LAS VEGAS, March 2 /PRNewswire/ -- The Majestic Star Casino, LLC ("MSC")
today announced financial results for the three- and twelve-month periods
ended December 31, 2003. 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") for a fee. BNG is owned by Barden Development,
Inc. ("BDI"). Unless indicated otherwise, the "Company" refers to The
Majestic Star Casino, LLC and all of its direct and indirect subsidiaries.
Consolidated Results
Before charges related to the early extinguishment of debt and loss on
discontinued operations, the Company, for the three- and twelve-month periods
ended December 31, 2003, had a net loss of $1.5 million and net income of
$81,000, respectively, compared to a net loss of $1.3 million and net income
of $3.3 million, respectively, for the three- and twelve-month periods ended
December 31, 2002. As a result of refinancing almost all of the Company's
outstanding debt during the three-month period ended December 31, 2003, the
Company incurred charges for the early extinguishment of debt totaling
$32.0 million (the "Refinancing Charges"), which reflects premiums paid and
the write-off of original issue discount and deferred financing costs related
to the redeemed and retired notes. Also, during the three-month period ended
December 31, 2003, the Company recognized a loss on discontinued operations.
MSC, through its wholly owned subsidiary, MIH, spun-out its equity interests
in BNG to BDI, MSC's parent company. Concurrent with the spinout, MIH wrote
down the assets of BNG to their fair market value. The write down resulted in
a $10.0 million charge. MIH also recognized losses from discontinued
operations of $455,000 and $640,000 for the three-month periods ended
December 31, 2003 and 2002, respectively, and $2.0 million in both the
twelve-month periods ended December 31, 2003 and 2002, respectively. As a
consequence of the charges discussed above, the net loss was
$43.9 million in both the three- and twelve-month periods ended December 31,
2003 compared to a net loss of $2.0 million and net income of $1.3 million,
respectively, during the same periods in 2002.
Net revenues for the three-month period ended December 31, 2003 were
$63.0 million, compared to $63.2 million in the same three-month period last
year, a decrease of $232,000. Net revenues for the twelve-month period ended
December 31, 2003 totaled $261.8 million compared to $263.1 million for the
same period in 2002. The Company's lower net revenues were met with higher
gaming tax expenses of $3.0 million and $6.6 million, respectively, during the
three- and twelve-month periods ended December 31, 2003 when compared to
similar periods in the prior year. Included in the $6.6 million gaming tax
expense increase is a $2.1 million charge taken by the Company in June 2003
for a retroactive gaming tax assessment in Indiana. Higher corporate expenses
of $696,000, primarily the result of adding staff earlier in the year and
$1.1 million of incremental parking garage lease expense, which results from a
full year of operations, also reduced net income for the year ended
December 31, 2003.
Adjusted EBITDA for the three-month period ended December 31, 2003 was
$10.7 million, compared to $11.8 million in the same period last year, a
decrease of $1.1 million. Adjusted EBITDA for the twelve-month period ended
December 31, 2003 totaled $53.4 million compared to $56.2 million for the same
period in 2002. 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 solely
depreciation), Refinancing Charges, gain on bond redemption (in 2002), loss on
discontinued operations, and a non-recurring retroactive gaming tax charge.
Adjusted EBITDA was negatively impacted by much higher gaming taxes, corporate
expenses and parking garage lease expenses as discussed above. In addition,
the Company expensed $20,000 and $199,000, respectively, during the three- and
twelve-month periods ended December 31, 2003, which it contributed to defeat
an initiative that would have legalized slot machines at five racetracks in
Colorado. See note 1 for a detailed explanation as to the usefulness and
limitations of using EBITDA and adjusted EBITDA as financial measures and a
reconciliation of net income to EBITDA and adjusted EBITDA.
Don H. Barden, the Company's Chairman, President and Chief Executive
Officer stated, "that consolidated adjusted EBITDA was lower in 2003 primarily
due to higher gaming taxes. If the Company would have paid gaming taxes at
the same effective tax rate as that experienced during 2002, adjusted EBITDA
in 2003 would have been $4.8 million higher and adjusted EBITDA would have
increased in 2003 by 3.5%."
The Company ended the year with $22.1 million of available cash. Total
debt outstanding at December 31, 2003 was $301.7 million consisting of
$260.0 million of 9-1/2% Senior Secured Notes, $15.7 million (net of original
issue discount) of 11.653% notes and $26.0 million drawn on the Company's
$80.0 million credit facility. The Company spent $18.5 million on capital
expenditures during the twelve-month period ended December 31, 2003,
principally for the purchase of slot machines, ticket-in ticket-out technology
and new casino management systems. On February 11, 2004, the Company acquired
approximately 170 acres of property from a related entity for $21.9 million,
which was determined utilizing an independent appraisal. The Company drew
$20.0 million on its $80.0 million credit facility to fund the acquisition.
The Company plans on spending an additional $18.0 million on capital
expenditures in 2004.
Majestic Star Casino (property operations only)
Net losses, before Refinancing Charges, for the three- and twelve-month
periods ended December 31, 2003 were $4.4 million and $2.3 million,
respectively. This compares to a net loss of $149,000 and a net income of
$3.2 million, respectively, for the three- and twelve-month periods ended
December 31, 2002.
Net revenues were $33.5 million and $138.9 million, respectively, for the
three- and twelve-month periods ended December 31, 2003, compared to
$34.4 million and $135.1 million, respectively, during the same periods in
2002. For the three-month period ended December 31, 2003, revenues were
negatively impacted by a casino remodel project that began in July and was
completed during the fourth quarter. New carpet was installed, the property's
slot floor was reconfigured and bathrooms were remodeled. In addition, the
South Shore Grille at Buffington Harbor (the pavilion and docking facility
that Majestic Star shares with its joint venture partner Trump Indiana)
("BHR") shut down to allow the Compass Group USA, Inc., an independent food
and beverage company, to remodel and operate the food outlet. The South Shore
Grille reopened on December 26, 2003 as Koko Taylor's Blues Cafe. In
addition, Compass Group remodeled and reopened the Skyline Buffet on
December 10, 2003 as Passports World Class Buffet. The Skyline Buffet was
closed earlier in the year. While Majestic Star has some limited food
operations on the boat, the restaurant facilities at BHR provide the main food
outlets for Majestic Star's patrons.
Property financial performance was negatively impacted by a substantial
increase in gaming tax expense and greater lease expense associated with the
parking garage at the casino. Gaming taxes increased $1.9 million and
$4.5 million, respectively, for the three- and twelve-month periods ended
December 31, 2003 compared to the similar periods in 2002. The primary reason
for the higher taxes was a change made to the tax structure on July 1, 2002
that corresponded to legislation approving dockside gaming. In addition to
the aforementioned gaming taxes, in June 2003, Majestic Star recognized a
$2.1 million, non-recurring, gaming tax charge when the Indiana legislature
determined that all casinos that implemented dockside gaming needed to pay
taxes under the new structure effective July 1, 2002 and not the date the
casinos actually began dockside gaming.
Parking garage lease expenses were $515,000 and $2.1 million,
respectively, for the three- and twelve-month periods ended December 31, 2003
compared to $448,000 and $964,000, respectively, for the same periods in 2002.
The parking garage opened in May 2002 with Majestic Star making lease payments
starting in June 2002. Majestic Star incurred a full year of lease expense in
2003.
In addition to the disruptions caused by the casino remodel project and
changes to the food operations at BHR, Majestic Star's net revenues for both
the three- and twelve-month periods ended December 31, 2003 were impacted by
the soft economy and intense competition for gaming customers in the northwest
Indiana and Chicago markets. We also believe the war with Iraq negatively
impacted our results earlier in the year.
Adjusted EBITDA at Majestic Star was $4.5 million and $25.3 million,
respectively, for the three- and twelve-month periods ended December 31, 2003,
compared to $5.6 million and $26.7 million, respectively, for the three- and
twelve-month periods ended December 31, 2002. Adjusted EBITDA reflects
property operations only and is EBITDA adjusted for the non-recurring
$2.1 million retroactive gaming tax charge in 2003.
Lake County, Indiana is in the process of a general reassessment of
property values for purposes of property taxes. Majestic Star's riverboat
vessel and parcels of land owned by BHR and Buffington Harbor Parking
Associates (a joint venture between an affiliate of Majestic Star and Trump
Indiana and for which Majestic Star is a lessee) ("BHPA") are all located in
Lake County, and were recently notified of an increase in assessed values.
Majestic Star, in consultation with legal counsel, believes that the assessed
values are excessive based on recent independent appraisals of similar land
parcels. In addition, in the case of the riverboat vessel, Majestic Star
believes that the assessed value was determined using an incorrect asset
classification, which fact has been tentatively confirmed by the assessor.
The reassessment process for Lake County has been outsourced to a
third-party contractor. County officials have publicly acknowledged that the
process is taking longer than expected and that many of the assessments of
value are being appealed by taxpayers, as is the case with Majestic Star.
Until the process of assessment is complete and an accurate property base is
established, a rate of tax cannot be determined. Accordingly, while Majestic
Star has received notification of assessed values, it has not received a
property tax bill nor can it reasonably determine a rate of tax to estimate
its liability.
In accordance with procedures set by the assessor's office, Majestic Star
has paid 70% of its 2002 tax liability as a deposit against the tax. Majestic
Star has recorded an accrual for the remaining 2002 tax liability and the 2003
tax liability, which is equivalent to the full year 2002 tax liability, plus a
factor for inflation, pending additional information from Lake County. In
total, Majestic Star's property taxes, plus its share of taxes passed-through
from BHR and BHPA were approximately $2,653,000 on an annual basis. A
significant increase in tax could be material to the Company's results of
operations. Depending on the status of the tax rate-setting process, it is
reasonably possible that the Company's estimate of taxes due could change
between this press release and the actual filing of the Company's annual
financial statements.
Fitzgeralds Tunica (property only)
Net income for the three- and twelve-month periods ended December 31, 2003
was $2.3 million and $12.4 million, respectively. This compares to net income
of $2.5 million and $14.3 million, respectively, for the three- and
twelve-month periods ended December 31, 2002. Net income for the twelve-month
period ended December 31, 2003 was most notably impacted by lower net
revenues. The management team at Fitzgeralds Tunica timely implemented
effective cost containment strategies in order to reduce expenses during
periods of soft market conditions and lower revenues. Even though EBITDA
(defined as earnings before interest, taxes, depreciation and amortization)
was down compared to the twelve-month period ended December 31, 2002,
Fitzgeralds Tunica had its second best EBITDA year ever.
EBITDA at Fitzgeralds Tunica was $4.3 million and $20.2 million,
respectively, for the three- and twelve-month periods ended December 31, 2003,
compared to $4.4 million and $21.7 million, respectively, for the three- and
twelve-month periods ended December 31, 2002 (there were no adjustments to
EBITDA in either 2002 or 2003).
Net revenues were $21.1 million and $89.2 million, respectively, for the
three- and twelve-month periods ended December 31, 2003, compared to
$20.6 million and $92.8 million, respectively, during the same periods in
2002. For the three-month period ended December 31, 2003, revenues were
improved as the result of slightly better market conditions and fairly
aggressive direct mail and patron comping. Adversely impacting net revenues
was a hotel remodel program that impacted two floors or approximately 20% of
the property's 507 rooms. Management began the room remodel program on
December 1, 2003 and the project was completed in mid-February 2004.
For the twelve-month period ended December 31, 2003, the property
experienced declining revenues due to disruptions caused by a casino remodel
project which included new carpet, the soft economy, intense competition for
gaming customers in the markets in which Fitzgeralds Tunica competes and a
period of severe weather.
Fitzgeralds Black Hawk (property only)
Net income for the three- and twelve-month periods ended December 31, 2003
was $1.5 million and $6.5 million, respectively. This compares to net income
of $1.7 million and $6.7 million, respectively, for the three- and
twelve-month periods ended December 31, 2002. Net revenues were $8.4 million
and $33.6 million, respectively, for the three- and twelve-month periods ended
December 31, 2003, compared to $8.1 million and $35.1 million, respectively,
during the same periods in 2002. Casino revenues for the twelve-month period
ended December 31, 2003 were down slightly in the Black Hawk market when
compared to the same period in 2002.
EBITDA at Fitzgeralds Black Hawk was $2.0 million and $8.2 million,
respectively, for the three- and twelve-month periods ended December 31, 2003,
compared to $2.1 million and $8.2 million, respectively, for the three- and
twelve-month periods ended December 31, 2002 (there were no adjustments to
EBITDA in either 2002 or 2003). Management's continued focus on higher margin
guests and reduced marketing expenses has contributed to flat EBITDA despite a
$1.5 million decrease in net revenues for the twelve-month period ended
December 31, 2003.
This press release includes statements that constitute "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, and are subject to the safe harbor provisions of those sections and
the Private Securities Litigation Reform Act of 1995. Words such as
"believes", "anticipates", "estimates", "plans", "intends", "expects", "will"
or "could" used in the Company's press releases and reports filed with the
Securities and Exchange Commission 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 current 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 risk of the Company's joint
venture partner not making its lease payments when due in connection with the
parking facility at Buffington Harbor; 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 our gaming licenses; increases in or new taxes
imposed on gaming revenues, admissions and gaming devices; a finding of
unsuitability by regulatory authorities with respect to the Company or its
officers or key employees; loss and/or retirement of key employees;
significant increase in fuel or transportation prices; adverse economic
conditions in the Company's markets; severe and unusual weather in the
Company's markets; adverse results of significant litigation matters;
non-renewal of the Company's gaming licenses from the appropriate governmental
authorities; and continuing effects of terrorist attacks and any future
occurrences of terrorist attacks or other destabilizing events.
For more information on these and other factors, see the Company's and
MIH's most recently filed annual report on Form 10-K, quarterly report on Form
10-Q and current reports on Form 8-K. We caution readers not to place undue
reliance on forward-looking statements, which speak only as of the date
hereof. All subsequent written and oral forward-looking statements
attributable to us are expressly qualified in their entirety by the cautionary
statements and factors that may affect future results contained throughout
this press release. The Company undertakes no obligation to publicly release
any revisions to such forward-looking statements to reflect events or
circumstances after the date hereof.
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
http://www.sec.gov or from the applicable web site, http://www.majesticstar.com or
http://www.fitzgeralds.com.
The Company has scheduled a conference call for Wednesday, March 3, 2004
at 10:00 a.m. (Eastern Time) to discuss both the three- and twelve-month
periods ended December 31, 2003 results. The dial-in number is
(800) 391-2548. Please provide pass code number VB852247 to the operator.
The moderator will be Michael E. Kelly, Executive Vice President and Chief
Operating Officer for the Company. A replay number will be available at
(800) 355-2355, pass code 852247#. Inquiries for additional information
should be directed to Jon S. Bennett, Vice President and Chief Financial
Officer 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 twelve-month periods
ended December 31, 2003 and December 31, 2002 at the Company's properties.
This information is exclusive of the Refinancing Charges discussed previously.
($ in millions, except for win per gaming unit)
Three Months Ended
December 31, Increase % Increase
Majestic Star 2003 2002 (Decrease) (Decrease)
(property only)
Operating income $2.3 $3.4 $(1.1) -32.4%
Net revenues $33.5 $34.4 $(0.9) -2.6%
Casino revenues $33.1 $34.0 $(0.9) -2.6%
Slot revenues $27.8 $28.0 $(0.2) -0.7%
Table game revenues $5.3 $6.0 $(0.7) -11.7%
Average number of
slot machines 1,501 1,541 (40) -2.6%
Average win per
slot machine per day $201.1 $197.0 $4.1 2.1%
Average number of
table games 50 55 (5) -9.1%
Average win per
table game per day $1,158.4 $1,199.0 $(40.6) -3.4%
Twelve Months Ended
December 31, Increase % Increase
Majestic Star 2003 2002 (Decrease) (Decrease)
(property only)
Operating income $15.0 $17.6 $(2.6) -14.8%
Net revenues $138.9 $135.1 $3.8 2.8%
Casino revenues $136.6 $132.6 $4.0 3.0%
Slot revenues $114.6 $113.1 $1.5 1.3%
Table game revenues $22.0 $19.5 $2.5 12.8%
Average number of
slot machines 1,523 1,508 15 1.0%
Average win per
slot machine per day $206.1 $205.0 $1.1 0.5%
Average number of
table games 52 53 (1) -1.9%
Average win per
table game per day $1,149.0 $1,009.0 $140.0 13.9%
($ in millions, except for win per gaming unit and hotel average daily
rate)
Three Months Ended
December 31, Increase % Increase
Fitzgeralds Tunica 2003 2002 (Decrease) (Decrease)
(property only)
Operating income $2.3 $2.5 $(0.2) -8.0%
Net revenues $21.1 $20.6 $0.5 2.4%
Casino revenues $20.1 $19.6 $0.5 2.6%
Slot revenues $18.1 $17.7 $0.4 2.3%
Table game revenues $2.0 $1.9 $0.1 5.3%
Average number of
slot machines 1,352 1,351 1 0.1%
Average win per
slot machine per day $145.1 $142.3 $2.8 2.0%
Average number of
table games 34 34 -- 0.0%
Average win per
table game per day $656.0 $609.5 $46.5 7.6%
Hotel occupancy 89.2% 88.5% 0.7% 0.8%
Hotel average
daily rate $46.00 $46.84 $(0.84) -1.8%
Twelve Months Ended
December 31,
Fitzgeralds Tunica 2003 2002 Decrease % Decrease
(property only)
Operating income $12.3 $14.3 $(2.0) -14.0%
Net revenues $89.2 $92.8 $(3.6) -3.9%
Casino revenues $84.4 $88.2 $(3.8) -4.3%
Slot revenues $76.2 $79.3 $(3.1) -3.9%
Table game revenues $8.2 $8.9 $(0.7) -7.9%
Average number of
slot machines 1,351 1,371 (20) -1.5%
Average win per
slot machine per day $154.4 $158.4 $(4.0) -2.5%
Average number
of table games 34 34 -- 0.0%
Average win per
table game per day $663.0 $719.9 $(56.9) -7.9%
Hotel occupancy 92.2% 93.4% -1.2% -1.3%
Hotel average
daily rate $47.23 $48.13 $(0.90) -1.9%
($ in millions, except for win per gaming unit)
Three Months Ended
December 31, Increase % Increase
Fitzgeralds Black Hawk 2003 2002 (Decrease) (Decrease)
(property only)
Operating income $1.5 $1.7 $(0.2) -11.8%
Net revenues $8.4 $8.1 $0.3 3.7%
Casino revenues $8.5 $8.4 $0.1 1.2%
Slot revenues $8.3 $8.2 $0.1 1.2%
Table game revenues $0.2 $0.2 $-- 0.0%
Average number
of slot machines 594 594 -- 0.0%
Average win per
slot machine per day $152.9 $149.7 $3.2 2.1%
Average number
of table games 6 6 -- 0.0%
Average win per
table game per day $340.4 $329.5 $10.9 3.3%
($ in millions, except for win per gaming unit)
Twelve Months Ended
December 31, Increase % Increase
Fitzgeralds Black Hawk 2003 2002 (Decrease) (Decrease)
(property only)
Operating income $6.5 $6.7 $(0.2) -3.0%
Net revenues $33.6 $35.1 $(1.5) -4.3%
Casino revenues $34.5 $36.0 $(1.5) -4.2%
Slot revenues $33.8 $35.3 $(1.5) -4.2%
Table game revenues $0.7 $0.7 $-- 0.0%
Average number
of slot machines 593 593 -- 0.0%
Average win per
slot machine per day $155.9 $163.1 $(7.2) -4.4%
Average number
of table games 6 6 -- 0.0%
Average win per
table game per day $323.0 $329.6 $(6.6) -2.0%
THE MAJESTIC STAR CASINO, LLC
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
Revenues
Casino $61,751,830 $61,926,300 $255,385,819 $256,828,271
Rooms 1,890,760 1,888,942 7,932,811 8,160,611
Food and beverage 3,139,044 2,962,406 12,799,586 12,812,763
Other 1,013,624 823,409 3,966,417 3,506,074
Total 67,795,258 67,601,057 280,084,633 281,307,719
Less promotional
allowances 4,803,543 4,377,635 18,301,474 18,205,607
Net 62,991,715 63,223,422 261,783,159 263,102,112
Costs and expenses
Casino 20,830,378 20,816,326 84,211,678 84,616,731
Rooms 630,488 655,362 2,552,127 2,684,354
Food and beverage 1,293,797 1,436,660 5,262,936 5,824,733
Other 329,340 285,391 1,179,893 1,030,061
Gaming taxes 12,991,313 9,955,209 55,252,255 48,671,035
Advertising and
promotion 3,713,508 4,400,308 14,666,285 16,137,600
General and
administrative 10,544,234 11,634,682 39,652,724 41,179,508
Corporate
expenses 921,142 1,202,445 3,456,171 2,759,744
Economic Incentive
- City of Gary 996,026 1,021,009 4,103,010 3,980,501
Depreciation and
amortization 4,211,209 4,536,557 17,488,800 18,124,835
Loss on investment
in Buffington
Harbor Riverboats,
LLC 600,828 618,013 2,395,436 2,424,392
Loss on sale
of assets 11,468 5,009 117,097 5,470
Pre-opening
expenses -- -- -- 13,391
Total 57,073,731 56,566,971 230,338,412 227,452,355
Operating income 5,917,984 6,656,451 31,444,747 35,649,757
Other income
(expense)
Interest income 24,188 56,438 104,331 181,287
Interest
expense (7,414,831) (8,074,335) (31,282,788) (32,406,270)
(Loss) gain on
bond
redemption (31,960,083) 68,957 (31,960,083) 68,957
Other expense (43,772) (41,385) (185,574) (183,200)
Total other
expense (39,394,498) (7,990,325) (63,324,114) (32,339,226)
(Loss) income
from continuing
operations (33,476,514) (1,333,874) (31,879,367) 3,310,531
Discontinued
Operations
Loss on Barden
Nevada Gaming,
including
$10,000,000
write-down of
assets to fair
market value
at December 31,
2003 (10,455,232) (640,002) (11,972,607) (1,994,777)
Net (loss)
income (43,931,746) (1,973,876) (43,851,974) 1,315,754
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 measures provide 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 believe that some investors and lenders consider EBITDA and
adjusted EBITDA to be useful measures 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 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.
THE MAJESTIC STAR CASINO, LLC
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2003 2002 2003 2002
Majestic Star (in thousands)
Net (loss) income $(14,404) $(149) $(12,353) $3,221
Interest expense,
net 6,658 3,516 17,219 14,261
Depreciation and
amortization 1,637 1,531 5,834 6,617
Other non-operating
expenses (1) 43 38 156 142
EBITDA $(6,066) $4,936 $10,856 $24,241
Loss on investment
in BHR (2) 601 618 2,395 2,425
Loss on bond
redemption (3) 10,008 -- 10,008 --
Retroactive Gaming
Tax Charge (6) -- -- 2,072 --
Adjusted EBITDA $4,543 $5,554 $25,331 $26,666
Fitzgeralds Tunica
Net income $2,279 $2,481 $12,352 $14,316
Interest income (2) (5) (11) (28)
Depreciation and
amortization 1,997 1,892 7,820 7,373
EBITDA $4,274 $4,368 $20,161 $21,661
Fitzgeralds Black Hawk
Net income $1,502 $1,658 $6,462 $6,702
Interest income -- (1) -- (8)
Depreciation and
amortization 468 447 1,730 1,537
EBITDA $1,970 $2,104 $8,192 $8,231
Majestic Investor
Holdings
Net loss $(33,308) $(5,964) $(50,313) $(22,924)
Interest expense,
net 735 4,508 13,971 18,000
Depreciation and
amortization 109 667 2,105 2,597
Other non-operating
expenses (1) -- 3 29 42
EBITDA $(32,464) $(786) $(34,208) $(2,285)
Loss (gain) on bond
redemption (3) (4) 21,952 (69) 21,952 (69)
Loss from
discontinued
operations (5) 10,455 640 11,973 1,995
Adjusted EBITDA (7) $(57) $(215) $(283) $(359)
Total Consolidated
Net (loss) income $(43,931) $(1,974) $(43,852) $1,315
Interest expense,
net 7,391 8,018 31,179 32,225
Depreciation and
amortization 4,211 4,537 17,489 18,124
Other non-operating
expenses (1) 43 41 185 184
EBITDA $(32,286) $10,622 $5,001 $51,848
Loss on investment
in BHR (2) 601 618 2,395 2,425
Loss (gain) on bond
redemption (3) 31,960 (69) 31,960 (69)
Loss from
discontinued
operations (5) 10,455 640 11,973 1,995
Retroactive Gaming
Tax Charge (6) -- -- 2,072 --
Adjusted EBITDA $10,730 $11,811 $53,401 $56,199
Notes:
(1) Non-usage fees on the Company's Credit Facilities.
(2) Represents depreciation expense from Buffington Harbor
Riverboats, LLC.
(3) Non-recurring charges resulting from refinancing substantially
all of the Company's debt.
(4) Gain on redemption of debt in the three- and twelve-month periods
ended December 31, 2002.
(5) Write down of Barden Nevada Gaming, LLC tofair market value plus
the loss related to operations.
(6) Non-recurring tax assessment in June 2003.
(7) Inclusive of $20,000 and $199,000 for the three- and twelve-month
periods, respectively, of expense to defeat the initiative in
Colorado that would have allowed slot machines at five race
tracks.
SOURCE Majestic Star Casino, LLC
Web Site: http://www.majesticstar.com http://www.fitzgeralds.com
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