenues $ 18.5 $ 18.9 $ (0.4) -2.1%
Table game revenues $ 0.4 $ 0.4 $ 0.0 4.9%
Average number of slot machines 591 600 (9) -1.5%
Average win per slot machine per day $ 172.93 $ 173.10 $ (0.17) -0.1%
Average number of table games 6 6 - 0.0%
Average win per table game per day $ 411.11 $ 389.70 $ 21.41 5.5%
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MAJESTIC STAR CASINO ANNOUNCES EARNINGS RESULTS 13
THE MAJESTIC STAR CASINO, LLC
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
For The Three Months Ended For The Six Months Ended
June 30, June 30,
------------------------------- ------------------------------
2005 2004 2005 2004
------------ ------------ ------------- -------------
REVENUES
Casino $ 68,275,963 $ 70,609,286 $ 139,358,610 $ 141,651,789
Rooms 1,917,569 1,919,669 3,711,673 3,793,506
Food and beverage 3,460,000 3,124,713 6,970,376 6,469,173
Other 1,392,747 1,155,236 2,450,477 2,214,880
------------ ------------ ------------- -------------
Total 75,046,279 76,808,904 152,491,136 154,129,348
Less promotional allowances 11,986,248 9,807,245 22,576,045 19,705,086
------------ ------------ ------------- -------------
Net Revenues 63,060,031 67,001,659 129,915,091 134,424,262
------------ ------------ ------------- -------------
COSTS AND EXPENSES
Casino 16,212,746 17,545,548 33,505,625 35,783,000
Rooms 441,108 467,054 825,053 932,296
Food and beverage 1,464,502 1,376,421 2,965,843 2,833,863
Other 242,399 323,551 501,877 565,084
Gaming taxes 14,752,004 15,327,424 30,050,193 30,511,538
Advertising and promotion 3,901,428 4,183,041 7,394,928 7,932,297
General and administrative 10,166,239 10,308,799 20,572,736 23,734,381
Corporate expenses 3,961,114 874,680 5,158,184 1,680,286
Economic Incentive - City of Gary 1,124,610 1,159,082 2,287,972 2,336,237
Depreciation and amortization 6,751,733 4,595,487 11,387,668 9,095,333
Loss on investment in Buffington
Harbor Riverboats, LLC 603,500 625,507 1,209,198 1,238,348
Loss on sale of assets 37,835 18,302 37,975 19,357
------------ ------------ ------------- -------------
Total 59,659,218 56,804,896 115,897,252 116,662,020
------------ ------------ ------------- -------------
Operating income 3,400,813 10,196,763 14,017,839 17,762,242
------------ ------------ ------------- -------------
OTHER INCOME (EXPENSE)
Interest income 86,414 5,289 98,616 10,403
Interest expense (7,443,649) (7,196,240) (14,680,024) (14,254,285)
Other expense (41,715) (95,639) (78,669) (123,847)
------------ ------------ ------------- -------------
Total other expense (7,398,950) (7,286,590) (14,660,077) (14,367,729)
------------ ------------ ------------- -------------
NET (LOSS) INCOME $ (3,998,137) $ 2,910,173 $ (642,238) $ 3,394,513
============ ============ ============= =============
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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 charges the
Company incurred for retroactive real property taxes and termination charges
incurred with the mutual termination of the sale of Fitzgeralds Black Hawk. The
Loan and Security Agreement ("Agreement") governing the Company's $80.0 million
credit facility requires that the Company maintain certain minimum EBITDA levels
as defined in the Agreement. 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, 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 CASINO 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 Six Months
Ended June 30, Ended June 30,
2005 2004 2005 2004
------------ ------------ ------------ ------------
MAJESTIC STAR
Net loss $ (2,988,288) $(1,563,957) $(4,174,194) $(5,363,839)
Interest expense, net 6,904,318 6,719,076 13,661,157 13,300,614
Depreciation and amortization 2,189,482 1,880,122 4,279,929 3,792,533
Other non-operating expenses (1) 41,715 95,639 78,669 123,847
------------ ------------ ------------ ------------
EBITDA $ 6,147,227 $ 7,130,880 $ 13,845,561 $ 11,853,155
Loss on investment in BHR (2) 603,500 625,507 1,209,198 1,238,348
Retroactive Property Tax Charge (3) -- -- -- 2,234,503
------------ ------------ ------------ ------------
Adjusted EBITDA $ 6,750,727 $ 7,756,387 $ 15,054,759 $ 15,326,006
------------ ------------ ------------ ------------
FITZGERALDS TUNICA
Net income $ 2,796,764 $ 3,052,989 $ 6,108,413 $ 7,071,542
Interest income (9,272) (1,991) (16,390) (4,724)
Depreciation and amortization 2,532,834 2,174,788 5,008,982 4,234,206
------------ ------------ ------------ ------------
EBITDA $ 5,320,326 $ 5,225,786 $ 11,101,005 $ 11,301,024
------------ ------------ ------------ ------------
FITZGERALDS BLACK HAWK
Net income $ 701,490 $ 2,800,696 $ 3,672,908 $ 4,842,886
Depreciation and amortization 1,960,076 471,238 1,960,076 929,475
------------ ------------ ------------ ------------
EBITDA $ 2,661,566 $ 3,271,934 $ 5,632,984 $ 5,772,361
------------ ------------ ------------ ------------
MAJESTIC INVESTOR HOLDINGS
Net loss $ (546,989) $ (504,875) $ (1,091,181) $ (1,475,790)
Interest expense, net 462,189 473,866 936,641 947,992
Depreciation and amortization 69,341 69,339 138,681 139,119
------------ ------------ ------------ ------------
EBITDA $ (15,459) $ 38,330 $ (15,859) $ (388,679)
------------ ------------ ------------ ------------
TOTAL FROM OPERATIONS
Net (loss) income - property operations $ (37,023) $ 3,784,853 $ 4,515,946 $ 5,074,799
Corporate allocation (3,961,114) (874,680) (5,158,184) (1,680,286)
------------ ------------ ------------ ------------
Net (loss) income $ (3,998,137) $ 2,910,173 $ (642,238) $ 3,394,513
Interest expense, net 7,357,235 7,190,951 14,581,408 14,243,882
Depreciation and amortization 6,751,733 4,595,487 11,387,668 9,095,333
Other non-operating expenses (1) 41,715 95,639 78,669 123,847
------------ ------------ ------------ ------------
EBITDA - Total $ 10,152,546 $ 14,792,250 $ 25,405,507 $ 26,857,575
Loss on investment in BHR (2) 603,500 625,507 1,209,198 1,238,348
Fitzgeralds Black Hawk sale termination charge (4) 2,257,222 -- 2,257,222 --
Retroactive property tax charge (3) -- -- -- 2,234,503
------------ ------------ ------------ ------------
Adjusted EBITDA - Total $ 13,013,268 $ 15,417,757 $ 28,871,927 $ 30,330,426
------------ ------------ ------------ ------------
Notes:
(1) Non-usage fees on the Company's Credit Facilities.
(2) Represents depreciation expense from Buffington Harbor Riverboats, LLC.
(3) Retroactive property tax charge in the three-month period ended March 31,
2004 for taxes related to 2002 and 2003.
(4) Charge incurred due to the mutual termination of the sale of
substantially all the assets of Fitzgeralds Black Hawk.