July 23, 2001 - Majestic Star Casino Announces
Strong Second Quarter Operating Results
Inquiries for additional information should be directed to Michael E. Kelly, Chief Operating and Financial Officer at (219) 977-7823.
GARY, Ind., July 23 /PRNewswire/ -- The Majestic Star Casino, LLC (the "Company") today announced operating results for the three and six month periods ended June 30, 2001. During the three month period ended June 30, 2001, the Company had net revenues of $31.7 million compared to $29.8 million for the same period last year, an increase of approximately $1.9 million or 6.5%. Net income for the three-month period ended June 30, 2001 was $296,000, compared to a loss before extraordinary items of $793,000 in the same period last year, an improvement of 137.4%. During the second quarter of 2000, the Company redeemed $6.0 million principal amount of 12-3/4% Senior Secured Notes, resulting in a loss on redemption of approximately $383,000. 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 $6.7 million compared to $5.7 million in the prior year. The $1.0 million or 17.8% increase in Adjusted EBITDA was primarily attributable to a 6.5% increase in casino revenues combined with an approximately $300,000 or 15.4% decrease in overall advertising expenditures.
Don H. Barden, Chairman and CEO stated "the Company has made tremendous strides over the past year in expanding its slot business and for the first six months of 2001 Majestic's slot revenue growth of 11.9% continues to out-pace the Northwest Indiana marketplace."
As of June 30, 2001, the Company had year-to-date net revenues for the six-month period of approximately $64.3 million, compared to $61.0 million in same period last year, an increase of approximately $3.3 million or 5.4%. The Company's year-to-date EBITDA was $13.4 million, compared to $12.0 million during the same period last year. The 11.4% increase in EBITDA is attributable to the strong double-digit growth in slot revenues, a 3.9% increase in the number of admissions and an overall decrease in advertising expenditures.
Casino revenues during the three months ended June 30, 2001 totaled approximately $31.0 million, of which slot machines accounted for approximately $26.3 million (84.9%) and table games accounted for approximately $4.7 million (15.1%). Slot coin-in increased $19.7 million and slot revenue increased $3.2 million or 13.9% 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 $203, compared to an average of $178 in the quarter ended June 30, 2000. Table revenues declined $1.3 million due primarily to a 10.1% decrease in the table drop and a lower than expected table hold. The average number of tables in operation was 50 with an average win per table per day of $1,019. The Company's admissions during the quarter grew 6.1% over the same period last year to 808,000. The average win per state passenger count was approximately $38 and the average win per patron was approximately $68.
Casino revenues during the six-month period ended June 30, 2001 totaled approximately $62.9 million compared to $59.7 million in the prior year, an increase of approximately $3.2 million or 5.3%. The average win per slot per day was $204 compared to $182 in the same period last year. The average win per state passenger count was approximately $38 and the average win per patron was approximately $70.
The Company also announced that 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) in June 2001 commenced construction on a 2,000 space parking facility. The parking structure budget, including the cost of the land and associated financing, has been revised from earlier estimates to approximately $37.9 million. The Company and Trump have funded approximately $17.0 million in advance lease payments and the remaining balance has been funded through a loan of approximately $20.9 million. The garage facility is anticipated to be completed in early 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 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. The Company is currently pursuing licensing in the various jurisdictions and anticipates that the transaction should close in the fourth quarter of 2001.
The Company also reported that it has reduced its outstanding debt from $138.8 million at December 31, 2000 to approximately $132.9 million at June 30, 2001. The Company ended the quarter with cash and cash equivalents of approximately $13.8 million, which amount excludes $4.8 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 Riverboat, 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 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, 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.