LAS VEGAS, March 16 /PRNewswire/ -- The Majestic Star Casino, LLC ("MSC") today
announced financial results for the three- and twelve-month periods ended December
31, 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"). The assets of Barden Colorado Gaming,
LLC are held for sale and are being reported as discontinued operations. 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. This press
release incorporates reclassifications of certain cash based promotional activities.
Consolidated Results-Three Month Period Ended December 31, 2004
Net revenues, for the Company's continuing operations, for the three-month period ended December 31, 2004 were $52.7 million,
compared to $50.7 million in the same three-month period last year, an increase of $2.0 million or 3.9%. Casino revenues increased
to $55.6 million from $53.2 million in the year ago period.
For the three-month period ended December 31, 2004, the Company had a loss from continuing operations of $1.6 million compared
to a loss from continuing operations of $35.2 million for the comparable quarter in 2003. The Company took a charge of $32.0
million in the fourth quarter of 2003 when it refinanced substantially all of its debt. For comparability purposes, after
adjusting for the charges related to the refinancing, loss from continuing operations in the fourth quarter of 2003 was $3.2
million.
Including discontinued operations, the Company expects to report net income of $0.6 million compared to a net loss of $43.9
million for the same period in 2003. Discontinued operations for the fourth quarter of 2004 reflects the results of the Company's
Black Hawk operation which is held for sale, as compared to the 2003 period, which reflects the results of both the Black
Hawk operation and BNG prior to its spin-off. BNG was spun off to BDI on December 31, 2003. Our 2003 net loss was impacted
by the $32.0 million refinancing charge discussed previously and a $10.0 million charge related to the write down of the BNG
assets to fair market value at spin-off. Adjusting for these two items, for comparability purposes, our 2003 net loss would
have been $2.0 million.
For the three-month period ended December 31, 2004, adjusted EBITDA from continuing operations was $10.4 million, compared
to $8.6 million in the same period last year, an increase of $1.8 million or 21.5%. Including Fitzgeralds Black Hawk, the
Company's adjusted EBITDA was $12.6 million, compared to $10.7 million in the same period last year, an increase of $1.9 million
or 17.6%. 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 all comprised of depreciation) and certain 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 2 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, Chief Executive Officer and President stated "the Company's fourth quarter performance
was a great way to finish the year and the various programs that were put in place to generate our much improved adjusted
EBITDA should be a catalyst for 2005."
Consolidated Results-Twelve Month Period Ended December 31, 2004
Net revenues of the Company's continuing operations, for the twelve-month period ended December 31, 2004, were $224.3 million,
compared to $213.0 million in the same twelve-month period last year, an increase of $11.3 million or 5.3%. Majestic Star
contributed $11.8 million of the increase. Casino revenues increased to $236.1 million from $220.9 million in the year ago
period.
For the twelve-month period ended December 31, 2004, the Company had a loss from continuing operations of approximately $4.9
million compared to a loss from continuing operations of $39.0 million for the comparable twelve-month period in 2003. For
comparability purposes, excluding the $32.0 million in refinancing charges discussed previously, the Company's loss from continuing
operations in 2003 was $7.0 million. Impacting net loss from continuing operations in the twelve-month period ended December
31, 2004 is a non-recurring charge at Majestic Star for retroactive real property taxes. A charge of $2.2 million was taken
in the first quarter of this year but was subsequently adjusted downward by $0.3 million as the Company has changed its estimate
for retroactive real property tax liabilities for the year 2003. Included in net loss from continuing operations for the twelve-month
period ended December 31, 2003 is a non-recurring $2.1 million charge reflecting the one-time retroactive impact of a change
in law relating to casino gaming taxes.
The Company paid 24.4% of its casino revenues for gaming and economic incentive taxes in 2004. This compares to 23.5% in
2003 (before the retroactive gaming tax charge). The increase is due to the higher marginal tax rates experienced at Majestic
Star as a result of higher casino revenues. Before consideration of the 2003 gaming tax charge for the change in law, gaming
and economic incentive taxes increased $5.5 million over 2003. General and administrative expenses increased $3.8 million
principally due to the net $1.9 million retroactive real 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 $2.7 million or approximately 8.5% in the twelve-month period ended December 31, 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 our discontinued operations the Company expects to report net income of $5.0 million compared to net loss of $43.9
million for the same period in 2003. Net loss for the 2003 period includes the refinancing charges and the write down of
BNG assets to fair market value discussed previously. For comparability purposes, net loss for the year 2003, before charges
related to the Company's refinancing and BNG asset write down, was $1.9 million.
"Our record net income of $5.0 million is a significant milestone for the Company," stated Mr. Barden. "The refinancing of
our high interest debt in October 2003, which significantly reduced the Company's interest expense, along with our improved
net revenues were primary contributors to our record net income."
For the twelve-month period ended December 31, 2004, adjusted EBITDA from continuing operations was $45.1 million, compared
to $44.5 million in the same period last year, an increase of $0.6 million. Including Fitzgeralds Black Hawk, the Company's
adjusted EBITDA was $56.1 million, compared to $53.4 million in the same period last year, an increase of $2.7 million. See
note 2 for a detailed explanation as to the usefulness and limitations of using EBITDA and adjusted EBITDA as a financial
measure.
At December 31, 2004, the Company had $16.7 million of available cash, as compared to approximately $22.1 million at December
31, 2003. The Company also had approximately $39.0 million in available borrowing capacity under its credit facility at December
31, 2004.
Total debt outstanding at December 31, 2004 was $316.9 million as compared to $301.7 million at December 31, 2003, an increase
of $15.2 million. Total debt outstanding at December 31, 2004 consisted of $260.0 million of 91/2% senior secured notes,
$15.9 million (net of original issue discount) of 11.653% notes and $41.0 million drawn on the Company's $80.0 million credit
facility. The Company spent $38.8 million on capital expenditures during the twelve-month period ended December 31, 2004.
The Company's capital expenditures included the acquisition of 170 acres of land adjacent to the Buffington Harbor and Majestic
Star facilities, the purchase of new gaming and related equipment, computer systems and software, expansion of the casino
floor at Fitzgeralds Tunica and construction of new administration buildings at Majestic Star and Fitzgeralds Tunica. The
Company anticipates spending $12.0 million in capital expenditures in 2005. Principal purchases will be for new slot machines
and the continued conversion of our existing slot machines to ticket in ticket out or TITO.
Majestic Star (property operations only)
Net revenues were $33.3 million for the three-month period ended December 31, 2004, an increase of $2.3 million or 7.4% over
the same three-month period in 2003. Net revenues improved in the fourth quarter 2004 due to the continued marketing and
promotional activities started earlier in the year. Net revenues were $141.1 million for the twelve-month period ended December
31, 2004, an increase of $11.8 million or 9.1% over the same period in the prior year.
Casino revenues at Majestic Star increased to $35.5 million and $149.6 million for the three- and twelve-month periods ended
December 31, 2004 from $33.1 million and $136.6 million in the same periods in 2003.
Mr. Barden stated, "Majestic Star's 9.5% casino revenue growth for 2004 led the northwest Indiana market, which showed a casino
revenue growth of 5.6%. As a result, Majestic Star increased its market share to 12.3% in 2004 from 11.9% in 2003. Majestic
Star's casino revenue growth is attributed to 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 our VIP lounge, the Monte Carlo Room, and the opening of Don and
Mike's Sports Bar."
For the three- and twelve-month periods ended December 31, 2004, table game revenues increased 21.6% and 24.4%, respectively,
and slot revenues increased 4.5% and 6.7%, respectively. Table games handle increased 12.2% and 15.4%, respectively, during
the fourth quarter and twelve-month period, and the table games win percentage increased to 15.9% in the fourth quarter from
14.6% in the same period last year. Year to date table games win percentage increased to 16.6% from 15.4% in the same twelve-month
period in the prior year. Slot coin-in increased 3.3% during the fourth quarter of 2004 from the fourth quarter of 2003,
and 7.1% for the twelve-month period ended December 31, 2004 from the similar prior year period.
Net loss for the three- and twelve-month periods ended December 31, 2004 was $1.9 million and $10.4 million, respectively,
compared to a net loss of $13.9 million and a net loss of $10.2 million for the three- and twelve-months ended December 31,
2003. Included in Majestic Star's net loss in both the three- and twelve-months ended December 31, 2003 is a $10.0 million
loss on early extinguishment of debt. After adjusting for the early extinguishment of debt charge, Majestic Star's net loss
for the three- and twelve-month periods ended December 31, 2003, for comparability purposes, was $3.8 million and $0.2 million,
respectively. Contributing to Majestic Star's net loss during the twelve-month period ended December 31, 2004 is $9.4 million
of additional interest expense as substantially all of the Company's $316.9 million of debt now is issued by Majestic Star
and then lent to its affiliates as non-interest bearing advances. From January 1, 2003 to October 7, 2003, 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 December 31, 2004 net loss includes a non-recurring
charge of $1.9 million for retroactive real property taxes, and the property's net loss for the year ended December 31, 2003
includes a non-recurring charge of $2.1 million for the one time impact of a change in gaming taxes.
Adjusted EBITDA at Majestic Star was $7.2 million and $28.6 million for the three- and twelve-month periods ended December
31, 2004, compared to $5.1 million and $27.4 million for the three- and twelve-month periods ended December 31, 2003. Property
adjusted EBITDA margins (defined as adjusted EBITDA divided by net revenues) improved to 21.5% in the fourth quarter of 2004
from 16.4% in the fourth quarter of 2003. For the twelve-month period ended December 31, 2004, the property's adjusted EBITDA
margin was 20.3% compared to 21.2% in the prior year twelve-month period. Adjusted EBITDA reflects property operations only,
is exclusive of corporate overhead, and is adjusted for retroactive real property taxes in both the three- and twelve- month
periods ended December 31, 2004, refinancing and early extinguishment of debt charges in the three- and twelve month periods
ended December 31, 2003, and retroactive gaming taxes in the twelve-month period ended December 31, 2003 (see the accompanying
table).
"Our ability to control costs while sustaining our revenue growth resulted in a significant improvement in quarterly adjusted
EBITDA" stated Mr. Barden. "As a result of our strong fourth quarter adjusted EBITDA, the property's full year 2004 adjusted
EBITDA was a property record. In addition, our full year 2004 net revenues and casino revenues were also records."
Majestic Star continues to add more ticket in ticket out ("TITO") slot machines to its casino floor. At this time the casino
floor has 1,162 TITO slot machines or approximately 71% of slot machines are equipped with this technology.
Fitzgeralds Tunica (property operations only)
Net revenues declined $0.2 million to $19.5 million for the three-month period ended December 31, 2004. Net revenues were
$83.2 million for the twelve-month period ended December 31, 2004, a decrease of $0.5 million or 0.5% over the same period
in the prior year.
Casino revenues at Fitzgeralds Tunica were $20.1 million for the three-month period ended December 31, 2004, and $86.5 million
for the twelve-month period ended December 31, 2004, as compared to $20.1 million and $84.4 million, respectively, in the
same periods in 2003. For the three- and twelve-month periods ended December 31, 2004, table game revenues decreased 9.3%
to $1.9 million and 6.8% to $7.7 million, respectively. Slot revenues increased to $18.3 million and $78.9 million, respectively,
for the three- and twelve-month periods ended December 31, 2004 from $18.1 million and $76.1 million, respectively, in the
same periods in 2003.
Net income for the three- and twelve-month periods ended December 31, 2004 was $1.8 million and $11.5 million, respectively.
This compares to net income of $2.5 million and $13.0 million for the three- and twelve-month periods ended December 31, 2003.
Our net income for both the three- and twelve-months ended December 31, 2004 was impacted by higher promotional costs, greater
payroll and benefit expenses in our administration areas and increased depreciation expense due to capital expenditures made
during 2004.
EBITDA at Fitzgeralds Tunica was $4.1 million and $20.3 million for the three- and twelve-month periods ended December 31,
2004, compared to $4.5 million and $20.8 million for the three- and twelve-month periods ended December 31, 2003. EBITDA
margins (defined as EBITDA divided by net revenues) declined to 21.3% in the fourth quarter of 2004 from 22.6% in the fourth
quarter of 2003. The year to date EBITDA margin declined to 24.4% in the twelve-month period ended December 31, 2004 from
24.9% in the same period last year. EBITDA reflects property operations only and is exclusive of corporate overhead. There
were no adjustments to EBITDA in the three- and twelve-month periods ended December 31, 2004 or the same periods in 2003.
Mr. Barden, commenting on the Fitzgeralds Tunica operation, stated, "the Tunica market remains very competitive and casino
revenue growth in the area has been minimal. As a means to increase our profitability, we will strive to direct our focus
on projects that will make our casino operation more efficient. This includes the implementation of TITO and various other
slot-marketing programs to create greater incentive for gamblers to visit our facility. During the fourth quarter of 2004,
the property began installing TITO on selected slot machines. At this time the property has 158 TITO games operational with
the goal of having 540 TITO slot machines in operation by year-end. With TITO, we should be able to redeploy our slot workforce
toward better guest service while giving our slot guests greater play time on our slot machines."
Fitzgeralds Black Hawk-Discontinued Operation of Property Held for Sale
Net revenues improved to $8.9 million for the three-month period ended December 31, 2004 from $8.0 million from the three-month
period ended December 31, 2003. Despite snowstorms in November, the property was able to improve its net revenues by 11.4%
over the prior year quarter. Net revenues were $36.2 million for the twelve-month period ended December 31, 2004, an increase
of $4.2 million or 13.3% over the same prior year period. The significant increase in net revenues is attributable to expanded
marketing programs, 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.
Casino revenues at Fitzgeralds Black Hawk increased to $9.4 million and $38.7 million, respectively, for the three- and twelve-month
periods ended December 31, 2004 from $8.5 million and $34.5 million, respectively, in the same periods in 2003. For the three-
and twelve-month periods ended December 31, 2004, slot revenues increased 10.8% and 12.0%, respectively. Slot coin-in increased
7.9% and 8.8%, respectively, during the fourth quarter and twelve-month period.
In November 2004, the so-called "Southern Access Road," was completed. The road provides another route to Black Hawk, through
Central City. For those casino customers that choose to take the new road, Fitzgeralds Black Hawk will be one of the first
properties encountered when entering Black Hawk.
Net income for the three- and twelve-month periods ended December 31, 2004 was $2.2 million and $10.0 million, respectively.
This compares to net income of $1.7 million and $7.1 million for the three- and twelve-month periods ended December 31, 2003.
EBITDA at Fitzgeralds Black Hawk was $2.2 million and $11.0 million for the three- and twelve-month periods ended December
31, 2004, compared to $2.2 million and $8.9 million for the three- and twelve-month periods ended December 31, 2003. EBITDA
margins were 24.9% and 30.3%, respectively; compared to 27.1% and 27.7% in the three- and twelve-month periods ended December
31, 2003. EBITDA reflects property operations only and is exclusive of corporate overhead. There were no adjustments to EBITDA
in the three- and twelve-month periods ended December 31, 2004 or the same periods in 2003.
"Similar to Majestic Star, Fitzgeralds Black Hawk's 2004 EBITDA, net revenues and casino revenue are records," stated Mr.
Barden. "While the fourth quarter's EBITDA was flat with the prior year, poor weather, particularly during the Thanksgiving
holiday weekend, negatively impacted our results."
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 91/2% notes; changes in our financial condition that
may cause us to not be in compliance with the covenants contained within the indenture governing the 91/2% 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 91/2% 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 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, 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 March 21, 2005 at 11:00 a.m. (Eastern Time) to discuss the three- and twelve-month
periods ended December 31, 2004 results. The dial-in number is (866) 837-9789. 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 671319.
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, 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 twelve-month periods ended December 31, 2004 and December 31, 2003 at the Company's properties.
Percentage increase (decrease) calculations are derived using the whole numbers rather than the rounded numbers.
($ in millions, except for win per gaming unit)
Three Months Ended
Majestic Star December 31, Increase % Increase
(property only) 2004 2003 (Decrease) (Decrease)
Operating income $4.8 $2.9 $1.9 65.5%
Net revenues $33.3 $31.0 $2.3 7.4%
Casino revenues $35.5 $33.1 $2.4 7.3%
Slot revenues $29.0 $27.8 $1.2 4.5%
Table game revenues $6.5 $5.3 $1.2 21.6%
Average number of
slot machines 1,631 1,501 130 8.7%
Average win per
slot machine per day $193.3 $201.1 $(7.8) -3.9%
Average number of
table games 47 50 (3) -6.0%
Average win per
table game per day $1,499.1 $1,158.4 $340.7 29.4%
Twelve Months Ended
Majestic Star December 31, Increase % Increase
(property only) 2004 2003 (Decrease) (Decrease)
Operating income $16.4 $17.1 $(0.7) -4.1%
Net revenues $141.1 $129.3 $11.8 9.1%
Casino revenues $149.6 $136.6 $13.0 9.5%
Slot revenues $122.2 $114.6 $7.6 6.7%
Table game revenues $27.3 $22.0 $5.3 24.4%
Average number of
slot machines 1,572 1,523 49 3.2%
Average win per
slot machine per day $212.5 $206.1 $6.4 3.1%
Average number of
table games 49 52 (3) -6.5%
Average win per
table game per day $1,539.1 $1,149.0 $390.1 34.0%
($ in millions, except for win per
gaming unit and hotel average daily rate)
Three Months Ended
Fitzgeralds Tunica December 31, Increase % Increase
(property only) 2004 2003 (Decrease) (Decrease)
Operating income $1.8 $2.5 $(0.7) -28.0%
Net revenues $19.5 $19.7 $(0.2) -1.4%
Casino revenues $20.1 $20.1 $-- 0.0%
Slot revenues $18.3 $18.1 $0.2 1.1%
Table game revenues $1.9 $2.1 $(0.2) -9.3%
Average number of
slot machines 1,374 1,352 22 1.6%
Average win per
slot machine per day $144.4 $145.1 $(0.7) -0.5%
Average number of
table games 34 34 -- 0.0%
Average win per
table game per day $595.0 $656.0 $(61.0) -9.3%
Hotel occupancy 89.8% 89.2% 0.6% 0.7%
Hotel average daily rate $44.83 $46.00 $(1.17) -2.5%
Twelve Months Ended
Fitzgeralds Tunica December 31, Increase % Increase
(property only) 2004 2003 (Decrease) (Decrease)
Operating income $11.5 $13.0 $(1.5) -11.5%
Net revenues $83.2 $83.7 $(0.5) -0.5%
Casino revenues $86.5 $84.4 $2.1 2.6%
Slot revenues $78.9 $76.1 $2.8 3.6%
Table game revenues $7.7 $8.2 $(0.5) -6.8%
Average number of
slot machines 1,361 1,351 10 0.7%
Average win per
slot machine per day $158.3 $154.4 $3.9 2.5%
Average number of
table games 34 34 - 0.0%
Average win per
table game per day $616.0 $663.0 $(47.0) -7.1%
Hotel occupancy 94.6% 92.2% 2.4% 2.6%
Hotel average daily rate $44.40 $47.23 $(2.83) -6.0%
($ in millions, except for win per gaming unit)
Three Months Ended
Fitzgeralds Black Hawk December 31, Increase % Increase
(property only) 2004 2003 (Decrease) (Decrease)
Operating income $2.2 $1.7 $0.5 29.4%
Net revenues $8.9 $8.0 $0.9 11.4%
Casino revenues $9.4 $8.5 $0.9 10.6%
Slot revenues $9.3 $8.4 $0.9 10.8%
Table game revenues $0.2 $0.2 $-- 2.1%
Average number of
slot machines 593 594 (1) -0.2%
Average win per
slot machine per day $169.6 $152.9 $16.7 10.9%
Average number of
table games 6 6 -- 0.0%
Average win per
table game per day $347.6 $340.4 $7.2 2.1%
($ in millions, except for win per gaming unit)
Twelve Months Ended
Fitzgeralds Black Hawk December 31,
(property only) 2004 2003 Increase % Increase
Operating income $10.0 $7.1 $2.9 40.8%
Net revenues $36.2 $32.0 $4.2 13.3%
Casino revenues $38.7 $34.5 $4.2 12.3%
Slot revenues $37.9 $33.8 $4.1 12.0%
Table game revenues $0.8 $0.7 $0.1 15.6%
Average number of
slot machines 597 593 4 0.7%
Average win per
slot machine per day $173.2 $155.9 $17.3 11.1%
Average number of
table games 6 6 -- 0.0%
Average win per
table game per day $372.2 $323.0 $49.2 15.2%
THE MAJESTIC STAR CASINO, LLC
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
For the For the
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
Revenues
Casino $55,612,213 $53,207,549 $236,093,555 $220,932,784
Rooms 1,853,073 1,890,760 7,673,287 7,932,811
Food and beverage 2,822,498 2,672,698 11,237,430 10,781,929
Other 1,047,461 934,495 4,160,416 3,695,873
Total 61,335,245 58,705,502 259,164,688 243,343,397
Less promotional
allowances 8,603,228 7,970,873 34,888,831 30,361,144
Net Revenues 52,732,017 50,734,629 224,275,857 212,982,253
Costs and expenses
Casino 13,847,691 14,053,643 59,414,813 57,925,536
Rooms 402,860 630,488 1,784,333 2,552,127
Food and beverage 1,328,520 1,088,540 5,142,378 4,401,352
Other 103,645 132,606 888,600 468,512
Gaming taxes 12,484,345 11,737,074 53,014,290 49,946,481
Advertising and
promotion 3,444,739 3,210,567 13,907,686 12,299,196
General and
administrative 8,508,962 9,377,635 39,045,937 35,240,662
Corporate expenses 893,229 921,142 3,399,281 3,456,161
Economic Incentive -
City of Gary 1,070,884 996,026 4,494,170 4,103,010
Depreciation and
amortization 4,459,754 3,742,788 16,991,342 15,759,122
Loss on investment in
Buffington Harbor
Riverboats, LLC 611,206 600,828 2,465,612 2,395,436
(Gain) loss on
sale of assets (43,729) 11,468 (49,995) 121,358
Total costs and
expenses 47,112,106 46,502,805 200,498,447 188,668,953
Operating income 5,619,911 4,231,824 23,777,410 24,313,300
Other income (expense)
Interest income 83,149 24,188 107,386 104,331
Interest expense (7,243,858) (7,414,831) (28,615,356) (31,282,788)
Loss on bond
redemption -- (31,960,083) -- (31,960,083)
Other expense (33,253) (43,772) (201,757) (185,574)
Total other
expense (7,193,962) (39,394,498) (28,709,727) (63,324,114)
Loss from continuing
operations (1,574,051) (35,162,674) (4,932,317) (39,010,814)
Discontinued Operations (Note 1)
Income (loss)
from discontinued
operations 2,177,881 (8,769,072) 9,950,843 (4,841,160)
Net income (loss) $603,830 $(43,931,746) $5,018,526 $(43,851,974)
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 twelve-months ended December 31, 2003.
Discontinued Operations in both the three- and twelve-months ended
December 31, 2003 includes a $10.0 million write-down of the assets of
Barden Nevada Gaming, LLC to fair market value at spin-off.
Note 2: 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
and gaming taxes, refinancing substantially all of the Company's debt
and the write-down of assets at Barden Nevada Gaming, LLC at spin-off.
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.
THE MAJESTIC STAR CASINO, LLC
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
For the For the
Three Months Ended Twelve Months Ended
December 31, December 31,
Continuing Operations 2004 2003 2004 2003
Majestic Star
Net loss $(1,932,440) $(13,851,437) $(10,431,064) $(10,248,239)
Interest expense,
net 6,690,720 6,657,926 26,623,873 17,218,901
Depreciation and
amortization 2,024,940 1,637,705 7,855,545 5,834,078
Other non-operating
expenses (1) 33,253 43,042 201,757 156,362
EBITDA $6,816,473 $(5,512,764) $24,250,111 $12,961,102
Loss on investment
in BHR (2) 611,206 600,828 2,465,612 2,395,436
Retroactive gaming
tax charge (3) -- -- -- 2,071,850
Retroactive real
property tax
charge (4) (271,284) -- 1,886,425 --
Loss on bond
redemption (5) -- 10,007,703 -- 10,007,703
Adjusted EBITDA $7,156,395 $5,095,767 $28,602,148 $27,436,091
Fitzgeralds Tunica
Net income $1,787,733 $2,463,528 $11,483,368 $13,033,529
Interest income (4,416) (2,826) (12,315) (11,246)
Depreciation and
amortization 2,365,471 1,997,260 8,857,996 7,819,845
EBITDA $4,148,788 $4,457,962 $20,329,049 $20,842,128
Majestic Investor
Holdings
Net loss $(536,115) $(32,853,623) $(2,585,340) $(48,339,943)
Interest expense,
net 474,405 735,543 1,896,412 13,970,802
Depreciation and
amortization 69,343 107,823 277,801 2,105,199
Other non-operating
expenses (1) -- 730 -- 29,212
EBITDA 7,633 (32,009,527) (411,127) (32,234,730)
Loss on bond
redemption (6) -- 21,952,380 -- 21,952,380
Write down of
BNG assets (7) -- 10,000,000 -- 10,000,000
Adjusted EBITDA $7,633 $(57,147) $(411,127) $(282,350)
Total From
Continuing
Operations
Net loss -
property
operations $(680,822) $(44,241,532) (1,533,036) $(45,554,653)
Corporate
allocation (893,229) (921,142) (3,399,281) (3,456,161)
Net loss -
continuing
operations $(1,574,051) $(45,162,674) $(4,932,317) $(49,010,814)
Interest expense,
net 7,160,709 7,390,643 28,507,970 31,178,457
Depreciation and
amortization 4,459,754 3,742,788 16,991,342 15,759,122
Other non-operating
expenses (1) 33,253 43,772 201,757 185,574
EBITDA - continuing
operations $10,079,665 $(33,985,471) $40,768,752 $(1,887,661)
Loss on investment
in BHR (2) 611,206 600,828 2,465,612 2,395,436
Retroactive gaming
tax charge (3) -- -- -- 2,071,850
Retroactive real
property
tax charge (4) (271,284) -- 1,886,425 --
Loss on bond
redemption (5) & (6) -- 3 1,960,083 -- 31,960,083
Write-down of
BNG assets (7) -- 10,000,000 -- 10,000,000
Adjusted EBITDA -
continuing
operations $10,419,587 $8,575,440 $45,120,789 $44,539,708
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(Continued)
(UNAUDITED)
For the For the
Three Months Ended Twelve Months Ended
Discontinued Operations December 31, December 31,
Fitzgeralds Black Hawk 2004 2003 2004 2003
Net income $2,177,881 $1,686,160 $9,950,843 $7,131,447
Interest expense,
net 26,255 -- 22,227 --
Depreciation and
amortization -- 468,421 994,332 1,729,678
EBITDA $2,204,136 $2,154,581 $10,967,402 $8,861,125
Fitzgeralds Las Vegas
Net loss -- $(455,232) $-- $(1,972,607)
Interest expense,
net -- 2,476 -- 17,027
Depreciation and
amortization -- 774,286 -- 2,869,262
EBITDA -- $321,530 $-- $913,682
Total Discontinued
Operations
Net income $2,177,881 $1,230,928 $9,950,843 $5,158,840
Interest expense,
net 26,255 2,476 22,227 17,027
Depreciation and
amortization -- 1,242,707 994,332 4,598,940
Adjusted EBITDA -
discontinued
operations $2,204,136 $2,476,111 $10,967,402 $9,774,807
Total Combined
Net income (loss) -
property
operations $1,497,059 $(43,010,604) $8,417,807 $(40,395,813)
Corporate
allocation (893,229) (921,142) (3,399,281) (3,456,161)
Net income (loss) -
total combined $603,830 $(43,931,746) $5,018,526 $(43,851,974)
Interest expense,
net 7,186,964 7,393,119 28,530,197 31,195,484
Depreciation and
amortization 4,459,754 4,985,495 17,985,674 20,358,062
Other non-operating
expenses (1) 33,253 43,772 201,757 185,574
EBITDA -
total combined $12,283,801 $(31,509,360) $51,736,154 $7,887,146
Loss on investment
in BHR (2) 611,206 600,828 2,465,612 2,395,436
Retroactive gaming
tax charge (3) -- -- -- 2,071,850
Retroactive real
property
tax charge (4) (271,284) -- 1,886,425 --
Loss on bond
redemption (5) & (6) -- 31,960,083 -- 31,960,083
Write-down of
BNG assets (7) -- 10,000,000 -- 10,000,000
Adjusted EBITDA -
total combined $12,623,723 $11,051,551 $56,088,191 $54,314,515
EBITDA contribution
from Fitzgeralds
Las Vegas -- (321,530) -- (913,682)
Adjusted EBITDA -
total combined after
Fitzgeralds
Las Vegas $12,623,723 $10,730,021 $56,088,191 $53,400,833
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 real property tax liabilities related to 2002 and
2003. Non-recurring real property tax liability accrued in the
first quarter of 2004 at $2,234,503 adjusted by $76,794 in the
third quarter of 2004 and adjusted by $271,284 in the fourth
quarter of 2004.
(5) Loss on redemption of The Majestic Star Casino, LLC 10 7/8%
notes.
(6) Loss on redemption of Majestic Investor Holdings, LLC 11.653%
notes.
(7) Write-down of the assets of Barden Nevada Gaming, LLC to fair
market value at spin-off to Barden Development, Inc. on
December 31, 2003.
Source: Majestic Star Casino, LLC
