President Casinos Inc – ‘10-Q’ for 11/30/00

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Quarterly Report   —   Form 10-Q
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Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      35    162K 
 2: EX-27       Financial Data Schedule (Pre-XBRL)                     1      7K 

10-Q   —   Quarterly Report
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==============================================================================  

UNITED STATES   
SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549    

FORM 10-Q   

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   
EXCHANGE ACT OF 1934  

For the quarterly period ended November 30, 2000    

OR  

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  
EXCHANGE ACT OF 1934  

COMMISSION FILE NUMBER: 0-20840   

PRESIDENT CASINOS, INC.   
------------------------------------------------------  
(Exact name of registrant as specified in its charter)  

   Delaware                             51-0341200
-------------------------------               ----------------      
(State or other jurisdiction of               (I.R.S. Employer      
   incorporation or                      Identification No.)
organization)                                     

802 North First Street, St. Louis, Missouri 63102   
----------------------------------------------------  
Address of principal executive offices-Zip Code   

314-622-3000  
----------------------------------------------------  
Registrant's telephone number, including area code  

Indicate by check mark whether the registrant (1) has filed all reports     
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of  
1934 during the preceding 12 months (or for such shorter period that the        
registrant was required to file such reports), and (2) has been subject to      
such filing requirements for the past 90 days.  Yes [X]  No [ ]                 

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock, $.06 par value,  
5,032,998 shares outstanding as of January 16, 2001.                            

==============================================================================  

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PRESIDENT CASINOS, INC. 
INDEX TO FORM 10-Q  

                                                                Page No.
Part I.  Financial Information                                                  

Item 1.  Financial Statements                                               

Condensed Consolidated Balance Sheets (Unaudited)                       
 as of November 30 and February 29, 2000.............................1

Condensed Consolidated Statements of Operations                         
and Net Income (Loss) Per Share Information (Unaudited)             
 for the Three and Nine Months Ended November 30, 2000 and 1999......2

Condensed Consolidated Statements of Cash Flows (Unaudited)             
 for the Nine Months Ended November 30, 2000 and 1999................3

Notes to Condensed Consolidated Financial Statements (Unaudited)......4 

Item 2.  Management's Discussion and Analysis of                            
      Financial Condition and Results of Operations.................13

Item 3   Quantitative and Qualitative Disclosures About Market Risk....29   

Part II.  Other Information                                                     

Item 1.  Legal Proceedings.............................................30   

Item 2.  Changes in Securities.........................................30   

Item 3.  Defaults Upon Senior Securities...............................30   

Item 4.  Submission of Matters to a Vote of Security Holders...........30   

Item 5.  Other Information.............................................30   

Item 6.  Exhibits and Reports on Form 8-K..............................31   

Signature................................................................32     

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Part I.  Financial Information                                                  
Item 1.  Financial Statements                                                   

PRESIDENT CASINOS, INC.   
CONDENSED CONSOLIDATED BALANCE SHEETS     
(UNAUDITED)     
(in thousands, except per share data)     

                                                                [Download Table]

                                                        Nov. 30,   Feb. 29, 
                                                          2000       2000   
                                                        --------   -------- 
                                                                            
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents......................       $ 12,349   $ 12,408 
  Restricted cash................................          3,325      2,780 
  Restricted short-term investments..............          6,575        960 
  Accounts receivable, net of allowance for                                 
    doubtful accounts of $264 and $331...........            984      1,401 
  Inventories....................................          1,113      1,728 
  Prepaid expenses and other current assets......          2,872      2,218 
                                                        ---------  ---------
      Total current assets.......................         27,218     21,495 
Property and equipment, net of accumulated                                  
  depreciation of $46,224 and $81,027............        110,726    142,490 
Other assets.....................................            535      1,409 
                                                        ---------  ---------
                                                        $138,479   $165,394 
                                                        =========  =========
LIABILITIES AND STOCKHOLDERS' DEFICIT                                       
Current liabilities                                                         
  Current maturities of long-term debt...........       $108,491   $135,577 
  Short-term debt................................            550      4,513 
  Accrued loan fee...............................          7,000      5,996 
  Accounts payable...............................          4,567      3,969 
  Accrued payroll and benefits...................          4,860      7,499 
  Accrued interest...............................          4,581      6,445 
  Other accrued expenses.........................          7,274      7,756 
                                                        ---------  ---------
      Total current liabilities..................        137,323    171,755 
Long-term liabilities:                                                      
   Notes payable.................................            --         --  
                                                        ---------  ---------
      Total liabilities..........................        137,323    171,755 
                                                        ---------  ---------
Minority interest................................         13,557     13,220 
Commitments and contingencies....................            --         --  
Stockholders' deficit:                                                      
  Preferred Stock, none issued and outstanding...            --         --  
  Common Stock, $0.06 par value per share;                                  
    100,000 shares authorized; 5,033 shares                                 
    issued and outstanding.......................            302        302 
  Additional paid-in capital.....................        101,729    101,729 
  Accumulated deficit............................       (114,432)  (121,612)
                                                        ---------  ---------
      Total stockholders' deficit................        (12,401)   (19,581)
                                                        ---------  ---------
                                                        $138,479   $165,394 
                                                        =========  =========

See Notes to Condensed Consolidated Financial Statements.                   

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 PRESIDENT CASINOS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS   
(UNAUDITED)   
(in thousands, except per share data)   

                                                        [Enlarge/Download Table]


                                                 Three Months           Nine Months      
                                                Ended Nov. 30,         Ended Nov. 30,    
                                               2000        1999       2000        1999   
                                              ------      ------     ------      ------  

                                                                                         
OPERATING REVENUES:                                                                      
  Gaming...................................  $ 33,091    $ 45,555   $120,721    $139,348 
  Food and beverage........................     4,605       6,240     16,146      18,874 
  Hotel....................................     1,544       1,594      5,697       5,856 
  Retail and other.........................     1,191       1,589      4,375       7,111 
  Less promotional allowances..............    (4,274)     (4,747)   (13,048)    (13,900)
                                             ---------   ---------  ---------   ---------
    Net operating revenues.................    36,157      50,231    133,891     157,289 
                                             ---------   ---------  ---------   ---------
OPERATING COSTS AND EXPENSES:                                                            
  Gaming and gaming cruise.................    20,798      27,916     73,745      84,206 
  Food and beverage........................     2,927       3,655     10,358      11,384 
  Hotel....................................       659         650      2,267       2,229 
  Retail and other.........................       563         715      1,895       2,221 
  Selling, general and administrative......    10,138      12,332     34,663      38,036 
  Depreciation and amortization............     1,911       3,676      8,299      10,000 
  Impairment of long-lived assets..........       --          --      11,400         --  
  Development costs........................        61          29        225         162 
                                             ---------   ---------  ---------   ---------
    Total operating costs and expenses.....    37,057      48,973    142,852     148,238 
                                             ---------   ---------  ---------   ---------
OPERATING INCOME/(LOSS)....................      (900)      1,258     (8,961)      9,051 
                                             ---------   ---------  ---------   ---------
OTHER INCOME (EXPENSE):                                                                  
  Interest income..........................       493         105        703         402 
  Interest expense.........................    (5,504)     (5,168)   (15,877)    (14,981)
  Gain/(loss) on sale of assets............    34,308         (35)    34,297         (33)
                                             ---------   ---------  ---------   ---------
    Total other income (expense)...........    29,297      (5,098)    19,123     (14,612)
                                             ---------   ---------  ---------   ---------
INCOME (LOSS) BEFORE MINORITY INTEREST.....    28,397      (3,840)    10,162      (5,561)
Minority interest..........................     2,246         332      2,982       1,023 
                                             ---------   ---------  ---------   ---------

NET INCOME (LOSS)..........................  $ 26,151    $ (4,172)  $  7,180    $ (6,584)
                                             =========   =========  =========   =========

Basic and diluted net income (loss)                                                      
  per share................................  $   5.20    $  (0.83)  $   1.43    $  (1.31)
                                             =========   =========  =========   =========

Weighted average common and dilutive                                                     
  potential shares outstanding..............    5,033       5,033      5,033       5,033 
                                             =========   =========  =========   =========

See Notes to Condensed Consolidated Financial Statements.                                

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PRESIDENT CASINOS, INC.   
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
(UNAUDITED)       
(in thousands)      

                                                                [Download Table]

                                                  Nine Months Ended Nov. 30,
                                                         2000        1999   
                                                        ------      ------  

                                                                            
Net cash provided by (used in)                                              
  operating activities............................    $ (8,495)   $  3,087  
                                                      ---------   --------- 
Cash flows from investing activities:                                       
  Expenditures for property and equipment.........      (8,427)     (6,895) 
  Change in restricted cash.......................        (545)        237  
  Proceeds from sales of property, equipment                                
    and inventory.................................      58,207         140  
  Purchase of short-term investments..............      (5,615)       (685) 
  Other...........................................         --          185  
                                                      ---------   --------- 
    Net cash provided by (used in)                                          
      investing activities........................      43,620      (7,018) 
                                                      ---------   --------- 
Cash flows from financing activities:                                       
  Repayment of notes payable......................     (32,536)     (1,054) 
  Payments on capital lease obligations...........          (3)       (905) 
  Minority interest payments......................      (2,645)       (520) 
                                                      ---------   --------- 
    Net cash used in financing activities.........     (35,184)     (2,479) 
                                                      ---------   --------- 
Net decrease in cash and cash equivalents.........         (59)     (6,410) 
Cash and cash equivalents at beginning of period..      12,408      17,110  
                                                      ---------   --------- 
Cash and cash equivalents at end of period........    $ 12,349    $ 10,700  
                                                      =========   ========= 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                           
  Cash paid for interest..........................    $ 16,122    $ 14,960  
                                                      =========   ========= 

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:                             
  Assets acquired in exchange for debt............    $  1,644    $  5,393  
                                                      =========   ========= 

See Notes to Condensed Consolidated Financial Statements.                   

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PRESIDENT CASINOS, INC.   
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS    
(UNAUDITED)     
(dollars in thousands)      

1.  Summary of Significant Accounting Policies                                  

Principles of Consolidation                                                     

The consolidated financial statements include the accounts and operations of
President Casinos, Inc., its wholly-owned subsidiaries, a 95%-owned limited     
partnership and a limited liability company in which the Company has a 100%     
ownership interest and in which an entity wholly-owned by the Chairman of the   
Board of the Company has preferred rights to certain cash flows (collectively,  
the "Company" or "PCI").  All material intercompany balances and transactions   
have been eliminated.                                                           

PCI owns and operates riverboat and dockside gaming casinos through its     
subsidiaries.  The Company conducts dockside gaming operations in Biloxi,       
Mississippi through its wholly-owned subsidiary The President Riverboat         
Casino-Mississippi, Inc. ("President Mississippi") and in St. Louis, Missouri   
north of the Arch through its wholly-owned subsidiary, President Riverboat      
Casino-Missouri, Inc. ("President Missouri").  In addition, the Company owns    
and manages certain hotel and ancillary facilities associated with its gaming   
operations.  The Broadwater Property in Biloxi is owned by the President        
Broadwater Hotel, LLC, a limited liability corporation in which the Company     
has a 100% ownership interest.  The Company also operates two nongaming dinner  
cruise, excursion and sightseeing vessels in St. Louis near the base of the     
arch.                                                                           

On October 10, 2000, the Company sold the assets of its Davenport casino and
hotel operations.  The Davenport casino operations were managed by the          
Company's wholly-owned subsidiary, President Riverboat Casino-Iowa, Inc. ("PRC  
Iowa"), which is the general partner of the 95% Company-owned operating         
partnership, The Connelly Group, L.P. ("TCG").  The Blackhawk Hotel in          
Davenport was a wholly-owned subsidiary of the Company.  The operating results  
of the Davenport casino and hotel operations have been included in the          
consolidated operating results until the date of such sale.                     

Basis of Presentation                                                           

The Company is experiencing difficulty generating sufficient cash flow to   
meet its obligations and sustain its operations.  As a result of the Company's  
relatively high degree of leverage and the need for significant capital         
expenditures at its St. Louis property, management determined that, pending a   
restructuring of its indebtedness, it would not be in the best interest of the  
Company to make the regularly scheduled interest payments on its $75,000        
Senior Exchange Notes and $25,000 Secured Notes.  Accordingly, the Company did  
not pay the regularly scheduled interest payments of $6,375 that were each due  
and payable March 15, and September 15, 2000, respectively.  Under the          
Indentures pursuant to which the Senior Exchange Notes and Secured Notes were   
issued, an Event of Default occurred on April 15, 2000, and is continuing as    
of the date hereof.  Additionally, the Company did not pay the $25,000          

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principal payment due September 15, 2000 on the Senior Exchange Notes.  The     
holders of at least 25% of the Senior Exchange Notes and Secured Notes have     
been notified of the defaults and have instructed the Indenture Trustee to      
accelerate the Senior Exchange Notes and Secured Notes and declare the unpaid   
principal and interest to be due and payable.                                   

On October 10, 2000, the Company sold the assets of its Davenport operations
for aggregate consideration of $58,200 in cash.  On November 22, 2000, the      
Company entered into an agreement with a majority of the holders of its 13%     
Senior Notes and a majority of the holders of its 12% Secured Notes.  The       
agreement provides for a proposed restructuring of the Company's debt           
obligations under the notes and the application of certain of the proceeds      
received by the Company from the sale of the assets of the Company's            
Davenport, Iowa operations.  Approximately $43,000 of the proceeds from the     
sale were deposited with a trustee.  Of this amount, $12,750 was used to pay    
missed interest payments due March 15, 2000 and September 15, 2000 on the 12%   
and 13% Notes; $25,000 was used to partially redeem the 12% and 13% Notes; and  
$5,250 will be used to pay interest due March 15, 2001 on the 12% and 13%       
Notes.  In addition, the Company made combined principal and interest payments  
of $1,851 and $1,953 to pay off TCG's line of credit and the indebtedness on    
the Company's Biloxi casino vessel, respectively.                               

As part of the proposed restructuring, the maturity of the 12% Notes and the
13% Notes will be extended from September 15, 2001 to September 15, 2003, if    
the Company meets certain interest coverage ratios for the first half of        
calendar 2001.  In lieu of the partial redemption of the 13% Notes scheduled    
for September 15, 2000, the restructured 13% Notes will provide for a sinking   
fund payment of $15,000 due August 31, 2001.  The sinking fund payment is       
subject to extension or termination based upon satisfaction of certain          
financial-based performance tests by the Company's St. Louis operations for     
the quarter ending in July 2001, and each quarter thereafter on a rolling       
basis.  In addition to the forgoing, as part of the proposed restructuring      
certain additional assets will be pledged to secure the 13% Notes and the       
Company will issue to the holders of the 12% Notes and the 13% Notes warrants   
to purchase up to 10% of the fully diluted common stock of the Company at an    
exercise price of $2.625 per share.                                             

To consummate the proposed restructuring, the Company will solicit consent  
of the noteholders to waive certain defaults and to amend the Indentures        
governing the 12% and 13% Notes.  The Company has until May 30, 2001 to cause   
the proposed restructuring to close and become effective unless such date is    
extended.  In the event the proposed restructuring is not completed by means    
of a consent solicitation, the Company anticipates seeking a final order of a   
court confirming the restructuring as part of a plan of reorganization.         

Additionally, the Company did not pay the $30,000 note and the associated   
$7,000 loan fee due July 22, 2000 related to the Broadwater Property.  The      
Company is currently in negotiations with the lender to restructure this debt.  
Also in default, due to cross default provisions associated with other debt     
agreements, is the Company's $2,700 "President Casino-Mississippi" note.  This  
debt is currently due and classified in current liabilities.  See Note 3-       
Short-Term Debt and Notes Payable.                                              

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By suspending certain interest and principal payments until such time as the
restructuring plan has been fully negotiated and implemented, the Company       
believes that its liquidity and capital resources will be sufficient to         
maintain its normal operations at current levels during the proposed            
restructuring period and does not anticipate any adverse impact on its          
operations, customers or employees.  However, costs incurred and to be          
incurred in connection with the restructuring plan have been and will continue  
to be substantial and, in any event, there can be no assurance that the         
Company will be able to restructure successfully its indebtedness or that its   
liquidity and capital resources will be sufficient to maintain its normal       
operations during the restructuring period.                                     

As of November 30, 2000, the Company has $12,349 of unrestricted cash and   
cash equivalents.  Of this amount, the Company requires approximately $6,500    
of cash to fund daily operations.  The Company is heavily dependant on cash     
generated from operations to continue to operate as planned in its existing     
jurisdictions and to make capital expenditures.  The Company anticipates that   
its existing available cash and cash equivalents and its anticipated cash       
generated from operations will be sufficient to fund its ongoing operating      
properties but not meet all its obligations for borrowed money.  To the extent  
cash generated from operations is less than anticipated, the Company may be     
required to curtail certain planned expenditures.                               

In the opinion of management, the accompanying unaudited condensed          
consolidated financial statements contain all adjustments, consisting only of   
normal recurring entries unless otherwise disclosed, necessary to present       
fairly the Company's financial information for the interim periods presented    
and have been prepared in accordance with accounting principles generally       
accepted in the United States of America.  The interim results reflected in     
the condensed consolidated financial statements are not necessarily indicative  
of results for the full year or other periods.                                  

The financial statements contained herein should be read in conjunction with
the audited consolidated financial statements and accompanying notes to the     
consolidated financial statements included in the Company's Annual Report on    
Form 10-K for the period ending February 29, 2000.  Accordingly, footnote       
disclosure which would substantially duplicate the disclosure in the audited    
consolidated financial statements has been omitted in the accompanying          
unaudited condensed consolidated financial statements.                          

Certain amounts for fiscal 2000 have been reclassified to conform with      
fiscal 2001 financial statement presentation.                                   

2.  Property and Equipment                                                      

On October 10, 2000, the Company sold the assets of its Davenport casino and
hotel operations for aggregate consideration of $58,200 in cash.  An            
allocation of $56,100 was made to the assets of TCG and $2,100 to the assets    
of the Blackhawk Hotel.  The Company recognized a net gain of $34,310 on the    
transaction.  See Note 5-Segment Information, for results of operations of the  
Davenport properties.                                                           

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During August 2000, management evaluated the net realizable value of its    
assets based on their intended future use and current market conditions.        
Specifically, during the quarter, the Company entered into an option to sell    
one vessel and with the sale of the Davenport properties, the need to maintain  
a reserve vessel for the upcoming hull inspection was eliminated.  As a         
result, the Company recorded an impairment of long-lived assets of $11,400 on   
two casino vessels not currently used by the Company's operations and           
accounted for in the Company's leasing segment.  The net realizable value was   
determined primarily by current offers from unrelated third parties on the two  
vessels.  The Company is unable to predict whether these offers will result in  
sales.                                                                          

3.  Short-Term Debt and Notes Payable                                           

Short-term debt is summarized as follows:                                   

                                                                [Download Table]

                                                    Nov. 30,       Feb. 29, 
                                                      2000           2000   
                                                     ------         ------  
                                                                            
"President Casino-Broadwater" note payable......   $    --         $  3,966 
Construction note payable.......................        487             --  
Various equipment notes payable.................         63             547 
                                                   ---------       ---------
     Short-term debt............................   $    550        $  4,513 
                                                   =========       =========

"President Casino-Broadwater" Barge Note                                    

In August 1999, the Company purchased "President Casino-Broadwater," the    
vessel on which the Company conducts its Biloxi gaming operations.  The         
Company had previously leased the "President Casino-Broadwater" since June      
1995.  On October 10, 2000, the Company paid the then outstanding principal     
balance of $1,853, interest of $16 and related fees of $84 from the proceeds    
of the sale of its Davenport operations.                                        

Construction Note Payable                                                   

In conjunction with the relocation of the "Admiral" (see Note 6), the       
Company negotiated extended payment terms with a vendor providing certain       
services related to the new site development.  Under the terms of the           
agreement, the Company pays $250 against monthly progress billings and any      
unpaid outstanding balance bears an interest rate of 9.75%.  As of November     
30, 2000, the Company paid $1,250 against $1,737 invoiced.                      

Various Equipment Notes Payable                                             

TCG and President Missouri purchased various gaming and office equipment on 
payment terms ranging from six to twelve months.  The terms are non-interest    
bearing and payments are generally due monthly.  The Company paid the balance   
of TCG's indebtedness in conjunction with the sale of the Davenport assets.     

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Long-term notes payable, classified as current as described in Note 1, are  
summarized as follows:                                                          

                                                                [Download Table]

                                                    Nov. 30,        Feb.29, 
                                                      2000           2000   
                                                     ------         ------  
                                                                            
Senior Exchange notes, 13%, principal                                       
  payments of $25,000 due September 2000 and                                
  $50,000 due September 2001, net of discount                               
  of $135 and $284..............................   $ 56,115        $ 74,716 
Secured Notes, 12%, principal payment of                                    
  $25,000 due September 2001, net of a gain                                 
  on modification of terms of $353 and $655.....     19,103          25,655 
Broadwater Hotel note payable, variable interest                            
  rate, 10.625% and 9.875% as of November 30                                
  and February 29, 2000, respectively,                                      
  principal payment due July 2000...............     30,000          30,000 
M/V "President Casino-Mississippi" note payable,                            
 variable interest rate, 9.67% and 9.29% as of                              
 November 30 and February 29, 2000,                                         
 respectively, principal payments due quarterly                             
 of $100, with a final payment of $2,100 due                                
 August 2002....................................      2,700           3,000 
Line of credit, prime plus 0.5%, combined                                   
 rate of 9.0% as of February 29, 2000...........        --            2,200 
Gaming equipment note payable, 11.0%, monthly                               
 combined principal and interest payments of                                
 $74 due through August 2001....................        571             --  
                                                   ---------       ---------
   Total notes payable..........................    108,489         135,571 

 Less: Current maturities.......................   (108,489)       (135,571)
                                                   ---------       ---------
                                                   $    --         $    --  
                                                   =========       =========

Senior Exchange Notes                                                       

In April 1995, the Company exchanged $100,000 of Senior Notes for an equal  
principal amount of 13% Senior Exchange Notes due 2001 ("Senior Exchange        
Notes") registered under the Securities Act of 1933.  The Senior Exchange       
Notes rank equal in right of payment to all present and future senior debt (as  
defined in the indenture governing the Senior Exchange Notes (the "Note         
Indenture")) of the Company and its subsidiaries and were payable as follows:   
25% of the outstanding principal amount on each of September 15, 1999 and       
September 15, 2000 and the remainder of the outstanding principal amount on     
September 15, 2001.  In addition, the Senior Exchange Notes are                 
unconditionally guaranteed, jointly and severally on a senior basis, by all of  
the Company's then existing wholly-owned subsidiaries (the "Guarantors"), and,  
under certain circumstances, the Company's future subsidiaries, although the    
subsidiary guarantee from TCG is limited in amount.  As security for the        
obligations of the Company and the Guarantors under the Senior Exchange Notes,  
the Company and the Guarantors have pledged their equity interests in each      
Guarantor and certain investments in certain gaming ventures.  The Note         
Indenture contains certain restrictive covenants which, among other things,     
limit the Company's ability to pay dividends, incur additional indebtedness     
(exclusive of $15,000 of senior debt), issue preferred stock, create liens on   
certain assets, merge or consolidate with another company and sell or           

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otherwise dispose of all or substantially all of its properties or assets.  On  
November 22, 2000, the Company and its principal subsidiaries executed an       
agreement with a majority of holders of its Senior Exchange Notes and a         
majority of the holders of its Secured Notes.  See Note 1-Basis of              
Presentation.                                                                   

Secured Notes                                                               

On December 3, 1998, the Company repurchased $25,000 of its Senior Exchange 
Notes.  The repurchased notes were used to satisfy the $25,000 principal        
payment due September 15, 1999 on the Company's $100,000 Senior Exchange        
Notes.  The repurchase was funded by the issuance of $25,000 of new 12% notes   
due September 15, 2001 (the "Secured Notes").  The Secured Notes have no        
mandatory redemption obligation and are secured by mortgages on the "Admiral"   
and the "New Yorker," as well as subsidiary guarantees.                         

Broadwater Hotel Note                                                       

In conjunction with the purchase of the Broadwater Property, President      
Broadwater, L.L.C. ("PBLLC") borrowed the sum of $30,000 from a third party     
lender, evidenced by a non-recourse promissory note (the "Indebtedness").       
Except as set forth in the promissory note and related security documents,      
PBLLC's obligations under the Indebtedness are nonrecourse and are secured by   
the Broadwater Property, its improvements and leases thereon.  The              
Indebtedness bears interest at a variable rate per annum equal to the greater   
of (i) 8.75% or (ii) 4% plus the LIBOR 30-day rate.                             

PBLLC is obligated under the Indebtedness to make monthly payments of       
interest accruing under the Indebtedness, and was obligated to repay the        
Indebtedness in full on July 22, 2000.  In addition, PBLLC was obligated to     
pay to the lender a loan fee in the amount of $7,000 which was fully earned     
and nonrefundable when the Indebtedness was due.  As of the default date, the   
Company is accruing, but has not paid, interest on the unpaid fee balance at    
the stipulated rate.  The Company has continued to make the monthly interest    
payments accruing on the $30,000 principal and is in negotiations with the      
lender regarding restructuring this debt under acceptable terms.  There can be  
no assurances that such negotiations will be successful.                        

M/V "President Casino-Mississippi" Note                                     

The 9.67% term note payable is collateralized by the vessel "President      
Casino-Mississippi" and various equipment and is personally guaranteed by Mr.   
Connelly.  This note also contains certain covenants which, among other         
things, require the Company to maintain a minimum tangible net worth of         
$40,000.  The Company received a waiver of the net worth covenant through the   
period ended September 30, 2000, at which time the Company's net worth          
requirement returned to $40,000.  The aforementioned default on the Company's   
Senior Exchange Notes and Secured Notes also constituted a default under this   
vessel note.  The Company has continued to make the quarterly principal and     
interest payments related to this note.  No action has been taken by the        
lender to accelerate the note and declare the unpaid principal due and          
payable.                                                                        

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Line of Credit                                                              

TCG, the Company's 95%-owned partnership, maintained a line of credit       
provided by Firstar Bank, N.A.  Outstanding principal of $1,800 and interest    
of $51 were paid from the proceeds of the sale of the assets of the Davenport   
casino operations and the line of credit was terminated on October 10, 2000.    

The various agreements governing the notes described above generally limit  
borrowings by the Company's affiliates without the respective lenders' prior    
consent.                                                                        

4.  Commitments and Contingent Liabilities                                      

On January 16, 1997, a case entitled "Whalen v. John E. Connelly, J. Edward 
Connelly and Associates, Inc., President Casinos, Inc. and PRC-Iowa, Inc." was  
filed in the Iowa District Court for Scott County by Michael L. Whalen          
("Whalen"), who is a five percent limited partner in TCG.  Whalen filed this    
lawsuit (the "Whalen Conversion Lawsuit") after accepting from Della III,       
Inc., a former general partner, shares of Common Stock and cash to which he     
was determined to be entitled pursuant to a previous judgment.  Whalen claimed  
in this lawsuit that because he asked for the stock and cash while he was       
appealing the judgment in a previous lawsuit and was not given the stock or     
cash until after the judgment was affirmed, the named defendants committed the  
tort of conversion.  Whalen sought as damages the difference in the value of    
the stock on the date of its "highest valuation" and the date he accepted the   
stock in 1996. Although the Company and Mr. Connelly were named as defendants,  
they were dismissed by the trial court for lack of jurisdiction.  The           
remaining defendants were JECA, a company controlled by Mr. Connelly that is    
the successor to Della III, and PRC-Iowa, Inc., which was the general partner   
of TCG and which had asserted a counterclaim against Mr. Whalen.  In November   
1998, the trial Court granted the remaining defendants' motion for summary      
judgment and dismissed Whalen's claim for conversion.  The trial court also     
dismissed the counterclaim against Mr. Whalen.  Mr. Whalen appealed to the      
Supreme Court of Iowa.  On December 20, 2000, that Court reversed the judgment  
and ruled that JECA could be found liable for conversion.  The case was         
remanded to the District Court for further proceedings to determine the amount  
of damages.  Further proceedings have not yet been scheduled in the District    
Court.                                                                          

On December 28, 2000, Mr. Whalen filed another lawsuit in Scott County      
District Court, "Whalen v. The Connelly Group L.P. and President Riverboat      
Casino Iowa, Inc."  In this lawsuit, Whalen asks for injunctive relief to       
prevent TCG or PRC-Iowa, Inc. from making any further distribution of assets    
from the remaining proceeds of the sale of TCG's assets to IOC-Davenport, Inc.  
and Isle of Capri Casinos, Inc. pending a determination of whether the assets   
can be distributed in light of the potential for a judgment in Whalen's favor   
in the Whalen Conversion Lawsuit.  A hearing in this case is currently          
scheduled for February 15, 2001.  The Company believes that, consistent with    
the Supreme Court's ruling in the Whalen Conversion lawsuit discussed above,    
damages in the Whalen Conversion Action, if any, should be assessed against     
JECA and not PRC-Iowa.  The Company believes that it has meritorious defenses   
and that the outcome of this action will not result in a material adverse       
effect on the Company.                                                          

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The Company is from time to time a party to litigation, which may or may not
be covered by insurance, arising in the ordinary course of its business.  The   
Company does not believe that the outcome of any such litigation will have a    
material adverse effect on the Company's financial condition, results of        
operations, or cash flows, or would have any material adverse impact upon the   
gaming licenses of the Company's subsidiaries.                                  

5.  Segment Information                                                         

The Company evaluates performance based on operations EBITDA.  Operations   
EBITDA is earnings before interest, taxes, depreciation and amortization of     
each of the reportable segments.  Corporate and development expenses,           
gain/loss on sale of assets and impairment of long-lived assets are not         
allocated to the reportable segments and are therefore excluded from            
operations EBITDA.                                                              

The Company has no inter-segment sales and accounts for transfers of        
property and inventory at its net book value at the time of such transfer.      

The Company's reportable segments are based on its three geographic gaming  
operations and its leasing operation.  The Biloxi Properties consists of the    
Biloxi casino and the Broadwater Property and the St. Louis Properties          
consists of the St. Louis casino and Gateway Riverboat Cruises.  The Davenport  
Properties consists of the Davenport casino and the Blackhawk Hotel, the        
assets of which were sold, and operations ceased, on October 10, 2000.          

The Company's reportable segments, other than the leasing operation, are    
similar in operations, but have distinct and separate regional markets.         

                                                                [Download Table]


                                          Three Months         Nine Months    
                                         Ended Nov. 30,       Ended Nov. 30,  
                                         2000      1999       2000      1999  
                                        ------    ------     ------    ------ 
                                                                              
OPERATING REVENUES:                                                           
 Biloxi Properties................... $ 13,589  $ 14,367   $ 42,697  $ 45,708 
 St. Louis Properties................   14,855    16,486     46,631    49,413 
 Davenport Properties................    7,713    19,378     44,563    60,348 
                                      --------- ---------  --------- ---------
 Gaming and ancillary operations.....   36,157    50,231    133,891   155,469 
 Leasing Operation...................      --        --         --      1,820 
                                      --------- ---------  --------- ---------
      Net operating revenues......... $ 36,157  $ 50,231   $133,891  $157,289 
                                      ========= =========  ========= =========

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                                                                [Download Table]

                                          Three Months         Nine Months    
                                          Ended Nov. 30,      Ended Nov. 30,  
                                         2000      1999       2000      1999  
                                        ------    ------     ------    ------ 
                                                                              
EBITDA (before development and                                                
   impairment expenses and gain/loss                                          
   on sale of property and equipment):                                        
 Biloxi Properties................... $    953  $  1,809   $  5,093  $  5,683 
 St. Louis Properties................      568     1,698      3,269     5,516 
 Davenport Properties................    1,025     2,921      7,027    10,334 
                                      --------- ---------  --------- ---------
 Gaming and ancillary operations.....    2,546     6,428     15,389    21,533 
 Leasing Operation...................     (271)     (309)      (871)    1,003 
                                      --------- ---------  --------- ---------
   Operations EBITDA.................    2,275     6,119     14,518    22,536 

OTHER COSTS AND EXPENSES:                                                     
 Corporate expense...................    1,203     1,156      3,555     3,323 
 Development expense.................       61        29        225       162 
 Depreciation and amortization.......    1,911     3,676      8,299    10,000 
 (Gain) loss on sale of assets.......  (34,308)       35    (34,297)       33 
 Loss on impairment..................      --        --      11,400       --  
 Interest, net.......................    5,011     5,063     15,174    14,579 
                                      --------- ---------  --------- ---------
    Total other costs and expenses...  (26,122)    9,959      4,356    29,097 
                                      --------- ---------  --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES                                             
  AND MINORITY INTEREST..............   28,397    (3,840)    10,162    (5,561)
 Minority interest...................    2,246       332      2,982     1,023 
                                      --------- ---------  --------- ---------
NET INCOME (LOSS).................... $ 26,151  $ (4,172)  $  7,180  $ (6,584)
                                      ========= =========  ========= =========

                                                                [Download Table]

                                             Nov. 30,   Feb. 29,
                                              2000        2000  
                                             ------      ------ 
                                                                
Property and Equipment:                                         
  Biloxi Properties.....................   $ 53,443    $ 54,638 
  St. Louis Properties..................     40,821      36,496 
  Davenport Properties..................        --       22,873 
                                           ---------   ---------
    Gaming and ancillary operations.....     94,264     114,007 
  Leasing Operations....................     13,023      25,685 
                                           ---------   ---------
    Operations Assets...................    107,287     139,692 
  Corporate Assets......................         38          54 
  Development Assets....................      3,401       2,744 
                                           ---------   ---------
    Net Property and Equipment..........   $110,726    $142,490 
                                           =========   =========

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                                                                [Download Table]

                                         Nine Months Ended Nov. 30,
                                              2000        1999     
                                             ------      ------    
                                                                   
Additions to Property and Equipment:                               
  Biloxi Properties.....................   $    840    $  7,724    
  St. Louis Properties..................      7,842       1,629    
  Davenport Properties..................        730       2,011    
  Leasing Operations....................        --          --     
                                           ---------   ---------   
    Operations' Assets..................      9,412      11,364    
  Corporate Assets......................          1           8    
  Development Assets....................        658         916    
                                           ---------   ---------   
                                           $ 10,071    $ 12,288    
                                           =========   =========   

Included in additions to property and equipment is $1,644 and $5,393,       
respectively, of assets acquired in exchange for debt.                          

6. Relocation of the "Admiral"                                                  

During July 1998, the Company and the City of St. Louis reached an agreement
for the relocation of the "Admiral" approximately 1,000 feet north from its     
then current location on the Mississippi River.  The casino was closed at       
midnight December 3, 2000 to prepare for the move and reopened December 7,      
2000 at 5:00 p.m.  The new location provides guests with improved parking and   
valet service, and better ingress/egress including improved access from         
Interstate 70.  This site is also less susceptible to flooding than the         
previous mooring site of the "Admiral."                                         

The aggregate cost to relocate the "Admiral" and construct ancillary        
facilities is expected to be approximately $8,760.  Under the terms of the      
agreement, the City funded $3,000 of the relocation costs, $2,400 of which was  
financed through bank debt.  The Company will pay for the remaining costs.      
Under the terms of the agreement, the Company has placed $500 in escrow to be   
used to fund a portion of these costs.  It is anticipated that the City will    
repay the $2,400 in debt from annual allocations of $600 from the City's        
annual home dock city public safety fund that is funded by admission taxes      
from the "Admiral."  The Company has guaranteed repayment of the bank debt if   
the City fails to pay the obligation.  As of January 11, 2001, the Company has  
guaranteed $1,948.                                                              

Item 2.  Management's Discussion and Analysis of Financial Condition and        
Results of Operations.                                                          

The following discussion should be read in conjunction with the consolidated
financial statements of the Company included elsewhere in this report.          

The Company is experiencing difficulty generating sufficient cash flow to   
meet its obligations and sustain its operations.  As a result of the Company's  
high degree of leverage and the need for significant capital expenditures at    
its St. Louis property, management determined that, pending a restructuring of  
its indebtedness, it would not be in the best interest of the Company to make   

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the regularly scheduled interest payments on its Senior Exchange Notes and      
Secured Notes.  Accordingly, the Company did not pay the regularly scheduled    
interest payments of $6.4 million that were each due and payable March 15,      
2000 and September 15, 2000, respectively.  Under the Indentures pursuant to    
which the Senior Exchange Notes and Secured Notes were issued, an Event of      
Default occurred on April 15, 2000, and is continuing as of the date hereof.    
Additionally the Company did not pay the $25.0 million principal payment due    
September 15, 2000 on the Senior Exchange Notes.  The holders of at least 25%   
of the Senior Exchange Notes and Secured Notes have instructed the Indenture    
Trustee to accelerate the Senior Exchange Notes and Secured Notes and declare   
the unpaid principal and interest to be due and payable.                        

On October 10, 2000, the Company sold the assets of its Davenport operations
for aggregate consideration of $58.2 million in cash.  An allocation of $56.1   
million was made to the assets of TCG and $2.1 million to the assets of the     
Blackhawk Hotel.  The Company recognized a gain of $34.3 million on the         
transaction.                                                                    

On November 22, 2000, the Company entered into an agreement with a majority 
of the holders of its 13% Senior Notes and a majority of holders of its 12%     
Secured Notes.  The agreement provides for a proposed restructuring of the      
Company's debt obligations under the notes and the application of certain of    
the proceeds received by the Company from the sale of the assets of the         
Company's Davenport operations.  Approximately $43.0 million of the proceeds    
from the sale were deposited with a securities intermediary.  Of this amount,   
$12.8 million was used to pay missed interest payments due March 15, 2000 and   
September 15, 2000 on the 12% and 13% Notes; $25.0 million was used to          
partially redeem the 12% and 13% Notes; and $5.3 million will be used to pay    
interest due March 15, 2001 on the 12% and 13% Notes.  In addition, the         
Company made combined principal and interest payments of $1.9 million and $2.0  
million to pay off TCG's line of credit and the indebtedness on the Company's   
Biloxi casino vessel, respectively.                                             

As part of the proposed restructuring, the maturity of the 12% Notes and the
13% Notes will be extended from September 15, 2001 to September 15, 2003, if    
the Company meets certain interest coverage ratios for the first half of        
calendar 2001.  In lieu of the partial redemption of the 13% Notes scheduled    
for September 15, 2000, the restructured 13% Notes will provide for a sinking   
fund payment of $15 million due August 31, 2001.  The sinking fund payment is   
subject to extension or termination based upon satisfaction of certain          
financial-based performance tests by the Company's St. Louis operations for     
the calendar quarter ending in July 2001, and each quarter thereafter on a      
rolling basis.  In addition to the foregoing, as part of the proposed           
restructuring certain additional assets will be pledged to secure the 13%       
Notes and the Company will issue to the holders of the 12% Notes and the 13%    
Notes warrants to purchase up to 10% of the fully diluted common stock of the   
Company at an exercise price of $2.625 per share.                               

To consummate the proposed restructuring, the Company will solicit consent  
of the noteholders to waive certain defaults and to amend the Indentures        
governing the 12% Notes and the 13% Notes.  The Company has until May 30, 2001  
to cause the proposed restructuring to close and become effective unless such   
date is extended.  In the event the proposed restructuring is not completed by  

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means of a consent solicitation, the Company anticipates seeking a final order  
of a court confirming the restructuring as part of a plan of reorganization.    

Additionally, the Company did not pay the $30.0 million note and the        
associated $7.0 million loan fee due July 22, 2000 related to the Broadwater    
Property.  The Company continues to make monthly interest payments accruing on  
the $30.0 million principal and is currently negotiating with the lender for    
restructuring the debt.  Also in default, due to cross default provisions       
associated with other debt agreements, is the Company's $2.7 million            
"President Casino-Mississippi" note.  The Company continues to make quarterly   
principal and interest payments.  These debts are currently due and classified  
in current liabilities.  In the event that these notes are accelerated, at      
this time the Company does not have the resources available to repay such       
indebtedness.  See Liquidity and Capital Resources.                             

By suspending certain interest and principal payments until such time as a  
restructuring plan has been negotiated and implemented, the Company believes    
that its liquidity and capital resources will be sufficient to maintain its     
normal operations at current levels during the restructuring period and does    
not anticipate any adverse impact on its operations, customers or employees.    
However, costs incurred and to be incurred in connection with the               
restructuring plan have been and will continue to be substantial and, in any    
event, there can be no assurance that the Company will be able to restructure   
successfully its indebtedness or that its liquidity and capital resources will  
be sufficient to maintain its normal operations during the restructuring        
period.                                                                         

Management is pursuing various strategic financing alternatives in order to 
fund these obligations and the Company's continuing operations.  The Company    
is working with recognized financial advisors in the gaming industry to pursue  
these alternatives, including the restructuring and refinancing of outstanding  
debt obligations and/or the sale of all or a portion of its assets.  The        
Company's ability to continue as a going concern is dependent on its ability    
to restructure successfully, refinance its debts or sell/charter assets on a    
timely basis under acceptable terms and conditions and the ability of the       
Company to generate sufficient cash to fund future operations.  There can be    
no assurance in this regard.                                                    

Overview                                                                        

The Company's operating results are affected by a number of factors,        
including competitive pressures, changes in regulations governing the           
Company's activities, the results of pursuing various development               
opportunities and general weather conditions.  Consequently, the Company's      
operating results may fluctuate from period to period and the results for any   
period may not be indicative of results for future periods.  The Company's      
operations are not significantly affected by seasonality.                       

--Competition                                                               

Intensified competition for patrons continues to occur at each of the       
Company's properties.                                                           

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Since gaming began in Biloxi in August 1992, there has been steadily        
increasing competition along the Mississippi Gulf Coast, in nearby New Orleans  
and elsewhere in Louisiana and Mississippi.  Several large hotel/casino         
complexes have been built in recent years with the largest single resort in     
the area opening in March 1999.  There are currently twelve casinos operating   
on the Mississippi Gulf Coast.  See "Potential Growth Opportunities" regarding  
a master plan for a destination resort the Company is developing in Biloxi,     
Mississippi.                                                                    

Within a 45-mile radius of the Quad Cities, the Company's Davenport casino  
operations competed with three other casino operations.  Expansion and          
increased marketing by these competitors and changes in the Illinois gaming     
laws resulted in a decrease in market share and an increase in promotional and  
marketing costs for the Company's Davenport operations.  The assets of the      
Davenport operations were sold on October 10, 2000.                             

Competition is intense in the St. Louis market area.  There are presently   
four other casino companies operating eight casinos in the market area.  Two    
of these are Illinois casino companies operating single casino vessels on the   
Mississippi River, one across the Mississippi from the "Admiral" and the        
second 20 miles upriver.  There were three Missouri casino companies in the     
market area, each of which operated two casino vessels approximately 20         
miles west of St. Louis on the Missouri River, one in the City of St. Charles,  
Missouri and two in Maryland Heights, Missouri.  In April 2000, one of these    
two casino companies purchased the other resulting in all four casinos being    
operated by the same company.                                                   

Applications were submitted to the Missouri Gaming Commission for approval  
of potential new licenses at four different locations within the St. Louis      
Metropolitan area along the Mississippi River, three of which are within 20     
miles or less of the "Admiral."  In July 2000, the Gaming Commission announced  
its decision to award an additional license to the applicant proposing a site   
at the greatest distance from the "Admiral" of the four proposed locations.     
The Commission's decision is being challenged by one of the applicants whose    
proposal was not selected and certain other entities.  Management believes      
that the opening of one or more additional casinos in the St. Louis market      
would have a negative impact on the Company's results of operations, with the   
currently selected location having the least impact.                            

--Regulatory Matters                                                        

Differences in gaming regulations in the St. Louis market between Illinois  
and Missouri operators have given both competitive advantages and               
disadvantages to the various operators.  Missouri regulations formerly did not  
require vessels to actually cruise.  However, simulated cruising requirements   
were imposed which restricted entry to a vessel to a 45-minute period every     
two hours.  Those competitors having two adjacent casino vessels could          
alternate hourly boarding times and provide virtually continuous boarding for   
their guests.  Thus, they had a distinct competitive advantage over the         
Company, which has a single casino vessel in Missouri.  Illinois casino         
vessels were formerly required to cruise, thereby limiting ingress and egress   
to their casinos.  On June 25, 1999, legislation was enacted eliminating the    
Illinois cruising requirements.  This change immediately gave the Illinois      

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operators an advantage over the Missouri operators as Illinois patrons could    
enter and exit the vessel at any time.  However, this advantage was negated on  
August 16, 1999, when the Missouri Gaming Commission allowed "continuous        
boarding" by establishing a program eliminating the boarding restrictions for   
the "Admiral" and other casinos in eastern Missouri.  This change to            
"continuous boarding" also enabled the "Admiral" to compete more effectively    
with the Missouri operators who have two adjacent casino vessels.  The program  
was subsequently extended to all casinos in the state of Missouri.              

Other Missouri regulations limit the loss per cruise per passenger by       
limiting the amount of chips or tokens a guest may purchase during each two-    
hour gaming session to $500.  Companies that operate adjacent casinos enable    
guests who reach the 2-hour loss limit to move to the adjacent casino and       
continue to play.  The lack of a statutory loss limit on Illinois casinos       
allows them to attract higher stake players; additionally, their guests are     
not burdened with the administrative requirements related to the loss limits.   
Any easing of the loss limits in Missouri would be expected to have a positive  
impact on the Company's St. Louis operations.                                   

--Weather Conditions                                                        

The Company's operating results are susceptible to the effects of floods,   
hurricanes and adverse weather conditions.  Historically, the Company has       
temporarily suspended operations on various occasions as a result of such       
adversities.  Under less severe conditions, high river levels cause reduced     
parking and a general public perception of diminished access to the casino      
resulting in decreased revenues.                                                

--Potential Growth Opportunities                                            

Biloxi, Mississippi                                                         

In July 1997, the Company, through a newly created subsidiary, President    
Broadwater Hotel, LLC ("PBLLC"), purchased for $40.5 million certain real       
estate and improvements located on the Gulf Coast in Biloxi, Mississippi from   
an entity which was wholly-owned by John E. Connelly, Chairman, Chief           
Executive Officer and principal stockholder of the Company.  The property       
comprises approximately 260 acres and includes two hotels, a 111-slip marina    
and the adjacent 18-hole Sun Golf Course (collectively, the "Broadwater         
Property").  The marina is the site of the Company's casino operations in       
Biloxi and was formerly leased by the Company under a long-term lease           
agreement.  The Company invested $5.0 million in PBLLC.                         

PBLLC financed the purchase of the Broadwater Property with $30.0 million of
financing from a third party lender, evidenced by a non-recourse promissory     
note (the "Indebtedness") and issued a $10.0 million membership interest to     
the seller.  Except as set forth in the promissory note and related security    
documents, PBLLC's obligations under the Indebtedness are nonrecourse and are   
secured by the Broadwater Property, its improvements and leases thereon.  The   
Indebtedness bears interest at a variable rate per annum equal to the greater   
of (i) 8.75%, or (ii) 4% plus the LIBOR 30-day rate.  The membership interest   
grows at the same rate.  The accrued balance of the membership account and      
unpaid growth as of November 30, 2000 was $13.4 million and is included on the  

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balance sheet in minority interest.  Cash payments relating to this membership  
interest have totaled $0.2 million since its inception.                         

PBLLC is obligated to make monthly payments of interest accruing under the  
Indebtedness, and was obligated to repay the Indebtedness in full on July 22,   
2000.  In addition, PBLLC was obligated to pay to the lender a loan fee in the  
amount of $7.0 million which was fully earned and nonrefundable when the        
Indebtedness was due.  See Liquidity and Capital Resources for a discussion of  
the repayment of this obligation.                                               

The Company has developed a master plan for the Broadwater Property.        
Management believes that this site is ideal for the development of              
"Destination Broadwater," a full-scale luxury destination resort offering an    
array of entertainment attractions in addition to gaming.  The plans for the    
resort feature a village which will include a cluster of casinos, hotels,       
restaurants, theaters and other entertainment attractions.  Management          
believes that with its beachfront location and contiguous golf course, the      
property is the best site for such a development in the Gulf Coast market.      

In January 1999, the Company received the permit from the Mississippi       
Department of Marine Resources ("DMR") for development of the full-scale        
destination resort.  This is the first of three permit approvals required of    
the Joint Permit Application submitted in August 1998 to the DMR, the U.S.      
Army Corps of Engineers and the Mississippi Department of Environment Quality.  
The two remaining permit approvals are still pending and awaiting the           
completion of the Environmental Impact Statement ("EIS").  The Company has      
received the Draft EIS, the notice of which was posted in the Federal Register  
in early June for public comment.  The comment period has been closed and the   
Final EIS is currently pending.                                                 

In March 1999, to facilitate its proposed master plan development, the      
Company entered into contracts with the State of Mississippi and the owners of  
Deer Island to purchase for $15.0 million and convey title to the island to     
the State of Mississippi.  Deer Island encompasses approximately 500 acres and  
is located just offshore of Biloxi.  It is primarily wilderness which the       
state would preserve for use by the people of Mississippi.  This transaction    
completes another essential step towards securing the necessary agreements and  
approvals from the State of Mississippi for the Company's Destination           
Broadwater development plans.  The purchase and conveyance of the title are     
contingent on the occurrence of various events, including the issuance to the   
Company of all required federal, state and local permits and the issuance by    
the State of Mississippi of the tidelands and fast lands leases and casino      
licenses necessary for development of Destination Broadwater.                   

In connection with the Company's proposed Destination Broadwater development
plan, to date, the Company has not identified any specific financing            
alternatives or sources as the necessary regulatory approvals have not been     
obtained.  There can be no assurance that the Company will be able to obtain    
the regulatory approvals or the requisite financing.  Should the Company fail   
to raise the required capital, such failure would materially and adversely      
impact the Company's business plan.                                             

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St. Louis, Missouri                                                         

Slot Upgrade   Machines and Loss Limit Card Tracking System                 

During the summer of 1998, all Missouri casinos in the St. Louis market,    
except the "Admiral," migrated from a manual/paper system of regulating the     
Missouri $500 loss limit to an electronic system.  This paperless loss          
tracking system is more accommodating to guests and allows for the use of bill  
validators on slot machines, a convenience that the "manual/paper" system does  
not allow.                                                                      

The slot machines offered by the "Admiral" until the end of August 2000     
lacked bill validators.  As a result, the Company could not provide guests the  
convenience of using bill validators nor adapt to the paperless loss tracking   
system, putting the "Admiral" at a significant competitive disadvantage with    
the other casinos in the area market.                                           

Effective August 28, 2000, Missouri began to allow credits generated through
use of the bill validators to go directly to the slot "credit meter" for use    
by the customer.  Previously in Missouri, a customer using a bill validator     
received tokens in the tray and fed these tokens into the machine.  The         
regulatory change provided a significant added convenience to slot players.     

In March 2000, the Company purchased 850 previously owned slot machines that
are equipped with bill validators and are fitted to operate with an electronic  
loss limit system.  Effective August 28, 2000, approximately 700 of these       
machines were installed on the "Admiral," all of which are currently            
operational with the electronic loss limit system.  As of November 30, 2000,    
the Company also added approximately 50 new machines with bill validators, and  
which are fitted to operate with an electronic loss limit system.  Management   
believes the Company will be better positioned to compete in the St. Louis      
market with these additions.                                                    

Relocation of the "Admiral"                                                 

During July 1998, the Company and the City of St. Louis reached an agreement
for the relocation of the "Admiral" approximately 1,000 feet north from its     
then current location on the Mississippi River, to the Laclede's Landing        
District.  The casino was closed at midnight December 3, 2000 to prepare for    
the move and reopened December 7, 2000 at 5:00 p.m.  The new location provides  
for an improved operation with better ingress and egress, provides better       
parking and is less susceptible to flooding.  The Company believes that this    
move will result in increased revenues for the "Admiral" and increased rent     
and tax revenues for the City of St. Louis.  The City funded the first $3.0     
million of the estimated $8.8 million in costs to relocate and improve the      
"Admiral."  Of the $3.0 million City-funded relocation costs, $2.4 million was  
financed through bank debt.  The Company will pay for the remaining costs.  It  
is anticipated that the City will repay the $2.4 million debt from gaming       
taxes it receives based upon gaming revenues of the "Admiral."  The Company     
has guaranteed repayment of the bank debt if the City fails to pay it.  As of   
January 11, 2001, the Company guaranteed $1.9 million.                          

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The platform construction on the new levee site began in September 1999.  As
of the end of November 2000, the Company has spent approximately $6.2 million   
on the relocation, of which the City has reimbursed the Company $3.0 million.   

The anticipated benefits of relocating the "Admiral" include:               

Ingress/Egress -- Traffic ingress to and egress from the casino, at its     
former location, was difficult.  Access from the major highways has             
historically been poor.  Significant improvements in exit and entrance ramps    
to the Laclede's Landing area off the main highway have been completed and      
road improvements within the Laclede's Landing area are underway or completed.  
Four roads to and from the main highway provide improved ingress to and egress  
from the new location.                                                          

Guest Parking -- Parking in the former location was limited and not         
controlled by the Company.  All parking facilities, including the valet         
parking areas, were operated by third parties.  Directly across the street      
from the casino was a large flood wall, which limited parking.  Guests had to   
either use the parking garages in the proximity of the casino and walk          
considerable distances or park on the levee.  The new location provides the     
potential for significantly improved parking facilities with parking garages    
and lots conveniently located, and the potential to expand and control the      
parking.                                                                        

Flooding -- Flooding and high water on the Mississippi River has negatively 
impacted the financial results of the "Admiral" operations every year since it  
has opened.  The impact first occurs as the river rises and reduces or totally  
eliminates parking on the levee, which formerly was the closest parking to the  
casino.  Periodically the river level has reached levels that have made the     
construction of costly scaffolding necessary to keep access to the casino       
open.  The new location is four feet higher and is much less susceptible to     
flooding.  Historically, if the "Admiral" had been at its new location          
since it opened for gaming in 1994, it is unlikely that the casino would have   
been forced to close due to flooding.                                           

Laclede's Landing Entertainment District -- Laclede's Landing is a historic 
area located north of the Arch on the Mississippi River and is an               
entertainment destination.  The "Admiral" was formerly located "next to" the    
Laclede's Landing area.  The casino was not visible from the downtown area,     
major highways or the Laclede's Landing entertainment area due to a flood wall  
and other infrastructure.  The relocated "Admiral" is centrally positioned in   
the entertainment district and readily visible to those coming to the           
Laclede's Landing area.                                                         

Commercial Development -- There has been significant commercial development 
in recent years in the Laclede's Landing area.  The number of conventions and   
entertainment at the nearby convention center and TWA Dome continues to be a    
catalyst for business in the area.  Management believes that the relocated      
"Admiral" will serve as a catalyst for further commercial and entertainment     
growth in the Laclede's Landing area.                                           

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While management believes both the slot upgrade and relocation of the       
"Admiral" should enhance St. Louis operations, there can be no assurances that  
these expected benefits will be realized.                                       

Results of Operations                                                           

The results of operations for the three-month and nine-month periods ended  
November 30, 2000 and 1999 include the gaming results for the Company's         
operations in Biloxi, Mississippi and St. Louis, Missouri and of much lesser    
significance, the non-gaming operations in Biloxi (the Broadwater Property)     
and St. Louis (Gateway Riverboat Cruises).  The results of operations also      
include the Company's gaming operations in Davenport, Iowa and to a much        
lesser significance the non-gaming operations in Davenport (the Blackhawk       
Hotel) through the date of sale.  The assets of the Davenport operations were   
sold on October 10, 2000.                                                       

The following table highlights the results of the Company's operations.     

                                                                [Download Table]


                                      Three Months Ended   Nine Months Ended 
                                           Nov. 30,             Nov. 30,     
                                        2000      1999       2000      1999  
                                       ------    ------     ------    ------ 
                                                   (in millions)             
                                                                             
Biloxi, Mississippi Operations                                               
   Operating revenues................. $ 13.6    $ 14.4     $ 42.8    $ 45.7 
   Operating income...................    0.3       1.0        3.0       4.0 

St. Louis, Missouri Operations                                               
   Operating revenues.................   14.9      16.5       46.6      49.4 
   Operating income (loss)............   (0.7)      0.6       (0.2)      2.0 

Davenport, Iowa Operations                                                   
   Operating revenues.................    7.7      19.4       44.5      60.3 
   Operating income...................    1.0       1.8        5.5       7.0 

Corporate Leasing Operations                                                 
   Operating revenues.................     --        --         --       1.8 
   Operating loss.....................   (0.3)     (1.0)     (13.6)     (0.5)

Corporate Administrative and                                                 
   Development expense................   (1.2)     (1.2)      (3.7)     (3.5)

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The following table highlights certain supplemental measures of the       
Company's financial performance.                                                

                                                                [Download Table]

                                      Three Months Ended   Nine Months Ended 
                                            Nov. 30,            Nov. 30,     
                                        2000      1999       2000      1999  
                                       ------    ------     ------    ------ 
                                               (dollars in millions)         
                                                                             
Biloxi, Mississippi Operations                                               
   EBITDA............................. $  0.9    $  1.8     $  5.0    $  5.7 
   EBITDA margin......................    6.7%     12.6%      11.7%     12.5%

St. Louis, Missouri Operations                                               
   EBITDA............................. $  0.6    $  1.7     $  3.3    $  5.5 
   EBITDA margin......................    4.0%     10.3%       7.1%     11.1%

Davenport, Iowa Operations                                                   
   EBITDA............................. $  1.0    $  2.9     $  7.0    $ 10.3 
   EBITDA margin......................    n/a      14.9%       n/a      17.1%

Corporate Leasing Operations                                                 
   EBITDA............................. $ (0.3)   $ (0.3)    $(12.3)   $  1.0 

Corporate Administrative and                                                 
   Development                                                               
   EBITDA............................. $ (1.2)   $ (1.2)    $ (3.7)   $ (3.5)

"EBITDA" consists of earnings from operations before interest, income taxes,
depreciation and amortization.  For the purposes of this presentation, EBITDA   
margin is calculated as EBITDA divided by operating revenue.                    

EBITDA and EBITDA margin are not determined in accordance with generally    
accepted accounting principles.  Since not all companies calculate these        
measures in the same manner, the Company's EBITDA measures may not be           
comparable to similarly titled measures reported by other companies.            

EBITDA should not be construed as an alternative to operating income as an  
indicator of the Company's operating performance, or as an alternative to cash  
flows from operational activities as a measure of liquidity.  The Company has   
presented EBITDA solely as a supplemental disclosure to facilitate a more       
complete analysis of the Company's financial performance.  The Company          
believes that this disclosure enhances the understanding of the financial       
performance of a company with substantial interest, depreciation and            
amortization.                                                                   

Three-Month Period Ended November 30, 2000 Compared to the                      
Three-Month Period Ended November 30, 1999                                      

On October 10, 2000, the Company sold the assets of its Davenport operations
for aggregate consideration of $58.2 million in cash.  An allocation of $56.1   
million was made to the assets of TCG and $2.1 million to the assets of the     
Blackhawk Hotel.  The Company recognized a gain of $34.3 million on the         
transaction.                                                                    

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Operating revenues.  The Company generated consolidated operating revenues  
of $36.2 million during the three-month period ended November 30, 2000,         
compared to $50.2 million during the three-month period ended November 30,      
1999, a decrease of $14.0 million, or 27.9%.  Excluding the Davenport           
operations, revenues decreased $2.3 million, or 7.5%.                           

Gaming revenues from the Company's Biloxi and St. Louis operations decreased
by $0.3 million and $1.4 million, respectively, during the three-month period   
ended November 30, 2000, compared to the three-month period ended November 30,  
1999, primarily as a result of increased competition.  In Biloxi, changes in    
marketing campaigns of competitors negatively impacted market share.  In St.    
Louis, gaming revenues decreased primarily as a result of the disruption of     
the slot floor as the slot product was updated with bill validators and the     
new electronic loss limit tracking system through out the period.               

The Company's revenues from food and beverage, hotel, retail, charter and   
other non-gaming activities (net of promotional allowances) decreased to $3.1   
million during the three-month period ended November 30, 2000, from $4.7        
million during the three-month period ended November 30, 1999, a decrease of    
$1.6 million, or 34.4%.  Excluding the Davenport operations, revenues           
decreased $0.7 million, or 24.4%.  The decrease was primarily attributable to:  
(i) an increase $0.5 million in promotional allowances in Biloxi in response    
to the competitive pressures in the market and (ii) a decrease of $0.2 million  
in food and beverage revenues in St. Louis primarily due to a reduction in      
complementary offers.                                                           

Operating costs and expenses.  The Company's consolidated gaming and gaming 
cruise operating costs and expenses were $20.8 million during the three-month   
period ended November 30, 2000, compared to $27.9 million during the            
three-month period ended November 30, 1999, a decrease of $7.1 million, or      
25.4%.  Excluding the Davenport operations, gaming and gaming cruise operating  
expenses decreased $0.5 million, or 2.9%.  As a percentage of gaming revenues,  
Biloxi and St. Louis gaming and gaming cruise costs increased to 62.9% during   
the three-month period ended November 30, 2000, from 61.1% during the           
three-month period ended November 30, 1999.                                     

The Company's consolidated selling, general and administrative expenses were
$10.1 million during the three-month period ended November 30, 2000, compared   
to $12.3 million for the three-month period ended November 30, 1999, a          
decrease of $2.2 million, or 17.9%.  Excluding the Davenport operations,        
selling, general and administrative expenses increased $0.1 million, or 1.2%.   
Increased costs incurred relating to the proposed restructuring and costs       
associated with preparing for the "Admiral" relocation were offset by           
decreases in general corporate overhead.  Excluding the Davenport operations,   
as a percentage of revenues, selling, general and administrative expenses       
increased to 29.8% during the three-month period ended November 30, 2000 from   
27.3% during the three-month period ended November 30, 1999.                    

Depreciation and amortization expenses were $1.9 million for the three-month
period ended November 30, 2000 compared to $3.7 million during the three-       
month period ended November 30, 1999, a decrease of $1.8 million.  The          
Davenport operations and the leasing operations ceased depreciating assets as   
of June 30, 2000 and August 31, 2000, respectively, based on management's       

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decision to sell such assets.  Depreciation expense for the three-month period  
ended November 30, 1999 was $1.1 million and $0.8 million, respectively, for    
the Davenport and leasing operations.                                           

Development costs were less than $0.1 million during both three-month       
periods ended November 30, 2000 and November 30, 1999.  All such costs          
incurred are for Destination Broadwater.                                        

Operating income.  As a result of the foregoing items, the Company incurred 
an operating loss of $0.9 million during the three-month period ended November  
30, 2000, compared to operating income of $1.3 million during the three-month   
period ended November 30, 1999.                                                 

Interest expense, net.  The Company incurred net interest expense of $5.0   
million during the three-month period ended November 30, 2000, compared to      
$5.1 million during the three-month period ended November 30, 1999, a decrease  
of $0.1 million, or 2.0%.  This decrease is the result of (i) the               
extinguishment of the Davenport line of credit and the Biloxi barge note and    
(ii) interest income earned on the proceeds from the sale of the Davenport      
assets, offset by an increase in interest expense as a result of compounding    
interest and penalties on certain indebtedness in default.                      

Minority interest expense.  The Company incurred $2.2 million minority      
interest expense for the three-month period ended November 30, 2000, compared   
to $0.3 million during the three-month period ended November 30, 1999.  The     
increase is the result of the minority interest related to the gain on sale of  
the Davenport casino assets.                                                    

Net income/loss.  The Company incurred net income of $26.2 million during   
the three-month period ended November 30, 2000, compared to a net loss of $4.2  
million during the three-month period ended November 30, 1999.                  

Nine-Month Period Ended November 30, 2000 Compared to the                       
Nine-Month Period Ended November 30, 1999                                       

On October 10, 2000, the Company sold the assets of its Davenport operations
for aggregate consideration of $58.2 million in cash.  An allocation of $56.1   
million was made to the assets of TCG and $2.1 million to the assets of the     
Blackhawk Hotel.  The Company recognized a gain of $34.3 million on the         
transaction.                                                                    

Operating revenues.  The Company generated consolidated operating revenues  
of $133.9 million during the nine-month period ended November 30, 2000,         
compared to $157.3 million during the nine-month period ended November 30,      
1999, a decrease of $23.4 million, or 14.9%.  Excluding the Davenport           
operations, revenues decreased $7.6 million, or 7.8%.  The Company's Biloxi     
and St. Louis operations experienced decreases of $2.9 million and $2.8         
million, respectively.  Additionally, the corporate leasing operation           
experienced a $1.8 million decrease in operating revenues as a result of the    
expiration of a charter agreement.                                              

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Gaming revenues decreased to $120.7 million for the nine-month period ended 
November 30, 2000, compared to $139.3 million for the nine-month period ended   
November 30, 1999, a decrease of $18.6 million or 13.4%.  Excluding the         
Davenport operations, gaming revenues decreased $3.8 million, or 4.5%.  Gaming  
revenues from the Biloxi and St. Louis operations contributed $1.5 million and  
$2.3 million, respectively, to the decrease.                                    

The Company's revenues from food and beverage, hotel, charter, retail and   
other (net of promotional allowances) were $13.2 million for the nine-month     
period ended November 30, 2000, compared to $17.9 million for the nine-month    
period ended November 30, 1999, a decrease of $4.7 million or 26.3%.            
Excluding the Davenport operations, revenues decreased $3.8 million, or 29.9%.  

Operating costs and expenses.  The Company's consolidated gaming and gaming 
cruise operating costs and expenses were $73.7 million for the nine-month       
period ended November 30, 2000, compared to $84.2 million for the nine-month    
period ended November 30, 1999, a decrease of $10.5 million, or 12.5%.          
Excluding the Davenport operations, gaming and gaming cruise operating costs    
and expenses decreased $1.5 million, or 2.9%.  Gaming costs decreased $0.6      
million and $0.9 million at the Biloxi and St. Louis operations, respectively.  
Decreased gaming revenues at both properties resulted in reduced gaming taxes.  
In addition, reduced current year promotions contributed to reduced gaming      
costs at the St. Louis property.  As a percentage of gaming revenues, Biloxi    
and St. Louis gaming and gaming cruise costs increased to 61.3% during the      
nine-month period ended November 30, 2000, from 60.3% during the nine-month     
period ended November 30, 1999.                                                 

The Company's consolidated selling, general and administrative expenses were
$34.7 million for the nine-month period ended November 30, 2000, compared to    
$38.0 million for the nine-month period ended November 30, 1999, a decrease of  
$3.3 million, or 8.7%.  Excluding the Davenport operations, selling, general    
and administrative expenses decreased $0.8 million, or 3.0%.  Excluding the     
Davenport operations, as a percentage of revenues, selling, general and         
administrative expenses increased to 32.0% during the nine-month period ended   
November 30, 2000 from 31.5% during the nine-month period ended November 30,    
1999.                                                                           

Depreciation and amortization expenses were $8.3 million during the nine-   
month period ended November 30, 2000, compared to $10.0 million during the      
nine-month period ended November 30, 1999, a decrease of $1.7 million, or       
17.0%.  The Davenport operations and the leasing operations ceased              
depreciating assets as of June 30, 2000 and August 31, 2000, respectively,      
based on management's decision to sell such assets.  Depreciation expense for   
the nine-month period ended November 30, 2000 was $1.5 million and $1.3         
million, respectively, for the Davenport and leasing operations compared to     
$3.3 million and $1.5 million for the nine months ended November 30, 1999.      

Development costs were $0.2 million during both nine-month periods ended    
November 30, 2000 and November 30, 1999.  Development costs for both nine-      
month periods were for Destination Broadwater.                                  

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Operating income.  As a result of the foregoing items, the Company incurred 
an operating loss of $9.0 million during the nine-month period ended November   
30, 2000 compared to operating income of $9.1 million during the nine-month     
period ended November 30, 1999.                                                 

Interest expense, net.  The Company incurred net interest expense of $15.2  
million during the nine-month period ended November 30, 2000 million and $15.0  
million during the nine-month period ended November 30, 1999.                   

Minority interest expense.  The Company incurred $3.0 million minority      
interest expense for the nine-month period ended November 30, 2000, compared    
to $1.0 million for the nine-month period ended November 30, 1999.  The         
increase is the result of the minority interest related to the gain on sale of  
the Davenport casino assets.                                                    

Net income/loss.  The Company generated net income of $7.2 million during   
the nine- month period ended November 30, 2000, compared to a net loss of $6.6  
million during the nine-month period ended November 30, 1999.                   

Liquidity and Capital Resources                                                 

The Company meets its working capital requirements from a combination of    
internally generated sources including cash from operations and the sale or     
charter of assets.                                                              

The Company requires approximately $6.5 million of cash in order to fund    
daily operations.  As of November 30, 2000, the Company had approximately $5.8  
million in non-restricted cash in excess of the required $6.5 million.  The     
Company is heavily dependant on cash generated from operations to continue to   
operate as planned in its existing jurisdictions and to fund capital            
expenditures.  To the extent cash generated from operations is less than        
anticipated, the Company may be required to curtail certain planned fiscal      
2001 expenditures or seek other sources of financing.  The Company may be       
limited in its ability to raise cash through additional financing.              

The Company has $3.3 million in restricted cash as of November 30, 2000.  Of
this amount, $3.0 million relates to the Broadwater Property.  Pursuant to      
debt agreement for the Broadwater Property, revenues are deposited in           
lockboxes that are controlled by the lender.  Such revenues include the         
operations of the hotels and golf course and $2.9 million annually of proceeds  
from rental of the Biloxi casino's mooring site.  Expenditures from the         
lockboxes are limited to the operating expenses, capital improvements and debt  
service of the Broadwater Property as defined by such agreements.               

The Company has $6.6 million in restricted short-term investments.  Of this 
amount, $5.3 million consists of certificates of deposit restricted for the     
March 15, 2001 interest payment on the 12% Secured Notes and 13% Senior         
Exchange Notes and $1.3 million consists of certificates of deposit             
guaranteeing certain other obligations of the Company.                          

The Company used $8.5 million in cash flow from operating activities during 
the nine-month period ended November 30, 2000, compared to generating cash      
flow of $3.1 million during the nine-month period ended November 30, 1999.      

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The Company experienced a net cash increase from investing activities of    
$43.6 million during the nine-month period ended November 30, 2000, compared    
to a decrease of $7.0 million during the nine-month period ended November 30,   
1999.  During the nine-month period ended November 30, 2000, the Company        
received $58.2 million cash proceeds from the sale of the assets of the         
Davenport operations.  The net cash decrease from investing activities for the  
nine-month period ended November 30, 1999 resulted primarily from expenditures  
on property and equipment.  During the nine-month period ended November 30,     
2000, the Company had fixed asset additions of approximately $10.1 million, of  
which, $1.6 million were non-cash additions in exchange for debt.  The Company  
spent approximately $0.8 million, $6.4 million and $0.5 million at the          
Company's Biloxi, St. Louis and Davenport operations, respectively.             
Additionally, the Company spent $0.7 million in conjunction with the potential  
development of the Broadwater Property into a multi-casino destination resort.  

The indenture governing the Company's Senior Exchange Notes due 2001 and the
indenture covering the Company's Secured Notes due 2001 (collectively, the      
"Indentures"), restricts the ability of PCI, TCG and PCI's wholly-owned         
subsidiaries which are guarantors of the Senior Exchange Notes and Secured      
Notes (collectively, the "Guarantors"), among other things, to dispose of or    
create liens on certain assets, to make certain investments and to pay          
dividends.  Under the Indentures, the Guarantors have the ability to seek to    
borrow additional funds of $15.0 million and may borrow additional funds for    
certain uses.  The Indentures also provide that the Guarantors must use cash    
proceeds from the sale of certain assets within 180 days to either (i)          
permanently reduce certain indebtedness or (ii) contract with an unrelated      
third party to make investments or capital expenditures or to acquire long-     
term tangible assets, in each case, in gaming and related businesses (provided  
any such investment is substantially complete in 270 days).  In the event such  
proceeds are not so utilized, the Company must make an offer to all holders of  
Senior Exchange Notes to repurchase at par value an aggregate principal amount  
of Senior Exchange Notes equal to the amount by which such proceeds exceeds     
$5.0 million.  Any remaining proceeds must be used in a like manner to          
repurchase Secured Notes.  Certain provisions of the Indenture do not apply to  
the Company's consolidated entities which do not guarantee the Senior Exchange  
Notes and Secured Notes.                                                        

On December 3, 1998, the Company repurchased $25.0 million of its Senior    
Exchange Notes for $23.8 million.  The repurchased notes were used to satisfy   
the $25.0 million principal payment due September 15, 1999 on the Company's     
$100.0 million Senior Exchange Notes.  The repurchase was funded by the         
issuance of $25.0 million of new 12% notes due September 15, 2001 (the          
"Secured Notes").  The Secured Notes have no mandatory redemption obligation    
and are secured by mortgages on the "Admiral" and the "New Yorker," as well as  
subsidiary guarantees.                                                          

In conjunction with the purchase of the Broadwater Property, PBLLC borrowed 
$30.0 million from a third party lender, evidenced by a non-recourse            
promissory note (the "Indebtedness").  Except as set forth in the promissory    
note and related security documents, PBLLC's obligations under the              
Indebtedness are nonrecourse and are secured by the Broadwater Property, its    
improvements and leases thereon.  The Indebtedness bears interest at a          

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variable rate per annum equal to the greater of (i) 8.75% or (ii) 4% plus the   
LIBOR 30-day rate.                                                              

Under the terms of the Indebtedness, PBLLC is required to make monthly      
payments of interest, and was to repay the Indebtedness in full and a $7.0      
million loan fee on July 22, 2000.  The Company defaulted on the principal and  
loan fee payments on July 22, 2000.  The Company has continued to make the      
monthly interest payments accruing on the $30.0 million principal and is in     
negotiations with the lender.  The lender accelerated the note and has          
declared the unpaid principal and loan fee due and payable.  The Company is     
continuing its discussions with the lender concerning the restructuring of the  
note.                                                                           

In August 1999, the Company purchased "President Casino-Broadwater," the    
vessel on which the Company conducts its Biloxi gaming operations.  On October  
10, 2000, the Company paid the then outstanding principal balance of $1.9       
million and a restructuring fee of $0.1 million from the proceeds of the sale   
of its Davenport operations.                                                    

The 9.67% term note payable is collateralized by the vessel "President      
Casino-Mississippi" and various equipment and is personally guaranteed by Mr.   
Connelly.  This note also contains certain covenants which, among other         
things, require the Company to maintain a minimum tangible net worth of $40.0   
million.  The aforementioned default on the Company's Senior Exchange Notes     
and Secured Notes also constituted a default under this note.  The Company has  
continued to make the quarterly principal and interest payments related to      
this note.  No action has been taken by the lender to accelerate the note and   
declare the unpaid principal due and payable.                                   

TCG, the Company's 95%-owned partnership, maintained a line of credit       
collateralized by first mortgages on the M/V "President" and the Blackhawk      
Hotel, various personal property and an assignment of various contracts.  The   
principal and interest on the line of credit were paid from the proceeds of     
the sale of the assets of the Davenport casino operations and the line of       
credit was terminated.                                                          

In connection with the Company's proposed "Destination Broadwater"          
development plan, to date, the Company has not identified any particular        
financing alternatives or sources as the necessary regulatory approvals have    
not been obtained.  There can be no assurance that the Company will be able to  
obtain the regulatory approvals or the requisite financing.  Should the         
Company fail to raise the required capital, such failure would materially and   
adversely impact the Company's business plan.                                   

Prospective Impact of Recently Issued Accounting Standards                      

In June 1998, the Financial Accounting Standards Board ("FASB") issued      
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for   
Derivative Instruments and Hedging Activities," which, after being amended by   
SFAS No. 137 "Accounting for Derivative Instruments and Hedging Activities --   
Deferral of the Effective Date of FASB Statement No. 133," is effective for     
fiscal years beginning after June 15, 2000.  The statement establishes          
accounting and reporting standards for derivative instruments.  The Company is  

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currently evaluating the impact of this new standard, but management believes   
it will not materially impact the Company as the Company does not engage in     
hedging activities or utilize derivative instruments.                           

Forward Looking Statements                                                      

This quarterly report on Form 10-Q and certain information provided         
periodically in writing and orally by the Company's designated officers and     
agents contain certain statements which constitute "forward-looking             
statements" within the meaning of Section 27A of the Securities Act of 1933,    
as amended and Section 21E of the Securities Exchange Act of 1934, as amended.  
The terms "Company," "we," "our" and "us" refer to President Casinos, Inc.      
The words "expect," "believe," "goal," "plan," "intend," "estimate," and        
similar expressions and variations thereof are intended to specifically         
identify forward-looking statements.  Those statements appear in this           
quarterly report on Form 10-Q and the documents incorporated herein by          
reference, particularly "Management's Discussion and Analysis of Financial      
Condition and Results of Operations," and include statements regarding the      
intent, belief or current expectations of the Company, its directors or its     
officers with respect to, among other things: (i) our financial prospects;      
(ii) our financing plans and our ability to meet our obligations under our      
debt obligations and obtain satisfactory operating and working capital; (iii)   
our operating and restructuring strategy; and (iv) the effect of competition    
and regulatory developments on our current and expected future revenues.  You   
are cautioned that any such forward looking statements are not guarantees of    
future performance and involve risks and uncertainties, and that actual         
results may differ materially from those projected in the forward looking       
statements as a result of various factors. The factors that might cause such    
differences include, among others, the following: (i) continuation of future    
operating and net losses by the Company; (ii) the inability of the Company to   
restructure its debt obligations; (iii) the inability of the Company to obtain  
sufficient cash from its operations and other resources to fund ongoing         
obligations; (iv) developments or new initiatives by our competitors in the     
markets in which we compete; (v) our stock price; (vi) adverse governmental or  
regulatory changes or actions which could negatively impact our operations;     
and (vii) other factors including those identified in the Company's filings     
made from time-to-time with the Securities and Exchange Commission.  The        
Company undertakes no obligation to publicly update or revise forward looking   
statements to reflect events or circumstances after the date of this quarterly  
report on Form 10-Q or to reflect the occurrence of unanticipated events.       

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.            

Although the majority of debt carries a fixed interest rate, the Company is 
exposed to interest rate risk in respect to the variable-rate debt maintained,  
which risk may be material.  The Company has not engaged in any hedging         
transactions with respect to such risks.                                        

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Part II.  Other Information                                                     

Item 1.  Legal Proceedings                                                      

Information with respect to legal proceedings to which the Company is a     
party is disclosed in Note 4 of Notes to Condensed Consolidated Financial       
Statements included in Part I of this report and is incorporated herein by      
reference.                                                                      

Item 2.  Changes in Securities                                                  

Not applicable.                                                             

Item 3.  Defaults Upon Senior Securities                                        

The Company has 13.0% Senior Exchange Notes and 12.0% Secured Notes.  The   
Company did not pay the regularly scheduled interest payments of $6.4 million   
that were each due and payable March 15, and September 15, 2000, respectively,  
under the Senior Exchange Notes and the Secured Notes.  Under the Indentures    
pursuant to which the Senior Exchange Notes and Secured Notes were issued, an   
Event of Default occurred on April 15, 2000, and is continuing as of the date   
hereof.  Additionally, the Company did not pay the $25.0 million principal      
payment due September 15, 2000 on the Senior Exchange Notes.  In November       
2000, the Company paid (i) $12.8 million interest and (ii) $18.75 million and   
$6.25 million principal on the Senior Exchange Notes and Secured Notes,         
respectively.  Total arrearage as of January 16 2001, is $56.25 million of      
principal and $0.6 million of interest on the Senior Exchange Notes and $18.75  
million of principal and %0.2 million interest on the Secured Notes.            

Additionally, the Company did not pay the $30.0 million note and the        
associated $7.0 million loan fee due July 22, 2000, related to the Broadwater   
Property.  The Company is obligated under the Indebtedness to make monthly      
payments of interest accruing under the Indebtedness at a variable rate per     
annum equal to the greater of (i) 8.75% or (ii) 4% plus the LIBOR 30-day rate.  
The Company has continued to make the monthly interest payments related to the  
$30.0 million note.  Since the date of default, the Company is accruing, but    
has not paid, interest on the $7.0 million fee and late fees on the entire      
$37.0 million.  Total arrearage as of January 16, 2001, is $37.0 million of     
principal and $1.1 million of interest and fees.                                

Item 4.  Submission of Matters to a Vote of Security Holders                    

Not applicable.                                                             

Item 5.  Other Information                                                      

Not applicable.                                                             

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Item 6.  Exhibits and Reports on Form 8-K                                       

(a)  Exhibits                                                   

          The exhibits filed as part of this report are listed on Index to
Exhibits accompanying this report.                    

(b)  Reports on Form 8-K                                        

         On October 12, 2000, the Company filed a Current Report on Form
         8-K dated September 20, 2000, reporting under Item 7 that James
           A. Zweifel, Executive Vice President and Chief Financial Officer,
  had been named Vice President and General Manager of the
       President Casino by the Arch, the Company's St. Louis casino.
    The Company also announced that Ralph J. Vaclavik had been
      appointed Chief Financial Officer and Senior Vice President.

         On October 20, 2000, the Company filed a Current Report on Form
       8-K dated September 20, 2000, reporting under Item 2 that the
        Company had consummated the sale of certain assets utilized in
       its Davenport, Iowa operations to Isle of Capri Casinos, Inc.
          pursuant to the terms and conditions of an Asset Sale Agreement,
           dated as of July 19, 2000, by and among The Connelly Group, L.P.,
          a limited partnership in which the Company holds a 95% ownership
         interest, TCG/Blackhawk, Inc., a wholly-owned subsidiary of the
      Company, IOC-Davenport, Inc. and Isle of Capri Casinos, Inc.

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SIGNATURE     

Pursuant to the requirements of the Securities Exchange Act of 1934, the    
Registrant has duly caused this report to be signed on its behalf by the        
undersigned thereunto duly authorized.                                          

                                 President Casinos, Inc.
                                     -----------------------------
                      (Registrant)

Date: January 16, 2001                       /s/ Ralph J. Vaclavik              
                                     -----------------------------
                           Ralph J. Vaclavik
                                   Senior Vice President and
                                 Chief Financial Officer

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INDEX TO EXHIBITS   
-----------------   

EXHIBIT NO.                                                                     

27       Financial Data Schedule for the nine-months ended November 30,   
2000, as required under EDGAR.                          

----------------------                                                          

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-Q’ Filing		Date		First		Last			Other Filings
		9/15/03		7		16
		9/15/01		7		29
		8/31/01		7		16			10-Q
		5/30/01		7		16
		3/15/01		7		28
		2/15/01		12
Filed on:		1/16/01		1		34
		1/11/01		15		21
		12/28/00		12
		12/20/00		12					8-K
		12/7/00		15		21
		12/3/00		15		21
For Period End:		11/30/00		1		35
		11/22/00		7		16
		10/20/00		33					8-K
		10/12/00		33					8-K
		10/10/00		6		30
		9/30/00		11
		9/20/00		33
		9/15/00		6		32
		8/31/00		25		27			10-Q,  NT 10-Q
		8/28/00		21
		7/22/00		7		32
		7/19/00		33
		6/30/00		25		27			10-Q
		6/15/00		30
		4/15/00		6		32
		3/15/00		7		16
		2/29/00		2		10			10-K,  10-K/A,  8-K
		11/30/99		2		29			10-Q
		9/15/99		10		29
		8/16/99		19
		6/25/99		18
		12/3/98		11		29
		1/16/97		12
									List all Filings