Episode 198 Majestic Star Casinos Gary, IN
Employer incorporation or organization as specified in its charter Identification No.
The Company has no publicly traded equity securities.
The number of shares of common stock issued and outstanding: Not Applicable.
DOCUMENTS INCORPORATED BY REFERENCE: NONE THE MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES A Wholly Owned Subsidiary of Barden Development, Inc.
Business 1 Item 2.
Properties 18 Item 3.
Legal Proceedings 18 Item 4.
Submission of Matters to a Vote of Security Holders 19 PART II Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 19 Item 6.
Selected Consolidated Financial Data 20 Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations 20 Item 7A.
Quantitative and Qualitative Just click for source About Market Risk 41 Item 8.
Financial Statements and Supplementary Data 43 Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 43 Item 9A.
Controls and Procedures 43 Item 9B.
Other Information 43 PART III Item 10.
Directors and Executive Officers of Registrant 44 Item 11.
Executive Compensation 45 Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 47 Item 13.
Certain Relationships and Related Transactions 48 Item 14.
Principal Accountant Fees and Services 49 PART IV Item 15.
Exhibits and Financial Statement Schedules 51 Signatures S-1 i PART I ITEM 1.
BUSINESS GENERAL The Majestic Star Casino, LLC was formed in December 1993 as an Indiana limited liability company.
The Majestic Star Casino, LLC conducts its operations both directly and through its subsidiaries.
In this report, unless indicated otherwise, "Majestic," the "Company," "we," "us," and "our" refer to The Majestic Star Casino, LLC, The Majestic Star Casino Capital Corp.
We own and operate three casino properties, located in Gary, Indiana, "Majestic Star"Tunica County, Mississippi "Barden Mississippi" or "Fitzgeralds Tunica"and Black Hawk, Colorado "Barden Colorado" or "Fitzgeralds Black Hawk".
Our properties collectively contain approximately 3,542 slot machines, 87 table games and 507 hotel rooms Fitzgeralds Tunica only.
Our properties are well established, each having been in operation for at least eight years, and are well situated within significant drive-in gaming markets.
Within each market, we leverage our strong brand names, experienced management, value-oriented amenities and emphasis on slot play to target mid-level gaming customers who overwhelmingly favor slot play.
The Company has been aggressively seeking new growth opportunities in numerous locations for reinvestment of the net proceeds from the sale of Fitzgeralds Black Hawk.
Since many of these new gaming opportunities are still evolving and being analyzed, or are part of a broader bidding process, it is premature to indicate specifically and quantitatively when these opportunities and the investments needed to bring these opportunities to fruition will transpire, if at all.
Reinvestment could also include enhancing or upgrading the facilities and amenities at either Majestic Star or Fitzgeralds Tunica.
The Company continues to evaluate all of its options.
We are indirectly wholly owned and controlled by Don H.
Barden, our Chairman, President and Chief Executive Officer and the sole shareholder of BDI.
Barden has an established track record of operating, developing and acquiring properties in the gaming industry and in other industries.
Our executive offices are located at 301 Fremont Street, 12th Floor, Las Vegas, Nevada 89101, and our telephone number is 702 388-2224.
The information in our website is not part of this report.
RESTATEMENT OF PREVIOUSLY REPORTED AMOUNTS Cash Based Promotional Activities The Company has determined that cash-based promotional activities should be presented as a reduction of gross revenues.
Such cash-based promotional activities had previously been recorded as casino expense.
The restatement has no impact on previously reported consolidated operating income, net income loss or any element of the consolidated balance sheets or consolidated statements of cash flows for any date or period presented.
This restatement has no impact on EBITDA or adjusted EBITDA as previously reported by the Company.
The restatement results from a re-evaluation of the accounting treatment of various cash-based promotional activities during the preparation and audit of the financial statements for the year ended December 31, 2004.
Periodically, the Company offers various cash based learn more here to its casino customers.
Generally these promotions are based upon the rated or tracked play of its customers.
These promotions can range in value and timing, and are offered at the sole discretion of the Company's management.
The Company's cash-based promotional activities are intended to encourage repeat visits to the Company's casinos.
While casino customers are under no obligation to spend the promotional cash in gaming activities at the casino, the customer must be physically present to receive the cash promotional award and the Company's experience shows that the vast majority of customers do engage in gaming activities the same day the cash is received.
The Company has concluded that the payout of cash under these cash-based promotional activities should be treated as a reduction of gross revenues when redeemed, in accordance with Emerging Issues Task Force "EITF" No.
Majestic Star is a riverboat casino located at Buffington Harbor in Gary, Indiana, approximately 23 miles southeast of downtown Chicago.
The riverboat casino is a four-story, 360-foot long vessel with a contemporary design that accommodates approximately 3,000 passengers plus crew.
The casino includes approximately 40,800 square feet of gaming space across three expansive decks, which contain approximately 1,574 slot machines and 47 table games.
In 2004, Majestic Star added an entertainment stage on the second floor of the casino and on the third floor completed the new Don and Mike's Sports Bar, which opened on May 5, 2004.
During the second quarter of 2004, Majestic Star also remodeled its VIP lounge and its high limit table game area and finished construction on an outdoor festival area located adjacent to the 2,000-space covered parking garage at the Buffington Harbor gaming complex.
The festival area provides another entertainment venue to bring people to our gaming facility.
Majestic Star operates from the Buffington Harbor gaming complex, which we share with the Trump Casino and own through a joint venture the "BHR Joint Venture" with Trump Indiana, Inc.
The Buffington Harbor gaming complex is a two-level, 85,410 square foot structure containing Passports World Class Buffet, Koko Taylor's Blues Cafe and three additional food and beverage outlets: Miller Pizza, Harbor Treats and Jackpot Java.
At this time, Buffington Harbor leases the rights to operate these restaurants to third parties and does not operate any of the food and beverage facilities located on its premises.
The Buffington Harbor gaming complex also contains a gift shop, banquet and entertainment facilities, and the recently remodeled VIP lounge, which is available only to Majestic Star's customers.
The Buffington Harbor gaming complex is situated on an approximately 100-acre site, containing a 2,000-space covered parking structure and 2,600 surface parking spaces, and offers valet parking and convenient bus loading and unloading facilities.
On November 22, 2004, Trump Hotels and Casino Resorts, Inc.
Since that time, THCR has been operating as a debtor in possession of its assets and Trump has continued to pay its monthly obligations under the BHR Joint Venture and parking garage lease.
This land is held for future development, which could incorporate various public and privately funded projects.
At this time the City of Gary is constructing a new access road that is a first phase toward developing the 170 acres.
In addition, the new access road will improve access to the Buffington Harbor gaming complex.
Part of the new road will terminate on the second deck of the 2,000 space covered parking garage.
The first phase of the road construction is anticipated to be completed in late spring of 2005.
Fitzgeralds Tunica is located in north Tunica County, Mississippi, approximately 30 miles from downtown Memphis, Tennessee.
Fitzgeralds Tunica has an Irish castle theme and is the focal point of a 50-acre site situated adjacent to the Mississippi River.
Fitzgeralds Tunica is a full-service entertainment destination and our customer base has been increased and diversified by our ability to attract, in addition to local customers, independent travelers, tour-and-travel customers and guests for special events and conventions.
Fitzgeralds Tunica includes a 507-room hotel including 72 suitesan indoor special events center, an indoor swimming pool and a casino offering approximately 1,375 slot machines and 34 table games, two bars, three restaurants read article a gift shop.
Fitzgerald Tunica has 1,264 surface parking spaces, a 411-space covered parking garage and 120 valet parking spaces.
In February 2004, we completed a remodel project to the rooms on the first and third floors of our nine-floor hotel.
The remodel project improved approximately 100 rooms.
During June 2004, the property completed improvements to the second floor of the casino, which includes larger restrooms, enhanced cage and guest service areas and an expanded casino floor that provides space for 90 additional slot machines, which became operational on July 9, 2004.
Also, in August 2 2004, the property installed a new slot player tracking and source system.
This new system has allowed us to install TITO technology, which will make our casino floor operate more efficiently while allowing us to improve guest service, and will provide for more effective marketing toward our casino customers.
Fitzgeralds Black Hawk is located adjacent to the entrance to the downtown gaming area of Black Hawk, Colorado.
Fitzgeralds Black Hawk is approximately 25 miles from Denver.
The casino offers approximately 591 slot machines, 6 table games, a restaurant and a bar.
Fitzgeralds Black Hawk also has a 392-space, all valet parking garage adjacent to the casino.
During 2004, we installed a new exterior sign package and enhanced its slot machine offerings by introducing new penny and multi-denominational slots, and relocated the high limit room to a more favorable area of the casino floor.
OPERATING STRATEGY Our operating strategy is to attract middle market guests by continuing to promote our properties as synonymous with a quality casino experience and personal service at an affordable price.
We intend to accomplish this by continuing to pursue the following principal elements of our strategy: GOOD LOCATIONS IN STRONG DRIVE-IN MARKETS.
Our properties are located in significant drive-in gaming markets, which allows our casino patrons to reach us in short travel times and make repeated trips to our gaming facilities.
Majestic Star is located in, and primarily draws from, the Chicago metropolitan area and is located 23 miles from downtown Chicago.
Majestic Star also attracts drive-in customers dealer cruise hiring casino ship other areas in Illinois, Indiana, and Michigan.
Buffington Harbor has the highest concentration of gaming positions in the Chicago market, offering patrons a total of approximately 4,000 gaming positions.
Fitzgeralds Tunica primarily draws its gaming patrons from the Memphis, Tennessee area and also attracts drive-in customers from Northern Mississippi, Little Rock, Arkansas to the west, southern Missouri to the north and Birmingham and Huntsville, Alabama to the east, as well as regional weekend travelers flying into Memphis.
The Tunica market draws most of its customers from within a 200-mile radius.
We believe our strong gaming brands help attract and retain customers.
We utilize a comprehensive integrated marketing campaign to brand Majestic Star as "THE WINNING PLACE TO PLAY TM " or "THIS IS MY KIND OF PLACE TM " in the Chicago metropolitan area for slot customers from the middle-income segment.
On March 1, 2004, Majestic Star began using Mike Ditka, the former Chicago Bears player and coach, as a celebrity spokesperson to promote, reposition and create better brand awareness of the property.
Our ads with Mike Ditka, along with other messages about Majestic Star, have appeared in all advertising venues including television, radio, print and outdoor media, which we believe has enhanced our slot leadership positioning and improved our market share among Chicago-area gaming facilities.
We intend to utilize these and other similar broad marketing techniques to attract middle-income customers, who we are then able to qualify and target for direct marketing activities.
The Fitzgeralds brand has developed into a nationally recognized gaming brand by using a consistent Irish Luck theme throughout the casinos, hotel, restaurants and bars at our properties.
The Irish Luck theme allows us to capitalize on our belief that every casino guest wants to feel lucky.
The Irish Luck theme incorporates various aspects of Irish folklore, such as leprechauns, horseshoes, four-leaf clovers, the Blarney Stone and a pot of gold at the end of a rainbow.
We believe that Fitzgeralds customers have come 3 to associate the Irish Luck theme and the associated trade dress and Fitzgeralds brand trademarks with strong guest services such as the personal attention and quality product and gaming experience that we seek to provide at both of our Fitzgeralds properties.
STRONG OWNERSHIP AND EXPERIENCED MANAGEMENT.
We are indirectly wholly owned and controlled by Don H.
Barden, our Chairman, President and Chief Executive Officer.
Barden has an established track record of developing, operating, and acquiring properties in the gaming industry.
Barden also has successfully built, owned, and operated numerous businesses in the cable television, international trade, and real estate industries and has owned and operated several radio stations over the past 35 years.
Barden and one of our affiliates, was named "Company of the Year" for 2003 by Black Enterprise magazine.
In addition, in 2004 Mr.
Barden received a Trumpet Award as Entrepreneur of the Year.
Trumpet Awards recognize the achievements of African-Americans and salutes them for their fortitude and persistence.
Further, in 2003, Mr.
We have a proven management team with substantial experience in the gaming industry and with our properties in their respective markets.
In addition, our property general managers and chief financial officer have a combined 111 years of experience in the casino industry.
We emphasize slot machine wagering, which we believe is the fastest growing, most stable and most profitable segment of the casino entertainment business.
The increasing popularity of slot machines is due, in part, to the continuing rapid technological innovation that is resulting in the replacement of older devices with advanced interactive electronic games and ticket-in ticket-out technology "TITO".
As of today, 71% of Majestic Star's slot machines are TITO and we anticipate 88% of our slot machines being TITO by the end of 2005.
In 2003, we installed a new slot player tracking and casino management system at Majestic Star.
These new systems provide us with advanced capabilities of tracking our customers' slot and table game play and allow us to implement new, more effective, promotions that we believe will enhance our revenues and profitability.
At Fitzgerald Tunica, we installed the same casino management system in February 2004 and the same slot player tracking system in June 2004 that are in use at Majestic Star.
These new systems at Fitzgeralds Tunica have allowed us to begin implementing TITO.
We currently have 158 TITO equipped slot machines on our casino floor with the goal of having 540 TITO equipped slot machines by the end of 2005.
In 2004, we invested significantly in newer slot machines, which we believe offer greater variety, higher frequency payouts and https://nycwebdesigner.org/casino/eureka-casino-black-hawk-colorado.html periods of play for our casino customers relative to traditional reel devices.
We continue to videos salsa casino gratis and modify our mix of slot machines to meet the demand of our customers.
As a result of our continued focus on slot play, slot revenues generated approximately 87% of our gaming revenues for the twelve months ended December 31, 2004.
FOCUS ON QUALITY AND SERVICE AT AN AFFORDABLE PRICE.
Our casinos provide a high-quality casino entertainment experience at an affordable price to attract middle market guests.
We believe these middle market guests constitute the largest segment of potential gaming customers whom we can then identify, qualify and target for direct marketing activities.
Our approach to business at our properties focuses on guest service and includes: - friendly employees; - trained hosts to personally assist guests; - quality food and beverages and, at Fitzgeralds Tunica, lodging at a moderate price; - a mix of gaming machines tailored to our customers; and - personal attention through direct mail promotions, targeted incentives and the use of the Majestic Star and Fitzgeralds Cards as part of a frequent player recognition program.
MARKETING and GROWTH STRATEGIES We believe that our future growth is going to be based upon our ability to successfully grow and market to speaking, latest microgaming mobile casinos simply database of casino customers, provide our customers with a superior level of service and value-oriented gaming, hotel Fitzgeralds Tunica onlyfood, beverage and entertainment options.
We will continue other forms of broad based marketing to attract customers to our facilities.
These other forms include television, radio, newspaper and outdoor media.
Our advertising messages are awareness, image and product oriented.
We also emphasize entertainment, events and promotions through different methods of advertising to increase our revenues.
All of our properties are located in regional markets.
Our customers generally live within close proximity to our casinos, and are likely to make frequent trips to our facilities.
Since we operate regionally, database marketing is a key element to encouraging casino customers to make frequent visits to our properties.
But equally as critical is attracting new customers to our casinos so that we can grow our database.
We do this through a combination of promotions, events, product and entertainment marketing.
We use both internal and broad based external media to create awareness of our promotions, events, products and entertainment.
Broad based media includes television, radio, newspaper, internet and outdoor media.
Once we get a customer to try one of our casino facilities, it is important that we get them to sign-up for a Majestic Star or Fitzgeralds player card.
Through our investment in player tracking technology systems, the use of the Majestic Star and Fitzgeralds player card allows us to track individual or combined play at slot machines, table games, as well as food and beverage and hotel expenditures available only at Fitzgeralds Tunica.
The systems allow us to identify players and their gaming preferences and practices and to develop a comprehensive customer database for marketing and guest services purposes.
Our player tracking programs allow us to target our marketing programs to categories of players, including advertising https://nycwebdesigner.org/casino/casino-service-industry-enterprise-new-jersey.html, promotions, tournaments with substantial cash prizes, special group and tour packages, direct mail, and other events and incentives designed to promote customer loyalty and increase repeat business.
Our tracking system also allows us to better tailor our pricing, promotions, gaming machine selection and other guest services to customer preferences.
We currently have an aggregate of over 442,000 active players in our combined Majestic Star and Fitzgeralds databases.
A majestic star casino buffet price element to enhancing our casino revenues and profitability is our continued investment in TITO technology.
We currently have 1,168 or 71% of our slot machines at Majestic Star equipped with TITO technology.
We anticipate having 1,450 or 88% of our slot machines equipped with TITO technology by the end of 2005.
In addition, in 2004 we began installing TITO technology on our slot machines at Fitzgeralds Tunica.
We currently have implemented TITO on 158 slot machines and anticipate having TITO on 540 of the property's nearly 1,400 slot machines by the end of 2005.
We also have invested in a new slot player tracking and marketing system at Fitzgeralds Black Hawk in 2005.
Once implemented, this system will allow us to start installing TITO on selected machines at that property.
TITO will allow us to operate our casino floors more efficiently.
This will allow us to provide greater levels of guest service.
In addition, TITO allows our customers to play their favorite slot machines longer with fewer interruptions.
Finally, TITO confirm. club player casino webplay express the problems of handling coin and tokens.
Our customers will find this advantageous since they will no longer have to carry buckets of coins and tokens to a redemption location.
With TITO, tickets can be redeemed at kiosks conveniently located throughout the casino.
We also continue to invest in amenities and entertainment venues.
super sites remodeling of the Monte Carlo Room, our VIP lounge, and the opening of Don and Mike's Sports Bar are all examples of our investments at Majestic Star.
The property also expanded the entertainment provided to its casino guests by offering acts on the Star Stage and completed construction of an outdoor festival area, which began hosting events in the summer of 2004.
With our Joint Venture Partner, we converted Buffington Harbor's first floor ticketing area into a 600-person banquet and entertainment facility.
These facilities are available for weddings, concerts, fairs, social gatherings, flea markets and other events designed to increase traffic to our casino.
We believe that Majestic Star is one of only two locations in the Chicago market with the capacity to significantly expand its land-based facilities.
We, along with our Joint Venture Partner, own approximately 100-acres at the Buffington Harbor gaming complex.
In addition, on February 11, 2004, we acquired approximately 170 acres of land located adjacent to the Buffington Harbor gaming complex.
We intend to use the land for development opportunities, which may include possible public and private investments.
In 2004, Tunica County opened the Tunica River Front Park adjacent to our Fitzgeralds Tunica property.
In addition, Tunica County constructed a new golf course near the Tunica casinos.
In an effort to increase customer traffic to the Tunica area, Tunica County is expanding its airport into a regional airport.
The airport runway has already been lengthened to accommodate regional jets.
In addition, the airport has recently installed an instrument landing system.
These improvements, and other improvements planned for the future, are intended to expand the Tunica market reach and bring more visitors to the area.
COMPETITION We face intense competition in each of the markets in which our gaming facilities are located.
Many of our competitors have significantly greater name recognition and financial, marketing and other resources than we do.
In addition to regional competitors, we compete with gaming facilities nationwide, including land-based casinos in Nevada and Atlantic City, not only for customers but also for employees.
We also compete, to some extent, with other forms of gaming on both a local and national level, including state-sponsored lotteries, Internet gaming, on- and off-track wagering and card parlors.
In northwest Indiana there are four other casinos that Majestic Star competes with for customers.
In addition there are numerous other casinos in the Chicago area, some of which are in close proximity to Majestic Star.
In Tunica, Mississippi, there are eight other casinos that compete with Fitzgeralds Tunica along with casinos further south in Mississippi and in other states that seek to attract customers from many of the same areas in which we market.
Our competitors continue to make significant capital expenditures in their properties.
During the third and fourth quarter of 2004, the Horseshoe Casino in Hammond, Indiana, added 2,000 spaces to its parking garage, significantly increasing its parking capacity.
Their pavilion will be expanded by 17,000 square feet and will house a new buffet, entertainment lounge and steak house.
The expansion is expected to be completed near the end of 2005.
In Black Hawk, Colorado, the Isle of Capri and Colorado Central Station casinos both owned by Isle of Capri have undertaken significant remodel and expansion projects.
Once completed, Isle of Capri and Colorado Central Station will provide significantly enhanced facilities and products in the Black Hawk market, which could increase competition and negatively impact our Black Hawk operations.
The recent and continued expansion of legalized casino gaming within existing jurisdictions and to new jurisdictions throughout the United States has increased competition faced by us and such competition will continue to increase in the future.
Currently, the award of the tenth casino license in Illinois is being challenged by Illinois state officials.
Currently there are ten casino licenses authorized in Illinois.
Once this matter is resolved, and a new casino operation is allowed to move forward, depending on the location of that casino, it could have a significant impact on the financial performance of our Majestic Star facility.
In addition, a Senate committee in the Illinois legislature approved legislation that would allow three casinos - a publicly owned, land-based casino in Chicago and two riverboat casinos, one in Waukegan and another in Chicago's south suburbs.
The legislation would also raise limits on existing riverboats from 1,200 gaming positions to 2,000 positions.
It is unknown if this legislation will continue to retain its current provisions and become law.
However, if it were to become law in its current form or something similar, then the financial impact to our Majestic Star operation could be significant.
In Indiana, the IGC authorized the establishment of an eleventh casino operation in Orange County, Indiana, which is located over 250 miles south of Gary, Indiana, the site of Majestic Star.
Subsequently, THCR dropped its bid on developing a casino in Orange County.
Other groups that previously competed for the right to operate the casino are 6 now showing renewed interest.
With regard to Mississippi, there are no limits on the number of gaming licenses allowed, and there has been discussion of additional competitors entering the market.
However, no development has occurred on any of these projects.
In Black Hawk, Colorado, the opening of the new road, Central City Parkway, provides an alternative route to Black Hawk through Central City.
As a result of the new route, there has been renewed interest in casino properties in Central City.
This renewed interest could take the form of new or expanded casinos, which would compete directly with our Fitzgeralds Black Hawk operation.
Additionally, if casino gaming were legalized in jurisdictions near our properties, where casino gaming currently is not permitted, we could face additional competition.
For example, our casino in Tunica, Mississippi competes for customers from Memphis, Tennessee and Little Rock, Arkansas, where casino gaming activity is currently prohibited.
However, in the past, Arkansas voters and the Arkansas legislature have considered various proposals to approve casino gaming in Arkansas or slot machines at certain racetracks.
Tennessee passed legislation and commenced a state-sponsored lottery in January 2004.
In addition, there have been efforts in the past to open a casino in Memphis, Tennessee.
Memphis is a primary feeder market for our Tunica facility.
While we believe it unlikely that a casino will open in Memphis, Tennessee, if such an event were to occur or if other casinos should open in our markets or areas that could potentially draw customers from our markets, the Company could experience a material negative impact to its business and financial results.
We are also subject to the competitive effects of consolidation and acquisitions within the gaming industry.
Harrah's and Horseshoe both operate casinos in the northwest Indiana and Tunica markets.
Harrah's also signed a definitive agreement on July 14, 2004 to acquire Caesars Entertainment, Inc.
In connection with the merger, on September 27, 2004, Harrah's agreed to sell Harrah's East Chicago and Harrah's Tunica, and Caesars agreed to sell its Bally's Tunica property to Colony Capital.
In addition, MGM Mirage "MGM" is in the process of acquiring Mandalay Resorts Group.
While it is difficult to determine the actual effects of the acquisitions, the acquisitions will allow both companies to expand their database of players and market share significantly and might help them to recognize operating and administrative synergies within both markets.
In addition, Colony Capital would invest significantly in Capital expenditures and marketing, thus increasing their presence and competition within our markets.
Competition requires us to continually make substantial capital expenditures to maintain and enhance the competitive positions of our properties, including updating slot machines to reflect changing technology, refurbishing rooms and public service areas periodically, replacing obsolete equipment on an ongoing basis and making other expenditures to increase the attractiveness and add to the appeal of our properties.
Because we are highly leveraged, after satisfying our obligations under our outstanding indebtedness, there can be no assurance that we will have sufficient funds to undertake these expenditures or that we will be able to obtain sufficient financing to fund such expenditures.
Our debt instruments limit our capital expenditures on an annual basis, and our ability to incur additional debt.
If we are unable to make adequate expenditures, our competitive position and our results of operations could be materially adversely affected.
EMPLOYEES AND UNIONS As of December 31, 2004, we directly employed approximately 2,081 persons.
As of December 31, 2004, Majestic Star and the BHR Joint Venture employed approximately 1,040 people, motor fashion in detroit 180 of whom are represented by a union.
At Majestic Star, Hotel Employees Restaurant Employees International Union, Local No.
There are also 69 employees at the BHR Joint Venture who are represented by UNITE HERE, Majestic Star and its Joint Venture Partner have begun negotiating a new contract with those employees.
While the Company believes that a new labor agreement will be negotiated and executed, at this time it cannot be determined what terms will be contained in the new contract or when the contract will be voted on by the UNITE HERE click the following article />The Seafarers Entertainment and Allied Trades Union represents 20 employees of Majestic Star under a contract that expires August 2007.
The United Steelworkers of America union represents 18 full and regular-part time slot mechanics at Majestic Star and is currently negotiating a contract with the Company.
An additional 9 employees of the BHR Joint Venture are represented by the International Union of Operating Engineers, Local No.
As of December 31, 2004, 7 Fitzgeralds Tunica and Fitzgeralds Black Hawk employed approximately 1,167 and 313 people, respectively, none of whom are represented by a union.
Management believes that our overall relations with its employees and unions are good.
In recruiting personnel, Majestic Star is obligated, under the terms of an agreement with the City of Gary, to use its best efforts to have an employee base which is comprised of 70% from racial minority groups, 52% females, 67% residents of the City of Gary and 90% residents of Lake County, Indiana.
We believe that our recruitment efforts and programs meet this obligation.
TRADE NAMES, TRADEMARKS AND SERVICE MARKS We utilize a comprehensive integrated marketing campaign to brand Majestic Star as "THE WINNING PLACE TO PLAY TM " or "THIS IS MY KIND OF PLACE TM " for slot customers from the middle-income segment.
We own certain trademarks that are integral to the business and operation of Majestic Star's riverboat gaming facility and the Fitzgeralds Casinos.
For Majestic Star, each of the trademarks, "Majestic Star Casino TM " words and design"Majestic Star TM ," "Club Majestic TM ," "Club Majestic Premier TM ," "Change Your Luck!
TM " and "We've Got Your Slots TM ," each are currently registered in the United States Patent and Trademark Office "PTO".
Applications for registrations have been filed in the PTO for the marks "THE WINNING PLACE TO PLAY" and "THIS IS MY KIND OF PLACE.
We own proprietary rights in registered and common law trade names, trademarks and service marks used in connection with the business and created to enhance the Irish Luck theme and gaming activities, including the marks "Fitzgeralds R ," "Fitz R ", and "Get Reel Lucky R ".
Following the Fitzgeralds acquisition, and under a license from us, Fitzgeralds Reno, Inc.
In addition, Fitzgeralds Reno may assign the license to the first purchaser of the casino in Reno; however, any other assignment requires our prior written consent.
We retained all other rights to the Fitzgeralds name and all Fitzgeralds trademarks, service marks and trade dress for use in connection with Fitzgeralds Tunica and Fitzgeralds Black Hawk.
In connection with any use of the Fitzgeralds name, the terms of the license require Fitzgeralds Gaming Corporation to comply with certain requirements, including operating any casino property using the Fitzgeralds name in accordance with our current operating standards.
In connection with the spin-off of Barden Nevada, we entered into a license with Barden Nevada to allow Barden Nevada the right to use the name "Fitzgeralds R " in connection with its operation of that property.
In connection with that certain Asset Purchase Agreement by and between Barden Colorado Gaming, LLC and Legends Gaming, LLC "Legends" dated as of July 12, 2004, Majestic Investor Holdings, LLC "MIH" agreed to enter into a License Agreement with Legends to be effective at the closing of the Asset Purchase Agreement, pursuant to which MIH will grant Legends an exclusive right and license to use and exploit certain trade names, trademarks and service marks collectively, the "Marks"solely in connection with the ownership, development, operation, management and promotion of Fitzgeralds Black Hawk, subject to the terms and conditions set forth in the License Agreement.
The license will have an initial term of ninety-nine 99 years, and in the event the initial term has not been terminated prior to its expiration, the term will automatically renew for an additional ninety-nine 99 years.
Except as otherwise permitted in the License Agreement, Legends may not adopt or use, without MIH's prior written consent, any variation of the Marks and agrees that it will operate and promote Fitzgeralds Black Hawk in accordance with quality standards as defined in the License Agreement.
Under certain defined circumstances, Https://nycwebdesigner.org/casino/casino-nebraska-map.html will have the right of first refusal to purchase the Marks for fair market value.
Legends may also effectuate one assignment of its rights under the License Agreement to any entity that owns and operates Fitzgeralds Black Hawk without the prior consent of MIH.
Any further assignments to non-affiliated successor owners of Fitzgeralds Black Hawk may be made only with the prior written consent of MIH.
The Company may incur material liability if contamination is discovered on any of its properties either during the course of future development or in connection with the properties designated for investigation or remediation, as discussed below.
The Study Area includes numerous specifically identified areas of mine tailings here other waste piles caused by historical mining activity in the area, which areas are the subject of ongoing investigation and clean-up by the EPA and the Colorado Department of Public Health and Environment "CDPHE".
CERCLA addresses remediation of sites from which there has been a release or threatened release of hazardous substances and authorizes the EPA to take any necessary response actions at Superfund sites, including requiring potentially responsible parties "PRPs" to clean up or contribute to the clean up of a Superfund site.
PRPs are broadly defined under CERCLA, and include past and present owners and operators of a site.
CERCLA imposes strict liability on PRPs, and courts exactly link it rich casino thanks commonly held PRPs to be jointly and severally liable for all remediation costs.
Fitzgeralds Black Hawk is not within any of the specific areas of the Study Area currently identified by the EPA and CDPHE for investigation or remediation.
The property on which the Fitzgeralds Black Hawk casino is situated was not a historical mining site but rather was the location for a general store.
The parking complex for the casino and an adjacent vacant lot, however, are situated near a historical milling area.
To date no remediation requirements have been recommended or required with regard to any portion of the property, although test borings would likely be required in connection with any future construction on the expansion parcel of the property.
Based on the assessments to date, we are not aware of any environmental problems affecting Fitzgeralds Black Hawk, which are likely to result in material costs to us.
No assurance can be ljubljana casino central, however, that environmental problems will not subsequently be discovered.
Furthermore, the EPA or other governmental authorities could broaden their investigations and identify areas of concern within the site, we could be identified as a PRP, and any liability related thereto could have a material adverse effect on us.
The 170 acres of land the "Land" acquired by Majestic Star on February 11, 2004 also contains areas with environmental issues.
Within the Land, there are areas that have been remediated or are in the process of remediation.
The City of Gary has been and continues to be responsible for remediation of all of the Land, and has agreed to indemnify the Company, by assignment through GNC, from and against any liability, obligation or expense, including attorney and consultant fees, arising out of or in connection with the environmental condition of the Land.
FINANCIAL INFORMATION ABOUT SEGMENTS For financial information regarding the Company's business segments, see Note 17 of the Notes to Consolidated Financial Statements.
SEASONALITY The gaming operations of the Company's properties are seasonal and, depending on the location and other circumstances, the effects of such seasonality could be significant.
The properties' results are affected by inclement weather in relevant markets.
For example, because of the climate in the Chicago metropolitan area, Majestic Star's operating revenues are expected to be stronger during the period from May through September.
Fitzgeralds Black Hawk, located in the Rocky Mountains of Colorado, is subject to snow and icy road conditions during the winter months.
Any such severe weather conditions may discourage potential customers from visiting the Fitzgeralds Black Hawk facilities.
At Fitzgeralds Tunica and Fitzgeralds Black Hawk, business levels are typically weaker from Thanksgiving through the end of the winter and typically stronger from mid-June to mid-November.
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.
Because of the spin-off of Barden Nevada, we are no longer subject to Nevada gaming licensing and regulatory control except that we must periodically report on our gaming operations outside of Nevada to the Nevada gaming regulators.
The following is a summary of the provisions of the laws and regulations applicable to the Company's gaming operations and other laws and regulations applicable to the Company as a registered holding company in Mississippi.
The summary does not purport to be a full description thereof and is qualified in its entirety by reference to such laws and regulations.
Indiana Gaming Regulation The ownership and operation of Majestic Star is subject to regulation by the State of Indiana.
In 1993, the State of Indiana passed the Riverboat Gambling Act that created the Indiana Gaming Commission the "IGC".
The IGC is given extensive powers and duties for the purposes of administering, regulating and enforcing riverboat gaming in Indiana.
The IGC has jurisdiction and supervision over all riverboat gaming operations in Indiana and all persons on riverboats where gaming operations are conducted.
These powers and duties include authority to i investigate all applicants for riverboat gaming licenses, ii select licensees from competing applicants, iii establish fees for licensees and iv prescribe all forms used by applicants.
The IGC is authorized to adopt rules for administering the gaming statute and the conditions under which riverboat gaming in Indiana may be conducted.
The IGC may suspend or revoke the license of a licensee or impose civil penalties, in some cases without notice or hearing, for any act in violation of the Riverboat Gambling Act or for any fraudulent act.
The Riverboat Gambling Act requires an extensive disclosure of records and other information concerning an applicant, including disclosure of all directors, officers and persons holding a five percent or more direct or indirect beneficial interest in an applicant.
In determining whether to grant or renew an owner's license to an applicant, the IGC considers a number of factors, including i the character, reputation, experience and financial integrity of the applicant, ii the facilities or proposed facilities for the conduct of riverboat gaming, iii the prospective revenue to be collected by the state from the conduct of riverboat gaming, iv the good faith affirmative action plan to recruit, train and upgrade minorities in all employment classifications, v the financial ability of the applicant to purchase and maintain adequate liability and casualty insurance, vi whether the applicant has adequate capitalization to provide and maintain the riverboat for the duration of the license and vii the extent to which the applicant meets or exceeds other standards adopted by the IGC.
The IGC may also give favorable consideration to applicants for read more depressed areas and applicants who provide for significant development of a large geographic area.
A gaming license is a revocable privilege and is not a property right.
An owner's initial license expires five years after the effective date of the license unless earlier terminated or revoked and may be renewed for one-year periods by the IGC upon satisfaction of certain statutory and regulatory requirements.
While the IGC reserves the right to investigate riverboat licensees at any time it deems necessary, after the expiration of the initial license, each riverboat licensee must undergo a complete reinvestigation every three years.
In June 1996, Majestic Star obtained its initial gaming license from the IGC and has renewed it annually since.
In June 2001 and 2004, Majestic Star underwent its requisite three-year reinvestigations satisfactorily.
Majestic Star's current license will remain valid until June 2005.
A riverboat owner's license and operating contract entitle the licensee or the operating agent to operate one riverboat.
In May 2003, the Riverboat Gambling Act was amended to allow a person to hold up to one hundred percent of up to two individual riverboat's licenses.
If a riverboat licensee or the operating agent is a publicly traded corporation, its articles of incorporation must contain language concerning transfer of ownership, suitability determinations and possible divestiture of ownership.
Riverboat licensees and operating agents may be subject to fines, suspension or revocation of its owner's license or operating contract for any conduct that violates the Act, rules promulgated thereunder or that constitutes a fraudulent act.
Additionally, the IGC is authorized to license suppliers and certain occupations related to riverboat gaming.
Gaming equipment and supplies customarily used in conducting riverboat gaming may be purchased or leased only from licensed suppliers.
By rules promulgated by the IGC, riverboat licensees, who employ non-licensed individuals in positions requiring licensure or who purchase supplies from a non-licensed entity, may be subject to a disciplinary action.
A riverboat licensee may not enter into or perform any contract or transaction in which it transfers or receives consideration that is not commercially reasonable or that does not reflect the fair market value of goods and services rendered or received.
All contracts are subject to disapproval by the IGC and contracts should reflect the potential for disapproval.
The Act places special emphasis on minority and women business enterprise participation in the riverboat industry.
Riverboat licensees and operating agents must establish goals of expending ten percent of the total dollars spent on goods and services with minority business enterprises and five percent with women business enterprises.
Each riverboat licensee is required to submit annually to the IGC a report that includes the total dollar value of contracts awarded for goods and services and the percentage awarded to minority and women's business enterprises.
The IGC may suspend, limit or revoke an owner's gaming license or impose a fine for failure to comply with these statutory requirements.
The Company has compiled and submitted unaudited reports for the calendar year ended December 31, 2004, which the Company believes demonstrate it has met these statutory requirements.
Under IGC regulations, minimum and maximum wagers on games are left to the discretion of the licensee.
Wagering is required to be conducted with tokens, chips or electronic cards instead of cash or coins.
Majestic Star commenced dockside gaming on August 5, 2002.
In connection with dockside operations, Indiana imposed a graduated wagering tax based upon adjusted gross receipts.
By statute enacted in 2003, riverboats had to commence utilization of the graduated tax rate on July 1, 2002, even though dockside operations at Majestic Star did not commence until August 5, 2002.
The statute further allowed Indiana riverboats to pay the difference in the tax liability in two installments, one due in 2003 and the second in 2004.
Prior to July 1, 2002, Indiana gaming taxes were levied on adjusted gross receipts, as defined by Indiana gaming laws, at the rate of 20%.
Pursuant to legislation enacted in 2003, riverboats may now operate 24 hours per day.
Majestic Star commenced 24-hour operations on July 12, 2003.
Riverboats licensed by the IGC are assessed as real property for property tax purposes and, thus, are taxed at rates determined by local taxing authorities.
All Indiana state excise taxes, use taxes and gross retail taxes apply to sales made on a riverboat.
Majestic Star is currently seeking a waiver from the IGC on the bond requirement.
The riverboat licensee and the operating agent must carry insurance in types and amounts as required by the IGC.
The IGC has also promulgated a rule mandating Riverboat Licensees to maintain a cash reserve to protect patrons against defaults in gaming debts.
The cash reserve is to be equal to a Riverboat Licensee's average payout for a three-day period based on the riverboat's performance the prior calendar casino rivers philadelphia />The cash reserve can consist of cash on hand, cash maintained in Indiana bank accounts and cash equivalents not otherwise committed rivers casino schenectady human resources phone number obligated.
We are in compliance with the cash reserve requirement.
The Company and its affiliates are subject to restrictions on the incurrence of debt.
A riverboat licensee and its affiliates may enter into debt transactions that total one million dollars or more only with the prior approval of the IGC.
Such approval is subject to compliance with request procedures and a showing that each person with whom the riverboat licensee and its affiliates enters into a debt transaction would be suitable for licensure under the Act.
Pursuant to legislation adopted in May 2003, the IGC adopted rules to establish and implement a voluntary exclusion program that requires, among other things, 1 that persons who participate in the voluntary exclusion program be included on a list of persons excluded from all Indiana riverboats, 2 that persons who participate in the voluntary exclusion program may not seek re-admittance to Indiana riverboats, 3 Riverboat Licensees and Operating Agents must make reasonable efforts, as determined by the IGC, to cease all direct marketing efforts to a person participating in a voluntary exclusion program, and 4 a Riverboat Licensee or Operating Agent may not cash a check of, or extend credit to, a person participating in the voluntary exclusion program.
The voluntary exclusion program does not preclude a Riverboat Licensee or Operating Agent from seeking payment of a debt accrued by a person before entry into the voluntary exclusion program.
The Mississippi Gaming Control Act the "Mississippi Act" legalized dockside casino gaming in Mississippi.
The Mississippi Commission has adopted regulations that provide the framework and requirements for casino operations in Mississippi.
The regulations are subject to amendment and interpretation by the Mississippi Commission.
Changes in Mississippi laws or regulations may limit or otherwise materially affect the types of gaming that may be conducted and such changes, if enacted, could have an adverse effect on us and our business, financial condition and results of operations.
In recent years, certain anti-gaming groups proposed for adoption through the initiative and referendum process certain amendments to the Mississippi Constitution, which would prohibit gaming in the state.
The proposals were declared illegal by Mississippi courts.
If another such proposal were to be offered and if a sufficient number of signatures were to be gathered to place a legal initiative on the ballot, it is possible for the voters of Mississippi to consider such a proposal in November of 2006.
While we are unable to predict whether such an initiative will appear on a ballot or the likelihood of such an initiative being approved by the voters, if such an initiative were passed and gaming were prohibited in Mississippi, it would have a significant adverse effect on us and our business, financial condition and results of operations.
Currently, dockside gaming is permissible in nine of the fourteen eligible counties in the State of Mississippi and gaming operations have commenced in seven counties.
Under Mississippi law, gaming vessels must be located on the Mississippi River or on navigable waters in eligible counties along the Mississippi River, or in the waters lying south of the counties along the Mississippi Gulf Coast.
Fitzgeralds Tunica is located on barges situated in a specially constructed basin near the Mississippi River.
In the past, whether basins such as the one in which the Fitzgeralds Tunica casino barges are located constituted "navigable waters" suitable for gaming under Mississippi law was a controversial issue.
The Mississippi Attorney General issued an opinion in July 1993 addressing legal locations for gaming vessels under the Mississippi Act, and on May 24, 1993, the Mississippi Commission approved the location of the casino barges on the Fitzgeralds Tunica site as legal under the opinion of the Mississippi Attorney General.
Since 1993, the Mississippi Commission has issued or renewed licenses to Fitzgeralds Tunica on several separate occasions.
We believe that Fitzgeralds Tunica is in compliance with the Mississippi Act and the Mississippi Attorney General's "navigable waters" opinion.
However, no assurance can be given that a court would ultimately conclude that our Fitzgeralds Tunica barges are located on navigable waters within the meaning of Mississippi law.
If the basin in which our Fitzgeralds Tunica casino barges are presently located were not deemed navigable waters within the meaning of Mississippi law, such a decision would have a material adverse effect on us and our business, financial condition and results of operations.
The Mississippi Act permits unlimited stakes gaming on permanently moored vessels on a 24-hour basis and does not restrict the percentage of space, which may be utilized for gaming.
The Mississippi Act permits substantially all traditional casino games and gaming devices.
Only persons who are 21 years of age or older may wager on games in the state of Mississippi.
We and any subsidiary of ours that owns or operates a casino in Mississippi a "Gaming Subsidiary" are subject to the licensing and regulatory control of the Mississippi Commission.
Each of the Company, Majestic Investor, LLC "Investor"Majestic Investor Holdings and BDI have registered under the Mississippi Act as either a publicly traded corporation a "Registered Corporation" or a holding company of Barden Mississippi Gaming, LLC "Barden Mississippi"the owner and operator of Fitzgeralds Tunica, a licensee of the Mississippi Commission.
BDI, the Company, Investor and Majestic Investor Holdings, as registered holding companies or publicly traded corporations, and Barden Mississippi, as a gaming licensee, are required to submit detailed financial, operating and other reports to the Mississippi Commission and furnish any other information that the Mississippi Commission may require.
If we are unable to continue to satisfy the registration requirements of the Mississippi Act, we, any of our related registered holding companies or publicly traded corporations and Barden Mississippi cannot own or operate gaming facilities in Mississippi.
No person may become a stockholder of or receive any percentage of profits from a licensed subsidiary of a registered holding company or publicly traded corporation without first obtaining licenses and approvals from the Mississippi Commission.
While we have received such approvals in connection with the licensing of Barden Mississippi, no assurance can more info given that we will continue to receive such approvals in the future.
Barden Mississippi must maintain its gaming license from the Mississippi Commission in order to continue to operate a casino in Mississippi.
Such licenses are issued by the Mississippi Commission subject to certain conditions, including continued compliance with all applicable state laws and regulations.
There are no limitations on the number of gaming licenses, which may be issued in Mississippi.
Gaming licenses require the payment of periodic fees and taxes, are not transferable, are issued for a three-year period and may be continued for two additional three-year periods and must be renewed periodically thereafter.
Barden Mississippi's current gaming license expires in December of 2007.
There can be no assurance that any subsequent application for a license will be approved.
We believe that we have obtained, applied for or are in the process of applying for all necessary findings of suitability with respect to the companies, although the Mississippi Commission, in its discretion, may require additional persons to file applications for findings of suitability.
In addition, any person having a material relationship or involvement with us may be required to be found suitable, in which case those persons must pay the costs and fees associated with such investigation.
The Mississippi Commission may deny an application for a finding of suitability for any cause that it deems reasonable.
Changes in certain licensed positions must be reported to the Mississippi Commission.
In addition to its authority to deny an application for a finding of suitability, the Mississippi Commission has jurisdiction to disapprove a change in any person's corporate position or title and such changes must be reported to the Mississippi Commission.
The Mississippi Commission has the power to require us, BDI, Investor, Majestic Investor Holdings and Barden Mississippi to suspend or dismiss officers, directors, managers, members and other key employees or sever relationships with other persons who refuse to file appropriate applications or whom the authorities find unsuitable to act in such capacities.
There can be no assurance that such persons who have filed or will be required to file applications for findings of suitability will be found suitable by the Mississippi Commission.
Determinations of suitability or questions pertaining to licensing are not subject to judicial review in Mississippi.
Substantially all material loans, leases, sales of securities and similar financing transactions by a Registered Corporation or a gaming subsidiary must be reported to or approved by the Mississippi Commission.
A Gaming Subsidiary may not make a public offering of its securities, but may pledge or mortgage casino facilities.
A Registered Corporation may not make a public offering of its securities without the prior approval of the Mississippi Commission if any part of the proceeds of the offering is to be used to finance the construction, acquisition or operation of gaming facilities in Mississippi or to retire or extend obligations incurred for those purposes.
Under the regulations of the Mississippi Commission, Barden Mississippi may not guarantee a security issued by us or any other affiliated company pursuant to a public offering, or pledge the assets of Barden Mississippi to secure payment or performance of the obligations evidenced by the security issued by the affiliated company, without the prior approval of the Mississippi Commission.
A pledge of the equity securities of a gaming licensee and the foreclosure of such a pledge are ineffective without the prior approval of the Mississippi Commission.
Moreover, restrictions on the transfer of an equity security issued by a Mississippi gaming licensee or a registered holding company and agreements not to encumber such securities are ineffective without the prior approval of the Mississippi Commission.
Changes in control of BDI, the Company, Investor, Majestic Investor Holdings or Barden Mississippi, whether through merger, consolidation, acquisition of assets, management or consulting agreements or any act or conduct by a person by which he or she obtains control, may not occur without the prior approval of the Mississippi Commission.
Entities seeking to acquire control of one or more of these companies must satisfy the Mississippi Commission in a variety of stringent standards prior to assuming control of any such company.
The Mississippi Commission may also require controlling stockholders, officers, directors, and other persons having a material relationship or involvement with the entity proposing to acquire control, to be investigated and licensed as part of the approval process relating to the transaction.
None of BDI, the Company, Investor, Investor Holdings or Barden Mississippi may engage in gaming activities in Mississippi while also conducting gaming operations outside of Mississippi without approval of the Mississippi Commission.
The Mississippi Commission may require determinations that, among other things, there are means for the Mississippi Commission to have access to information concerning the out-of-state gaming operations of our affiliates and us.
We have received a waiver of foreign gaming approval from the Mississippi Commission for our gaming operations in Indiana and Colorado.
We will be required to obtain the approval or a waiver of such approval from the Mississippi Commission prior to engaging in any additional future gaming operations outside of Mississippi.
There can be no assurance that any such approvals will be obtained.
In addition, we, BDI, Investor, Majestic Investor Holdings, Barden Mississippi and the persons involved could be subject to substantial fines for each separate violation.
Because of such a violation, the Mississippi Commission could attempt to appoint a supervisor to operate the casino facilities.
Limitation, conditioning or suspension of any gaming license or approval or the appointment of a supervisor could and revocation of any gaming license or approval would materially adversely affect us and our business, financial condition and results of operations.
License fees and taxes are computed in various ways depending on the type of gaming involved and are payable to the State of Mississippi and to the counties and cities in which a Gaming Subsidiary's operations are conducted.
Depending upon the particular fee or tax involved, these fees and taxes are payable either weekly, monthly, quarterly or annually.
Gaming taxes are based upon: - a percentage of the gross gaming revenues received by the codigo de bonus tropez operation; - the number of gaming devices operated by the casino; or - the number of table games operated by the casino.
The foregoing license fees paid by Barden Mississippi are allowed as a credit against Barden Mississippi's Mississippi income tax liability for the year paid.
The gross revenue fee imposed by Tunica County equals approximately four percent of the gaming receipts.
Colorado Gaming Regulation Colorado legalized limited gaming by constitutional amendment approved by Colorado voters on November 6, 1990.
The Colorado legislature thereafter enacted the Limited Gaming Act of 1991 the "Colorado Act" to implement the provisions of the constitutional amendment, and limited gaming commenced in Colorado on October 1, 1991.
The Colorado Act authorizes limited gaming only in certain designated commercial districts of Central City, Black Hawk and Cripple Creek, Colorado.
Limited gaming consists of poker, blackjack and slot machines, all with maximum single bets of five dollars.
Only persons aged 21 or older may participate in limited gaming, and limited gaming and the sale of alcoholic beverages are prohibited between the hours of 2:00 a.
Limited gaming is only allowed on premises licensed for that purpose, and the licensed premises of any building may not exceed 35% of the square footage of the building and no more than 50% of any floor of such building.
There is no limitation on the size of any structure or total square footage devoted to limited gaming.
Pursuant to the Colorado Act and the rules and regulations promulgated thereunder collectively, the "Colorado Gaming Regulations"the ownership and operation of limited gaming facilities in Colorado, however acquired, are subject to extensive regulation.
The Colorado Act created the Division of Gaming the "Colorado Division" within the Colorado Department of Revenue and the Colorado Limited Gaming Control Commission the "Colorado Gaming Commission" to license, implement, regulate, and supervise the conduct of limited gaming.
The Director of the Colorado Division the "Colorado Director"under the general supervision of the Colorado Gaming Commission, is granted broad powers to ensure compliance with the Colorado Act and the rules.
The first three licenses require annual renewal by the Colorado Gaming Commission.
Support and key employee licenses are issued for two-year periods and are renewable by the Division Director.
The license renewal process requires that the Colorado Division re-certifies to the Colorado Gaming Commission that the licensee continues to operate in compliance with all statutes, rules and regulations governing the conduct of casino gaming in Colorado and continues to be of good moral character and fitness.
The Colorado Gaming Commission has broad discretion to condition, suspend for up to six months, revoke, limit or restrict a license at any time and also has the authority to impose fines.
A retail gaming license is required for all persons conducting limited stakes gaming on their premises.
In addition, an operator license is required for all persons who engage in the business of placing and operating slot machines on the premises of a retailer.
However, a retailer is not required to hold an operator license.
No person may have an ownership interest in more than three retail licenses.
The operator and retail gaming licenses for Fitzgeralds Black Hawk were renewed by the Colorado Gaming Commission for a one-year period in September 2004.
The Colorado Act requires that every officer, director, and stockholder of private corporations or equivalent office or ownership holders for non-corporate applicants, and every officer, director or stockholder holding either a 5% or greater interest or controlling interest of a publicly traded corporation or owners of an applicant or licensee, shall be a person of good moral character and submit to a full background investigation conducted by the Colorado Division and the Colorado Gaming Commission.
The Colorado Gaming Commission may require any person having an interest in a license or a licensee to undergo a full background investigation and pay the cost of investigation in the same manner as an applicant.
Limited disclosure forms are required of those persons holding any equity interest in a non-publicly traded applicant.
In addition, all persons loaning monies, goods, or real or personal property to a licensee or applicant, or having any interest in a licensee or applicant, or entering into any agreement with a licensee or applicant, must provide any information requested by the Colorado Division or Colorado Gaming Commission, and at the discretion of the Colorado Division or the Colorado Gaming Commission, these persons must supply all information relevant to a determination of any such person's suitability for licensure and must submit to a full background investigation if ordered by the Colorado Gaming Commission.
Failure to promptly provide all information requested, or to submit to a suitability or background investigation, may result in the denial of a license application, suspension or revocation of an existing license, termination of any lease, note arrangement, or agreement between the applicant or licensee and the person requested to provide the information, and other sanctions.
Investigations for suitability, background, or any other reason may delay a license application or the operation under any agreement with a licensee.
All agreements, contracts, leases or arrangements in violation of the Colorado Act or the rules are void and unenforceable.
Persons found unsuitable by the Colorado Gaming Commission may be required immediately to terminate any interest in, association or agreement with, or relationship to a licensee.
A finding of unsuitability with respect to any officer, director, employee, associate, lender or beneficial owner of a licensee or applicant may also jeopardize the licensee's license or applicant's license application.
Licenses may be conditioned upon termination of any relationship with unsuitable persons.
Books and records must be furnished upon demand to the Colorado Gaming Commission, the Colorado Division and other law enforcement authorities.
The rules also establish extensive playing procedures, standards, requirements and rules of play for poker, blackjack and slot machines.
Retail gaming licensees must, in addition, adopt comprehensive internal control procedures governing their limited gaming operations.
Such procedures include the areas of accounting, internal fiscal control, surveillance, security, cashier operations, key control, reporting procedures, personnel procedures and fill and drop procedures, among others.
Such procedures must be approved in advance by the Colorado Division.
Licensees are prohibited from engaging in fraudulent acts which include, among other things, misrepresenting the probabilities of pay out, improperly canceling a bet, conducting limited gaming without a valid license and employing an unlicensed person in a position which requires a licensed employee.
Licensees must report to the Colorado Division all licenses and all applications for licenses in foreign jurisdictions.
With limited exceptions applicable to licensees that are publicly traded entities, no person, this web page persons who may acquire an interest in a licensee pursuant to a foreclosure, may sell, lease, purchase, convey or acquire any interest in a retail gaming or operator license or business without the prior approval of the Colorado Gaming Commission.
The State of Colorado has enacted an annual tax on the adjusted gross proceeds "AGP" from limited gaming.
AGP is generally defined as the amounts wagered minus payments to players.
For poker, AGP means those sums wagered on a hand retained by the licensee as compensation.
Currently, the gaming tax on AGP ranges between 0.
The gaming tax is paid monthly, with licensees required to file returns by the 15th of the following month.
dukes casino tokens 7 days to die July 1 of each year, the Colorado Gaming Commission establishes the gaming tax rates for the following 12 months.
Under the Constitution of the State of Colorado, the Colorado Gaming Commission may increase the gaming tax rate to as much as 40% of AGP.
Since July 1, 1999, the Colorado Commission has set a gaming tax rate of 0.
The tax rates were reaffirmed by the Colorado Gaming Commission on June 17, 2004 for the period July 1, 2004 through June 30, 2005.
For the fiscal year starting July 1, 2005, the Colorado Gaming Commission is currently evaluating the tax rates.
There is no assurance that the Colorado Gaming Commission will keep tax rates at their current levels.
The Colorado Gaming Commission also may impose device fees.
Effective July 1, 1999, the Colorado Commission eliminated annual device fees.
Despite the elimination of the annual device fee, casinos are still required to obtain device stamps from the Colorado Division of Gaming and must follow device tracking procedures.
Black Hawk also imposes taxes and fees on other aspects of the businesses of gaming licensees, such as parking, liquor license and other municipal taxes and fees.
It is not unreasonable to expect substantial increases in these fees or the imposition of new taxes and fees.
A violation of the Colorado Act, or any of the rules, is a criminal offense.
Persons violating the Colorado Act or the rules may, in addition to any gaming license suspension or revocation, or administrative fine, be subject to criminal prosecution resulting in incarceration, fines or both.
Treasury Department Regulations The Internal Revenue Code and Treasury Regulations require operators of casinos located in the United States to file information returns for U.
The Internal Revenue Code and Treasury Regulations also require operators to withhold taxes on some keno, bingo, and slot machine winnings of nonresident australia casino guide />On September 26, 2002 FinCEN implemented the suspicious activity-reporting rule.
This reporting obligation requires casinos to report suspicious monetary transactions when the casino knows, suspects, or has reason to suspect that the transaction involves funds derived from illegal activity or is otherwise intended to facilitate illegal activity.
In late April 2004, The Treasury Department began an audit of Fitzgeralds Tunica's compliance with the currency transaction and suspicious activity reporting requirements.
We feel that this audit is routine in nature and not the result of specific reporting requirement violations.
The audit is still in process.
Compliance with Other Laws and Regulations Our operations are also subject to extensive state and local regulations in addition to the regulations described above, and, on a periodic basis, we must obtain various other licenses and permits, including those required to sell alcoholic beverages.
PROPERTIES We own and operate three casino properties, located in Gary, Indiana, Tunica County, Mississippi read article Black Hawk, Colorado.
SUMMARY OF PROPERTY INFORMATION FITZGERALDS MAJESTIC STAR FITZGERALDS TUNICA BLACK HAWK --------------- ------------------ ----------------- Date Opened June 1996 June 1994 May 1995 Gaming Square Feet 40,800 38,088 10,253 Slot Machines 1,574 1,375 agree dr hook calgary deerfoot casino are Table Games 47 34 6 Hotel Rooms -- 435 and prairie band casino room rates opinion -- 72 suites Amenities Buffet Buffet Restaurant Food Court Steak house Bar Restaurant Coffee shop Gift shop 2 bars Ballroom Ballroom Bars Gift shop Parking 2,000 covered 411 covered 392 covered valet 2,600 surface 1,264 surface 300 valet 120 valet ITEM 3.
LEGAL PROCEEDINGS Various legal proceedings are pending against the Company.
Management considers all such pending proceedings, comprised primarily of personal injury and equal employment opportunity EEO claims, to be routine litigation incidental to the Company's business.
Except as described below, 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, results of operations or cash flows.
District Court, Northern District of Indiana on behalf of himself and a class of other similarly situated employees to obtain a maritime lien for back wages for overtime hours worked while employed with Majestic Star plus all other relief to which they may be entitled under the Fair Labor Standards Act "FLSA" and the Maritime 18 Lien Act.
On October 1, 2004, the Company moved to dismiss the complaint for insufficiency of service of process under both the Federal Rules of Civil Procedure and the Supplemental Rules of Civil Procedure relating to Maritime claims.
On November 10, 2004, the Court denied the Company's Motion to Dismiss for insufficiency of service of process; however, it reserved ruling on whether the complaint was properly served under the Supplemental Rules of Civil Procedure relating to Maritime claims.
On November 13, 2004, the plaintiffs moved for leave to amend their complaint to add The Majestic Star Casino, LLC as an additional defendant and on December 3, 2004, moved for leave to file a third amended complaint to add four individuals all of whom had previously filed consents to join the lawsuit as plaintiffs to the action and to add a Fair Labor Standards Act claim against the Company.
On December 30, 2004, the Company filed a Response in Opposition to Plaintiffs' Motion for Leave to File a Second and Third Amended Complaint and Alternatively to Dismiss the Complaint under Rule 12 b 1 and 12 b 6.
The plaintiffs have filed an opposition to the Company's motion to dismiss and the Company has filed a reply in response thereto.
On January 25, 2005, the Magistrate Judge presiding over the case entered an order granting plaintiffs leave to file their third amended complaint, but did not rule on the Company's motion to dismiss.
There could be 23 seamen who qualify for the class.
A pretrial conference has been set for April 25, 2005.
It is too early to determine the likelihood of an unfavorable outcome to the Company.
In December 2002, a complaint was filed in the U.
District Court for the Northern District of Mississippi against Barden Mississippi and the former owner of Fitzgeralds Tunica, alleging violation of Title VII of the Civil Rights Act of 1964 and violation of 42 U.
Section 1981, as well as certain other state law claims.
The former owner of Fitzgeralds Tunica was dismissed from the case in 2003.
All appellate briefs have been filed.
There is no set date by which the appeals court is required to issue a decision.
Our insurance carrier has agreed to extend coverage over the entire claim except for the amount relating to punitive damages and has agreed to share past and current expenses with the Company.
The parties are engaged in settlement discussions; however, should they be unable to reach an agreement, the Company will continue to vigorously prosecute its appeal.
In June 2003, a complaint was filed in the U.
District Court for the Northern District of Mississippi against several Tunica-area casino owners and operators, including Barden Mississippi, alleging violation of federal and state antitrust laws, as well as various other tort and contract claims.
The plaintiffs claim the defendants made a joint decision to refuse to advertise on the plaintiffs' website.
The litigation is in the discovery phase and the case is currently set for trial beginning August 22, 2005.
The Company intends to vigorously defend against this lawsuit; however, it is too early to determine the outcome and the effect, if any, on the Company's financial position and results of operations.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable.
PART II ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company is a limited liability company and Mr.
Barden indirectly holds 100% of our membership interests.
There is no established public trading market for the membership interests.
We did not pay any cash dividends during the past three years, and have no current plan to pay any cash dividends in the near term.
We are restricted in our ability to pay dividends under various covenants of our debt agreements.
SELECTED CONSOLIDATED FINANCIAL DATA The information required by this item is incorporated herein by reference from the section captioned "Five Year Summary of Selected Financial Data and Related Restatement" set forth in Item 7.
Management's Discussion and Analysis of Financial Condition majestic star casino buffet price Results of Operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS STATEMENT ON FORWARD-LOOKING INFORMATION Throughout this report we make forward-looking statements.
Forward-looking statements include the words "may," "will," "would," "could," "likely," "estimate," "intend," "plan," "continue," "believe," "expect" or "anticipate" and other similar words and include all discussions about our acquisition and development plans.
We do not guarantee that the transactions and events described in this report will happen as described or that any positive trends noted in this report will continue.
The forward-looking statements contained in parking casino luzern report are generally located in the material set forth under the headings "Business," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," but may be found in other locations as well.
These forward-looking statements generally relate to our plans, objectives and expectations for future operations and are based upon management's reasonable estimates of future results or trends.
Although we believe that our plans and objectives reflected in or suggested by such forward-looking statements are reasonable, we may not achieve such plans or objectives.
You should read this report completely and with the understanding that actual future results may be materially different from what we expect.
We will not update forward-looking statements even though our situation may change in the future.
All future written and verbal forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.
The following discussion should be read in conjunction with, and is qualified in its entirety by, our financial statements, including the notes thereto listed in Item 15 a.
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA AND RELATED RESTATEMENT The Company has restated the accompanying financial data for the years ended December 31, 2003, 2002, 2001 and 2000 to reflect a revision in classification of certain cash based promotional "CBP" activities.
During the preparation and audit of the financial statements for the year ended December 31, 2004, the Company re-evaluated the accounting treatment of its CBP programs.
Periodically, the Company makes various CBP offers to its casino customers.
Generally these offers are based upon the rated or tracked play of its customers.
These promotions can range in value and timing and are offered at the sole discretion of the Company's management.
The Company's CBP activities are intended to encourage repeat visits to the Company's casinos.
While casino customers are under no obligation to spend the promotional cash in gaming activities at the casino, the Company's experience shows that the vast majority of customers do engage in gaming activities the same day the cash is received.
The Company has concluded that the payout of cash under these CBP programs should be treated as a reduction of gross revenues when redeemed.
The costs related to these CBP programs were previously classified as a casino expense.
The restatement affected net revenues and operating expenses, as shown in the accompanying financial statements, but has no impact on consolidated operating income, net income loss or any element of the consolidated balance sheets or consolidated statements of cash flows for any date or period presented.
See Note 2 of Notes to Consolidated Financial Statements.
Accordingly, the consolidated results of operations for the year ended December 31, 2001 reflect only 25 days of operating results for the Fitzgeralds properties.
These majestic star casino buffet price are reflected in the line items assets held for sale and liabilities related to assets held for sale.
The selected balance sheet data as of December 31, 2003, 2002, and 2001 reflect the assets and liabilities of Fitzgeralds Black Hawk as held for use.
The selected balance sheet data as of December 31, 2002 and 2001 reflect the assets and liabilities article source Barden Nevada as held for use.
Fitzgeralds Tunica and Fitzgeralds Black Hawk are collectively referred to herein as the "Fitzgeralds Casinos.
The proceeds of the Fitzgeralds Black Hawk sale are subject to adjustment based upon required capital expenditures and certain levels of working capital as defined in the APA.
As a result of the pending sale of Fitzgeralds Black Hawk, the operating results of Fitzgeralds Black Hawk are reflected in discontinued operations for all periods included in our tables and discussions.
In addition, Fitzgeralds Las Vegas was spun-out to Barden Development, Inc.
Because the spin-off of Fitzgeralds Las Vegas occurred on December 31, 2003, the discussion of our historical operating results in this section does not include the financial results of Fitzgeralds Las Vegas except to the extent it is a discontinued operation.
Majestic Star has been owned and operated by the Company since 1996.
On December 6, 2001, the Company acquired the Fitzgeralds Casinos and commenced operations of the Fitzgeralds Casinos on December 7, 2001.
The increase is primarily due to our marketing and promotional programs, and focus on providing our casino guests with the newest and most appealing slot machines.
Our increased net income is principally due to our improved gross revenues and lower interest expenses and certain charges incurred in 2003 to refinance substantially all of the Company's debt and the write-down of Barden Nevada assets to fair value prior to the spin-off to BDI.
The Company derives in excess of 91% of its revenues from its casino operations, comprised of slot machines and table games.
Casino revenues are the difference between the amount wagered and the amount paid to customers from gaming activities.
Approximately 87% of our casino revenues are from slot machine revenues.
Casino revenues are impacted by wagering volumes and the variability of win percentages associated with our casino games.
The other principal components of revenues are room revenues from the hotel at Fitzgeralds Tunica and food and beverage revenues at both Majestic Star and Fitzgeralds Tunica.
Room revenues are a function of occupancy rate and average daily rate.
Food and beverage revenues are similarly affected by the volume of, and the prices charged by us for, food and beverage.
Our gross revenues are reduced by our promotional allowances.
Promotional allowances consist of the retail value of hotel Fitzgeralds Tunica onlyfood and beverage and other services and merchandise provided to our customers on a complimentary basis.
In addition, we reduce revenues for the cash based payments to customers who are members of our slot clubs and cash-based promotional activities, including cash given to our customers through our direct mail programs.
The Company's most significant expenses are expenses related to operating the casinos and the rooms Fitzgeralds Tunica onlyand the furnishing of food and beverage to our customers.
Casino expenses include rental expenses of 23 slot machines, payroll and benefit expenses, the cost of complimentaries provided to the casino departments for rooms, food and beverage, expenses for supplies, repairs and maintenance and various promotional activities.
The Company's other significant expenses relate to advertising and promotional expenses, gaming taxes, general and administrative, and depreciation and amortization.
Advertising and promotional expenses primarily reflect the costs of media and production, including television, radio, billboards and direct mail, hosting and development of our casino customers, sales, and the payroll and benefits to support these functions.
Gaming taxes consist of wagering taxes and admissions taxes paid to the States of Indiana and Mississippi.
The Company pays other forms of taxes including, sales and use taxes, payroll taxes, property taxes, franchise taxes, etc.
These expenses are included in the expense category most directly related to the tax.
General and administrative expenses include insurance, finance, human resources, information technology, facilities, utilities, general housekeeping, wardrobe, professional fees, property taxes, repairs and maintenance, rent and other expenses associated with the parking garage lease with Buffington Harbor Parking Associates "BHPA"berthing fees paid to the BHR Joint Venture and the payroll and benefits involved in operating the general and administrative areas.
Depreciation and amortization expense include depreciation on land improvements, building and building improvements, machinery, and equipment.
These capitalized fees were written off when substantially all the related debt was purchased in 2003.
In addition, Fitzgeralds Tunica is amortizing certain intangible assets that were recognized at its acquisition based on the value of the assets that were acquired.
Also, the Company is recognizing a loss for its equity investment in the BHR Joint Venture.
After Majestic Star and the Joint Venture Partner reimburse the BHR Joint Venture for all operating losses and the costs of services, meals and beverages provided directly to their customers, the remaining net loss of the BHR Joint Venture results from depreciation expense and loss on disposal of assets associated with the BHR Joint Venture property.
The events that affected our 2004 results or that may affect future results are listed below and discussed in greater detail in our discussion of operating results and under the section entitled "Factors that May Affect Future Results".
Consolidated casino revenues contributed 91.
In 2004, Majestic Star increased its marketing efforts.
The property initiated marketing campaigns to create better awareness in the highly competitive northwest Indiana market.
Many of the campaigns were centered around Mike Ditka, former NFL coach and player for the Chicago Bears.
Ditka became a celebrity spokesperson for the property and was featured in different advertising media throughout the Chicago and northwest Indiana area.
The property also intensified its direct mail marketing programs and created a new cash back program for its slot customers.
Majestic Star will continue to utilize many of its successful marketing programs into 2005.
The Tunica, Mississippi casino market is very competitive and market growth was minimal in 2004.
The property was able to generate the increase in casino revenue by continuing to emphasize its direct mail and promotional programs.
In addition, in 2004, the property management team emphasized getting rated casino customers into the hotel.
As a result of this effort, approximately 66.
This compares to 40.
In order to maximize profitability and cash flow, the property's management team is focused on cost containment, except where investment is necessary to maintain competitiveness, such as in the acquisition of new slot machine technology, as more fully discussed below.
Consolidated promotional allowances include the retail value of hotel rooms Fitzgeralds Tunica onlyfood, beverage and 24 merchandise provided to our casino customers at no charge.
Consolidated promotional allowances also include cash based promotional activities, including those cash based activities related to our slot clubs and direct mail program.
The increase casino parking consolidated promotional allowances is principally attributable to a new slot club program at Majestic Star, the increased emphasis on direct mail and the shift of filling more hotel rooms with rated casino players at Fitzgeralds Tunica.
The increase is the result of higher gaming volumes and the cost of complimentary services and products provided to our casino customers.
The increase in our consolidated gaming and economic incentive taxes is due to our strong growth in casino revenues.
Other areas contributing to our increased general and administrative expenses include increased payroll and benefits, greater current year property taxes, principally at Majestic Star, and insurance and regulatory costs.
At Fitzgeralds Tunica we implemented a new slot player tracking and marketing system and expanded the casino floor space, which increased slot machine capacity by 90 games, along with remodeling the bathrooms, cage and guest services areas.
In addition, we continue the implementation of TITO at Majestic Star.
At this time 1,162, or 71.
In addition, the implementation of the new slot player tracking and marketing system at Fitzgeralds Tunica allowed us to begin installing TITO at that property.
Currently we have 158 slot machines that operate with TITO with the goal of having 540 slot machines TITO operational by the end of 2005.
In February 2005 we invested in new slot player tracking and marketing technology at Fitzgeralds Black Hawk which will allow the property to begin installing TITO.
The new slot machines, coupled with TITO technology, should allow our casino guests to play their favorite slot machines with fewer interruptions, thus generating longer playing times on TITO equipped slot machines and allowing us to provide better guest service.
In February 2004, Fitzgeralds Tunica completed a room remodel project with improvements to approximately 100 of the property's 507 hotel rooms.
Within the Majestic Star vessel, construction of the new Don and Mike's Sports Bar was completed and the bar opened in May 2004.
The 25 Sports Bar offers sports entertainment on 13 flat screen TV's, coupled with a food and beverage operation.
The Sports Bar contains 39 slot machines and was constructed in the third floor players' lounge.
The new Sports Bar has allowed us to close our first floor snack bar so that we can expand our casino floor and add additional slot machines.
Majestic Star has also remodeled the VIP lounge and its high limit table games area known as the Monte Carlo Room.
Road construction costs will be paid from public funds.
The first phase of the road construction is expected to be completed in the late spring of 2005.
For example, in the Tunica market, Harrah's completed its acquisition of Horseshoe giving Harrah's two properties in the market.
Harrah's then announced that it was going to acquire Caesars which would give Harrah's an additional three properties in the Tunica market.
Including Fitzgeralds Tunica, there are currently nine properties in the Tunica market, with Harrah's potentially controlling more than half of the existing properties.
Harrah's and Caesars have subsequently announced the sale of two of the Tunica properties to Colony Capital.
With Harrah's acquisition of Horseshoe, Harrah's now controls the two market leading casinos in the northwest Indiana market.
However, Harrah's has subsequently announced the sale of its Harrah's East Chicago property to Colony Capital.
While it is difficult to determine the long-term effects of the acquisitions, the Harrah's organization will have acquired the top competitor in both the Tunica and northwest Indiana markets, will have expanded its database of players and market share significantly, and may be able to recognize operating and administrative synergies within both markets.
In addition, Colony Capital could invest significantly in capital expenditures and marketing, thus increasing their presence and competition within our markets.
In addition, Barden Development, Inc.
These assessments pertain to the years 1996-2002.
Majestic Star, a pass through entity for federal and state income tax purposes, contends that it is not liable for the assessments.
The Company has formally protested with the state that it is not liable for the assessments.
The Company's debt agreements, however, allow the Company to make distributions to its member for the purposes of the member's income tax liability resulting from the operations of the Company.
Should the member ultimately be found liable for additional taxes relating to this matter, the Company will make such permitted distributions.
The Company and Barden Development, Inc.
The information contained above under "Statement on Forward-Looking Information" and the competitive factors set forth in "Item 1.
Business", under the caption "Competition," have had and will continue to have an effect on our operations.
CONSOLIDATED STATEMENTS OF OPERATIONS - PERCENTAGE OF GROSS REVENUES For the years ended December 31, 2003 2002 2004 Restated Restated ------- -------- -------- OPERATING REVENUES: Casino 91.
Percentage increase decrease calculations are derived using the whole numbers rather than the rounded numbers.
All amounts are shown before corporate overhead.
Percentage increase decrease calculations are derived using the whole numbers rather than the rounded numbers.
All percentage calculations are shown before corporate overhead.
Majestic Star For The Twelve Months Ended December 31, ----------------------------------- 2003 2002 2004 Restated Restated ----- -------- -------- Casino revenues 57.
Consolidated casino revenues, which comprise approximately 91.
The increase in our consolidated casino revenues represents 95.
These efforts include a multimedia advertising campaign featuring former Chicago Bears player and coach, Mike Ditka, as the property's celebrity spokesperson, the re-branding of the property as "THE WINNING PLACE TO PLAY" TMthe establishment of a new players club loyalty program, the remodeling of the property's VIP lounge and high limit area, the Monte Carlo Room, the opening of Don and Mike's Sports Bar, majestic star casino buffet price acquisitions of the newest and most entertaining slot machines and our continued investment in ticket in ticket out technology "TITO".
Currently, Majestic Star has 1,162 TITO slot machines in operation 71.
The property also expanded the entertainment provided to its casino guests by offering nightly acts on the Star Stage and periodic concerts and events at the Festival Park.
Majestic Star's slot coin-in amounts wagered by customers increased 7.
In addition, table games handle amounts wagered by customers is up 15.
This is primarily the result of raising our table game betting limits and targeted marketing.
Our greater volumes, coupled with a higher win percentage in table games, which increased to 16.
Fitzgeralds Tunica's increase in casino revenue resulted from greater efforts in direct mail and more emphasis on putting rated casino players in the hotel.
The Tunica market is very competitive and growth is nominal.
The property's management is focusing on programs that will increase cash flow in a cost effective manner.
At Majestic Investor Holdings, an intermediary holding company formed to purchase the Fitzgeralds Properties and service the 11.
The decline at Majestic Investor Holdings is principally due to the purchase of 89.
A significant portion of Majestic Investor Holdings operating costs and expenses came from the amortization of capitalized financing costs related to the 11.
Upon purchase in 2003 of the 11.
At Majestic Star, casino expenses were higher due to greater volumes, higher progressive expenses and increased costs of providing complimentary food and beverage services to our casino guests at the food operations within Buffington Harbor.
The increase is attributable to the advertising and promotional activities at Majestic Star.
The increased costs at Majestic Star are the result majestic star casino buffet price the new marketing campaigns described earlier and a greater presence in various forms of media.
The property has also increased its entertainment.
The marketing effort at Majestic Star improved both its identity and competitive position in the northwest Indiana and Chicago markets, and was one of the main reasons for the property's significant casino revenue growth.
Majestic Star also incurred higher current year property taxes for which it is either directly or indirectly responsible, increased payroll and payroll benefits, higher regulatory fees and increased costs associated with the 170 acres of property acquired from Gary New Century, an affiliate, in February 2004, offset by lower costs associated with BHR.
The retroactive property tax accruals at Majestic Star discussed above resulted from events beginning in January 2004, when Majestic Star received a preliminary property tax reassessment notice that increased the valuation of its riverboat vessel in Lake County, Indiana.
The valuation assessment was part of a countywide reassessment, which was retroactive to March 1, 2002.
The reassessment was a result of a 1998 Indiana Supreme Court ruling that declared the method of property assessment previously used was unconstitutional.
Majestic Star followed administrative policies of the taxing authorities and paid Lake County an amount equal to 70% of its 2001 property tax liability, and estimated river belle casino australia accrual for the balance due for 2002 and 2003 at December 31, 2003.
In April 2004, tax rates on the real property within Lake County, Indiana were issued.
In addition, in April 2004, the State of Indiana issued final notices of assessed valuations to property owners within Lake County.
The Company used the information provided in April to revise its estimate of the amounts due.
See Note 15 to the Notes to Consolidated Financial Statements.
BHR, the Company's joint venture with Trump, also received a notice of final assessed value of its real property.
Similarly Buffington Harbor Parking Associates "BHPA"the owner of a parking garage for which Majestic Star is a lessee under an operating lease, received a notice reflecting final assessed values.
Majestic Star, through the joint venture agreement and the operating lease agreement, is liable for its portion of BHR's and BHPA's property tax liabilities.
During 2004, Majestic Star paid the remaining amounts due for its 2002 property tax liabilities.
The increases are the result of capital expenditures made at both properties.
Amortization expense at Majestic Investor Holdings, in 2003, resulted from the periodic write-off of capitalized financing fees over the life of the 11.
The majority of these fees were written off in October of 2003, when the Company purchased 89.
Consolidated other expenses consist primarily of interest expense and loss on bond redemption.
The reduced interest expense is the result of refinancing substantially all of the Company's outstanding debt in October 2003.
There were no bond redemptions in 2004.
Discontinued operations for 2004 reflect the results of the Company's Black Hawk operation, which is held for sale, while discontinued operations for 2003 reflect the results of both the Black Hawk operation and Fitzgeralds Las Vegas prior to the spin off.
Since consolidated casino revenues represents 90.
Nevertheless, casino revenues increased at Majestic Star during 2003.
Supporting overall gaming activity at Majestic Star was the opening of the 2,000 space parking garage at Buffington The does jamul casino have a hotel delirium in May 2002, the implementation of dockside gaming in August 2002 and the provision for around the clock gaming which began in July 2003.
Due to the lack of growth in our revenues, the Company focused on cost containment.
The increase is primarily due to the higher tiered tax structure in Indiana imposed in connection with the implementation of dockside gaming in August 2002.
For a more detailed discussion on the gaming tax structures in the states in which we operate, see "Government Regulations and Licensing.
The decrease in general and administrative expenses is primarily due to reduced payroll and benefit expenses, lower costs associated with the operations of the BHR Joint Venture, and reduced insurance premiums and bonus expenses.
Offsetting these lower expenses was an increase in parking garage lease expenses paid by Majestic Star attributable to a full year of lease payments in 2003 compared to only seven months of payments in 2002, when the garage opened.
The loss on the retirement of debt is comprised of the premium paid to redeem or purchase and retire the old notes, and the write-off of the unamortized capitalized debt issuance costs and the original issue discount related to the old notes.
We generate substantial cash flows from operating activities.
We use our cash flows to meet our financial obligations, which consist principally of financing our daily operations of our casinos, servicing our debt, funding capital improvements and projects, and making distributions to BDI under the manager agreement.
During 2004, we used our line of credit to partially finance capital expenditures, including the acquisition of 170 acres of land, plus associated legal fees and other costs, from an affiliate.
The majority of principal payments on our senior debt are not due until October 2010.
While we continue to evaluate potential opportunities to expand our existing casinos or to pursue other growth opportunities, we may not have sufficient funds to finance such strategic projects without additional borrowing.
In addition, our existing debt agreements limit our ability to incur additional debt unless we can meet certain financial ratios.
Should the Company identify an asset or business acquisition, there is no guarantee that any additional financing needed by the Company will be available on acceptable terms or at all in order to allow for the investment in such opportunities.
In addition, we anticipate that the sale of the assets of Fitzgeralds Black Hawk will generate a gain.
The Majestic Star Casino, LLC is a limited liability company and the income and expenses of the Company pass through to its member.
Any gain will be included with other income and expenses 35 the Company passes through to its member.
Accordingly, not all of the proceeds for the sale may be available to the Company, as a portion may be distributed to the member as allowed by the indenture.
The purchase of certain gaming facilities by larger more recognized brand names or the expansion of gaming in jurisdictions in which gambling is already legal or currently illegal could significantly increase competition for the Company and thereby require additional investment by the Company in its facilities, gaming devices and marketing efforts.
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.
The modified definition of EBITDA is effective as of December 31, 2003.
Without the Amendment, the Company would not have met the required EBITDA covenant for the quarter ended March 31, 2004 as contained in the Loan and Security Agreement.
Amendment Two clarifies that the purchase of the 170 acres of land located adjacent to the Buffington Harbor gaming complex is not a "Capital Expenditure" under the Loan and Security Agreement nor is it subject to the fiscal year Capital Expenditure limitations set forth in the Loan and Security Agreement.
Amendment Two is effective as of March 1, 2005.
On September go here, 2004, the Department assessed Barden Development, Inc.
No assessments have been received for the fiscal year 2003 or for the fiscal year 2004.
The assessments relate to deductions for payments of taxes on adjusted gross gaming revenues the Company's member took in computing adjusted gross income for Indiana state income tax purposes.
The Department has taken the position that the Company had an obligation to withhold and remit tax for the non-resident shareholder of its member.
The Company timely filed protests for all tax years at issue and those protests are currently pending before the Legal Division of the Department.
On April 19, 2004, the Indiana Tax Court ruled in a similar case involving another Indiana casino, Aztar Indiana Gaming Corporation "Aztar" that the gross wagering tax is a tax based on or measured by income and that it must be added back to the taxable income base for the purpose of determining adjusted gross income for Indiana tax purposes.
On September 28, 2004, the Indiana Supreme Court denied Aztar's request to review the Indiana Tax Court's decision and thus the Indiana Tax Court's opinion in the Aztar case is controlling precedent.
On October 5, 2004, the 36 Department sent a letter to the Company indicating that it considers the matter closed unless the Company's protest contains new issues not addressed in the Aztar matter.
The Company is a limited liability company and therefore it is the Company's belief that it is not liable or obligated to pay the assessment or interest thereon.
In addition, the Company will continue to pursue its protest with the Department on the grounds that the assessments contain calculation errors and that its protest sets forth issues not decided in Aztar.
Accordingly, should the Company's member ultimately be found liable for additional state income taxes to the State of Indiana, the Company would make distributions sufficient to pay the additional tax.
Any payments would be recorded as distributions in Member's Deficit.
The Company does not intend to make any distributions until it has fully evaluated its options with its member and parent, Barden Development, Inc.
The range is based on the Company's EBITDA defined in the credit agreement, as earnings before interest, taxes, depreciation and amortization plus losses that occurred from the early retirement of debt during the three-month period ended December 31, 2003.
The Wells Fargo Foothill, Inc.
NEW ACCOUNTING PRINCIPLES In November 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards 151 "Inventory Costs-an amendment of ARB No.
SFAS 151 amends ARB No.
SFAS 151 is effective for financial statements for fiscal years beginning after June 15, 2005.
The Company does not expect that the adoption of SFAS 151 will have a material impact on its financial position, results of operations or its cash flows.
SFAS 153 amends APB Opinion No.
SFAS 153 is effective for financial statements for fiscal majestic star casino buffet price beginning after June 15, 2005.
The Company does not expect that the adoption of SFAS 153 will have a material impact on its financial position, results of operations or its cash flows.
CRITICAL ACCOUNTING POLICIES Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires our management to make estimates and assumptions about the effects of matters that are inherently uncertain including those matters related to property taxes at Majestic Star.
We have summarized our significant accounting policies in Note 2 to our consolidated financial statements.
Of our accounting policies, we believe the following may involve a higher degree of judgment and complexity.
Revenue Recognition -- Casino revenue is the net win from gaming activities, which is the difference between the amount wagered by our gaming patrons and the amount paid out to our patrons as a result of those wagers.
Hotel, food and beverage and other revenue are recognized at the time the related service is performed.
We deduct from our gross revenues the retail value of hotel rooms, food, beverage and merchandise provided to our casino customers on a complimentary basis.
We also deduct from our gross revenues the value of certain cash based promotional activities, including cash earned by customers as part of our slot club programs and cash coupons mailed to our casino customers.
We regularly evaluate our acquired businesses for potential impairment indicators.
Additionally, we adopted the provisions of SFAS 142, "Goodwill and Other Intangible Assets," in January 2002, that require us to perform impairment testing at least annually.
Our judgments regarding the existence of impairment indicators are based on, among other things, the regulatory and market status and operational performance of our acquired business.
Future events could significantly impact our judgments and any resulting impairment loss could have a material adverse impact on our financial condition and results of operations.
We depreciate our assets on a straight-line basis over their estimated useful lives.
The estimate of the useful lives is based on the nature of the asset as well as our current operating strategy.
Future events, such as property expansions, new competition and new regulations, could result in a change in the manner in which we are using certain assets requiring a change in the estimated useful lives of such assets.
In assessing the recoverability of the carrying value of property and equipment, we must make assumptions regarding estimated future cash flows and other factors.
If these estimates or the related assumptions change in the future, we may be required to record impairment charges for these assets.
Casino Club Liability - Majestic Star, Fitzgeralds Tunica and Fitzgeralds Black Hawk offer programs whereby participants can accumulate points for casino wagering that can currently be redeemed for cash, lodging, food and beverages and merchandise.
A liability is recorded for the estimate of unredeemed points based upon each property's redemption history.
Changes in the program, increases in membership and changes in the redemption patterns of the participants can impact this liability.
Self-Insurance -- The Company maintains accruals for self-insured health and workers compensation programs, which are classified in payroll and related liabilities in the consolidated balance sheets.
Management and consultants determine the estimates of these accruals by periodically evaluating the historical expenses and projected trends related to these accruals.
Actual results may differ from those estimates.
These estimates are based upon our knowledge and experience about past and current events and also upon reasonable future events.
Actual results may differ from those estimates.
Each of the lease agreements call for The Majestic Star Casino, LLC and Trump Indiana to make monthly lease payments.
However, each party is entitled to a credit of 50% of such payment if the other party makes its monthly payment.
In the above Contractual Commitments schedule the BHPA operating lease is shown net of the 50% credit.
FACTORS THAT MAY AFFECT FUTURE RESULTS Significant Leverage We have a significant amount of debt.
In addition, the indenture governing the notes permits us to incur additional debt in certain circumstances.
Our high level of debt could have important consequences and significant adverse effects on our business.
For example, it could, among other things: - - require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, development projects, acquisitions and other general corporate purposes; - - limit our ability to fund or obtain additional financing for future working capital, or capital expenditures necessary to keep our casinos competitive or to finance expansions of our existing facilities or consummate acquisitions; - - increase our vulnerability to adverse economic and industry conditions or a downturn in our business; and - - result in an event of default if we fail to comply with the financial and other restrictive covenants contained in the indenture or our senior secured credit facility, which event of default could result in all of our indebtedness becoming immediately due and payable and would permit some or all of our lenders to foreclose on our assets securing such indebtedness.
We face intense competition in each of the markets in which our gaming facilities are located.
In some of the jurisdictions in which we operate, competition is expected to intensify as new gaming operations enter these markets and existing competitors consolidate with one another or expand or enhance their operations.
Our competitors have engaged in aggressive market strategies.
In addition, expansion of legalized gaming to new jurisdictions throughout the United States also has increased competition faced by us and will continue to do so in the future.
Competition requires us to make substantial capital expenditures to maintain and enhance the competitive positions of our properties.
Because we are highly leveraged, after satisfying our obligations under our outstanding indebtedness, there can be no assurance that we will have sufficient funds to undertake these expenditures, that we will be able to obtain sufficient financing to fund such expenditures or that our senior secured credit facility will permit such capital expenditures to be made.
Government Regulation and Taxes.
No assurances can be given that any new gaming licenses, liquor licenses, registrations, findings of suitability, permits and approvals, will be given or that existing ones will be renewed when they expire.
The compliance costs associated with these laws, regulations and licenses are significant.
A change in the laws, regulations and licenses applicable to our business or a violation of any current or future laws or regulations or our gaming licenses could require us to make material expenditures or could otherwise materially adversely affect our business or financial results.
Further, because the casino industry see more provide a significant source of tax revenues, changes in tax laws or the interpretation of existing laws can adversely affect the Company.
Certain expanded opportunities for the Company, such as dockside gaming, have been combined with increased taxation.
In addition, the Company is challenging certain tax assessments, including those related to the deductibility of gaming tax expense when computing income taxes in Indiana, which if ultimately determined adversely to the Company could have a material adverse visit web page on our financial results.
Legislation or local referenda on gaming may restrict or adversely impact our operations.
The casino entertainment industry is subject to political and regulatory uncertainty.
In some of the jurisdictions in which we currently operate or from which we attract customers, or in which we may expand, gaming is subject to local referenda and there have been a number of initiatives to ban or expand to new venues gaming in the jurisdictions in which our casinos are located or to expand gaming to new venues competitive with our properties.
For example, there have been prior attempts to ban gaming in Mississippi.
If the results of a referendum held in a jurisdiction in which we operate were to restrict gaming in whole or in part or if the results of a referendum in a nearby non-gaming jurisdiction were to permit gaming, our results of operations could be negatively impacted.
The economic health of the casino industry is affected by a number of macro economic factors that are beyond our control, including: i general economic conditions and economic conditions specific to our primary markets; ii levels of disposable income of casino patrons; iii increased transportation costs resulting in decreased travel by patrons; and, iv increased energy costs.
We believe that one or more of the foregoing economic conditions did 40 have an adverse impact on our results of operation in 2004 and any of these factors could negatively impact our revenues and results of operations in the future.
Continuing military action, the prospects of extended military action and the click here of domestic terrorism have resulted in a decline in vacation travel and tourism.
The magnitude and duration of these effects is unknown and cannot be predicted.
Any decline in vacation travel and tourism could adversely affect our revenues.
Continued or even worsening negative market conditions related to any future occurrences of terrorist actions or other destabilizing events, and other actions that perpetuate a climate of war could cause existing and potential customers to delay and cancel travel, convention and vacation plans, could decrease wagering and increase energy or other costs, and as a result could adversely affect our revenues and cash flow in the future.
Efficient operation of the BHR Joint Venture to support our casino will depend upon our continuing ability, as well as that of our Joint Venture Partner, to fund day-to-day operations and agree on related business matters.
In addition, both we and our Joint Venture Partner are jointly and severally liable to make lease payments related to the Buffington Harbor parking facility.
When our Joint Venture Partner makes its share of the lease payment, we receive a 50% credit towards our lease obligations.
Any failure by the Joint Venture Partner to fund operations of the BHR Joint Venture when required or to make the lease payments related to the Buffington Harbor parking facility including its obligations under the BHPA leaseor any significant conflict in this relationship that is not promptly resolved, would adversely affect the operations of the gaming complex.
A significant disruption in the business of the gaming complex is likely to adversely affect the operations of Majestic Star and our ability to generate revenues.
On November 21, 2004, THCR entered into a pre-negotiated plan of reorganization under Chapter 11 of the U.
Since that time, THCR has been operating as a debtor in possession of its assets and Trump has continued to pay its monthly obligations under both the BHR operating and BHPA lease agreements.
However, pursuant to the loan agreement on the BHPA parking garage, Trump was required to have the bankruptcy court allow the assumption of the parking garage lease by Trump within 90 days of filing bankruptcy.
Trump failed to have the bankruptcy court approve assumption of the lease.
This has created a technical default under the loan agreement.
Trump is currently in the process of having the bankruptcy court approve the assumption of the lease and to date the lenders under the BHPA loan agreement have not pursued the remedies for the technical default.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices.
Our primary exposure to market risk is interest rate risk associated with our long-term debt.
The Company does not have any financial instruments held for trading or other speculative purposes, does not invest in derivative financial instruments, interest rate swaps or other investments that alter interest rate exposure.
For debt obligations, the table presents notional amounts and weighted average interest rates by contractual maturity dates for the twelve-month periods ended December 31: Fair Amounts in Thousands 2005 2006 2007 2008 2009 Thereafter Total Value 1 ---- ---- ------- ---- ---- ---------- -------- --------- Variable rate debt: - - Amounts outstanding under the senior credit facility, payable at LIBOR plus a margin of 3.
The range is based on the Company's EBITDA.
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices.
However, the amount of outstanding borrowings is expected to fluctuate and may be reduced from time to time.
The nature and amount of the Company's debt may vary as a result of future business requirements, market conditions and other factors.
Additionally, should we assume variable rate debt in the future, we will be subject to market risk, which is the risk of loss from changes in market prices and interest rates.
Interest expense on our fixed rate debt instruments are not affected by a change in the market rates of interest, and therefore, such changes generally do not have an impact on future earnings.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Item 15 a of this Annual Report on Form 10-K.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable.
CONTROLS AND PROCEDURES As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Continue reading disclosure controls and procedures pursuant to Rule 15d-15 of the Securities Exchange Act of 1934.
Based upon that evaluation which included an assessment of the circumstances relating to the restatement for cash based promotional allowancesthe Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to cause the material information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 to be recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
There have been no changes in the Company's internal controls over financial reporting during the quarter ended December 31, 2004 that have materially affected, or are reasonably likely to materially affect the Company's internal controls over financial reporting.
OTHER INFORMATION Not applicable.
DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT The following table sets forth certain information with respect to the directors and executive officers of the Company as of December 31, 2004.
NAME AGE POSITION S ---- --- ----------- Don H.
Barden 61 Chairman, President and Chief Executive Officer Michelle R.
Sherman 39 Director Steven J.
Lemberg 50 Director Andrew J.
Warhola 78 Director Jon S.
Bennett 44 Vice President and Chief Financial Officer Don H.
Barden is Chairman, President and Chief Executive Officer of the Company and, since November 1993, Chairman and President of BDI, the manager of the Company, with responsibility for key policy-making functions.
Since their formations, Mr.
Barden is also President and Chief Executive Officer of Investor and Manager of Investor Holdings; Barden Colorado; Barden Mississippi; and Chairman, President and Chief Executive Officer of Majestic Investor Capital Corp.
Barden also has served as a director of Investor Capital since its formation.
Over the past 35 years, Mr.
Barden has successfully developed, owned and operated majestic star casino buffet price business enterprises in various industries including real estate development, casino gaming, broadcasting, cable television and international trade.
Black Enterprise Magazine named Barden Companies, Inc.
Barden and one of our affiliates, "Company of the Year" for 2003.
Barden received a Trumpet Award as "Entrepreneur of the Year.
Further, in 2003, Mr.
Sherman has been a Director of the Company since July 9, 2004.
Sherman also serves as Vice President, Chief Financial Officer and Treasurer of Barden Companies, Inc "Barden".
Sherman has been with Barden for over 11 years, serving Barden in various capacities including accounting, finance administration and business development.
Sherman is an officer in many Barden entities.
Sherman is a licensed Certified Public Accountant in the State of Michigan and has a Master of Science degree in International Finance.
Lemberg has been a Director of the Company since July 9, 2004.
Lemberg also serves as Executive Vice President of Strategic Initiatives for the Company, a position he has held since January 3, 2005.
Prior to employment with the Company, Mr.
Lemberg was the Chief Executive Officer of a national promotional company.
Lemberg held various positions with that company and its predecessor entities from January 1996 to December 2004, including Chief Operating Officer, Chief Financial Officer, and Executive Vice President of a division of a NYSE-listed company.
Lemberg was also a Tax Partner in the firm Coopers and Lybrand from 1989 to 1996.
Lemberg received a juris doctor degree from the University of Here School of Law.
He is a Certified Public Accountant and a licensed attorney in the State of Michigan.
Warhola has been a Director of the Company since July 9, 2004.
Warhola received a bachelor's degree in economics in 1948 and a bachelor of laws degree in 1951 both from the University of Michigan.
Warhola went on to develop a successful law practice in Lorain, Ohio.
Warhola's law firm specialized in real estate, small business, banking and health care.
Warhola has retired from the firm.
Warhola's career he served as a board member and trustee to various organizations, was active in many community and civic groups and co-founded a radio station.
Bennett has been the Vice President and Chief Financial Officer of the Company since October 2002 with overall responsibility for all aspects of the Company's financial management, accounting and reporting processes.
Bennett is also the Vice President and Chief Financial Officer for Investor, Investor Holdings, The Majestic Star Casino Capital Corp.
Bennett's appointment as Vice President and Chief Financial Officer, Mr.
Bennett was Vice President of Finance and Administration for Barden Mississippi from the acquisition in December 2001 to his promotion in October 2002.
Bennett has held various positions with Fitzgeralds Gaming Corporation, including Vice President of Finance and Administration for 44 Fitzgeralds Tunica from April 1997 to December 2001 and Director of Finance for three Fitzgeralds Gaming Corporation properties located in Reno, Nevada.
Bennett was also Chief Financial Officer for Peppermill Casinos, Inc.
Directors are reimbursed for expenses reasonably incurred in connection with their service on the Board.
CODE OF ETHICS We have adopted a Code of Ethics that applies to our Directors, Chief Executive Officer and Chief Financial Officer and any other person performing similar functions.
The failure of any of these persons to comply with the Code of Ethics may result in disciplinary action, up to and including termination of employment.
This Code of Ethics has been posted to our website at www.
EXECUTIVE COMPENSATION The following table sets forth all compensation earned for services performed for The Majestic Star Casino, LLC, and its subsidiaries, during the years shown below by our Chief Executive Officer and our other current and past executive officers during 2004.
All compensation is paid by The Majestic Star Casino, LLC.
ANNUAL COMPENSATION -------------------- ALL OTHER NAME AND POSITION YEAR SALARY BONUS COMPENSATION ----------------- ---- -------- --------- ------------ Don H.
For the year 2004, the amounts reflected in "All Other Compensation" for Mr.
Kelly was fully vested.
For the year 2003, the amounts reflected in "All Other Compensation" for Mr.
The amounts in "All Other Compensation" for Mr.
Bonuses reflected in the Executive Compensation Schedule are for the year earned.
Kelly resigned his employment in August 2004.
For the year 2003, Mr.
Bennett was the Vice President of Finance and Administration at Barden Mississippi.
The amount in "All Other Compensation" for Mr.
Bonuses reflected in the Executive Compensation Schedule are for the year earned, not paid.
Barden with an auto allowance.
Bennett serves as our Vice President and Chief Financial Officer pursuant to an employment agreement with the Company dated October 21, 2002, as amended December 20, 2004.
Under this agreement, Mr.
Bennett can also earn bonuses subject to the discretion of the President and Chief Executive Officer.
In addition to such compensation, Mr.
Bennett is also entitled to additional compensation upon a change in control, equal to the remaining amount due under his employment agreement plus six months of his annual salary following the expiration of his current employment agreement.
Lemberg serves as a Board member and, effective January 3, 2005, joined the Company as Executive Vice President of Strategic Initiatives pursuant to an employment agreement dated December 17, 2004.
Unless sooner terminated as provided therein, the agreement continues in effect for two years.
Thereafter, the term automatically extends for successive one year periods unless either party provides notice of its intention not to renew the agreement.
Lemberg is also entitled to participate in the Company's employee benefits plans as are generally made available to the Company's senior executives and is entitled to reimbursement of business expenses.
If the Company terminates Mr.
Lemberg without "cause," if Mr.
Lemberg terminates his employment for "good reason" as each such term is defined in the agreement or if the Company fails to renew the agreement, Mr.
Lemberg is entitled to continued base salary for a maximum of six months or the remaining term of the agreement, bonus compensation for the employment term and COBRA benefits for a period of six months.
Lemberg agreed not to compete with the Company for a period of nine months following termination of his employment for any reason in the State of Nevada or within 150 miles of any location at which the Company or any of its affiliates including its parent, subsidiaries and joint ventures conducts or proposes to conduct gaming operations.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Compensation Committee was formed in July 2004 with Andrew J.
Warhola ChairmanSteven J.
Lemberg and Michelle R.
Warhola and Lemberg were independent directors and none of the members were employees or former employees of the Company or its subsidiaries.
Sherman is an officer of the Company's parent, Barden Development, Inc.
Effective January 3, 2005, the Company employed Mr.
Lemberg as Executive Vice President of Strategic Initiatives and Mr.
Lemberg resigned from the Compensation Committee effective December 31, 2004.
COMPENSATION COMMITTEE The Compensation Committee the "Committee" is responsible for establishing, monitoring and implementing the policies that govern compensation programs for the Company's executives and key management.
The Committee reviews compensation policies and procedures with management and makes recommendations to the Board of Directors and determines the compensation for the Chief Executive Officer "CEO".
The CEO establishes the compensation of the other executive officers of the Company after consultation with the Committee using the parameters set by the Committee.
The primary goal of the Committee is to ensure that the Company's compensation programs 1 effectively attract and retain executives and key read more 2 establish and implement policies and procedures in a fair and equitable manner; and 3 are consistent with the employee's individual performance and the performance of the Company as a whole.
The ranges for compensation of the executive officers, including the CEO, and key management are generally set at levels that the Committee believes to be competitive with other gaming companies.
For the purpose of comparing the compensation programs of other gaming companies, the Committee reviews various relevant factors, including size and structure, the composition of the Company's properties, the market in which they operate, the structure of their compensation programs and the availability dan bilzerian app casino public compensation information.
The Committee sets salary ranges for the Company's executives and key management at levels it believes to be competitive with gaming companies of similar size and in similar markets.
Annual salaries are established based upon available market data, employee's length of service, employee contribution to the overall goals and performance of the Company.
Annual salaries of executives and key management are reviewed from time to time and adjustments are made where necessary to remain competitive with gaming companies of similar size and structure.
Performance bonuses are discretionary and are determined based on the individual's overall performance for that year, their contribution to the goals of the Company and, with the exception of corporate personnel, the financial performance of their applicable property.
source are paid after the CEO and management have assessed the Company's year-end financial results.
The Committee establishes the CEO's compensation and considers multiple factors in making such determination.
The CEO is the Chairman, President, founder and 100% owner of the Company.
He created the long-term vision for the Company and continues to successfully implement strategies that contribute to the growth of the Company; he is positively recognized by the business and financial community as the driving majestic star casino buffet price behind the growth and continued success of the Company.
The Similar fastest way to make money in casino was overall compensation includes his annual salary and other fringe benefits.
As a result of a review of CEO compensation for gaming companies of similar size and structure, the CEO received an increase in his base salary, effective January 1, 2005.
The CEO currently does not and has not historically participated in the Company's bonus program.
COMPENSATION COMMITTEE: ANDREW J.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS We are indirectly wholly owned by Don H.
Barden, our Chairman, President and Chief Executive Officer.
The following table sets forth the beneficial ownership of each of The Majestic Star Casino, LLC and The Majestic Star Casino Capital Corp.
THE THE MAJESTIC MAJESTIC MAJESTIC BARDEN BARDEN MAJESTIC STAR MAJESTIC INVESTOR INVESTOR MISSISSIPPI COLORADO NAME AND ADDRESS OF STAR CAPITAL INVESTOR, HOLDINGS, CAPITAL GAMING, GAMING, BENEFICIAL OWNER LLC CORP.
LLC LLC - ------------------- -------- -------- --------- --------- -------- ----------- ----------- Don H.
Barden 100% 1 100% 2 100% 3 100% 4 100% 5 100% 6 100% 7 8 163 Madison Avenue Suite 2000 Detroit, MI 48226 1 Includes the membership interests in The Majestic Star Casino, LLC, all of which are beneficially owned directly by BDI.
Barden is the beneficial owner of 100% of BDI.
Barden is the beneficial owner of 100% of BDI.
Barden is the beneficial owner of 100% of BDI.
Barden is the beneficial owner of 100% of BDI.
Barden is the beneficial owner of 100% of BDI.
Barden is the beneficial owner of 100% of BDI.
Barden is the beneficial owner of 100% of BDI.
Michael Kelly, Executive Vice President and Chief Operating Officer of the Company.
This loan bore no interest and was due and go here in full in January 2005.
In both March 2003 and March 2004, Mr.
In August 2004, Mr.
Kelly left the Company's employment.
TRANSACTIONS BY OR WITH AFFILIATES On February 11, 2004, we acquired approximately 170 acres of land located adjacent to the Buffington Harbor gaming complex from an affiliate of ours the "GNC Land".
The purchase price for the GNC Land was not greater than eighty percent 80% of the appraised value as evidenced by the written appraisal of an independent appraiser dated not more than ninety 90 days prior to the closing.
NAMING RIGHTS AGREEMENT Gary New Century, LLC "GNC"a company wholly owned by Mr.
Barden, intended to develop an outdoor amphitheater on property it owned adjacent to Majestic Star.
The Company entered into a Naming Rights Agreement with GNC effective in October 2001.
The initial term of the Naming Rights Agreement was three years commencing on the opening of the amphitheater.
PRINCIPAL ACCOUNTANT FEES AND SERVICES PricewaterhouseCoopers LLP "PwC" acted as our independent registered public accounting firm during 2004, 2003 and 2002.
Below is a breakdown of the fees paid to them.
Services performed included: - - Audit of the Company's annual financial statements, including the audits of various subsidiaries conducting gaming operations as required by the regulations of the respective jurisdictions.
These fees were associated with federal and state tax compliance, tax advice, tax planning and tax return preparation.
These fees related to 401 k plan audits and health plan Form 5500 Filings.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES a 1.
Financial Statements as listed on Page F-1.
Financial Statement Schedule as listed on Page F-1.
Exhibits: The exhibits included as part of this report are listed in the attached Exhibit Index on Page E-1, which is incorporated herein by reference.
THE MAJESTIC STAR CASINO, LLC THE MAJESTIC STAR CASINO CAPITAL CORP.
Barden ------------------------------- -------------------------------- Don H.
Barden Chairman, President and Chief President and Chief Executive Executive Officer Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on March 31, 2005 on behalf of the Registrant and in the capacities indicated.
Barden Chairman, President and Chief Executive - ---------------------------- Officer Principal Executive Officer Don H.
Bennett Vice President and Chief Financial Officer - ---------------------------- Principal Financial and Accounting Officer Jon S.
Lemberg Director - ---------------------------- Steven J.
Sherman Director - ---------------------------- Michelle R.
Warhola Director - ---------------------------- Andrew J.
Warhola THE MAJESTIC STAR CASINO CAPITAL CORP.
Barden President and Chief Executive Officer - ---------------------------- Principal Executive Officer Don H.
Bennett Vice President and Chief Financial Officer - ---------------------------- Principal Financial and Accounting Officer Jon S.
Bennett S-1 EXHIBIT INDEX Certain of the following exhibits have been previously filed with the Securities and Exchange Commission by the Company pursuant to the requirements of the Securities Act of 1933 and the Securities Exchange Act see more 1934.
Such exhibits are identified by the parenthetical references following the listing of each such exhibit and are incorporated herein by reference.
The Company's Commission file number is 333-06489.
DESCRIPTION OF EXHIBITS 2.
Barden and The Majestic Star Visit web page, LLC 10.
Lemberg and The Majestic Star Casino, LLC 10.
THE MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES A Wholly Owned Subsidiary of Barden Development, Inc.
INDEX OF CONSOLIDATED Hotels near casino STATEMENTS PAGE ---- THE MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES Report of Independent Registered Public Accounting Firm F- 2 Consolidated Balance Sheets as of December 31, 2004 and 2003 F- 3 Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002 F- 4 Consolidated Statements of Changes in Member's Deficit for the years ended December 31, 2004, 2003 and 2002 F- 5 Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002 F- 6 Notes to Consolidated Financial Statements F- 8 Schedule II- Valuation and Qualifying Accounts F-37 BUFFINGTON HARBOR RIVERBOATS, LLC 1 Report of Independent Auditors F-38 Balance Sheets as of December 31, 2004 and 2003 F-39 Statements of Operations for the years ended December 31, 2004, 2003 and 2002 F-40 Statements of Members' Capital for the years ended December 31, 2004, 2003 and 2002 F-41 Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002 F-42 Notes to Financial Statements F-43 1 The financial statements of Buffington Harbor Riverboats, LLC are included in this 10-K in order to comply with Rule 3-09 of Regulation S-X.
F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Member of The Majestic Star Casino, LLC and Subsidiaries: In our opinion, the consolidated financial statements listed in the index appearing on page F-1 present fairly, in all material respects, the financial position of The Majestic Star Casino, LLC and its subsidiaries a wholly owned subsidiary of Barden Development, Inc.
In addition, in our opinion, the consolidated financial statement schedule listed in the horseshoe casino indiana buffet phone number appearing on page F-1 presents fairly in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
These financial statements and financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.
We conducted our audits of these statements in accordance with the auditing standards of the Public Company Accounting Oversight Board United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement and financial statement schedule presentation.
We believe that our audits provide a reasonable basis for our opinion.
As more fully described in Note 2 Restatementthe Company has restated its 2003 and 2002 consolidated financial statements to reflect a revision in classification for cash-based promotional programs.
F-3 THE MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES A Wholly Owned Subsidiary of Barden Development, Inc.
F-4 THE MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES A Wholly Owned Subsidiary of Barden Development, Inc.
F-5 THE MAJESTIC STAR CASINO, LLC Learn more here SUBSIDIARIES A Wholly Owned Subsidiary of Barden Development, Inc.
C 2,465,612 2,395,436 2,424,392 Gain loss on disposal of assets 31,130 117,097 5,219 Loss gain on bond redemption - 31,960,083 68,957 Loss on spin-off of discontinued operation - 11,972,607 - Changes in operating assets and liabilities: Decrease increase in accounts receivable, net 84,831 330,599 224,482 Increase in receivables from affiliates 372,328 707,110 - Decrease increase in inventories 18,315 44,228 13,222 Increase in prepaid expenses 173,764 7,297 1,259,507 Decrease in other assets 209,058 455,542 1,511,208 Decrease increase in accounts payable 5,262,507 3,444,422 873,426 Increase in accrued payroll and other expenses 115,657 845,510 1,375,464 Decrease increase in accrued interest 499,984 4,549,918 6,820,527 Increase in other accrued liabilities 2,602,094 3,688,690 633,362 ------------ ------------- ------------ Net cash provided by operating activities 22,160,054 31,976,897 21,304,723 ------------ ------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Fitzgeralds acquisition related costs - - 986,158 Increase in restricted cash 1,140,008 1,150,000 250,000 Proceeds from seller for Fitzgeralds purchase price adjustment - - 3,800,000 Acquisition of property and equipment, net of amounts in accounts payable 36,011,778 18,462,990 10,396,222 Distribution of cash to Barden Development, Inc.
F-6 THE MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES A Wholly Owned Subsidiary of Barden Development, Inc.
F-7 THE MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES A Wholly Owned Subsidiary of Barden Development, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1.
ORGANIZATION The Majestic Star Casino, LLC the "Company" is a wholly owned subsidiary of Barden Development, Inc.
The Company commenced gaming operations in the City of Gary at Buffington Harbor, located in Lake County, Indiana on June 7, 1996.
The Majestic Star Casino, LLC is a multi-jurisdictional gaming company.
The Company directly owns and operates one riverboat gaming facility located in Gary, Indiana "Majestic Star".
Through its wholly owned subsidiary, Majestic Investor Holdings, LLC "Investor Holdings"the Company also indirectly owned other subsidiaries that operated the following "Fitzgeralds-brand" casino properties during the periods presented in the accompanying consolidated financial statements: - A casino-hotel located in Tunica County, Mississippi "Fitzgeralds Tunica".
On July 12, 2004, the Company entered into an agreement to sell substantially all of the net assets of Fitzgeralds Black Hawk, which sale was not yet completed as of December 31, 2004.
As a result of the pending sale, results of Fitzgeralds Black Hawk have been presented in discontinued operations for each of the three years ended December 31, 2004, 2003 and 2002 in the accompanying statements of operations.
See Note 3 - Basis of Presentation and Note 7 - Discontinued Operations.
Fitzgeralds Las Vegas was spun off to the Company's member on December 31, 2003.
As a result of the spin off, results of Fitzgeralds Las Vegas have been presented in discontinued operations for the years ended December 31, 2003 and 2002 in the accompanying statements of operations.
See Note 3 - Basis of Presentation and Note 7 - Sorry, flamingo casino amenities that Operations.
The Company also has the following subsidiaries, which were formed for the purpose of facilitating financing transactions: - Majestic Star Casino Capital Corp.
MSCC has no assets or operations.
See Note 12 - Long Term Debt.
See Note 12 - Long Term Debt.
The Company also has a non-controlling 50% interest in a corporate joint venture formed for the purpose of acquiring and developing certain facilities for the gaming operations in the City of Gary.
See Note 10 - Investment in Buffington Harbor Riverboats, L.
Except where otherwise noted, the words "we," "us," "our," and similar terms, as well as the "Company," refer to The Majestic Star Casino, LLC and all of its direct and indirect subsidiaries.
RESTATEMENT The Company has restated the accompanying consolidated statements of operations for the years ended December 31, 2003 and 2002 to reflect a revision in classification of certain cash based promotional "CBP" activities.
During the preparation and audit of the financial statements for the year ended December 31, 2004, the Company reevaluated the accounting treatment of its CBP programs.
Periodically, the Company makes various CBP offers to its casino customers.
Generally these offers are based upon the rated or tracked play of its customers.
These promotions can range in value and timing and are offered at casino aparate pacanele sole discretion of the Company's management.
The Company's Https://nycwebdesigner.org/casino/casinos-in-sedona.html activities are intended to encourage repeat visits to the Company's casinos.
While casino customers are under no obligation to spend the promotional cash in gaming activities at the casino, the Company's experience shows that the vast majority of customers do engage in gaming activities the same day the cash is received.
The Company has concluded that the payout of cash under these CBP programs should be treated as a reduction of gross revenues when redeemed.
The costs related to these CBP programs were previously classified as a casino expense.
The restatement affected net revenues and operating expenses, as shown in the accompanying table, but has no impact on consolidated operating income, net income loss or any element of the consolidated balance sheets or consolidated statements of cash flows for any date or period presented.
F-8 THE MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES A Wholly Owned Subsidiary of Barden Development, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED The accompanying tables reconcile the results of operations for the years ended December 31, 2003 and 2002, previously reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2003, to the amounts included in the accompanying consolidated financial statements amounts in thousands of dollars.
BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of The Majestic Star Casino, LLC and its wholly owned direct and indirect subsidiaries.
All inter-company transactions and balances have been eliminated.
Investments in affiliates in which the Company has the ability to exercise significant influence, but not control, are accounted for by the equity method.
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or "GAAP", and with the instructions to Form 10-K.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Significant estimates incorporated into our consolidated financial statements include the estimated useful lives of depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, estimated cash flow in assessing the recoverability of long lived assets, and estimated liabilities for our self-insured medical and worker's compensation plans, property taxes, slot club point programs and litigation, claims and assessments.
Actual results could differ from those estimates.
F-9 THE MAJESTIC STAR CASINO, LLC AND SUBSIDIARIES A Wholly Owned Subsidiary of Barden Development, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED SPIN-OFF - The spin-off of Fitzgeralds Las Vegas to BDI occurred on December 31, 2003.
As such, the assets, liabilities and equity of Fitzgeralds Las Vegas are not included in our consolidated balance sheets as of December 31, 2004 and 2003.
The consolidated statements of operations recognize Fitzgeralds Las Vegas as a discontinued operation for the years ended December 31, 2003 and 2002.
The consolidated statements of cash flows for the year ended December 31, 2003 reflect the distribution of cash from Fitzgeralds Las Vegas to BDI.
The remaining spin-off of our equity interests in Fitzgeralds Las Vegas involved no cash.
The statements of cash flows for the year ended December 31, 2002 fully reflect the cash activities of Fitzgeralds Las Vegas.
See Note 7 - Discontinued Operations.
PENDING SALE OF FITZGERALDS BLACK HAWK - On July 12, 2004, the Company entered into an agreement to sell substantially all of the assets subject to certain liabilities of Fitzgeralds Black Hawk, which sale is not yet completed at December 31, 2004.
Consequently, the assets of Fitzgeralds Black Hawk for the year ended December 31, 2004, are classified on the consolidated balance sheet as assets held for sale, and its liabilities are classified as liabilities related to assets held for sale.
The results of Fitzgeralds Black Hawk are reflected in discontinued operations in the accompanying consolidated statements of operations for the years ended December 31, 2004, 2003 and 2002.
The statements of cash flow reflects the cash flow activities of Fitzgeralds Black Hawk for the years ended December 31, 2004, 2003 and 2002.
See Note 7 - Discontinued Operations.
CASH AND CASH EQUIVALENTS - The Company considers cash equivalents to include short-term investments with original maturities, or remaining maturities at time of purchase, of ninety days or less.
Cash equivalents are carried at cost plus accrued interest, pity, casino fountain park edinburgh advise approximates fair value.
The Company places its cash primarily in checking and money market accounts with high credit quality financial institutions, which, at times, have exceeded federally insured limits.
Ep. 253 - Majestic Star Casino (1/2) - December 9, 2013
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