Company Receives Regulatory Approvals In Fitzgeralds Acquisition

 

Majestic Garage Construction Well Underway

 

    GARY, Ind., Oct. 22 /PRNewswire/ -- The Majestic Star Casino, LLC (the "Company") today announced operating results for the three and nine month periods ended September 30, 2001.  During the three month period ended September 30, 2001, the Company had net revenues of $31.6 million compared to $28.8 million for the same period last year, an increase of approximately

$2.7 million or 9.4%.  Net loss for the three month period ended September 30, 2001 was $449,000, compared to a net loss of $2.1 million in the same period last year, an improvement of 79.0%.  Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, loss on bond redemption, loss on disposal of assets and costs associated with its "unrestricted subsidiary" Majestic Investor, LLC) was $6.4 million compared to $5.1 million in the prior year.  The $1.3 million or 24.7% increase in Adjusted EBITDA was primarily attributable to a 12.1% increase in slot revenues.

    As of September 30, 2001, the Company had year-to-date net revenues for the nine month period of approximately $95.9 million, compared to

$89.9 million in same period last year, an increase of approximately

$6.0 million or 6.7%.  The Company's year-to-date EBITDA was $19.8 million, compared to $17.1 million during the same period last year.  The $2.6 million 15.4% increase in EBITDA is attributable to the strong double digit growth in slot revenues and a 4.0% increase in the number of admissions and an 8.3% overall decrease in advertising expenditures.

    Casino revenues during the three months ended September 30, 2001 totaled approximately $30.9 million, of which slot machines accounted for approximately $26.2 million (84.8%) and table games accounted for approximately $4.7 million (15.2%).  Slot coin-in increased $21.9 million and slot revenue increased $2.8 million or 12.1% compared to the same period last year.  The average number of slot machines in operation was 1,424 with an average win per slot per day of $200, compared to 1,432 units with an average win per slot per day of $175 in the period ended September 30, 2000. The average number of tables in operation was 49 with an average win per table per day of $1,043. The Company's admissions during the quarter grew 4.0% over the same period last year to 820,000.  The average win per state passenger count was approximately $38 and the average win per patron was approximately $66. 

    Casino revenues during the nine month period ended September 30, 2001 totaled approximately $93.8 million compared to $87.9 million in the prior year, an increase of approximately $5.9 million or 6.7%.  The average win per slot per day was $203 compared to $180 in the same period last year.  The average win per state passenger count was approximately $38 and the average win per patron was approximately $68.

    The Company also stated that construction of a 2,000 space parking facility by Buffington Harbor Parking Associates, LLC ("BHPA") a joint venture between Trump Indiana, Inc ("Trump") and AMB Parking LLC (a company wholly owned by Don H. Barden) is well underway.  Michael Kelly, Chief Operating Officer stated "that the majority of the foundation supporting the structure has been poured and that the erection of the pre-fabricated structure has begun in earnest."  Mr. Kelly went on to state "that at the present time the general contractor appears to be running slightly ahead of schedule and the parking facility is on target to be completed late first quarter or early second quarter 2002."

    Majestic Investor, LLC ("Majestic Investor") was formed in September 2000 as an "unrestricted subsidiary" of the Company under the Indenture relating to the Company's 10-7/8% Senior Secured Notes.  Majestic Investor was initially formed to satisfy the Company's offsite development obligations under a Development Agreement with the City of Gary.  The Company has met and satisfied all of its financial obligations under the Development Agreement.  On November 22, 2000, Majestic Investor entered into a definitive purchase agreement with Fitzgeralds Gaming Corporation to purchase three Fitzgeralds brand casinos.  Majestic Investor in September 2001 assigned its rights to Majestic Investor Holdings, LLC, a 100% owned affiliate of Majestic Investor, LLC.  Majestic Investor Holdings, LLC plans to purchase Fitzgeralds casinos in Las Vegas, Nevada, Tunica, Mississippi, and Black Hawk, Colorado for approximately $149 million in cash, subject to adjustment in certain circumstances, plus the assumption of certain liabilities.  The sale is consistent with the reorganization that Fitzgeralds Gaming Corporation has negotiated with a committee representing its noteholders.  To facilitate this transaction, Fitzgeralds Gaming Corporation and its subsidiaries voluntarily filed for Chapter 11 Bankruptcy in U. S. District Court in Nevada on December 5, 2000.  The sale of these properties to Majestic Investor was approved by the Bankruptcy Court on March 19, 2001, but still remains contingent on, among other things, licensing and financing. Don H. Barden, Chairman and CEO of Majestic Star and its affiliated subsidairies, including Majestic Investor Holdings, LLC stated "that the Company received regulatory approvals to purchase and operate the three Fitzgeralds brand properties from Mississippi, Colorado and Nevada the week of October 15, 2001."  Mr. Barden also stated "that the Company has filed and received appropriate approvals from the Federal Trade Commission with respect to the Hart-Scott-Radino Act."  The Company anticipates that the transaction, pending financing should close during the fourth quarter of 2001. 

    The Company also reported that September 30, 2001 was its outstanding approximately $132.5 million.  The Company ended the quarter with cash and cash equivalents of approximately $8.4 million, which amount excludes

$4.9 million in cash and restricted cash at Majestic Investor.

    The Company was formed in December 1993 as an Indiana limited liability company to provided gaming and related entertainment to the public.  The Company began operations on June 7, 1996.  Through October 27, 1997, the Company conducted its operations onboard a Chartered Vessel.  On October 27, 1997 the Company placed into service a $50.1 million permanent vessel which is owned by the Company and contains approximately 43,000 square feet of gaming on three expansive levels with approximately 1,423 slot machines and 49 table games.

    The Company and Trump Indiana, Inc. ("Trump"), the holder of a second gaming license to operate in the City of Gary, formed Buffington Harbor Riverboats, L.L.C. ("BHR") to own and operate certain common facilities at Buffington Harbor, such as the guest pavilion, vessel berths, parking lots and other infrastructures.  The Company and Trump each have a fifty-percent ownership interest in BHR.

    This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events.  Statements containing expressions such as "believes," "anticipates," "estimates" or "expects" used in the Company's press releases and reports filed with the Securities and Exchange Commission (including period reports on Form 10-K and Form 10-Q) are intended to identify forward-looking statements.  All forward-looking statements involve risks and uncertainties.  Although the Company believes its expectations are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurances that actual results will not materially differ from expected results.  The Company cautions that these and similar statements included in this press release and in previously filed periodic reports are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements.  Such factors include, without limitation, the following:  the construction of a covered parking facility located at the Company's gaming complex; the ability to fund planned development needs and to service debt from existing operations and from new financing; increased competition in existing markets or the opening of new gaming jurisdictions; a decline in the public acceptance of gaming; the limitation, conditioning or suspension of the Company's gaming license; increases in or new taxes imposed on gaming revenues, admission taxes or gaming devices; a finding of unsuitability by regulatory authorities with respect to the Company, its officers, or key employees; loss and/or retirement of key executives; significant increase in fuel or transportation prices; adverse economic conditions in the Company's markets; severe and unusual weather in the Company's market and non-renewal of the Company's license from the Indiana Gaming Commission.

    Inquiries for additional information should be directed to Michael E. Kelly, Chief Operating and Financial Officer at (219) 977-7823.  (Condensed Statements of Operations and Other Statistical Data follow).

 

THE MAJESTIC STAR CASINO, LLC

 

STATEMENT OF INCOME

PARENT ONLY

 

(Unaudited)

                           

                               Three Months Ended       Nine Months Ended

                                  September 30,            September 30,

                                2001        2000         2001        2000

Revenues:                           

  Casino               $30,881,266  $28,202,683  $93,812,490  $87,949,496

  Food and beverage        517,368      478,993    1,587,246    1,468,996

  Other                    317,465      275,570      940,122      779,615

    Gross Revenues      31,716,099   28,957,246   96,339,858   90,198,107

      less promotional

      allowances          (163,179)    (110,449)    (442,698)    (302,478)

    Net Revenues        31,552,920   28,846,797   95,897,160   89,895,629

                           

Costs and Expenses:                           

  Casino                 6,512,406    6,467,501   19,858,025   18,640,979

  Gaming and admission

    taxes                8,638,565    8,013,444   26,148,146   24,704,976

  Food and beverage        595,216      632,403    1,839,058    1,810,460

  Advertising and

    promotion            2,088,028    2,096,364    5,821,634    6,348,006

  General and

    administrative       6,387,106    6,151,040   19,630,388   19,045,968

  Economic incentive

    - City of Gary         926,963      873,875    2,815,996    2,720,901

  Depreciation

    and amortization     2,582,645    2,284,267    7,029,641    6,833,417

  Loss on disposal

    of assets                    -      301,658       12,114      301,658

                           

    Total costs

      and expenses      27,730,929   26,820,552   83,155,002   80,406,365

                           

    Operating income     3,821,991    2,026,245   12,742,158    9,489,264

                           

Other Income (Expense):                           

  Loss on investment in                             

    Buffington Harbor

    Riverboats, L.L.C.    (636,751)    (738,699)  (2,185,746)  (2,190,536)

  Interest income           26,377      260,331      165,483      692,797

  Interest expense      (3,620,266)  (3,655,441) (10,863,541) (11,181,649)

  Other non-operating

    expense                (40,165)     (25,539)     (87,644)    (103,639)

    Total other income

      (expense)         (4,270,805)  (4,159,348) (12,971,448) (12,783,027)

                           

    Income (loss) before

      extraordinary item  (448,814)  (2,133,103)    (229,290)  (3,293,763)

                           

Extraordinary Item:                           

  Loss on bond redemption        -            -            -     (382,500)

                           

    Net income (loss)    $(448,814) $(2,133,103)   $(229,290) $(3,676,263)

                           

 

THE MAJESTIC STAR CASINO, LLC

   

Summary Data (in Millions)

(Unaudited)

                           

                                Three Months Ended    Nine Months Ended       

                                   September 30,        September 30,        

                                 2001       2000       2001       2000       

                           

Gross Revenues                  $31.7     $29.0       $96.3      $90.2        

  Casino                         30.9      28.2        93.8       87.9        

  Food and beverage               0.5       0.5         1.6        1.5        

  Other                           0.3       0.3         0.9        0.8        

                          

  Operating Income               $3.8      $2.0       $12.7       $9.5        

  Adjusted EBITDA (a)            $6.4      $5.1       $19.8      $17.1        

                           

(a) Adjusted EBITDA (defined as earnings before interest, income taxes,

    depreciation, amortization, and excluding loss on bond redemption,

    disposal of assets and expenses associated with Majestic Investor,

    LLC) is presented solely as a supplemental disclosure to assist in the

    evaluation of the Company's ability to generate cash flow.  In

    particular, the Company believes that an analysis of EBITDA enhances

    the understanding of the financial performance of companies with

    substantial depreciation and amoritzation.   

                           

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SOURCE  Majestic Star Casino, LLC

    -0-                             10/22/2001

    /CONTACT:  Michael E. Kelly of Majestic Star Casino, +1-219-977-7823/

    /Web site:  http://www.majesticstar.com/

 

CO:  Majestic Star Casino, LLC

ST:  Indiana

IN:  CNO

SU:  ERN