<PAGE>
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 September 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 333-06489
Indiana THE MAJESTIC STAR CASINO, LLC 43-1664986
Indiana THE MAJESTIC STAR CASINO CAPITAL CORP. 35-2100872
(State or other (Exact name of registrant (I.R.S. Employer
jurisdiction of as specified in its charter) Identification No.)
incorporation or
organization)
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
September 30, 2000:
Class Number of shares
----- ----------------
Not applicable Not applicable
<PAGE>
THE MAJESTIC STAR CASINO, LLC
Index
Page No.
--------
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets --
September 30, 2000 (Unaudited) and December 31, 1999............1
Consolidated Statements of Income --
Nine months ended September 30, 2000 and 1999 (Unaudited).......2
Consolidated Statements of Cash Flow --
Nine months ended September 30, 2000 and 1999 (Unaudited).......3
Notes to Consolidated Financial Statements (Unaudited)............4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................7
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......17
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
i
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
THE MAJESTIC STAR CASINO, LLC
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
(Unaudited)
----------------------------------------------------------------------------------------------
<S> <C> <C>
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 under 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 (deficit) ................. (21,356,857) (17,082,984)
------------- -------------
Total Liabilities and Members' Equity ..................... $ 128,261,014 $ 133,150,043
============= =============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
1
<PAGE>
THE MAJESTIC STAR CASINO, LLC
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended September 30, Ended September 30, Ended September 30, Ended September 30,
2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE>
The Majestic Star Casino, LLC
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the nine months For the nine months
Ended September 30, Ended September 30,
2000 1999
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net loss .................................................................... $ (3,676,263) $ (13,054,936)
Adjustment to reconcile net loss to net cash provided by operating activities
Depreciation ............................................................... 5,126,232 4,681,974
Amortization ............................................................... 1,707,185 1,384,559
Loss on investment in Buffington Harbor Riverboats, L.L.C .................. 2,190,536 2,110,678
Loss on disposal of assets ................................................. 301,658 --
Loss on bond redemption .................................................... 382,500 15,238,156
(Increase) decrease in accounts receivable, net ........................... 507,543 (110,051)
(Increase) decrease in inventories ......................................... 20,095 (16,979)
(Increase) decrease in prepaid expenses .................................... (123,291) 177,277
Increase in other assets ................................................... (304,477) (3,090,051)
Decrease in accounts payable ............................................... 182,428 242,497
Increase (decrease) in accrued payroll and other expenses .................. 149,585 (249,116)
Increase (decrease) in accrued interest .................................... (4,299,798) 286,809
Increase in other accrued liabilities ...................................... 466,867 1,022,780
------------- -------------
Net cash provided by operating activities .............................. 2,630,800 8,623,597
------------- -------------
Cash Flows From Investing Activities
Acquisition of property, equipment and vessel improvements ................. (2,523,674) (3,008,988)
Increase(decrease) in deposits ............................................. 1,000,000 (15,000)
Investment in Buffington Harbor Riverboats, L.L.C .......................... (8,651,027) (195,822)
Purchase of 49% interest in Gary New Century ............................... (9,000,000) --
Sale of 49% interest in Gary New Century ................................... 9,000,000 --
Proceeds from sale of slot machines ........................................ 135,100 --
------------- -------------
Net cash used by investment activities .................................. (10,039,601) (3,219,810)
------------- -------------
Cash Flows From Financing Activities
Redemption of 12-3/4% of Senior Secured Notes with Contingent Interest ..... (6,382,500) (116,005,298)
Proceeds from issuance of 10-7/8% Senior Secured Notes ..................... -- 127,738,000
(Increase) decrease in restricted cash ..................................... 7,357,874 (7,491,175)
Payment of 10-7/8% Senior Secured Notes issuance costs ..................... -- (4,241,526)
Increase in short-term debt ................................................ -- 6,000,000
Distribution of Management Fees ............................................ (597,610) --
Issuance of loans to Barden Development, Inc. .............................. (4,000,000) --
Payment of loans from Barden Development, Inc. ............................. 4,000,000 --
Cash received from line-of-credit .......................................... 12,000,000 --
Cash paid to reduce line-of-credit ......................................... (1,700,000) --
Cash paid to reduce long-term debt ......................................... (1,613,342) (10,271,718)
------------- -------------
Net cash provided (used) by financing activities ............................ 9,064,422 (4,271,717)
------------- -------------
Net increase in cash and cash equivalents ................................... 1,655,621 1,132,070
Cash and cash equivalents, beginning of period .............................. 20,145,044 17,295,401
------------- -------------
Cash and cash equivalents, end of period .................................... $ 21,800,665 $ 18,427,471
============= =============
Interest paid:
Principal Member ........................................................... $ -- $ 167,455
Equipment Debt ............................................................. $ 200,402 $ 367,392
Senior Secured Notes - Fixed Interest, 12.75% .............................. $ 382,500 $ 7,844,438
Senior Secured Notes - Contingent Interest, 12.75% ......................... $ 246,138 $ 3,018,090
Senior Secured Notes - Fixed Interest, 10.875% ............................. $ 14,648,021 $ --
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
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. In September, 2000, the Company formed Majestic
Investor, LLC to facilitate the fulfillment of the Company's off-site
development obligations. The newly formed company is wholly owned by the Company
and was designated an unrestricted subsidiary under the terms of the Indenture
relating to the Company's 10-7/8% Senior Secured Notes due 2006.
The accompanying consolidated financial statements are unaudited and include the
accounts of the Company, and its wholly owned subsidiary. All significant
intercompany transactions and balances have been eliminated. These financial
statements 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 nine months ended September 30, 2000, 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, 1999.
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.
4
<PAGE>
The following represents selected financial information of BHR:
Buffington Harbor Riverboats, L.L.C.
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
September 30, 2000 September 30, 1999 September 30, 2000 September 30, 1999
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Gross Revenue ........... $ 4,903,030 $ 4,866,261 $ 14,975,783 $ 14,395,911
Operating Income (Loss) . $ 91,585 $ 89,302 $ 268,254 $ 269,403
Net Loss ................ $ (1,480,986) $ (1,413,374) $ (4,384,661) $ (4,221,356)
</TABLE>
Note 3 Debt Refinancing
During the quarter ended June 30, 2000, the Company redeemed $6.0 million of
12-3/4% Senior Secured Notes, with Contingent Interest. In connection with such
redemption, the Company incurred a $383,000 charge, representing the premium
paid on redemption. The charge was recorded as an extraordinary item.
Note 4 Commitments and Contingencies:
Legal Proceedings
On July 16, 1999, a complaint was filed in a Michigan state court in Detroit,
Michigan, against BHR, the Joint Venture Partner, and the Company. The
plaintiff, a patron, claims to have been over served alcohol by the Company and
then was injured as a result of a slip and fall on an escalator at BHR and is
requesting compensatory and punitive damages of $55.0 million. This claim was
dismissed by the Michigan court on February 28, 2000. On May 12, 2000, the
plaintiff refiled a similar claim in the U. S. District Court in Hammond,
Indiana and is now requesting compensatory and punitive damages of $51.0
million. 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.
There have been no other material changes in the legal proceedings previously
described in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999.
BHR Lease Obligations
Until September 2000, BHR was obligated under a lease agreement with Lehigh
Portland Cement Company ("Lehigh Cement") to pay rent of $125,000 per month for
the use of certain real estate that is integral to the gaming operations of the
Joint Venture Partner and the Company. The lease also placed certain
restrictions on the use of the harbor by the Joint Venture Partners, required
the reimbursement of certain costs which may be incurred by Lehigh Portland
Cement and required BHR to pursue permitting of and building of a new harbor.
The lease was canceled as of September 29, 2000, when an affiliate of the
Company purchased the property and harbor leased by Lehigh to BHR. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" below.
5
<PAGE>
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
relatively 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.
6
<PAGE>
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 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 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.
Overview
The Company was formed in December 1993 as an Indiana limited liability company
to develop a riverboat casino in the City. The IGC granted the Company a five
year riverboat owner's license on June 3, 1996 and the Company began operations
on June 7, 1996. The Majestic Star Casino Capital Corp. ("Capital"), a wholly
owned subsidiary of the Company was incorporated on May 11, 1999 in the State of
Indiana solely for the purpose of serving as a co-issuer to facilitate the
Company's offering of 10-7/8% Senior Secured Notes. Capital has no assets,
liabilities, or operations. In order to satisfy the Company's off-site
development obligations, in September, 2000, the Company formed Majestic
Investor, LLC. The newly formed company is wholly owned by the Company and was
designated an unrestricted subsidiary under the terms of the Indenture relating
to the Company's 10-7/8% Secured Notes. The discussion of operations and related
statements are consolidated and include the Company and Majestic Investor, LLC.
All significant intercompany transactions and balances have been eliminated.
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
7
<PAGE>
each have a fifty-percent ownership interest in BHR.
On October 27, 1997, the Company replaced a leased vessel (the "Chartered
Vessel") with the current Majestic Star Casino vessel owned by the Company (the
"Permanent Vessel"). The Permanent Vessel was initially placed in service at a
cost of approximately $50.1 million and currently contains approximately 43,000
square feet of casino space, 1,447 slot machines and 54 table games on three
decks.
The federal law that prohibited cruising on federal waterways was amended in
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.
Due primarily to winter weather conditions during late fourth quarter and all of
the first quarter of each year, the Company generally conducts its gaming
operations with the Permanent Vessel docked. The Company usually resumes a
regular cruising schedule during April. During mid-June 2000, the U. S. Coast
Guard imposed a temporary moratorium on cruising for all Lake Michigan casino
vessels until further notice. The Company currently is simulating a regular
cruising schedule with respect to the boarding of passengers during the
temporary moratorium.
Because of the climate in the Chicago metropolitan area, the Company's
operations are expected to be seasonal with higher revenues expected during the
period from 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.
Results of Operations
The following discussion provides a comparison of the results of operations for
the three and nine month periods ended September 30, 2000, with the three and
nine month periods ended September 30, 1999. Gross revenues were approximately
$29.0 million and $90.2 million during the three month and nine month periods
ended September 30, 2000, compared to $29.6 million and $90.5 million during the
three and nine month periods ended September 30, 1999, respectively.
The following table sets forth: (i) summary information from the Company's
consolidated statements of income, information relative to EBITDA (as defined
below) derived therefrom; and (ii) detailed information from the Company's
consolidated statements of income, as well as information relative to EBITDA,
expressed as a percentage of gross revenues.
CONSOLIDATED STATEMENTS OF INCOME - - SUMMARY INFORMATION
---------------------------------------------------------
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------------ ------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Gross Revenues $ 28,957 $ 29,648 $ 90,198 $ 90,497
Operating Income $ 2,026 $ 4,351 $ 9,489 $ 15,498
EBITDA (1) $ 5,135 $ 6,503 $ 17,147 $ 21,564
</TABLE>
8
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME - - AS A PERCENTAGE OF GROSS REVENUES
-----------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
---------
Casino 97.4% 97.5% 97.5% 97.6%
Food and beverage 1.7% 1.6% 1.6% 1.6%
Other 0.9% 0.9% 0.9% 0.8%
----- ----- ----- -----
Gross Revenues 100.0% 100.0% 100.0% 100.0%
less promotional allowances (0.4)% (0.3)% (0.3)% (0.3)%
Net Revenues 99.6% 99.7% 99.7% 99.7%
Costs and Expenses:
-------------------
Casino 22.3% 17.2% 20.7% 16.9%
Gaming and admission taxes 27.7% 27.5% 27.4% 27.4%
Food and beverage 2.2% 2.1% 2.0% 2.1%
Advertising and promotion 7.2% 7.8% 7.0% 6.2%
General and administrative 21.3% 20.1% 21.1% 20.3%
Economic incentive-City of Gary 3.0% 3.0% 3.0% 3.0%
Depreciation and amortization 7.9% 7.3% 7.6% 6.7%
Loss on disposition of assets 1.0% -- 0.4% --
----- ----- ----- -----
Total 92.6% 85.0% 89.2% 82.6%
Operating Income: 7.0% 14.7% 10.5% 17.1%
-----------------
Other Income (Expense):
-----------------------
Loss on investment in BHR (2.6)% (2.4)% (2.4)% (2.3)%
Interest income 0.9% 0.6% 0.7% 0.6%
Interest expense (12.6)% (13.0)% (12.4)% (12.8)%
Interest expense to affiliate -- -- -- (0.2)%
Other non-operating expense (0.1)% -- (0.1)% --
----- ----- ----- -----
Total (14.4)% (14.8)% (14.2)% (14.7)%
----- ----- ----- -----
Net income(loss) before
extraordinary item (7.4)% (0.1)% (3.7)% 2.4%
Extraordinary Item:
-------------------
Loss on bond redemption -- -- (0.4)% (16.8)%
Net Income (Loss): (7.4)% (0.1)% (4.1)% (14.4)%
------------------ ----- ----- ----- -----
EBITDA: (1) 17.7% 21.9% 19.0% 23.8%
-------
</TABLE>
NOTE:
-----
1. 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. In particular, the Company believes that an
analysis of EBITDA enhances the understanding of the financial
performance of companies with substantial depreciation and
amortization.
Results for any one or more periods are not necessarily indicative of annual
results or continuing trends.
Comparison of the Three Months Ended September 30, 2000 and 1999
Gross revenues for the three months ended September 30, 2000, amounted to
approximately $28,957,000, a decrease of approximately $691,000 from gross
revenues recorded in the third quarter ended September 30, 1999. The 2.3%
decrease in gross revenues was primarily attributable to a
9
<PAGE>
decrease in casino revenues as a result of a 12.1% decline in the table drop and
a decrease in the table hold to 14.7%.
Casino revenues during the three months ended September 30, 2000, totaled
approximately $28,203,000, of which slot machines accounted for approximately
$23,343,000 (82.8%) and table games accounted for approximately $4,860,000
(17.2%). The average number of slot machines in operation increased to 1,447
during the three months ended September 30, 2000, from 1,421 during the three
months ended September 30, 1999. The coin-in increased approximately $12,800,000
or 3.9% during the period and the slot hold percent was 6.9% during the three
months ended September 30, 2000 and during the three months ended September 30,
1999. The average win per slot machine per day also increased to approximately
$175 for the three months ended September 30, 2000, from approximately $170
during the three months ended September 30, 1999. The average number of table
games in operation during the three months ended September 30, 2000, decreased
to 54 from 57 during the three months ended September 30, 1999. 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 during the three months ended September 30,
1999. The average daily win per state passenger count was approximately $36 and
the average daily win per patron was approximately $63 during the three months
ended September 30, 2000, compared to an average daily win per state passenger
count of approximately $37 and an average daily win per patron of approximately
$65 for the three months ended September 30, 1999.
Food and beverage revenues for the three months ended September 30, 2000,
totaled approximately $479,000 or 1.7% of gross revenues, compared to
approximately $468,000 or 1.6% of gross revenues for the three months ended
September 30, 1999. Other revenue, consisting primarily of commission income,
totaled approximately $276,000, or 1.0% of gross revenues compared to
approximately $270,000 or 0.9% of gross revenues for the three months ended
September 30, 1999.
Promotional allowances (complementaries) included in the Company's gross food
revenues for the three months ended September 30, 2000, and 1999, were
approximately $110,000 and $87,000, respectively. Promotional allowances
provided to the Company's gaming patrons at facilities located in, and/or owned
by BHR for the three months ended September 30, 2000, and 1999, totaled
approximately $118,000 and $196,000, 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 September 30, 2000, totaled
approximately $6,468,000, or 22.3% of gross revenues and 22.9% of casino
revenues, respectively, compared to approximately $5,100,000, or 17.2% of gross
revenues and 17.6% of casino revenues, respectively, for the three months ended
September 30, 1999. These expenses were primarily comprised of salaries, wages
and benefits, and operating and promotional expenses of the casino. The dollar
increase of $1,368,000 in casino operating expenses is primarily attributed to
approximately $737,000 associated with the slot club cash back program which
resulted in a 12.0% increase in new slot club members, approximately $340,000
associated with increased progressive liability expenses, and approximately
$182,000 for gaming equipment rental.
Gaming and admissions taxes totaled approximately $8,013,000 for the three
months ended September 30, 2000, compared to approximately $8,152,000 for the
three months ended September
10
<PAGE>
30, 1999. 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 $874,000 was paid during the three months ended
September 30, 2000, compared to approximately $900,000 in the three months ended
September 30, 1999, to the City under an agreement whereby the Company pays 3%
of the adjusted gross receipts directly to the City.
Advertising and promotion expenses for the three months ended September 30,
2000, totaled approximately $2,096,000, or 7.2% of gross revenues, compared to
approximately $2,325,000, or 7.8% of gross revenues during the three months
ended September 30, 1999. 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 $229,000 decrease in advertising
and promotion expenses during the three months ended September 30, 2000 was
primarily the result of an overall reduction in marketing expenditures which was
partially offset by an increase in slot club marketing expenditures previously
discussed and classified as casino operating expenses.
General and administrative expenses for the three months ended September 30,
2000, were approximately $6,151,000, or 21.2% of gross revenues, compared to
$5,973,000, or 20.1% of gross revenues, during the three months ended September
30, 1999. These expenses included approximately $1,813,000 for berthing fees
paid to BHR, $1,249,000 for marine operations and $648,000 for security and
surveillance operations during the third quarter of 2000.
Depreciation and amortization for the third quarter ended September 30, 2000,
was approximately $2,284,000, or 7.9% of gross revenues, compared to
approximately $2,152,000, or 7.3% of gross revenues, during the three months
ended September 30, 1999. The $132,000 increase in depreciation and amortization
expense for the three months ended September 30, 2000, is attributable to the
deferred financing costs associated with the issuance of $130.0 million of
10-7/8% Senior Secured Notes, and increased expense associated with machinery
and equipment placed into service during the past year.
In August, 2000, 193 slot machines initially purchased in 1996 and 1997 with a
net book value of approximately $437,000 were sold for approximately $135,000.
The loss on disposal was approximately $302,000.
Operating income for the three months ended September 30, 2000, was
approximately $2,026,000, or 7.0% of gross revenues, compared to $4,351,000, or
14.7% of gross revenues for the three months ended September 30, 1999. The
$2,325,000 or 53.4% decrease in operating income is primarily attributable to
increased expenditures associated with casino operations, general and
administrative, loss on disposition of assets, and increased depreciation and
amortization as previous discussed.
Net interest expense for the three months ended September 30, 2000, was
$3,395,000, or approximately 11.7% of gross revenues, compared to $3,675,000, or
approximately 12.4% for the same period last year. The $280,000 decrease is
principally attributed to the elimination of the Contingent Interest on the
refinanced 12-3/4% Senior Secured Notes and the repayment of the $8.8 million
demand note to Barden Development ("BDI"), an affiliate, both of which occurred
during the second quarter of 1999.
Other non-operating expenses of approximately $26,000 includes fees associated
with the line of credit.
11
<PAGE>
The Company's loss relating to its investment in BHR for the three months ended
September 30, 2000, was approximately $739,000. The loss represents the
Company's 50% share of BHR's non-cash net loss (primarily depreciation and
amortization). Actual costs of approximately $1,813,000 associated with
operating BHR are included in the expense line "General and Administrative".
As a result of the foregoing, the Company experienced net losses of
approximately $2,133,000 and $31,000 during the three months ended September 30,
2000, and 1999, respectively.
Comparison of the Nine Months Ended September 30, 2000 and 1999
Gross revenues for the nine months ended September 30, 2000, amounted to
approximately $90,198,000, a decrease of $299,000 compared to gross revenues
recorded in the nine months ended September 30, 1999. The less than 1% decrease
in gross 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 table hold of 18.7%. The decline in table drop and
revenues was partially offset by a $48.0 million or 4.9% increase in slot
coin-in and a 4.4% increase in slot revenues. Also during the first half of
1999, the riverboat casinos operating in Illinois were required to cruise.
During June 1999, the cruising restrictions were removed in Illinois and the
riverboat casinos operated dockside with unlimited access to patrons.
Casino revenues during the nine months ended September 30, 2000, totaled
approximately $87,950,000, of which slot machines accounted for approximately
$70,594,000 (80.3%) and table games accounted for approximately $17,356,000
(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 the slot hold percent decreased less than 0.04% during the nine months
ended September 30, 2000 compared to the nine months ended September 30, 1999.
The average win per slot machine per day increased to approximately $180 for the
nine months ended September 30, 2000, from approximately $174 during the nine
months ended September 30, 1999. The average number of table games in operation
during the nine months ended September 30, 2000, decreased to 56 from 58 during
the nine months ended September 30, 1999. The table drop decreased 4.0% and the
table hold decreased to 16.5% during the nine months ended September 30, 2000
compared to 18.7% during the nine months ended September 30, 1999. 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 average daily win per state passenger
count was approximately $37 and the average daily win per patron was
approximately $66 during the nine months ended September 30, 2000, compared to
an average daily win per state passenger count of approximately $37 and an
average daily win per patron of approximately $67 for the nine months ended
September 30, 1999.
Food and beverage revenues for the nine months ended September 30, 2000, totaled
approximately $1,469,000 or 1.6% of gross revenues, compared to approximately
$1,436,000 or 1.6% of gross revenues for the nine months ended September 30,
1999. Other revenue totaling approximately $780,000, or 0.9% of gross revenues
for the nine months ended September 30, 2000, consisted primarily of commission
income compared to approximately $738,000 during the nine months ended September
30, 1999.
Promotional allowances (complementaries) included in the Company's gross food
revenues for the nine months ended September 30, 2000, and 1999, were
approximately $302,000 and $226,000,
12
<PAGE>
respectively. Promotional allowances provided to the Company's gaming patrons at
facilities located in, and/or owned by BHR for the nine months ended September
30, 2000, and 1999, totaled approximately $320,000 and $582,000, respectively,
and are characterized in the financial statements as an expense to the casino.
The $262,000 decrease in complementaries provided at BHR operated facilities was
partially offset by a $76,000 increase in complementaries provided on board the
vessel. BHR invoices the Company monthly for these promotional allowances at
cost.
Casino operating expenses for the nine months ended September 30, 2000, totaled
approximately $18,641,000, or 20.7% of gross revenues and 21.2% of casino
revenues, respectively, compared to approximately $15,316,000, or 16.9% of gross
revenues and 17.3% of casino revenues, respectively, for the nine months ended
September 30, 1999. These expenses were primarily comprised of salaries, wages
and benefits, operating and promotional expenses of the casino. The dollar
increase of $3,325,000 in casino operating expenses is primarily attributed to
an increase of approximately $2,093,000 for expenses associated with the slot
club cash back program which has resulted in a 13.0% increase in new slot club
members, approximately $520,000 in payroll and payroll related benefits and
$425,000 for gaming equipment rental (i.e. Wheel of Fortune(R) and Monopoly(R)).
Gaming and admissions taxes totaled approximately $24,705,000 for the nine
months ended September 30, 2000, compared to approximately $24,815,000 for the
nine months ended September 30, 1999. 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 $2,721,000 was paid
during the nine months ended September 30, 2000, compared to approximately
$2,736,000 in the nine months ended September 30, 1999, to the City under an
agreement whereby the Company pays 3% of the adjusted gross receipts directly to
the City.
Advertising and promotion expenses for the nine months ended September 30, 2000,
totaled approximately $6,348,000, or 7.0% of gross revenues, compared to
approximately $5,644,000, or 6.2% of gross revenues during the nine months ended
September 30, 1999. 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 $704,000 or 12.5% increase in
advertising and promotion expenses during the nine months ended September 30,
2000, was primarily the result of a $581,000 increase in costs associated with
junket transportation including charter bus passengers and an increase of
$308,000 in television and radio as part of undertaking an aggressive and
integrated brand image campaign that was conducted during the first and second
quarters of 2000. As discussed in the comparison of the three months ended
September 30, 2000 and 1999, overall marketing costs have declined during the
current quarter compared to the prior year same quarter.
General and administrative expenses for the nine months ended September 30,
2000, were approximately $19,046,000, or 21.1% of gross revenues, compared to
$18,353,000, or 20.3% of gross revenues, during the nine months ended September
30, 1999. These expenses included approximately $5,445,000 for berthing fees
paid to BHR, $3,927,000 for marine operations and $1,933,000 for security and
surveillance operations during the nine months ended September 30, 2000. The
dollar increase of $693,000 in these expenses is primarily attributed to
non-operating expenses associated with development costs and dockside
initiatives.
Depreciation and amortization for the nine months ended September 30, 2000, was
approximately $6,833,000, or 7.6% of gross
13
<PAGE>
revenues, compared to approximately $6,067,000, or 6.7% of gross revenues,
during the nine months ended September 30, 1999. The dollar increase of $766,000
in depreciation and amortization expense for the nine months ended September 30,
1999, is primarily attributable to the increased expense associated with
machinery and equipment placed into service during the past year and
amortization of the debt issue costs associated with the June 1999 issuance of
the 10 7-8% Senior Secured Notes.
Operating income for the nine months ended September 30, 2000, was approximately
$9,489,000, or 10.5% of gross revenues, compared to an operating income for the
nine months ended September 30, 1999 of $15,498,000, or 17.1% of gross revenues.
During the nine months ended September 30, 2000, the Company had a net loss on
the disposition of assets totaling approximately $302,000. The $6,009,000 or
38.8% decrease in operating income is principally attributable to a decrease in
gross revenues of approximately $299,000 and increased expenditures of
approximately $3,325,000 associated with casino operations, approximately
$704,000 associated with marketing, and increased general and administrative
expenses including non-operating expenses and an increase of approximately
$617,000 for depreciation and amortization as previously discussed.
Net interest expense for the nine months ended September 30, 2000, was
$10,489,000, or approximately 11.7% of gross revenues, compared to $11,204,000,
or approximately 12.4% for the same period last year. The $715,000 decrease in
net interest expense is primarily attributed to the refinancing of the 12-3/4%
Senior Secured Notes with Contingent Interest and the repayment of the $8.8
million demand note due to BDI both of which occurred during the second quarter
of 1999.
The Company's loss relating to its investment in BHR for the nine months ended
September 30, 2000, was approximately $2,191,000. The loss represents the
Company's 50% share of BHR's non-cash net loss (primarily depreciation and
amortization). Actual costs of approximately $5,445,000 associated with
operating BHR are included in the expense line "General and Administrative".
As a result of the foregoing, the Company experienced a loss before the
extraordinary item of $3,294,000 and income of $2,183,000 during the nine months
ended September 30, 2000 and 1999, respectively. The Company's loss on the
redemption of its 12-3/4% Senior Secured Notes with Contingent Interest was
approximately $383,000 and $15,238,000 during the nine months ended September
30, 2000 and 1999, respectively. Net losses were approximately $3,676,000 and
$13,055,000 during the nine months ended September 30, 2000, and 1999,
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 during the three and nine month periods ended September 30,
2000 was approximately $5,135,000 and $17,147,000, respectively, or 17.7% and
19.0%, respectively, of gross revenues, compared to approximately $6,503,000 and
$21,564,000, respectively, or 21.9% and 23.8%, respectively, of gross revenues,
during the three and nine month periods ended September 30, 1999. The decrease
respectively, in EBITDA for the three and nine months ended September 30, 2000
is primarily the result of an increase in casino and marketing expenditures
combined with a decrease in the table hold and table drop. EBITDA during the
three months ended September 30, 2000 excludes non-operating expenses associated
with dockside lobbying initiatives, economic development and acquisition
expenses and extraordinary items of $522,000. 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
14
<PAGE>
from operating activities as a measure of liquidity.
Liquidity and Capital Resources
At September 30, 2000, the Company had cash and cash equivalents of
approximately $21.8 million. During the nine months ended September 30, 2000,
the Company's capital expenditures were approximately $2.5 million, which
included approximately $1.4 million for slot machines and other gaming
equipment, $742,000 for furniture, equipment, and vessel improvements, and
$377,000 for computer equipment and software. During the third quarter of 2000,
Barden Development, Inc. ("BDI") repaid loans that the Company had made to BDI
during the second and third quarters of 2000, together with interest at the
annual rate of 10.5%. The Company also made a capital contribution of
approximately $8.7 million to BHR during the third quarter of 2000, and of this
amount approximately $1.2 million was used for general enhancements and $7.5
million was utilized by BHR to make certain advances to Buffington Harbor
Parking Associates ("BHPA") to purchase land previously leased by BHR.
During the quarter ended June 30, 1999, the Company issued $130.0 million of
10-7/8% Senior Secured Notes due 2006, in an exchange offer that was registered
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended. The net proceeds from this offering were used in part to redeem $99.0
million principal amount of the Company's 12-3/4% Senior Secured Notes with
Contingent Interest due 2003. During June 1999, approximately $7.5 million of
net proceeds was classified as restricted cash to effect a covenant defeasance
of the remaining $6.0 million of 12-3/4% Senior Secured Notes. During May 2000,
the Company redeemed this remaining $6.0 million of 12-3/4% Senior Secured
Notes. Holders of the outstanding 10-7/8% Senior Secured Notes due 2006 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.
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 for future development
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
<PAGE>
$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.
The Company has met its capital requirements to date through its cash flow from
operations, capital contributions from its sole member and borrowings from third
parties. For the nine months ended September 30, 2000, net cash provided from
operations totaled approximately $2.6 million. For the nine months ended
September 30, 2000, approximately $10.0 million in cash was used by investing
activities, compared to $3.2 million used by investing activities for the nine
months ended September 30, 1999. Net cash provided by financing activities was
$9.1 million for the nine month period ended September 30, 2000 which included
$4.0 million in loans made to and repaid by BDI, compared to $4.3 million used
by financing activities for the nine month period ended September 30, 1999.
As of September 30, 2000, borrowings included $130.0 million principal amount of
10-7/8% Senior Secured Notes due 2006, and approximately $1.5 million of
equipment financing. The 10-7/8% Senior Secured Notes are secured by
substantially all current and future assets other than certain excluded assets.
In addition, in August 1999, the Company established a $20.0 million credit
facility, which is also secured by substantially all current and future assets
other than to the lien securing the 10-7/8% Senior Secured Notes. During
September 2000, $12.0 million was borrowed on this credit facility, and $1.7
million of these borrowings has been repaid. These borrowings were made to
partially fund the $9.0 million capital contribution to Majestic Investor as
well as the $7.5 million contribution to BHR, as previously discussed.
Management believes that the Company's cash flow from operations, certain
planned equipment financings, and its current line of credit, will be adequate
to meet the Company's anticipated future requirements for working capital, its
capital expenditures and scheduled payments of interest and principal on the
Senior Secured Notes and other permitted indebtedness for the year 2000. No
assurance can be given, however, that such proceeds and, operating cash flow
from the Permanent Vessel, in light of increased competition principally, as a
result of dockside gambling in Illinois and the purchase of certain Indiana
gaming facilities by larger more recognized brand names, will be
16
<PAGE>
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.
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.
There have been no material changes in the legal proceedings previously
described in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999.
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 filed during the nine month period ended September 30,
2000.
17
<PAGE>
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 November 14, 2000.
THE MAJESTIC STAR CASINO, LLC
By: Barden Development Inc., Manager
By: /s/ Don H. Barden
----------------------------------
Don H. Barden
President and Chief Executive Officer
THE MAJESTIC STAR CASINO CAPITAL CORP.
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 November 14,2000
----------------------- Officer of the Manager and the
Don H. Barden Company (Principal Executive Officer)
/s/ Michael E. Kelly Vice President and Chief November 14,2000
----------------------- Operating and Financial Officer
Michael E. Kelly (Principal Financial and
Accounting Officer of the Company)
18
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
27 Financial Data Schedule (Edgar Version Only)
19
