GARY, Ind., Nov. 13 /PRNewswire/ -- The Majestic Star Casino, LLC today announced operating results for the three and nine month periods ended September 30, 2000.  During the three month period ended September 30, 2000 the Company had net revenues of $28.8 million, compared to $29.6 million in the same period in the prior year, a decrease of approximately 2.4%.  Net loss for the three month period ended September 30, 2000, was $2.1 million compared to net loss of $31,000 in the prior period ended September 30, 1999.  EBITDA (earnings before interest, taxes, depreciation, amortization, non-operating expenses and loss on bond redemption) during the three months ended
September 30, 2000 was approximately $5.1 million, compared to approximately $6.5 million during the same period in the prior year. The $1.4 million decrease in EBITDA is primarily the result of an increase in casino operating expenditures combined with a decrease in net revenues.

    Net revenues for the nine months ended September 30, 2000, amounted to approximately $89.9 million, a decrease of approximately $375,000 compared to net revenues of $90.3 million recorded in the nine months ended September 30, 1999.  The less than 1% decrease in net revenues was primarily attributable to a $4.4 million decrease in the table drop and a lower than anticipated year-to-date table hold of 16.5% compared to a prior year-to-date table hold of 18.7%.  The decline in table revenues was partially offset by a $3.0 million or 4.4% increase in slot revenues.  The Company's year-to-date EBITDA was $17.1 million, compared to $21.6 million during the same period last year.  The decline in EBITDA is primarily the result of an increase in casino and marketing expenditures combined with a decrease in both the table hold and table drop, as previously discussed.

    Casino revenues during the three months ended September 30, 2000 totaled approximately $28.2 million, of which slot machines accounted for approximately $23.3 million (82.8%) and table games accounted for approximately $4.9 million (17.2%).  The coin-in increased approximately $12.8 million or 3.9% and slot revenues increased $1.1 million or 5.0%.  The average number of slot machines in operation increased from 1,421 to 1,447 and the average win per slot increased from $170 to $175. The table drop decreased 12.1% and the table hold decreased to 14.7% during the three months ended September 30, 2000 compared to a table hold of 17.7% during the three months ended September 30, 1999.  The average win per table game per day during the three months ended September 30, 2000, decreased to approximately $978 compared to approximately $1,275 in the prior years period.  The average daily win per state passenger count was approximately $36 and the average daily win per patron was $63.

    Casino revenues during the nine months ended September 30, 2000 totaled approximately $88.0 million, of which slot machines accounted for approximately $70.6 million (80.3%) and table games accounted for approximately $17.4 million (19.7%).  The average number of slot machines in operation slightly decreased to 1,432 during the nine months ended
September 30, 2000 from 1,435 during the nine months ended September 30, 1999.  The coin-in increased $48.0 million or 4.9% and slot revenues increased
$3.0 million or 4.4% while the slot hold slightly decreased 0.04% during the nine months ended September 30, 2000.  The average win per slot machine per day increased to approximately $180 for the nine month period compared to $174 in the comparable 1999 period.  The table drop decreased 4.0% and the table hold decreased to 16.5% during the nine months ended September 30, 2000 compared to a table hold of 18.7% during the nine months ended September 30, 1999.  The affect of the lower table hold during the nine month period ended September 30, 2000 is estimated to be approximately $2.4 million.  The average win per table game per day during the nine months ended September 30, 2000 decreased to approximately $1,140, compared to approximately $1,316 during the nine months ended September 30, 1999. 

    The Company ended the quarter with cash and cash equivalents of
$21.8 million.

    Majestic Star was founded in December 1993 as an Indiana limited liability company, to develop a riverboat casino in the City of Gary as its sole operation.  The Company's operations began on June 7, 1996. The Company through October 19, 1997 conducted its operations onboard a Chartered Vessel.  On October 27, 1997 the Company placed into service the $50.1 million Permanent Vessel which contains approximately 43,000 square feet of gaming on three expansive levels with approximately 1,447 slot machines and 54 table games.

    The Company and Trump Indiana, the holder of a second license to operate from the City, formed BHR to own and operate certain common facilities at Buffington Harbor such as the guest pavilion, vessel berths, parking lots and other infrastructure.  The Company and Trump each have a fifty-percent ownership interest in BHR.

    Under the terms of its development agreement with the City of Gary, the Company committed to make development expenditures of not less than
$116.0 million for its casino and associated infrastructure during a five year period.  The Company has met this commitment by purchasing and equipping the Permanent Vessel, constructing substantial harbor improvements and the BHR facilities, and by investing in an affiliated entity that purchased land adjacent to the BHR facility.  The purchase of land for $25.0 million was completed in September 2000, by Gary New Century, LLC ("GNC"), a limited liability company owned and controlled by Don H. Barden, the Company's sole member.  In order to fulfill the Company's remaining development commitment to the City, a portion of the purchase price for the land was provided to GNC by Majestic Investor, LLC, a newly formed limited liability company that is wholly owned by the Company. 

    Majestic Investor was capitalized during the third quarter of 2000 with a $9.0 million investment by the Company, and Majestic Investor used these monies to acquire a 49% equity interest in GNC.  Majestic Investor is considered an "unrestricted subsidiary" of the Company under the Indenture relating to the Company's 10-7/8% Senior Secured Notes due 2006.

    BHR had originally entered into a lease agreement with Lehigh Portland Cement Company, to lease certain property that is integral to the gaming operations of the Company and its Joint Venture Partner.  In September 2000, GNC purchased approximately 190 acres of land adjacent to the Buffington Harbor Complex, including the land that had formerly been leased by BHR from Lehigh Portland Cement, for $25.0 million.  The lease agreement with Lehigh Portland Cement has been terminated, which relieves BHR of the remaining
62 monthly payments of $125,000 each. A portion of this land was subsequently sold by GNC to Buffington Harbor Parking Associates ("BHPA") for
$15.0 million, and BHPA intends to construct and operate a parking garage on the purchased land.  BHPA is a joint venture between Trump Indiana and AMB Parking, LLC, a company owned and controlled by Don H. Barden.  Following the sale of this parcel of land to BHPA, GNC re-purchased Majestic Investor's 49% ownership interest for its original cost of $9.0 million.  BHPA has leased a portion of its land to BHR under a triple net lease that provides for rental payments by BHR which are equal to the debt service and other expenses incurred by BHPA to construct and operate a parking structure planned for the site. These rental payments will provide the sole source of repayment of BHPA's debt service and other operating expenses.  The rental payments will be funded by the Company and its Joint Venture Partner as an operating expense pursuant to their respective berthing agreements with the BHR Joint Venture.

    The Company had originally been required by the City to arrange for the issuance of a Surety Bond in the amount of $12.5 million to guarantee the remaining $10.0 million portion of its development commitment for off-site improvements.  The Surety Bond in turn was backed by a letter of credit issued by an unaffiliated bank, and the Company was required to deposit cash collateral in the amount of $3.5 million with the bank to guarantee its reimbursement obligation to the bank if the letter of credit had to be drawn on by the bonding company that provided the Surety Bond.  In September 2000, the bank released $1.0 million of the deposit.  The Company anticipates that the majority of the remaining $2.5 million of cash collateral will be released during the fourth quarter of 2000, upon the Company renegotiating a revised Surety Bond to satisfy $2.5 million of state and city regulatory obligations. It is anticipated that Mr. Barden will provide a personal guarantee to the bonding company which will allow a substantial reduction in the amount of cash collateral.

    This press release includes various "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 design, construction and funding 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's 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 adverse results of significant litigation matters.

    The Company has scheduled a conference call for Tuesday, November 14, 2000 at 11:00am (eastern time) to discuss the third quarter results.  The dial in number is   1-800-978-7659 and the moderator is Mike Kelly.  A replay number will also be available, 1-800-405-2236, #785269.

    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 attached).

 

 

THE MAJESTIC STAR CASINO, LLC

Consolidated Balance Sheets

 

                                            September 30,   December 31,

                                                2000           1999   

                                                                                                                                            (Unaudited)                                                               

ASSETS

Current Assets:

  Cash and cash equivalents                 $21,800,665     $20,145,044       

  Accounts receivable, less allowance for

    doubtful accounts of $72,169 and

    $36,548, respectively                     1,488,361       1,995,904

  Inventories                                    46,954          67,049

  Prepaid expenses                            1,165,039       1,041,748

  Restricted Cash                                    --       7,357,874

      Total current assets                   24,501,019      30,607,619

 

Property, equipment, and vessel

  improvements, net                          50,511,502      53,550,817

 

Other Assets:

  Deferred financing costs, less

    accumulated amortization of

    $1,056,991 and $419,823,

    respectively                              4,658,544       5,205,917

  Deferred costs, less accumulated

    amortization of $4,823,162 and

    $3,994,262, respectively                    828,867       1,657,767

  Investment in Buffington Harbor

    Riverboats, L.L.C.                       44,606,706      38,146,213

  Other assets and deposits                   3,154,376       3,981,710

      Total other assets                     53,248,493      48,991,607

 

      Total Assets                         $128,261,014    $133,150,043

 

LIABILITIES AND MEMBERS' EQUITY

Current Liabilities:

  Borrowings on line-of-credit              $10,300,000            $--

  Current maturities of long-term debt        1,565,407      8,208,002

  Accounts payable                            1,041,515        859,087

  Other accrued liabilities:                                                                          

    Payroll and related                       1,086,193        936,608

    Interest                                  3,603,462      7,903,260

    Other accrued liabilities                 3,746,022      3,227,147

    Due to Buffington Harbor

     Riverboats, L.L.C.                         123,815        176,861           

      Total current liabilities              21,466,414     21,310,965

 

Long-term debt, net of current maturities   128,151,457    128,922,062

Commitments and contingencies                

      Total long-term liabilities           128,151,457    128,922,062

 

      Total Liabilities                     149,617,871    150,233,027

 

Members' Equity:

  Members' contributions                     24,000,000     24,000,000

  Retained earnings (Accumulated deficit)   (45,356,857)   (41,082,984)

      Total members' equity                 (21,356,857)   (17,082,984)

 

      Total Liabilities and

        Members' Equity                    $128,261,014   $133,150,043

 

 

THE MAJESTIC STAR CASINO, LLC

 

Consolidated Statements of Income

(Unaudited)

 

                       Three Months  Three Months  Nine Months   Nine Months         
                          Ended         Ended         Ended         Ended

                       September 30, September 30, September 30, September 30,
                           2000          1999          2000          1999              

    Revenues:

    Casino             $28,202,683   $28,910,478  $87,949,496   $88,323,765

    Food and beverage      478,993       467,593    1,468,996     1,435,575           
    Other                  275,570       270,064      779,615       738,063

    

        Gross revenues  28,957,246    29,648,135   90,198,107    90,497,403

    

        less promotional

          allowances      (110,449)      (86,993)    (302,478)     (226,284)

    

        Net revenues    28,846,797    29,561,142   89,895,629    90,271,119

    

    Costs and Expenses:

      Casino             6,467,501     5,100,062   18,640,979    15,315,611

      Gaming and

        admission taxes  8,013,444     8,151,686   24,704,976    24,814,655

      Food and beverage    632,403       607,688    1,810,460     1,843,777

      Advertising and

        promotion        2,096,364     2,325,335    6,348,006     5,644,121

      General and

        administrative   6,151,040     5,973,380   19,045,968    18,352,857

      Economic incentive

        - City of Gary     873,875       900,297    2,720,901     2,735,689

      Depreciation and

        amortization     2,284,267     2,152,007    6,833,417     6,066,533

      Loss on disposition

        of assets          301,658            --      301,658            --

    

        Total costs and

          expenses      26,820,552    25,210,455   80,406,365    74,773,243

    

        Operating income 2,026,245     4,350,687    9,489,264    15,497,876

    

    Other Income (Expense):

      Loss on investment in 

        Buffington Harbor

         Riverboats,

         L.L.C.           (738,699)     (706,687)  (2,190,536)   (2,110,678)

      Interest income      260,331       183,127      692,797       579,257

      Interest expense  (3,655,441)   (3,857,758) (11,181,649)  (11,615,781)

      Interest expense to

        affiliate               --            --           --      (167,454)

      Other non-operating

        expense            (25,539)           --     (103,639)           --

        Total other

          income

          (expense)     (4,159,348)   (4,381,318) (12,783,027)  (13,314,656)

                                  

        Income (loss)

          before

          extraordinary

          item          (2,133,103)      (30,631)  (3,293,763)    2,183,220

    

    Extraordinary Item:

      Loss on bond redemption   --            --     (382,500)  (15,238,156)

        Net (Loss)     $(2,133,103)     $(30,631) $(3,676,263) $(13,054,936)

 

 

THE MAJESTIC STAR CASINO, LLC

Summary Data (in Millions)

(Unaudited)

                                                                       

                        Three Months Three Months   Nine Months   Nine Months

                      Ended Sep 30,  Ended Sep 30, Ended Sep 30, Ended Sep 30,                                    

                              2000        1999           2000          1999 

    Gross Revenues:          $29.0       $29.7          $90.2         $90.5

      Casino                  28.2        28.9           87.9          88.3

      Food and beverage         .5          .5            1.5           1.5                            

      Other                     .3          .3             .8           0.7    

    Operating Income           2.0         4.4            9.5          15.5

    EDITDA(A)                 $5.1        $6.5          $17.1         $21.6

    

    NOTE:

    A. EBITDA (defined as earnings before interest, income taxes, depreciation, amortization, non-operating expenses for dockside lobbying initiatives, economic development and acquisition expenses, and extraordinary items) is presented solely as a supplemental disclosure to assist in the evaluation of the Company's ability to generate cash flow.  During the second quarter of 2000, the Company incurred a $383,000 charge, representing the premium paid on the redemption of the $6.0 million of 12-3/4% Senior Secured Notes which was recorded as an extraordinary item.  Non-operating expenses during the third quarter of 2000 totaled approximately $522,000.  In particular, the Company believes that an analysis of EBITDA enhances the understanding of the financial performance of companies with substantial depreciation and amortization.

 

SOURCE  Majestic Star Casino, LLC

    -0-                             11/13/2000

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

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

 

CO:  Majestic Star Casino, LLC

ST:  Indiana

IN:  CNO

SU:  ERN