UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 333-06489
THE MAJESTIC STAR CASINO, LLC
(Exact name of registrant as specified in its charter)
Indiana 43-1664986
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Buffington Harbor Drive
Gary, Indiana 46406-3000
(219) 977-7823
(Registrant's address and telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
Yes [X] No [ ]
Shares outstanding of each of the registrant's classes of common stock as of
June 30, 1999:
Class Number of shares
- ----- ----------------
Not applicable Not applicable
<PAGE>
THE MAJESTIC STAR CASINO, LLC
Index
Part I -- FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Balance Sheets, as of June 30, 1999 (Unaudited)
and December 31, 1998 1
Statements of Income (Unaudited) for the three
and six months ended June 30, 1999 and 1998 2
Statements of Cash Flows (Unaudited) for the six
months ended June 30, 1999 and 1998 3
Notes to Financial Statements (Unaudited) 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 16
Part II -- OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
<PAGE> 1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE MAJESTIC STAR CASINO, LLC
Balance Sheets
June 30, 1999 December 31, 1998
- ----------------------------------------------------------------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $14,301,761 $17,295,401
Accounts receivable, less allowance
for doubtful accounts of $38,424
and $148,608, respectively 817,801 850,086
Inventories 51,149 41,948
Prepaid expenses 964,082 984,512
Restricted cash 7,491,175 --
--------- ----------
Total current assets 23,625,968 19,171,947
---------- ----------
Property, equipment, and vessel
improvements, net 54,948,784 55,953,220
Other assets:
Deferred financing costs, less
accumulated amortization of $23,810
and $1,544,086, respectively 4,984,190 2,657,129
Deferred costs, less accumulated
amortization of $3,441,662 and
$2,899,062, respectively 2,210,367 2,762,967
Investment in Buffington Harbor
Riverboats, L.L.C. 39,417,907 40,748,887
Other assets and deposits 3,981,712 3,966,710
--------- ---------
Total other assets 50,594,176 50,135,693
---------- ----------
Total assets $129,168,928 $125,260,860
============ ============
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Current maturities of long-term debt $8,193,113 $1,945,724
Accounts payable 810,994 428,070
Other accrued liabilities:
Payroll and related 855,023 1,073,801
Interest 758,504 4,216,422
Other accrued liabilities 4,675,214 3,039,970
Due to Buffington Harbor
Riverboats, L.L.C. 45,230 405,010
--------- ---------
Total current liabilities 15,338,078 11,108,997
Long-term debt, net of current maturities 129,852,979 108,390,332
Note to member -- 8,759,355
Commitments and contingencies -- --
----------- -----------
Total long-term liabilities 129,852,979 117,149,687
----------- -----------
Total liabilities 145,191,057 128,258,684
----------- -----------
Members' equity:
Members' contributions 24,000,000 24,000,000
Retained earnings (accumulated deficit) (40,022,129) (26,997,824)
----------- -----------
Total members' (deficit) (16,022,129) (2,997,824)
----------- ----------
Total liabilities and members'
equity $129,168,928 $125,260,860
============ ============
The accompanying notes are an integral part of these financial statements.
<PAGE> 2
<TABLE>
<CAPTION>
THE MAJESTIC STAR CASINO, LLC
Statements of Income
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
Revenues:
Casino $30,527,215 $27,635,544 $59,413,287 $55,219,428
Food and beverage 500,081 391,625 967,982 858,141
Other 248,596 254,352 467,999 817,892
---------- ---------- ---------- ----------
Gross revenues 31,275,892 28,281,521 60,849,268 56,895,461
less promotional allowances (76,943) (78,595) (139,291) (210,857)
---------- ---------- ---------- ----------
Net revenues 31,198,949 28,202,926 60,709,977 56,684,604
Costs and expenses:
Casino 5,057,329 4,609,372 10,215,549 9,488,392
Gaming and admission taxes 8,515,879 8,176,607 16,662,969 16,306,860
Food and beverage 615,620 578,445 1,236,089 1,176,364
Advertising and promotion 1,810,690 3,216,868 3,318,786 6,128,878
General and administrative 6,196,377 5,612,006 12,379,477 12,138,343
Economic incentive - City of Gary 941,821 854,241 1,835,392 1,706,517
Depreciation and amortization 1,971,806 1,901,726 3,914,526 3,832,417
Loss on disposition of assets -- 168,683 -- 903,675
---------- ---------- ---------- ----------
Total costs and expenses 25,109,522 25,117,948 49,562,788 51,681,446
---------- ---------- ---------- ----------
Operating income 6,089,427 3,084,978 11,147,189 5,003,158
---------- ---------- ---------- ----------
Other income (expense):
Loss on investment in
Buffington Harbor Riverboats, L.L.C. (599,977) (673,986) (1,403,991) (1,600,534)
Interest income 201,805 236,683 396,130 459,690
Interest expense (3,880,151) (3,810,203) (7,758,023) (7,629,663)
Interest expense to affiliate (68,254) (145,162) (167,454) (290,683)
---------- ---------- ---------- ----------
Total other income (expense) (4,346,577) (4,392,668) (8,933,338) (9,061,190)
---------- ---------- ---------- ----------
Income (loss) before extraordinary item 1,742,850 (1,307,690) 2,213,851 (4,058,032)
Extraordinary Item:
Loss on bond redemption (15,238,156) -- (15,238,156) --
----------- ---------- ----------- ----------
Net (loss) $(13,495,306) $(1,307,690) $(13,024,305) $(4,058,032)
=========== ========== =========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
THE MAJESTIC STAR CASINO, LLC
Statements of Cash Flows
For the six months For the six months
Ended June 30, 1999 Ended June 30, 1998
- ------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities--
Net loss $(13,024,305) $(4,058,032)
Adjustment to reconcile net loss to net cash provided
by operating activities:
Depreciation 3,071,850 2,956,585
Amortization 842,676 875,832
Loss on investment in Buffington Harbor Riverboats, L.L.C. 1,403,991 1,600,534
Loss on disposal of assets -- 903,675
Loss on bond redemption 15,238,156 --
Decrease in accounts receivable, net 32,285 109,466
(Increase) decrease in inventories (9,201) 2,835
(Increase) decrease in prepaid expenses 20,430 (383,953)
Increase in other assets (2,597,702) (1,429)
Increase (decrease) in accounts payable 382,924 (774,742)
Decrease in accrued payroll and other expenses (218,778) (834,038)
Increase (decrease) in accrued interest (3,457,918) 529,758
Increase in other accrued liabilities 1,278,209 763,142
--------- ---------
Net cash provided by operating activities 2,962,617 1,689,633
Cash flows from investing activities--
Acquisition of property, equipment and vessel improvements (2,067,414) (1,516,194)
Proceeds from sale of slot equipment -- 481,800
(Increase) decrease in deposits (15,000) 609,274
Increase in Letter of Credit deposit -- (3,624,708)
Investment in Buffington Harbor Riverboats, L.L.C. (73,011) (260,369)
Decrease in restricted cash -- 11,904,716
---------- ----------
Net cash provided (used) by investment activities (2,155,425) 7,594,519
Cash flows from financing activities--
Redemption of 12-3/4% of Senior Secured Notes (116,005,298) --
Proceeds from issuance of 10-7/8% Senior Secured Notes 127,738,000 --
Increase in restricted cash (7,491,175) --
Payment of Senior Secured Notes issuance costs (4,241,526) --
Increase in short-term debt 6,000,000 --
Cash paid to reduce short-term debt -- (100,694)
Cash paid to reduce long-term debt (9,800,833) (1,008,164)
Reduction of notes payable -- (481,800)
---------- ----------
Net cash (used) by financing activities (3,800,832) (1,590,658)
Net increase (decrease) in cash and cash equivalents (2,993,640) 7,693,494
Cash and cash equivalents, beginning of period 17,295,401 8,083,594
---------- ----------
Cash and cash equivalents, end of period $14,301,761 $15,777,088
========== ==========
Interest paid:
Principal member $167,455 $145,162
Equipment debt $254,360 $193,725
Senior Secured Notes-fixed interest $7,844,438 $6,693,750
Senior Secured Notes-contingent interest $3,018,090 $ -0-
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 4
THE MAJESTIC STAR CASINO, LLC
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The Majestic Star Casino, LLC (the "Company"), was formed on December 8,
1993, as an Indiana limited liability company, to provide gaming and related
entertainment to the public. The Company commenced gaming operations in the
City of Gary (the "City") at Buffington Harbor, located in Lake County, in
the State of Indiana on June 7, 1996. During the second quarter a wholly-
owned subsidiary, The Majestic Star Capital Corp., was formed to facilitate
the offering of new debt. The Majestic Star Casino Corp. has no assets,
liabilites or operations.
The accompanying unaudited financial statements represent the operations of
The Majestic Star Casino, LLC, as well as its investment in Buffington
Harbor Riverboats, L.L.C., and have been prepared in accordance with
generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (which include
normal recurring adjustments) considered necessary for a fair presentation
of the results for the interim periods have been made. The results for the
three and six months ended June 30, 1999, are not necessarily indicative of
results to be expected for the full fiscal year. The financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.
Note 2. Investment in Buffington Harbor Riverboats, L.L.C. ("BHR")
On October 31, 1995, the Company and Trump Indiana, Inc. (the "Joint Venture
Partner") entered into the First Amended and Restated Operating Agreement of
BHR for the purpose of acquiring and developing certain facilities for the
gaming operations in the City ("BHR Property"). BHR is responsible for the
management, development and operation of the BHR Property. The Company and
the Joint Venture Partner have each entered into an agreement with BHR (the
"Berthing Agreement") to use BHR Property for their respective gaming
operations and have committed to pay cash operating losses of BHR as
additional berthing fees. The Company and the Joint Venture Partner share
equally in the operating expenses relating to the BHR Property, except for
costs associated with food and beverage and gift shop, which are allocated
on a percentage of use by the casino customers of the Company and the Joint
Venture Partner.
<PAGE> 5
The following represents selected financial information of BHR:
<TABLE>
<CAPTION>
Buffington Harbor Riverboats, L.L.C.
Statements of Income
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross revenue $4,930,317 $5,085,419 $9,529,650 $9,900,523
Operating income (loss) $294,811 $(131,557) $180,101 $(243,231)
Net (loss) $(1,199,952) $(1,347,933) $(2,807,982) $(3,201,069)
</TABLE>
Note 3. Debt Refinancing
During the quarter ended June 30, 1999, the Company refinanced a substantial
portion of its long-term debt. $99 million of the 12-3/4% Senior Secured
Notes were redeemed and $130 million of 10-7/8% Senior Secured Notes were
issued. $7,491,000 of cash has been restricted for the payment of principal,
premium and interest related to the $6 million principal amount of
unredeemed 12-3/4% Senior Secured Notes.
Note 4. Extraordinary Item -- Loss on Bond Redemption
In connection with the Company's refinancing of its long-term debt, the
Company charged $15,238,000 to results of operations, representing premium
paid and unamortized deferred financing expenses. The charge was recorded
as an extraordinary item.
Note 5. Commitments and Contingencies
Legal Proceedings
On March 27, 1998, a complaint was filed in the Lake County Superior Court
in East Chicago, Indiana, against BHR, the Joint Venture Partner and the
Company. The plaintiff, a former employee of the Company, claims to have
been assaulted in the BHR parking lot on June 25, 1997, and is requesting
compensatory and punitive damages totaling approximately $11.0 million. The
suit alleges that the Joint Venture Partner and the Company failed to
provide adequate security to prevent assaults. The Company intends to
vigorously defend against such suit. However, the case is in the discovery
phase and it is too early to predict the outcome of such suit and the
effect, if any on the Company's financial position and results of
operations.
Harbor Lease
Under a lease agreement with Lehigh Portland Cement Company ("Lehigh
Cement"), BHR has leased certain property which is integral to the gaming
operations of the Joint Venture Partner and the Company. The lease places
certain restrictions on the use of the harbor by the Joint Venture Partners,
requires the reimbursement of certain costs which may be incurred by Lehigh
Cement and requires BHR to pursue permitting of and building of a new
harbor. The lease was rent free through December 29, 1997, and subject to
certain conditions, primarily continuing progress toward permitting of and
then building of a new harbor, the lease has been extended until the earlier
of December 31, 2005, or the completion of a new harbor. Starting in
January 1998, under the lease, the BHR Joint Venture pays rent of $125,000
per month. A new harbor may require new guest facilities. The level of
expenditures required for such new facilities cannot be accurately estimated
at this time.
<PAGE> 6
Indiana Gaming Regulations
The ownership and operation of riverboat gaming operations in Indiana are
subject to strict state regulation under the Riverboat Gambling Act ("Act")
and the administrative rules promulgated thereunder. The Indiana Gaming
Commission ("IGC") is empowered to administer, regulate and enforce the
system of riverboat gaming established under the Act and has jurisdiction
and supervision over all riverboat gaming operations in Indiana, as well as
all persons on riverboats where gaming operations are conducted. The IGC is
empowered to regulate a wide variety of gaming and nongaming related
activities, including the licensing of supplies to, and employees at,
riverboat gaming operations and to approve the form of entity qualifiers and
intermediary and holding companies. Indiana is a new jurisdiction and the
emerging regulatory framework is not yet complete. The IGC has adopted
certain final rules and has published others in proposed or draft form which
are proceeding through the review and final adoption process. The IGC has
broad rulemaking power, and it is impossible to predict what effect, if any,
the amendment of existing rules or the finalization of currently new rules
might have on the Company's operations.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Statement on Forward-Looking Information
This quarterly report 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" or
"expects" used in the Company's press releases and reports filed with the
Securities and Exchange Commission (including periodic 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 report 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 purchase of real estate
for, and the design and construction of, a covered parking facility located
at the Company's gaming complex; the ability to fund planned development
needs and to service debt from existing operations and from new financing;
increased competition in existing markets or the opening of new gaming
jurisdictions; a decline in the public acceptance of gaming; the limitation,
conditioning or suspension of the Company's gaming license; increases in or
new taxes imposed on gaming revenues 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 markets and adverse results of significant litigation matters.
Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date thereof. The Company undertakes
no obligation to publicly release any revisions to such forward-looking
statements to reflect events or circumstances after the date hereof.
<PAGE> 7
Overview
The Company was formed in December 1993 as an Indiana limited liability
company to develop a riverboat casino in the City. The Company's efforts
resulted in the IGC granting the Company a five year riverboat owner's
license on June 3, 1996. The Company began operations on June 7, 1996.
The Company and Trump Indiana, Inc. (the "Joint Venture Partner"), the
holder of a second gaming license to operate from the City, formed
Buffington Harbor Riverboats, L.L.C. ("BHR") to own and operate certain
common facilities at Buffington Harbor (the "Gaming Complex") such as the
guest pavilion, vessel berths, parking lots and other infrastructure. The
Company and the Joint Venture Partner each have a 50% ownership interest in
BHR.
The Company's operations through October 19, 1997, were conducted on the
Chartered Vessel. The Chartered Vessel was chartered pursuant to a five
year lease, which began in May 1996, and contained approximately 26,000
square feet of gaming space, 932 slot machines and 50 table games.
In 1996, the Company entered into various agreements for the design,
engineering and construction of the Permanent Vessel. The Chartered Vessel
was replaced with the Permanent Vessel on October 27, 1997. The Permanent
Vessel, which is owned by the Company, contains approximately 43,000 square
feet of casino space on three decks, approximately 1,410 slot machines and
56 table games. The Permanent Vessel has an atrium, escalators and
elevators. To date, the Company has expended approximately $54.3 million,
excluding capitalized interest, on the Permanent Vessel.
On March 30, 1998, the Company executed an amendment to the August 17, 1995,
charter agreement whereby New Yorker Acquisition Corporation, the lessor,
accepted re-delivery of the Chartered Vessel effective March 1, 1998, "as-
is, where-is" at Erie, Pennsylvania, from the Company, the lessee. The
Company also agreed to release a $500,000 escrow account with accrued
interest thereon, free and clear of any claims thereon, to New Yorker
Acquisition Corporation in lieu of restoring the Chartered Vessel back to
its original condition. As of March 1, 1998, all obligations of New Yorker
Acquisition Corporation and the Company were fully satisfied and the parties
have no further obligations under the original charter agreement. The
Company during the three months ended March 31, 1998, and the three months
ended June 30, 1998, wrote-off assets previously utilized and/or left on
board the Chartered Vessel that had a net book value of approximately
$735,000 and $20,000, respectively.
The federal law that prohibited cruising on federal waterways was amended
during the fourth quarter of 1996 to allow cruises and, as a result, the IGC
advised the Company that cruising could commence November 15, 1996, subject
to winter weather conditions. However, due primarily to winter weather
conditions during the first quarter of 1999, 1998, and 1997, the Company
conducted virtually all of its gaming operations with the Permanent Vessel
or the Chartered Vessel, respectively docked. The Company, for fiscal year
1999, resumed a regular cruising schedule during the second quarter of 1999.
Because of the climate in the Chicago metropolitan area, the Company's
operations are expected to be seasonal with stronger results expected during
the period May through September. Accordingly, the Company's results of
operations are expected to fluctuate from quarter to quarter and the results
for any fiscal quarter may not be indicative of results for future fiscal
quarters.
<PAGE> 8
Year 2000 Issue
The approach of the year 2000 has become a potential problem for businesses
utilizing computers in their operations since many computer programs are
date sensitive and will only recognize the last two digits of the year,
thereby recognizing the year 2000 as the year 1900 or not at all (the "Year
2000 Issue"). Management has undertaken a comprehensive assessment of the
Company's exposure to the Year 2000 Issue and what will be required to
ensure that the Company is year 2000 compliant. The primary computer
programs utilized in the Company's operations and financial reporting
systems have been acquired from independent software vendors. The Company
has contacted these vendors to determine whether their systems are year 2000
compliant, and, if not, establish timelines as to when the Company will
receive the required upgrades that assure that these systems will be year
2000 compliant. As of June 30, 1999 approximately 75% of the computer
programs utilized in the Company's operations have been upgraded, and the
software vendors have represented that such programs are year 2000
compliant. Maintenance or modification costs estimated to be between
$400,000 to $500,000 associated with the Year 2000 Issue will be expensed as
incurred, while the costs of any new software will be capitalized and
amortized over the software's useful life. The Company does not expect to
incur costs in connection with the Year 2000 Issue that would have a
material impact on operations. Although the Company presently believes that
all of its software programs will be year 2000 compliant, there can be no
assurances that the Company will not be adversely affected by the Year 2000
Issue.
Results of Operations
The following discussion of results of operations provides a comparison of
the six and three month periods ended June 30, 1999, with the six and three
month periods ended June 30, 1998. Gross revenues were approximately $60.8
million and $31.3 million during the six and three month periods ended June
30, 1999 compared to $56.7 million and $28.2 million during the six and
three months ended June 30, 1998, respectively. Due to winter weather
conditions, the Company did not operate all or part of two days during the
three months ended March 31, 1999, and for three days during the three
months ended March 31, 1998.
The following tables set forth: (i) summary information from the Company's
statements of income, as well as information relative to EBITDA (as defined
below) derived therefrom; and (ii) the Company's statements of income, as
well as information relative to EBITDA, expressed as a percentage of gross
revenues.
<TABLE>
<CAPTION> Statements of Income - - Summary Information
(dollars in thousands)
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross revenues (1) $31,276 $28,282 $60,849 $56,895
Operating income (2)(3) $6,089 $3,085 $11,147 $5,003
EBITDA (4) $8,061 $5,155 $15,062 $10,494
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
Statements of Income -- As a percentage of Gross Revenues
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Casino 97.6% 97.7% 97.6% 97.1%
Food and beverage 1.6% 1.4% 1.6% 1.5%
Other (1) 0.8% 0.9% 0.8% 1.4%
--- --- --- ---
Gross revenues 100.0% 100.0% 100.0% 100.0%
less promotional allowances (0.2)% (0.3)% (0.2)% (0.4)%
Net revenues 99.8% 99.7% 99.8% 99.6%
Costs and expenses:
Casino 16.2% 16.3% 16.8% 16.7%
Gaming and admission taxes 27.2% 28.9% 27.4% 28.7%
Food and beverage 2.0% 2.0% 2.0% 2.1%
Advertising and promotion 5.8% 11.4% 5.5% 10.8%
General and administrative (2) 19.8% 19.8% 20.3% 21.3%
Economic incentive-City of Gary 3.0% 3.0% 3.0% 3.0%
Depreciation and amortization 6.3% 6.7% 6.4% 6.7%
Loss on disposition of assets (3) -- 0.6% -- 1.6%
----- ----- ----- -----
Total 80.3% 88.7% 81.5% 90.9%
Operating income (loss): 19.5% 11.0% 18.3% 8.7%
Other income (expense):
Loss on investment in BHR (1.9)% (2.4)% (2.3)% (2.8)%
Interest income 0.6% 0.8% 0.7% 0.8%
Interest expense (12.4)% (13.5)% (12.7)% (13.4)%
Interest expense to affiliate (0.2)% (0.5)% (0.3)% (0.5)%
------ ------ ------ ------
Total (13.9)% (15.6)% (14.7)% (15.9)%
------- ------- ------- -------
Net income (loss) before
extraordinary item 5.6% (4.6)% 3.6% (7.2)%
Extraordinary item:
Loss on bond redemption (48.7)% -- (25.0)% --
Net (loss): (43.1)% (4.6)% (21.4)% (7.2)%
EBITDA: (4) 25.77% 18.2% 24.75% 18.4%
- ----------
NOTES:
1. Includes a lump sum payment in March 1998 of approximately $314,000 from the Company's Joint Venture
Partner to compensate the Company for the loss of certain parking spaces to be utilized by the Joint
Venture Partner for the construction of a hotel facility.
2. Includes approximately $752,000 during the three months ended March 31, 1998 in expenses associated
with the lease and subsequent termination of the charter vessel lease agreement effective March 1,
1998.
3. Includes losses on disposal of assets the three months ended March 31,1998 and the three months
ended June 30, 1998 of approximately $735,000 and $169,000, respectively.
4. EBITDA (defined as earnings before interest, income taxes, depreciation and amortization and, for
purposes hereof, does not include payments associated with, and termination of, the Chartered Vessel
lease) is presented solely as a supplemental disclosure to assist in the evaluation of the Company's
ability to generate cash flow. In particular, the Company believes that an analysis of EBITDA
enhances the understanding of the financial performance of companies with substantial depreciation
and amortization. EBITDA is not a generally accepted accounting principles financial indicator and
should not be considered an alternative to, or more meaningful than, net income or income from
operations as an indicator of the Company's operating performance or net cash provided by operating
activities as measure of liquidity.
</TABLE>
<PAGE> 10
Results for any one or more periods are not necessarily indicative of annual
results or continuing trends.
Comparison of the Three Months Ended June 30, 1999 and 1998
Gross revenues for the second quarter ended June 30, 1999, amounted to
approximately $31,276,000, an increase of approximately $2,994,000 from
gross revenues recorded in the second quarter ended June 30, 1998. The
10.6% increase in gross revenues was primarily attributable to an increase
in the win per patron.
Casino revenues during the three months ended June 30, 1999, totaled
approximately $30,527,000, of which slot machines accounted for
approximately $23,265,000 (76.2%) and table games accounted for
approximately $7,262,000 (23.8%). The average number of slot machines in
operation decreased to 1,410 during the three months ended June 30, 1999,
from 1,526 during the three months ended June 30, 1998. The average win per
slot machine per day increased to approximately $179 for the three months
ended June 30, 1999, from approximately $153 during the three months ended
June 30, 1998. The average number of table games in operation during the
three months ended June 30, 1999, decreased to 56 from 61 during the three
months ended June 30, 1998. The average win per table game per day during
the three months ended June 30, 1999, increased to approximately $1,425
compared to approximately $1,075 during the three months ended June 30,
1998. The average daily win per state passenger count was approximately $38
and the average daily win per patron was approximately $69 during the three
months ended June 30, 1999, compared to an average daily win per state
passenger count of approximately $31 and an average daily win per patron of
approximately $54 for the three months ended June 30, 1998.
Food and beverage revenues for the three months ended June 30, 1999, totaled
approximately $500,000 or 1.6% of gross revenues, compared to approximately
$392,000 or 1.4% of gross revenues for the three months ended June 30, 1998.
Other revenue, consisting of primarily of commission income, totaled
approximately $249,000, or 0.8% of gross revenues, compared to approximately
$254,000, or 0.9% of gross revenues, for the three months ended June 30,
1998.
Promotional allowances (complementaries) included in the Company's gross
food revenues for the three months ended June 30, 1999, and 1998, were
approximately $77,000 and $79,000, respectively. Promotional allowances
provided to the Company's gaming patrons at facilities located in, and/or
owned by BHR for the three months ended June 30, 1999, and 1998, totaled
approximately $204,000 and $104,000, respectively, and are characterized in
the financial statements as an expense to the casino. BHR invoices the
Company monthly for these promotional allowances at cost, which approximates
the retail value of these promotional allowances.
Casino operating expenses for the three months ended June 30, 1999, totaled
approximately $5,057,000, or 16.2% of gross revenues and 16.6% of casino
revenues, respectively, compared to approximately $4,609,000, or 16.3% of
gross revenues and 16.7% of casino revenues, respectively, for the three
months ended June 30, 1998. These expenses were primarily comprised of
salaries, wages and benefits, and operating and promotional expenses of the
casino. The dollar increase of $448,000, or 9.7%, in casino operating
expenses is primarily attributed to an increase in gaming equipment rental
and progressive expense for jackpots offset by a slight decrease in payroll
expense.
Gaming and admissions taxes totaled approximately $8,516,000 for the three
months ended June 30, 1999, compared to approximately $8,177,000 for the
three months ended June 30, 1998. These taxes are levied on adjusted gross
receipts, as defined by Indiana gaming laws, at the rate of 20%, plus $3
per passenger per the state passenger count. An additional $942,000 was
paid during the three months ended June 30, 1999, compared to approximately
$854,000 in the three months ended June 30, 1998, to the City under an
agreement whereby the Company pays approximately 3% of the adjusted gross
receipts directly to the City.
<PAGE> 11
Advertising and promotion expenses for the three months ended June 30, 1999,
totaled approximately $1,811,000, or 5.8% of gross revenues, compared to
approximately $3,217,000, or 11.4% of gross revenues during the three months
ended June 30, 1998. Advertising and promotion expenses included salaries,
wages and benefits of the marketing and casino service departments, as well
as promotions, advertising and special events. The $1,406,000 or 43.7%
decrease in advertising and promotion expenses during the three months ended
June 30, 1999, was primarily the result of the Company redirecting its
marketing dollars to target or direct marketing from mass marketing and also
significantly reducing the amount of chartered bus passengers.
General and administrative expenses for the three months ended June 30,
1999, were approximately $6,196,000, or 19.8% of gross revenues, compared to
$5,612,000, or 19.8% of gross revenues, during the three months ended June
30, 1998. These expenses included approximately $1,843,000 for berthing
fees paid to BHR, $1,286,000 for marine operations and $612,524 for security
and surveillance operations during the second quarter of 1999. The $584,000
increase in these expenses is primarily attributed to an increase of
approximately $174,000 in berthing fees primarily for BHR property taxes,
approximately $140,000 in security due to an increase in staffing, and
approximately $115,000 for property taxes associated with the larger vessel
during the three months ended June 30, 1999.
Depreciation and amortization for the second quarter ended June 30, 1999,
was approximately $1,972,000, or 6.3% of gross revenues, compared to
approximately $1,902,000, or 6.7% of gross revenues, during the three months
ended June 30, 1998. The $70,000 increase in depreciation expense for the
three months ended June 30, 1999, is attributable to the increased expense
associated with machinery and equipment placed into service during the past
year.
Operating income for the three months ended June 30, 1999, was approximately
$6,089,000, or 19.5% of gross revenues, compared to an operating income for
the three months ended June 30, 1998 of $3,085,000, or 11.0% of gross
revenues. During the three months ended June 30, 1998, the Company had a
net loss on disposition of assets totaling approximately $169,000. The
Company wrote off assets used on the Chartered Vessel that had a net book
value of approximately $20,000 and disposed of slot machines that had a net
book value of approximately $149,000. The $3,004,000, or 97.4%, increase in
operating income is principally attributable to the increase of the average
daily win per patron to $69 during the three months ended June 30, 1999,
from $54 during the three months ended June 30, 1998, combined with a
$1,406,000, or 43.7%, decrease in overall marketing expenses.
Net interest expense for the three months ended June 30, 1999, was
$3,747,000, or approximately 12.0% of gross revenues, compared to
$3,719,000, or approximately 13.2% for the same period last year. The
$28,000 increase in net interest expense is principally attributed to the
overall increase in outstanding debt during the second quarter of 1999
compared to the second quarter of 1998. For the three months ended June
30, 1999, the Company paid accrued contingent interest of approximately
$3,018,000.
The Company's loss on the redemption of its 12-3/4% Senior Secured Notes was
approximately $15,238,000, comprised of $12,836,000 of premium and
$2,402,000 of unamortized deferred financing costs, and the loss relating to
its investment in BHR for the three months ended June 30, 1999, was
approximately $600,000. The BHR loss represents the Company's 50% share of
BHR's non-cash net loss (primarily depreciation and amortization).
As a result of the foregoing, the Company experienced income before the
extraordinary item of $1,743,000 and a loss of $1,308,000, during the three
months ended June 30, 1999 and 1998, respectively. Net losses were
approximately $13,495,000 and $1,308,000 during the three months ended June
30, 1999, and 1998, respectively.
<PAGE> 12
Comparison of the Six Months Ended June 30, 1999 and 1998
Gross revenues for the six months ended June 30, 1999, amounted to
approximately $60,849,000, an increase of $3,954,000 over gross revenues
recorded in the six months ended June 30, 1998. The 7.0% increase in gross
revenues was attributable to an increase in the daily win per patron.
Casino revenues during the six months ended June 30, 1999, totaled
approximately $59,413,000, of which slot machines accounted for
approximately $45,409,000 (76.4%) and table games accounted for
approximately $14,004,000 (23.6%). The average number of slot machines in
operation decreased to 1,442 during the six months ended June 30, 1999, from
1,531 during the six months ended June 30, 1998. The average win per slot
machine per day increased to approximately $176 for the six months ended
June 30, 1999, from approximately $153 during the six months ended June 30,
1998. The average number of table games in operation during the six months
ended June 30, 1999, decreased to 59 from 61 during the six months ended
June 30, 1998. The average win per table game per day during the six months
ended June 30,1999, increased to approximately $1,319, compared to
approximately $1,174 during the six months ended June 30, 1998. The average
daily win per state passenger count was approximately $37 and the average
daily win per patron was approximately $68 during the six months ended June
30, 1999, compared to an average daily win per state passenger count of
approximately $31 and an average daily win per patron of approximately $55
for the six months ended June 30, 1998.
Food and beverage revenues for the six months ended June 30, 1999, totaled
approximately $968,000, or 1.6% of gross revenues, compared to approximately
$858,000, or 1.5% of gross revenues, for the six months ended June 30, 1998.
The dollar increase in food and beverage revenues is attributed to an
overall increase in the number of customers served. Other revenue totaling
approximately $468,000, or 0.8% of gross revenues for the six months ended
June 30, 1999, consisted primarily of commission income compared to
approximately $818,000 during the six months ended June 30, 1998. Other
revenue during the six months ended June 30, 1998 included a lump sum
payment of $314,000 from the Company's Joint Venture Partner to compensate
the Company for the loss of certain parking spaces to be utilized by the
Joint Venture Partner for the construction of a hotel facility.
Promotional allowances (complementaries) included in the Company's gross
food revenues for the six months ended June 30, 1999, and 1998, were
approximately $139,000 and $211,000, respectively. The $72,000 decrease on
board the vessel was offset by increased complementaries provided at BHR
operated facilities. Promotional allowances provided to the Company's
gaming patrons at facilities located in, and/or owned by BHR for the six
months ended June 30, 1999, and 1998, totaled approximately $387,000 and
$238,000, respectively, and are characterized in the financial statements as
an expense to the casino. BHR invoices the Company monthly for these
promotional allowances at cost, which approximates the retail value of these
promotional allowances.
Casino operating expenses for the six months ended June 30, 1999, totaled
approximately $10,216,000, or 16.8% of gross revenues and 17.2% of casino
revenues, respectively, compared to approximately $9,488,000, or 16.7% of
gross revenues and 17.2% of casino revenues, respectively, for the six
months ended June 30, 1998. These expenses were primarily comprised of
salaries, wages and benefits, and operating and promotional expenses of the
casino. The dollar increase of $728,000 or 7.0% in casino operating expenses
is primarily attributed to an increase of approximately $544,000 for gaming
equipment rental and approximately $172,000 for progressive expense related
to jackpots.
<PAGE> 13
Gaming and admissions taxes totaled approximately $16,663,000 for the six
months ended June 30, 1999, compared to approximately $16,307,000 for the
three months ended June 30, 1998. These taxes are levied on adjusted gross
receipts, as defined by Indiana gaming laws, at the rate of 20%, plus $3
per passenger per the state passenger count. An additional $1,835,000 was
paid during the six months ended June 30, 1999, compared to approximately
$1,707,000 in the six months ended June 30, 1998, to the City under an
agreement whereby the Company pays approximately 3% of the adjusted gross
receipts directly to the City.
Advertising and promotion expenses for the six months ended June 30, 1999,
totaled approximately $3,319,000, or 5.0% of gross revenues, compared to
approximately $6,129,000, or 10.8% of gross revenues during the six months
ended June 30, 1998. Advertising and promotion expenses included salaries,
wages and benefits of the marketing and casino service departments, as well
as promotions, advertising and special events. The $2,810,000 or 45.8%
decrease in advertising and promotion expenses as a percentage of gross
revenues during the six months ended June 30, 1999, was primarily the result
of redirecting its marketing dollars to target or direct marketing from mass
marketing and special events combined with a significant reduction in the
amount of chartered bus passengers.
General and administrative expenses for the six months ended June 30, 1999,
were approximately $12,379,000, or 20.3% of gross revenues, compared to
$12,138,000, or 21.3% of gross revenues, during the six months ended June
30, 1998. These expenses included approximately $3,516,000 for berthing
fees paid to BHR, $2,623,000 for marine operations and $1,136,000 for
security and surveillance operations during the six months ended June 30,
1999. The $241,000 dollar increase in these expenses is primarily
attributed to an increase for property taxes during the six months ended
June 30, 1999.
Depreciation and amortization for the six months ended June 30, 1999, was
approximately $3,915,000, or 6.4% of gross revenues, compared to
approximately $3,832,000, or 6.7% of gross revenues, during the six months
ended June 30, 1998. The $83,000 dollar increase in depreciation expense for
the six months ended June 30, 1999, is principally attributable to the
increased expense associated with machinery and equipment placed into
service during the past year.
Operating income for the six months ended June 30, 1999, was approximately
$11,147,000, or 18.3% of gross revenues, compared to an operating income for
the six months ended June 30, 1998, of $5,003,000, or 8.7% of gross
revenues. During the six months ended June 30, 1998, the Company had a net
loss on the disposition of assets totaling approximately $904,000. The
Company wrote-off slot machines that had a net book value of approximately
$149,000 and assets used on the Chartered Vessel that had a net book value
of approximately $755,000. The $6,144,000 or 122.8% increase in operating
income is principally attributable to the increase of the average daily win
per patron to $68 during the six months ended June 30, 1999 from $55 during
the six months ended June 30, 1998, combined with a 45.8% decrease in
marketing expenses.
Net interest expense for the six months ended June 30, 1999, was $7,529,000,
or approximately 12.4% of gross revenues, compared to $7,461,000, or
approximately 13.1% for the same period last year. The decrease in interest
expense is primarily attributed to the repayment of the $8.8 million demand
note due to Barden Development, Inc. ("BDI") and was partially offset by a
$28,000 increase in interest expense due to an increase in overall
outstanding debt during the six months ended June 30, 1999, compared to the
six months ended June 30, 1998. For the six months ended June 30, 1999,
the Company paid accrued contingent interest of approximately $3,018,000.
The Company's loss on the redemption of its 12-3/4% Senior Secured Notes was
approximately $15,238,000 and the loss relating to its investment in BHR for
the six months ended June 30, 1999, was approximately $1,404,000. The BHR
loss represents the Company's 50% share of BHR's non-cash net loss
(primarily depreciation and amortization).
<PAGE> 14
As a result of the foregoing, the Company experienced income before the
extraordinary item of $2,214,000 and a loss of $4,058,000, during the six
months ended June 30, 1999 and 1998, respectively. Net losses were
approximately $13,024,000 and $4,058,000 during the six months ended June
30, 1999, and 1998, respectively.
Earnings Before Interest, Income Taxes, Depreciation and Amortization
("EBITDA")
EBITDA is presented solely as a supplemental disclosure and is used by the
Company to assist in the evaluation of the cash generating ability of its
gaming business. EBITDA (excluding loss on disposal of assets and Chartered
Vessel lease and termination payments) during the three and six month
periods ended June 30, 1999 was approximately $8,061,000 and $15,062,000,
respectively, or 25.8% and 24.7%, respectively, of gross revenues, compared
to approximately $5,155,000 and $10,494,000, respectively, or 18.2% and
18.4%, respectively, of gross revenues, during the three and six month
periods ended June 30, 1998. The increase in EBITDA for the three and six
months ended June 30, 1999 is primarily the result of an increase in the win
per patron combined with a reduction in overall marketing expenditures and
strong operating margins. EBITDA should be viewed only in conjunction with
all of the Company's financial data and statements, and should not be
construed as an alternative either to income from operations (as an
indicator of the Company's operating performance) or to cash flows from
operating activities as a measure of liquidity.
Liquidity and Capital Resources
During the quarter ended June 30, 1999, the Company issued $130.0 million of
10-7/8% Senior Secured Notes due 2006. These bonds are in the process of
being registered with the Securities and Exchange Commission. The net
proceeds from the offering were utilized to redeem $99 million principal
amount of the Company's 12-3/4% Senior Secured Notes due 2003. During June
1999, approximately $7.5 million was classified as restricted cash to effect
a covenant defeasance of the remaining $6.0 million of the 12-3/4% Senior
Secured Notes. Holders of the outstanding 10-7/8% Senior Secured Notes have
the right to require that the Company repurchase the notes at a premium
under certain conditions including a change in control of the Company.
At June 30, 1999, the Company had cash and cash equivalents of approximately
$14.3 million. During the six months ended June 30, 1999, the Company's
capital expenditures were approximately $2.1 million. Approximately $773,000
was expended for the construction of two VIP lounge facilities of which one
is located on the vessel. The lounge on the vessel is located in the former
Poker Room and was opened on July 15, 1999. The second lounge is located
adjacent to the boarding area. Approximately $520,000 was expended on slot
machines and upgrading gaming equipment. The Company also contributed
approximately $73,000 from working capital to BHR for general enhancements
during this period.
The Company, to date, has met its capital requirements through net cash from
operations, capital contributions and loans. For the six months ended June
30, 1999, net cash provided from operations totaled approximately $3.0
million compared to approximately $1.7 million for the six months ended June
30, 1998. For the six months ended June 30, 1999, $2,155,000 in cash was
used by investing activities, compared to $7,595,000 provided by investing
activities for the six months ended June 30, 1998. The majority of this
change was caused by cash released from restriction during the six months
ended June 30, 1998. Net cash used by financing activities was $3,801,000
for the six months ended June 30, 1999, compared to $1,591,000 used by
financing activities for the six months ended June 30, 1998. This change
was caused by the net impact of the debt refinancing, including the
restriction of cash for the covenant defeasance. During the six months
ended June 30, 1999, the Company also repaid an $8.8 million demand note
originally borrowed from BDI in 1996.
<PAGE> 15
As of June 30, 1999, loans included: (i) $130.0 million principal amount of
10-7/8% Senior Secured Notes due 2006; (ii) $6.0 million principal amount of
12-3/4% Senior Secured Notes; and (iii) approximately $4.3 million of
equipment financing. The 10-7/8% million Senior Secured Notes are secured
by substantially all current and future assets other than certain excluded
assets. The Company is negotiating a new $20.0 million credit facility,
which will also be secured by substantially all current and future assets,
other than certain excluded assets. The lien on the collateral securing the
proposed credit facility will be senior to the lien on the collateral
securing the 10-7/8% Senior Secured Notes. The establishment of the
proposed credit facility is subject to approval of the IGC.
Under the terms of its development agreement with the City, the Company
committed, among other things, to make development expenditures of $116
million for its casino and associated infrastructure in the City over the
next five years. The Company has met or accrued a significant portion of
these commitments. The two principal components of the remaining portion of
these commitments are as follows: (1) $10 million for off-site development
in the City by December 31, 1999 with the particular project(s) to be agreed
to by the City; and (2) an investment of $12 million to be expended over
the five years following the June 1996 opening of the casino for
enhancements to the Company's operations at Buffington Harbor and/or the
gaming complex. The Company has already expended this $12 million for
enhancements of operations at Buffington Harbor and must receive approval
from the City of Gary that these expenditures satisfy the second component
of the remaining portion of the Development Agreement. With respect to the
off-site development commitment, the Company arranged for a $12.5 million
surety bond which provides collateral for completion of this development.
The Company has deposited $3.6 million with a bank to guarantee a letter of
credit to benefit the bonding company that provided the surety bond.
The Company anticipates that additional capital contributions, currently
estimated to be between $500,000 and $700,000, for an emergency back-up
generator and food service area upgrade may be required for the BHR
facilities. The Company and the Joint Venture Partner also intend to
construct a multi-level covered parking structure. The parking structure is
expected to provide customers with approximately 1,600 covered parking
spaces and indoor access to the Buffington Harbor gaming complex. Customers
currently either park their automobiles in a parking lot or use valet
parking services. The parking project is estimated to cost approximately
$35.0 million, including approximately $15.0 million for the land. The
Company currently expects to contribute approximately $3.5 million of
capital toward the project and to fund such further investments from
operations. The Company believes that the convenience of the new parking
structure will attract a significant number of new customers to Buffington
Harbor, thereby providing substantial opportunities to increase our net
revenue and cash flow. The BHR Joint Venture intends to acquire the harbor
and the property underlying the new parking structure and the harbor. There
can be no assurance that the harbor or the property on which the garage is
to be built will be acquired or that such facility will be constructed or
that the garage will be built on terms favorable to the Company or at all.
Under a lease agreement with Lehigh Portland Cement Company ("Lehigh
Cement"), BHR has leased certain property which is integral to the gaming
operations of the Company and its Joint Venture Partner. The lease places
certain restrictions on the use of the harbor by the Company and its Joint
Venture Partner and requires the reimbursement of certain costs which may be
incurred by Lehigh Cement. The lease was rent free through December 29,
1997, and, subject to certain conditions, such as progress toward permits
for a new harbor, has been extended to the earlier of December 21, 2005, or
to such time as BHR has obtained requisite regulatory permits and completed
construction of its permanent harbor, with a monthly payment of $125,000.
BHR anticipates filing the requisite regulatory permits during 1999. If the
regulatory permits are obtained, the BHR Joint Venture may be required to
construct a new harbor, berthing and guest facilities. The level of
expenditures required for such new facilities cannot be accurately estimated
at this time.
<PAGE>
<PAGE> 16
Although BDI to date has contributed approximately $24 million to the
Company, the Members' Equity Account became negative during the first
quarter of 1998 and continues to be negative as of June 30, 1999. The
decline in the Members' Equity Account is primarily attributed to start-up
costs, operating losses,the disposition of assets previously utilized on the
Chartered Vessel, and the loss on the redemption of $99.0 million principal
amount of 12-3/4% Senior Secured Notes.
Based upon the Company's anticipated future operations on board the
Permanent Vessel and capital expenditures, management believes that the
available cash flow from the Company's future operations and certain planned
equipment financings, together with the proceeds from the 10-7/8% Senior
Secured Notes and the anticipated line of credit, will be adequate to meet
the Company's anticipated future requirements for working capital, the
remaining development obligations to the City, and its capital expenditures
and scheduled payments of interest and principal on the Senior Secured Notes
and other permitted indebtedness for 1999. No assurance can be given,
however, that such proceeds and operating cash flow from the Permanent
Vessel, in light of increased competition, will be sufficient for such
purposes. If necessary and to the extent permitted under the Indenture, the
Company will seek additional financing through borrowings and debt or equity
financing. There can be no assurance that additional financing, if needed,
will be available to the Company, or that, if available, the financing will
be on terms favorable to the Company. In addition, there is no assurance
that the Company's estimate of its reasonably anticipated liquidity needs is
accurate or that unforeseen events will not occur, resulting in the need to
raise additional funds.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
<PAGE> 17
Part II -- OTHER INFORMATION
Item 1. Legal Proceedings
Various legal proceedings are pending against the Company. Management
considers all such pending proceedings, which are primarily personal injury
claims, to be ordinary litigation incidental to the character of the
Company's business. Management believes that the resolution of these
proceedings will not, individually or in the aggregate, have a material
effect on the Company's financial condition or results of operations.
On March 27, 1998, a complaint was filed in the Lake County Superior Court
in East Chicago, Indiana, against BHR, Trump Indiana, Inc. (the "Joint
Venture Partner") and the Company. The plaintiff, a former employee of the
Company, claims to have been assaulted in the BHR parking lot on June 25,
1997 and is requesting compensatory and punitive damages totaling
approximately $11 million. The suit alleges that the Joint Venture Partner
and the Company failed to provide adequate security to prevent assaults.
The Company intends to vigorously defend against such suit. However, it is
too early to determine the outcome of such suit and the effect, if any on
the Company's financial position and results of operations.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
No. Description
- -- -----------
27 Financial Data Schedule (Edgar Version Only) (filed herewith).
(b) REPORTS ON FORM 8-K
None
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on
August 12, 1999.
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc., Manager
By: /S/ DON H. BARDEN
----------------------------------
Don H. Barden, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
/S/ DON H. BARDEN
- --------------------- President and Chief Executive August 12, 1999
Don H. Barden Officer of the Manager and the
Company (Principal Executive
Officer)
/S/ MICHAEL E. KELLY
- --------------------- Vice President, Chief Operating August 12, 1999
Michael E. Kelly and Financial Officer (Principal
Financial and Accounting Officer
of the Company)
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