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EXHIBIT 99.1
Slide Presentation from November 13, 2000 presentation by Jefferies & Company
to the Casino Tax Advisory Commission
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SLIDE 1
Presentation Cover sheet
SLIDE 2
Introduction to Jefferies
Jefferies & Company, Inc. is a full service investment banking firm to
middle market growth companies
Expertise in equity, high yield, and convertible underwriting and
trading, as well as research and acquisition finance
Wholly-owned subsidiary of Jefferies Group, Inc., a publicly traded
company (NYSE Symbol: JEF) with market capitalization of approximately
$650 million and over 900 employees in 23 offices internationally
Jefferies Group is rated "investment grade" by Standard & Poor's and
Moody's
SLIDE 3
Introduction to Jefferies (Cont'd)
Extensive experience in Restructuring and Gaming assignments
Recapitalization and Restructuring Group
Restructured nearly $20 billion in liabilities, both in-court and
out-of-court situations, in many industries since 1997, including
recently:
ICO Global Communications - represented Official Creditors Committee
AmeriServe Food Service, Inc. - represented Official Creditors
Committee
Specialty Foods Corporation - represented Company
Kaiser Group International - represented Debtor
Silver Cinemas - represented Debtor
Gaming Group
Completed over $2.4 billion of gaming financings, including recently:
$130 million Senior Secured Notes / The Majestic Star Casino, LLC
(refinancing)
$45 million First Mortgage Notes / Riviera Black Hawk, Inc.
(construction financing)
$55 million Senior Secured Notes / Louisiana Casino Cruises, Inc.
(refinancing)
Trades approximately $1 billion in high yield gaming paper annually
Coverage of every significant gaming jurisdiction in the United States
SLIDE 4
Jefferies' Retention
Retained by JCC Holding Company, Inc. in July 2000 to act as financial
advisor to review, consult and advise JCC regarding its financial
circumstances
Assignment is three-fold:
Analyze JCC's current financial circumstances
Financial Performance
Quality of Operations
Capital Structure
Recommend a plan of action
Facilitate restructuring process
Conclusion
Casino operations reasonably run
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JCC unable to support its current capitalization
Operating restrictions impair financial performance
Tax structure unsupportable and inconsistent with other jurisdictions
SLIDE 5
Due Diligence Process
Jefferies undertook an exhaustive due diligence process in coming to
its conclusions
Jefferies analyzed the Company's financials
Reviewed historical performance
Reviewed projections
Jefferies looked at the quality of operations
Reviewed marketing programs
Performed comparable properties analyses
Interviewed operating management
Jefferies analyzed the capital structure
Reviewed current indebtedness and obligations
Analyzed inadequate cash flow coverage of existing fixed obligations
SLIDE 6
History
Capital Investment (inception through 12/31/00 Estimated)
Total Invested Capital $1,118.5 million
Total Amount Paid to State and City $ 439.3 million
SLIDE 7
Financial Performance
($ in Thousands)
<TABLE>
<CAPTION>
1999 2000
Nov-Dec(1) 1Q 2Q 3Q Total
<S> <C> <C> <C> <C> <C>
Net Revenues.................... $ 40,962 $ 62,613 $ 64,310 $ 70,089 $ 237,975
Operating Expenses.............. 30,109 49,128 44,957 47,985 172,180
State Taxes..................... 17,808 24,932 24,932 25,205 92,877
City Lease Payments............. 3,099 3,826 3,828 3,944 14,697
Guarantee Fee................... 1,000 1,500 1,500 1,500 5,500
Management Fee.................. 1,306 1,987 2,053 2,238 7,583
EBITDA(2)....................... $ (12,360) $ (18,760) $ (12,959) $ (10,783) (54,862)
Contractual Interest............ 6,869 10,712 11,068 11,815 40,464
Cash Flow(3).................... $ (19,229) $ (29,472) $ (24,027) $ (22,598) $ (95,326)
</TABLE>
Includes three days of operations in October 1999.
Earnings before interest, taxes, depreciation and amortization.
Net income plus depreciation and amortization.
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SLIDE 8
Financial Performance
<TABLE>
<S> <C>
Q4 1999
Net Revenues $ 40.9 Million
Cash Flows $(19.2) Million
State Taxes and City Lease Payments $ 20.9 Million
Q1 2000
Net Revenues $ 62.6 Million
Cash Flows $(29.5) Million
State Taxes and City Lease Payments $ 28.7 Million
Q2 2000
Net Revenues $ 64.3 Million
Cash Flows $(24.0) Million
State Taxes and City Lease Payments $ 28.7 Million
Q3 2000
Net Revenues $ 70.1 Million
Cash Flows $(22.6) Million
State Taxes and City Lease Payments $ 29.1 Million
</TABLE>
SLIDE 9
Comparative Analysis
Land-Based Style Casino Markets
($ in Millions)
<TABLE>
<CAPTION>
2000
Estimated Las Vegas Las Vegas Atlantic City Mississippi
JCC Strip Local Casinos Casinos
<S> <C> <C> <C> <C> <C>
Sample Size......................... Average - 9 Average - 8 Average - 6 Average - 14
Net Revenue......................... $264.5 $430.8 $136.0 $446.2 $111.7
EBITDA.............................. (54.9) 112.8 35.1 110.1 23.8
Margin.............................. (20.7)% 26.2% 25.8% 24.7% 21.3%
Gaming Tax.......................... $100.0 $14.3 $7.7 $32.5 $15.6
EBITDAM before Gaming
Taxes and Lease Payments............ 75.3 127.1 42.8 142.6 32.8
Margin.............................. 28.5% 29.5% 31.4% 32.0% 29.3%
Gaming Tax %........................ 40.25% 6.25% 6.25% 9.25% 8.00%
</TABLE>
JCC margin in-line with other land-based style casinos
JCC effective gaming tax rate significantly higher than other jurisdictions
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SLIDE 10
Current Situation
JCC is currently generating insufficient revenues & cash flow to fund
its minimum tax payments & service its debt obligations
Operating trends indicate that this situation is unlikely to materially
change
Harrah's(1) is funding JCC's operations under applicable agreements
Funding additional capital for daily payments to the State pursuant to
a guarantee through March 31, 2001
Deferring receipt of expense allocations and management/guarantee fees
Bank forced purchase of $166.5 million of their debt by Harrah's
pursuant to prior commitments
The interest on JCC's debt continues to be deferred, except for
interest on bank debt which must be paid on a current basis
(1) Herein, Harrah's and Harrah's Entertainment, Inc., refer to, together and
separately, as the case may be, Harrah's Entertainment, Inc., and its
subsidiaries.
SLIDE 11
Current Situation (Cont'd)
JCC, as it is currently configured, is not financially viable
Cannot pay operating expenses
Cannot pay minimum taxes
Cannot service debt
SLIDE 12
Solution
A successful restructuring is necessary and feasible
To be lasting, a restructuring of JCC must:
Provide reasonable payments to the State
Ease operating restrictions
Earn a sufficient return of capital to induce agreement for the
restructuring
Have sufficient liquidity to meet unforeseen contingencies
Provide flexibility for future growth
SLIDE 13
Restructuring Proposal
Plan Specifications
18 1/2% tax rate on gaming revenue with an initial $50 million minimum
tax payment, graduating to $60 million
Louisiana: 18.50% (riverboats)
Nevada: 6.25%
Atlantic City: 9.25%
Mississippi: 8.00%
Colorado: 20.00%
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Missouri: 20.00%
Indiana: 20.00%
Illinois: graduated tax beginning at 15.00%
Two times interest coverage at EBITDA line
Conservative / soundly based business assumptions
This Plan Must Work - there will not be another chance
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Restructuring Proposal (Cont'd)
Plan requires significant changes in current capital structure,
ownership, operating agreement, taxes and operating restrictions
Reduction in HET fees and expenses / compromise of certain other HET
claims
$500 million of debt converted into equity or eliminated
Eliminates current equity holders
Adjustment in terms of remaining debt
Reduction in taxes
Greater of 18 1/2% or $50 million in the 1st year, $55 million in the
2nd year, and $60 million in the 3rd year and beyond
Relief from operating restrictions
SLIDE 15
Restructuring Proposal (Cont'd)
Reduction Schedule
($ in Thousands)
<TABLE>
<CAPTION>
Estimated Pro Forma
Reduction Items 2000 Reduction 2000
<S> <C> <C> <C>
HET Operating Expenses................................. $ 24,463 41.5% $ 14,319
HET Management Fee..................................... 8,409 68.6% 2,645
HET Total........................................ 32,873 48.4% 16,964
State Taxes ........................................... 100,000 50.0% 50,000
</TABLE>
SLIDE 16
Restructuring Proposal (Cont'd)
Reduction Schedule (Cont'd)
Debt Estimated at 3/31/03 $630.0 Million
Pro Forma Debt $120.0 Million
SLIDE 17
Restructuring Proposal (Cont'd)
Pro Forma Allocation of Operating Cash Flows
($ in Thousands)
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<TABLE>
<CAPTION>
2001 Projected 2002 Projected 2003 Projected
$ % $ % $ %
<S> <C> <C> <C> <C> <C> <C>
Pro Forma Operating Profit............. $ 98,529 100.0% $ 108,751 100.0% $ 113,370 100.0%
State Taxes............................ 50,000 50.7% 55,000 50.6% 60,000 52.9%
City Lease Payments.................... 16,375 16.6% 16,000 14.7% 15,500 13.7%
Management Fee......................... 6,154 6.2% 7,105 6.5% 7,238 6.4%
EBITDA................................. 26,000 26.4% 30,645 28.2% 30,632 27.0%
Debt Service - Net Interest............ 10,699 10.9% 9,994 9.2% 8,964 7.9%
Debt Service - Principal............... 5,437 5.5% 13,191 12.1% 12,877 11.4%
Capital Expenditures................... 9,450 9.6% 5,198 4.8% 6,657 5.9%
Working Capital Changes................ 196 0.2% 181 0.2% 2 0.0%
Income Taxes........................... 218 0.2% 2,081 1.9% 2,133 1.9%
Free Cash Flow......................... $ -- 0.0% $ -- 0.0% $ -- 0.0%
</TABLE>
SLIDE 18
Restructuring Proposal (Cont'd)
Pro Forma Allocation of Operating Cash Flows
2001 Operating Profit
---------------------
EBITA (1) 26%
Management Fee 6%
City Payment 17%
State 51%
2002 Operating Profit
---------------------
EBITA (1) 28%
Management Fee 7%
City Payment 15%
State 50%
(1) Available for debt service, capital expenditures, income taxes and working
capital.
SLIDE 19
Process for Implementing Restructuring
Negotiations among all parties - underway
JCC
Harrah's
Banks
Bondholders
State
City
Obtain approval of agreements from Bankruptcy Court
Does not involve interrupting operations
Process can take 90 days
All documents executed and restructuring implemented
