Majestic Investor Capital Corp, et al. – ‘10-Q’ for 3/31/03

On:  Thursday, 5/15/03, at 5:35pm ET   ·   For:  3/31/03   ·   Accession #:  950124-3-1809   ·   File #s:  333-81584, -04

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Quarterly Report   —   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report for Period Ended 03/31/03            39    185K 
 2: EX-99.1     SEC. 906 Certification of Chief Executive Officer      1      6K 
 3: EX-99.2     SEC. 906 Certification of Chief Financial Officer      1      6K 

10-Q   —   Quarterly Report for Period Ended 03/31/03
Document Table of Contents

10-Q
1st Page of 39
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D. C. 20549

 FORM 10-Q

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

 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

or

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

 Commission file number: 333-81584

DELAWARE                 MAJESTIC INVESTOR HOLDINGS, LLC          36-4468392    

DELAWARE                 MAJESTIC INVESTOR CAPITAL CORP.          36-4471622    

(State or other           (Exact name of registrant as        (I.R.S. Employer  
jurisdiction of             specified in its charter.        Identification No.)
incorporation or                                                                
organization)                                                                   

 ONE BUFFINGTON HARBOR DRIVE
 GARY, INDIANA
46406-3000
(219) 977-7823

 (Address of principal executive offices and telephone number, including
area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was     
required to file such reports), and (2) has been subject to filing requirements 
for the past 90 days.                                                           

Yes  X     No                                                                   
-----     -----                                                           

Indicate by check mark whether the registrant is an accelerated filer (as       
defined in Rule 12b-2 of the Act)                                               

Yes        No  X                                                                
-----     -----                                                           

Shares outstanding of each of the registrant's classes of common stock:         

Class                               Number of shares                            
-----                               ----------------                            
Not applicable                      Not applicable                              

10-Q
2nd Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 2nd
 MAJESTIC INVESTOR HOLDINGS, LLC

 INDEX

                                                        [Enlarge/Download Table]


PART I            FINANCIAL INFORMATION                                              PAGE NO.
                                                                                     --------
                                                                                             
        Item 1.   Consolidated Financial Statements                                          

                  Consolidated Balance Sheets as of March 31, 2003 (Unaudited)               
                  and December 31, 2002                                                  1   

                  Consolidated Statement of Operations for the three months                  
                  ended March 31, 2003 and 2002 (Unaudited)                              2   

                  Consolidated Statement of Cash Flows for the three months                  
                  ended March 31, 2003 and 2002 (Unaudited)                              3   

                  Notes to Financial Statements                                          4   

        Supplemental Consolidating Schedules:                                                

                  Consolidating Balance Sheet as of March 31, 2003 (Unaudited)           17  

                  Consolidating Balance Sheet as of December 31, 2002 (Unaudited)        18  

                  Consolidating Statements of Operations for the three months ended          
                  March 31, 2003 (Unaudited)                                             19  

                  Consolidating Statements of Operations for the three months ended          
                  March 31, 2002 (Unaudited)                                             20  

                  Consolidating Statements of Cash Flows for the three months ended          
                  March 31, 2003 (Unaudited)                                             21  

                  Consolidating Statements of Cash Flows for the three months ended          
                  March 31, 2002 (Unaudited)                                             22  

        Item 2.   Management's Discussion and Analysis of Financial                          
                  Condition and Results of Operations                                    23  

        Item 3.   Quantitative and Qualitative Disclosures About Market Risk             32  

        Item 4.   Controls and Procedures                                                32  

PART II       OTHER INFORMATION                                                              

        Item 1.   Legal Proceedings                                                      32  

        Item 6.   Exhibits and Reports on Form 8-K                                       33  

        SIGNATURES                                                                       34  

        CERTIFICATIONS                                                                   35  


i 

10-Q
3rd Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 3rd
PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS                                       

 MAJESTIC INVESTOR HOLDINGS, LLC
 CONSOLIDATED BALANCE SHEETS
 (UNAUDITED)

                                                        [Enlarge/Download Table]


                                                                 MARCH 31,   DECEMBER 31,
                                                                   2003          2002    
                                                               ------------  ------------
                                                                                         
ASSETS                                                                                   
Current Assets:                                                                          
    Cash and cash equivalents                                  $ 21,076,219  $ 15,983,824
    Restricted cash                                                 500,000       250,000
    Accounts receivable, less allowance for doubtful accounts                            
        of $204,019 and $239,066, respectively                    1,081,130     1,241,183
    Inventories                                                     928,837       929,126
    Prepaid expenses                                              1,617,003     1,644,735
    Note receivable from related party                                    -       700,000
    Other                                                            53,883        39,133
                                                               ------------  ------------
                Total current assets                             25,257,072    20,788,001
                                                               ------------  ------------

Property, equipment and improvements, net                       115,771,657   117,297,506
Intangible assets, net                                           17,292,996    17,691,746
Goodwill                                                          5,922,398     5,922,398

Other Assets:                                                                            
    Deferred financing costs, net of accumulated amortization                            
        of $1,755,716 and $1,407,041, respectively                6,368,564     6,714,902
    Restricted cash                                               1,000,000     1,000,000
    Other assets, prepaid leases and deposits                     1,648,855     1,624,359
                                                               ------------  ------------
                Total other assets                                9,017,419     9,339,261
                                                               ------------  ------------

                Total Assets                                   $173,261,542  $171,038,912
                                                               ============  ============

LIABILITIES AND MEMBER'S EQUITY                                                          
Current Liabilities:                                                                     
    Current maturities of long-term debt                       $     79,406  $    134,084
    Accounts payable                                              1,795,522     2,136,369
    Other accrued liabilities:                                                           
        Payroll and related                                       4,604,160     5,949,275
        Interest                                                  5,895,144     1,473,785
        Progressive jackpots                                      2,331,862     2,476,543
        Slot club liability                                         831,389       738,559
        Other accrued liabilities                                 3,613,668     4,401,378
                                                               ------------  ------------
                Total current liabilities                        19,151,151    17,309,993
                                                               ------------  ------------

Long-term debt, net of current maturities                       145,943,045   145,646,514
                                                               ------------  ------------

                Total Liabilities                               165,094,196   162,956,507

Commitments and contingencies                                                            

Member's Equity:                                                  8,167,346     8,082,405
                                                               ------------  ------------
                Total Liabilities and Member's Equity          $173,261,542  $171,038,912
                                                               ============  ============


The accompanying notes are an integral part of these consolidated 
financial statements. 

1 

10-Q
4th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 4th
 MAJESTIC INVESTOR HOLDINGS, LLC
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)

                                                        [Enlarge/Download Table]


                                       FOR THE THREE MONTHS ENDED  FOR THE THREE MONTHS ENDED
                                              MARCH 31, 2003             MARCH 31, 2002      
                                       --------------------------  --------------------------
                                                                                             
REVENUES:                                                                                    
     Casino                                   $ 39,435,707                $ 42,354,751       
     Rooms                                       3,798,785                   4,088,511       
     Food and beverage                           4,860,940                   5,096,101       
     Other                                         800,838                     888,490       
                                              ------------                ------------       

          Gross revenues                        48,896,270                  52,427,853       

          Less promotional allowances           (5,617,111)                 (6,123,455)      
                                              ------------                ------------       

          Net revenues                          43,279,159                  46,304,398       
                                              ------------                ------------       

COSTS AND EXPENSES:                                                                          
     Casino                                     15,558,718                  18,026,159       
     Rooms                                       1,545,896                   1,768,500       
     Food and beverage                           2,498,200                   2,770,118       
     Other                                         409,608                     378,654       
     Gaming taxes                                4,575,313                   5,019,754       
     Advertising and promotion                   3,251,419                   3,296,536       
     General and administrative                  6,437,693                   6,161,194       
     Depreciation and amortization               3,653,460                   3,387,015       
     Pre-opening expenses                                -                       7,287       
                                              ------------                ------------       

          Total costs and expenses              37,930,307                  40,815,217       
                                              ------------                ------------       

          Operating income                       5,348,852                   5,489,181       
                                              ------------                ------------       

OTHER INCOME (EXPENSE):                                                                      
     Interest income                                22,943                      31,608       
     Interest expense                           (4,428,090)                 (4,515,387)      
     Gain on sale of assets                         15,000                       6,542       
     Other non-operating expense                    (9,479)                    (17,492)      
                                              ------------                ------------       
          Total other expense                   (4,399,626)                 (4,494,729)      
                                              ------------                ------------       

          Net income                          $    949,226                $    994,452       
                                              ============                ============       


The accompanying notes are an integral part of these consolidated 
financial statements. 

2 

10-Q
5th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 5th
 MAJESTIC INVESTOR HOLDINGS, LLC
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)

                                                        [Enlarge/Download Table]

                                                                    FOR THE            FOR THE      
                                                              THREE MONTHS ENDED  THREE MONTHS ENDED
                                                                   MARCH 31,           MARCH 31,    
                                                                     2003                2002       
                                                                 ------------        ------------   
                                                                                                    
CASH FLOWS FROM OPERATING ACTIVITIES:                                                               
Net income                                                       $    949,226        $    994,452   
Adjustments to reconcile net income to net cash provided by                                         
operating activities:                                                                               
      Depreciation                                                  2,588,972           2,362,841   
      Amortization                                                  1,064,488           1,024,174   
      Gain on sale of assets                                          (15,000)             (6,542)  
Changes in operating assets and liabilities:                                                        
      Decrease (increase) in accounts receivable                      160,052             (78,072)  
      Decrease in inventories                                             288              71,082   
      Decrease (increase) in prepaid expenses                          27,732            (369,346)  
      Increase  in other assets                                       (39,234)           (604,976)  
      Decrease in accounts payable                                   (340,847)           (396,241)  
      Decrease in amounts due to related parties, net                (184,621)            (32,060)  
      Decrease in accrued payroll and related expenses             (1,345,116)           (688,788)  
      Increase in accrued interest                                  4,421,359           4,437,005   
      (Decrease) increase  in other accrued liabilities              (654,941)            252,061   
                                                                 ------------        ------------   
          Net cash provided by operating activities                 6,632,358           6,965,590   

CASH FLOWS FROM INVESTING ACTIVITIES:                                                               
      Increase in restricted cash                                    (250,000)                  -   
      Acquisition of property, equipment and improvements          (1,063,123)         (1,171,782)  
      Payment of acquisition related costs                                  -            (796,649)  
      Proceeds from sale of equipment                                  15,000               6,542   
                                                                 ------------        ------------   
          Net cash used in investing activities                    (1,298,123)         (1,961,889)  
                                                                 ------------        ------------   

CASH FLOWS FROM FINANCING ACTIVITIES:                                                               
      Cash advances from related parties                                    -             164,570   
      Line of credit, net                                                   -          (4,800,000)  
      Payment of 11.653% Senior Secured Notes issuance costs           (2,337)           (505,136)  
      Cash paid to reduce long-term debt                              (75,209)            (55,182)  
      Repayment of loan to Barden Development, Inc.                   700,000                   -   
      Distribution to Barden Development, Inc.                       (864,294)           (188,242)  
                                                                 ------------        ------------   
          Net cash  used in financing activities                     (241,840)         (5,383,990)  
                                                                 ------------        ------------   
Net increase (decrease) in cash and cash equivalents                5,092,395            (380,289)  
Cash and cash equivalents, beginning of period                     15,983,824          17,704,815   
                                                                 ------------        ------------   
Cash and cash equivalents, end of period                         $ 21,076,219        $ 17,324,526   
                                                                 ============        ============   

INTEREST PAID:                                                                                      
      Equipment Debt                                             $      4,981        $      8,361   
      Lines of credit                                            $          -        $     70,020   


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED 
FINANCIAL STATEMENTS. 

3 

10-Q
6th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 6th
 MAJESTIC INVESTOR HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1.  BASIS OF PRESENTATION                                                  

        Majestic Investor Holdings, LLC (the "Company"), is a Delaware limited
liability company formed on September 14, 2001. The Company owns and operates   
three Fitzgeralds brand casinos through its wholly-owned subsidiaries, Barden   
Mississippi Gaming, LLC, Barden Colorado Gaming, LLC and Barden Nevada Gaming,  
LLC, each of which is a "restricted subsidiary" of the Company under the        
Indenture relating to the Company's 11.653% Senior Secured Notes (the "Notes"). 
Majestic Investor Capital Corp. ("MICC"), another wholly-owned subsidiary of the
Company, was formed specifically to facilitate the offering of the Company's    
Notes and does not have any material assets or operations.                      

        The Company is a wholly-owned subsidiary of Majestic Investor, LLC and
an indirect wholly-owned subsidiary of The Majestic Star Casino, LLC ("Majestic 
Star"), owner and operator of the Majestic Star Casino, a riverboat casino      
located at Buffington Harbor in Gary, Indiana. The Company is indirectly        
wholly-owned and controlled by Don H. Barden, the Company's Member, Chairman,   
President and Chief Executive Officer.                                          

       Except where otherwise noted, the words "we," "us," "our" and similar
terms, as well as the "Company," refer to Majestic Investor Holdings, LLC and   
all of its subsidiaries.                                                        

      The accompanying consolidated financial statements are unaudited and
include the accounts of the Company and the guarantor subsidiaries: Barden      
Mississippi Gaming, LLC, Barden Colorado Gaming, LLC and Barden Nevada Gaming,  
LLC. Majestic Investor Capital, a wholly-owned subsidiary of the Company, is a  
non-guarantor subsidiary. However, Majestic Investor Capital does not have any  
material assets, obligations or operations. All significant intercompany        
transactions and balances have been eliminated. These financial statements have 
been prepared in accordance with generally accepted accounting principles for   
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information   
and footnotes required by generally accepted accounting principles for complete 
financial statements. In the opinion of management, all adjustments (which      
include normal recurring adjustments) considered necessary for a fair           
presentation of the results for the interim period have been made. The results  
for the three months ended March 31, 2003 are not necessarily indicative of     
results to be expected for the full fiscal year. The financial statements should
be read in conjunction with the financial statements and notes thereto included 
in the Company's Annual Report on Form 10-K for the year ended December 31,     
2002.                                                                           

        The consolidated financial statements and footnotes for the prior year
reflect certain reclassifications to conform to the current year presentation,  
which has no effect on previously reported net income.                          

4 

10-Q
7th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 7th
 MAJESTIC INVESTOR HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2.   NEW ACCOUNTING PRINCIPLES                                             

In April 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 145 ("SFAS 145"). Among
other matters, SFAS 145 addresses the presentation for gains and losses on early
retirements of debt in the statement of operations. SFAS 145 is effective for   
fiscal years beginning after May 15, 2003. Adoption of SFAS 145 is not          
anticipated to have a material impact on our financial condition, results of    
operations or cash flows.                                                       

        In November 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure        
Requirements for Guarantees, Including Guarantees of Indebtedness of Others."   
FIN 45 elaborates on the disclosures to be made by a guarantor in its interim   
and annual financial statements about its obligations under certain guarantees  
that it has issued. It also clarifies (for guarantees issued after January 1,   
2003) that a guarantor is required to recognize at the inception of a guarantee,
a liability for the fair value of the obligations undertaken in issuing the     
guarantee. At March 31, 2003, the Company did not have any guarantees outside of
its consolidated group and accordingly does not expect the adoption of FIN 45 to
have a material impact on its financial condition, results of operations or cash
flows.                                                                          

       In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities."
FIN 46 addresses the requirements for business enterprises to consolidate       
related entities in which they are determined to be the primary economic        
beneficiary as a result of their variable economic interests. FIN 46 is intended
to provide guidance in judging multiple economic interest in an entity and in   
determining the primary beneficiary. FIN 46 outlines disclosure requirements for
"Variable Interest Entities ("VIE")" in existence prior to January 31, 2003, and
outlines consolidation requirement for VIEs created after January 31, 2003. The 
Company has reviewed its major relationships and its overall economic interests 
with other companies consisting of related parties, companies in which it has an
equity position and other suppliers to determine the extent of its variable     
economic interest in these parties. The review has not resulted in a            
determination that the Company would be judged to be the primary economic       
beneficiary in any material relationships, or that any material entities would  
be judged to be VIEs of the Company. The Company believes it has appropriately  
reported the economic impact and its share of risks of its commercial           
relationships through its equity accounting along with appropriate disclosure of
its commitments.                                                                

NOTE 3.  COMMITMENTS AND CONTINGENCIES                                          

Gaming Regulations                                                              

         The ownership and operation of our casino gaming facilities are subject
to various state and local laws and regulations in the jurisdictions where they 
are located. In Nevada, our gaming operations are subject to the Nevada Gaming  
Control Act, and to the licensing and regulatory control of the Nevada Gaming   
Commission, the Nevada State Gaming Control Board and various local ordinances  
and regulations, including, without limitation, applicable city and county      
gaming and liquor licensing authorities. In Mississippi, our gaming operations  
are subject to the Mississippi Gaming Control Act, and to the licensing and/or  
regulatory control of the Mississippi                                           

5 

10-Q
8th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 8th
 MAJESTIC INVESTOR HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3.  COMMITMENTS AND CONTINGENCIES (CONTINUED)                              

Gaming Commission, the Mississippi State Tax Commission and various state and   
local regulatory agencies, including liquor licensing authorities. In Colorado, 
our gaming operations are subject to the Limited Gaming Act of 1991, which      
created the Division of Gaming within the Colorado Department of Revenue and the
Colorado Limited Gaming Control Commission to license, implement, regulate and  
supervise the conduct of limited gaming. Our operations are also subject to the 
Colorado Liquor Code and the state and local liquor licensing authorities. In   
addition, as The Majestic Star Casino, LLC does business in the State of        
Indiana, the Company is subject to certain reviews by the Indiana Gaming        
Commission.                                                                     

   The Company's directors, officers, managers and key employees are
required to hold individual licenses. These requirements vary from jurisdiction 
to jurisdiction. Licenses and permits for gaming operations and of individual   
licensees are subject to revocation or non-renewal for cause. Under certain     
circumstances, holders of our securities are required to secure independent     
licenses and permits.                                                           

Legal Proceedings                                                               

       Various legal proceedings are pending against the Company. Management
considers all such pending proceedings, comprised primarily of personal injury  
and equal employment opportunity (EEO) claims, to be routine litigation         
incidental to the Company's business. Management believes that the resolution of
these proceedings will not individually or in the aggregate, have a material    
effect on the Company's financial condition or results of operations.           

Restricted Cash                                                                 

  At March 31, 2003 and December 31, 2002, restricted cash of $1.0
million represents U. S. Treasury Notes held in an escrow account for the       
benefit of certain owners of land leased to Fitzgeralds Las Vegas. Also at      
December 31, 2002, restricted cash of $250,000 at Majestic Investor Holdings    
represents a letter of credit for self-insured workers compensation at          
Fitzgeralds Tunica and Fitzgeralds Black Hawk. At March 31, 2003, this          
amount was increased to $500,000 when Fitzgeralds Las Vegas was added to the    
self-insured workers compensation program.                                      

NOTE 4. INTANGIBLE ASSETS                                                       

Intangible assets primarily include $9.8 million for customer 
relationships, $3.7 million for tradename and $5.2 million for gaming licenses. 
Intangible assets for customer relationships and tradenames are being amortized 
over a period of 8-10 years. In accordance with SFAS 142, goodwill, and other   
indefinite lived intangible assets, such as the Company's gaming license, are   
not amortized but instead are subject to impairment tests at least annually.    

6 

10-Q
9th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 9th
 MAJESTIC INVESTOR HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4. INTANGIBLE ASSETS (CONTINUED)                                           

         The gross carrying amount and accumulated amortization of the Company's
intangible assets, other than goodwill, as of March 31, 2003, are as follows:   

                                                                [Download Table]


                                Gross Carrying   Accumulated      Net Amount  
                                    Amount       Amortization   March 31, 2003
                                --------------  --------------  --------------
                                (in thousands)  (in thousands)  (in thousands)
                                                                              
Amortized intangible assets:                                                  

Customer relationships              $ 9,800         $(1,619)        $ 8,181   
Tradename                             3,700            (488)          3,212   
Riverboat excursion license             700               -             700   
                                    -------         -------         -------   

Total                               $14,200         $(2,107)        $12,093   
                                    =======         =======         =======   

Unamortized intangible assets:                                                

Gaming license                      $ 5,200         $     -         $ 5,200   
                                    -------         -------         -------   

Total                               $ 5,200         $     -         $ 5,200   
                                    =======         =======         =======   

    The amortization expense recorded on the intangible assets for the
three months ended March 31, 2003 was $0.4 million. The estimated amortization  
expense for each of the five succeeding fiscal years is as follows (in          
thousands):                                                                     

                                                                [Download Table]


  For the year ended December 31,            
  -------------------------------            
                                             
    2003                            $   1,618
    2004                                1,642
    2005                                1,642
    2006                                1,642
    2007                                1,642

NOTE 5.  GOODWILL                                                               

        There were no changes in the carrying amount of goodwill for the three
months ended March 31, 2003. The carrying amount of goodwill for the three      
months ended March 31, 2003 was approximately $5,922,000. In accordance with    
SFAS 142, goodwill is not amortized but instead subject to impairment tests at  
least annually.                                                                 

7 

10-Q
10th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 10th
 MAJESTIC INVESTOR HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6.  SEGMENT INFORMATION                                                    

         The Company owns and operates three properties as follows: a casino and
hotel located in downtown Las Vegas, Nevada; a casino and hotel located in      
Tunica, Mississippi; and a casino located in Black Hawk, Colorado (collectively,
the "Properties").                                                              

The Company identifies its business in three segments based on
geographic location. The Properties, in each of their segments, market primarily
to middle-income guests, emphasizing their Fitzgeralds brand and their          
"Fitzgerald Irish Luck" theme. The major products offered in each segment are as
follows: casino, hotel rooms (except in Black Hawk, Colorado) and food and      
beverage.                                                                       

        The accounting policies of each business segment are the same as those
described in the summary of significant accounting policies previously described
in the Company's Annual Report on Form 10-K for the year ended December 31,     
2002. There are minimal inter-segment sales. Corporate costs are allocated to   
the business segment through management fees and are reflected in "General and  
Administrative" expense.                                                        

     A summary of the Properties' operations by business segment for the
three months ended March 31, 2003 and March 31, 2002 is presented below:        

8 

10-Q
11th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 11th
MAJESTIC INVESTOR HOLDINGS, LLC 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6. SEGMENT INFORMATION (CONTINUED)                                         

                                                        [Enlarge/Download Table]

                                                  As of and for the Three Months Ended

                                                   March 31, 2003      March 31, 2002 
                                                   --------------      -------------- 
                                                   (In thousands)      (In thousands) 
                                                                                      
Net revenues:                                                                         
         Fitzgeralds Tunica                           $  22,965           $  24,347   
         Fitzgeralds Black Hawk                           7,916               8,962   
         Fitzgeralds Las Vegas                           12,398              12,995   
                                                      ---------           ---------   
                    Total                             $  43,279           $  46,304   
                                                      ---------           ---------   

Income (loss) from operations:                                                        
         Fitzgeralds Tunica                           $   4,548           $   4,628   
         Fitzgeralds Black Hawk                           1,231               1,259   
         Fitzgeralds Las Vegas                              236                 240   
         Unallocated and other (1)                         (666)               (638)  
                                                      ---------           ---------   
                    Total                             $   5,349           $   5,489   
                                                      ---------           ---------   

Segment depreciation and amortization                                                 
         Fitzgeralds Tunica                           $   1,905           $   1,780   
         Fitzgeralds Black Hawk                             412                 364   
         Fitzgeralds Las Vegas                              671                 617   
         Unallocated and other (1)                          666                 626   
                                                      ---------           ---------   
                    Total                             $   3,654           $   3,387   
                                                      ---------           ---------   

Expenditures for additions to long-lived assets:                                      
         Fitzgeralds Tunica                           $     267           $     513   
         Fitzgeralds Black Hawk                             249                 104   
         Fitzgeralds Las Vegas                              547                 555   
                                                      ---------           ---------   
                    Total                             $   1,063           $   1,172   
                                                      ---------           ---------   

Segment assets:                                                                       
         Fitzgeralds Tunica                           $  86,987           $  89,921   
         Fitzgeralds Black Hawk                          29,953              30,234   
         Fitzgeralds Las Vegas                           38,367              45,597   
         Unallocated and other (1)                      134,035             172,607   
                                                      ---------           ---------   
                    Total                             $ 289,342           $ 338,359   
         Less:  Intercompany                           (116,080)           (155,508)  
                                                      ---------           ---------   
                    Total                             $ 173,262           $ 182,851   
                                                      ---------           ---------   

(1) Unallocated and other include corporate items and eliminations that are not 
allocated to the operating segments.                                            

9 

10-Q
12th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 12th
 MAJESTIC INVESTOR HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7.  RELATED PARTY TRANSACTIONS                                             

On September 19, 2001, the Company entered into an LLC Manager
Agreement with Barden Development, Inc. ("BDI"), which was amended and restated 
on December 5, 2001, effective December 6, 2001, pursuant to which BDI will act 
as the Manager of the Company. Distribution of profits to BDI are limited by the
Indenture for the Investor Holdings Senior Secured Notes for any fiscal quarter,
shall not exceed 1% of net revenues plus 5% of consolidated cash flow for the   
immediately preceding fiscal quarter, provided that the payment of such         
distributions shall be subordinated to the payment in full of principal,        
interest and liquidated damages, as defined, if any, then due on the Investor   
Holdings Senior Secured Notes. During the three months ended March 31, 2003, a  
distribution of $864,000, related to the fourth quarter of 2002, was paid to BDI
in accordance with the LLC Manager Agreement between the Company and BDI dated  
December 5, 2001.                                                               

       In December 2001, the Company issued a $700,000 note to BDI. The note
bore interest at a rate of 7% per annum. The principal and accrued but unpaid   
interest were due and payable in full on December 12, 2002. The principal and   
accrued interest was paid on March 17, 2003.                                    

NOTE 8.  SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION                           

  The Company's $151.8 million of 11.653% Senior Secured Notes are
unconditionally and irrevocably guaranteed, jointly and severally, by all of the
restricted subsidiaries of the Company. The guarantees rank senior in right of  
payment to all existing and future subordinated indebtedness of these restricted
subsidiaries and equal in right of payment with all existing and future senior  
indebtedness of these restricted subsidiaries.                                  

      The following condensed consolidating information presents condensed
financial statements as of March 31, 2003 and December 31, 2002 and for the     
three months ended March 31, 2003 and March 31, 2002, of the Company, the       
guarantor subsidiaries (on a combined basis) and the elimination entries        
necessary to combine such entities on a consolidated basis. MICC, a wholly-owned
subsidiary of the Company, is a non-guarantor subsidiary. However, MICC does not
have any material assets, obligations or operations. Therefore, no non-guarantor
subsidiary information has been presented below.                                

10

10-Q
13th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 13th
 MAJESTIC INVESTOR HOLDINGS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING BALANCE SHEETS AS OF MARCH 31, 2003                     
(UNAUDITED)                                                                     

                                                        [Enlarge/Download Table]


                                                            Majestic                                                     
                                                            Investor       Guarantor      Eliminating           Total    
                                                          Holdings, LLC   Subsidiaries      Entries         Consolidated 
                                                          -------------  -------------   -------------      -------------
                                                                                                                         
ASSETS                                                                                                                   
Current Assets:                                                                                                          
      Cash and cash equivalents                           $   5,783,064  $  15,293,155   $           -      $  21,076,219
      Restricted cash                                           500,000              -               -            500,000
      Accounts receivable (net)                                       -      1,081,130               -          1,081,130
      Inventories                                                     -        928,837               -            928,837
      Prepaid expenses and other current assets                 279,162      1,567,771        (176,047)(a)      1,670,886
                                                          -------------  -------------   -------------      -------------
                  Total current assets                        6,562,226     18,870,893        (176,047)        25,257,072
                                                          -------------  -------------   -------------      -------------

Property and equipment, net                                           -    115,771,657               -        115,771,657
Intangible assets, net                                        5,200,000     12,092,996               -         17,292,996
Due from related parties                                    115,904,126              -    (115,904,126)(b)              -
Other assets                                                  6,368,564      8,571,253                         14,939,817
Investment in subsidiaries                                   25,986,523              -     (25,986,523)(b)              -
                                                          -------------  -------------   -------------      -------------

                  Total Assets                            $ 160,021,439  $ 155,306,799   $(142,066,696)     $ 173,261,542
                                                          =============  =============   =============      =============

LIABILITIES AND MEMBER'S  EQUITY                                                                                         
Current Liabilities:                                                                                                     

      Current maturities of long-term debt               $            -  $      79,406  $            -      $      79,406
      Accounts payable, accrued and other                     6,005,583     13,242,209        (176,047)(a)     19,071,745
                                                          -------------  -------------   -------------      -------------
                  Total current liabilities                   6,005,583     13,321,615        (176,047)        19,151,151
                                                          -------------  -------------   -------------      -------------

Due to related parties                                                     115,904,126    (115,904,126)(b)              -
Long-term debt, net of current maturities                   145,848,510         94,535                        145,943,045
                                                          -------------  -------------   -------------      -------------

                  Total Liabilities                         151,854,093    129,320,276    (116,080,173)       165,094,196

Member's Equity                                               8,167,346     25,986,523     (25,986,523)(b)      8,167,346
                                                          -------------  -------------   -------------      -------------

                  Total Liabilities and Member's Equity   $ 160,021,439  $ 155,306,799   $(142,066,696)     $ 173,261,542
                                                          =============  =============   =============      =============

(a)   To eliminate intercompany receivables and payables.                       
(b)   To eliminate intercompany accounts and investment in subsidiaries.        

11

10-Q
14th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 14th
 MAJESTIC INVESTOR HOLDINGS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 2002                  
(UNAUDITED)                                                                     

                                                        [Enlarge/Download Table]

                                                           Majestic                                                       
                                                           Investor      Guarantor      Eliminating              Total    
                                                         Holdings, LLC  Subsidiaries      Entries            Consolidated 
                                                         -------------  -------------  -------------         -------------
                                                                                                                          
ASSETS                                                                                                                    
Current Assets:                                                                                                           
      Cash and cash equivalents                          $   1,007,660  $  14,976,164  $           -         $  15,983,824
      Restricted cash                                          250,000              -              -               250,000
      Accounts receivable (net)                                 52,695      1,188,488              -             1,241,183
      Inventories                                                    -        929,126              -               929,126
      Prepaid expenses and other current assets              5,573,991      1,575,678     (4,765,801)(a)         2,383,868
                                                         -------------  -------------  -------------         -------------
                  Total current assets                       6,884,346     18,669,456     (4,765,801)           20,788,001
                                                         -------------  -------------  -------------         -------------

Property and equipment, net                                          -    117,297,506              -           117,297,506
Intangible assets, net                                       5,200,000     12,491,746              -            17,691,746
Due from related parties                                   116,816,043              -   (116,816,043)(b)                 -
Other assets                                                 6,714,902      8,546,757              -            15,261,659
Investment in subsidiaries                                  19,959,009              -    (19,959,009)(b)                 -
                                                         -------------  -------------  -------------         -------------

                  Total Assets                           $ 155,574,300  $ 157,005,465  $(141,540,853)        $ 171,038,912
                                                         =============  =============  =============         =============

LIABILITIES AND MEMBER'S EQUITY                                                                                           
Current Liabilities:                                                                                                      

      Current maturities of long-term debt               $           -  $     134,084  $           -         $     134,084
      Accounts payable, accrued and other                    1,960,447     15,215,462              -            17,175,909
                                                         -------------  -------------  -------------         -------------
                  Total current liabilities                  1,960,447     15,349,546              -            17,309,993
                                                         -------------  -------------  -------------         -------------

Due to related parties                                               -    121,581,844   (121,581,844)(a)(b)              -
Long-term debt, net of current maturities                  145,531,448        115,066              -           145,646,514
                                                         -------------  -------------  -------------         -------------

                  Total Liabilities                        147,491,895    137,046,456   (121,581,844)          162,956,507

Member's Equity                                              8,082,405     19,959,009    (19,959,009)(b)         8,082,405
                                                         -------------  -------------  -------------         -------------

                  Total Liabilities and Member's Equity  $ 155,574,300  $ 157,005,465  $(141,540,853)        $ 171,038,912
                                                         =============  =============  =============         =============

(a)   To eliminate intercompany receivables and payables.                       
(b)   To eliminate intercompany accounts and investment in subsidiaries.        

12

10-Q
15th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 15th
 MAJESTIC INVESTOR HOLDINGS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED     
MARCH 31, 2003                                                                  
(UNAUDITED)                                                                     

                                                        [Enlarge/Download Table]


                                           MAJESTIC INVESTOR   GUARANTOR   ELIMINATING                    
                                            HOLDINGS, LLC    SUBSIDIARIES    ENTRIES         CONSOLIDATED 
                                           --------------   -------------  ------------    ---------------

                                                                                                          
REVENUES:                                                                                                 
     Casino                                $           -    $ 39,435,707   $         -     $   39,435,707 
     Rooms                                             -       3,798,785             -          3,798,785 
     Food and beverage                                 -       4,860,940             -          4,860,940 
     Other                                             -         800,838             -            800,838 
                                           --------------   -------------  ------------    ---------------
          Gross revenues                               -      48,896,270             -         48,896,270 

          Less promotional allowances                  -      (5,617,111)            -         (5,617,111)
                                           --------------   -------------  ------------    ---------------

          Net revenues                                 -      43,279,159             -         43,279,159 

COSTS AND EXPENSES:                                                                                       
     Casino                                            -      15,558,718             -         15,558,718 
     Rooms                                             -       1,545,896             -          1,545,896 
     Food and beverage                                 -       2,498,200             -          2,498,200 
     Other                                             -         409,608             -            409,608 
     Gaming taxes                                      -       4,575,313             -          4,575,313 
     Advertising and promotion                         -       3,251,419             -          3,251,419 
     General and administrative                        -       6,437,693             -          6,437,693 
     Depreciation and amortization               665,738       2,987,722             -          3,653,460 
                                           --------------   -------------  ------------    ---------------
          Total costs and expenses               665,738      37,264,569             -         37,930,307 
                                           --------------   -------------  ------------    ---------------

          Operating income (loss)               (665,738)      6,014,590             -          5,348,852 
                                           --------------   -------------  ------------    ---------------

OTHER INCOME (EXPENSE):                                                                                   
     Interest income                              18,298           4,645             -             22,943 
     Interest expense                         (4,421,360)         (6,730)            -         (4,428,090)
     Gain on sale of assets                            -          15,000             -             15,000 
     Other non-operating expense                  (9,479)              -             -             (9,479)
     Equity in net income of subsidiaries      6,027,505               -    (6,027,505)(a)              - 
                                           --------------   -------------  ------------    ---------------
          Total other income (expense)         1,614,964          12,915    (6,027,505)        (4,399,626)
                                           --------------   -------------  ------------    ---------------

          Net income                       $     949,226    $  6,027,505   $(6,027,505)    $      949,226 
                                           ==============   =============  ============    ===============

(a) To eliminate equity in net income of subsidiaries.                          

13

10-Q
16th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 16th
 MAJESTIC INVESTOR HOLDINGS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED     
MARCH 31, 2002                                                                  
UNAUDITED)                                                                      

                                                        [Enlarge/Download Table]


                                           MAJESTIC INVESTOR     GUARANTOR      ELIMINATING                    
                                             HOLDINGS, LLC      SUBSIDIARIES      ENTRIES         CONSOLIDATED 
                                             -------------      ------------      -------         ------------ 
                                                                                                               
REVENUES:                                                                                                      
     Casino                                  $            -   $  42,354,751   $            -     $  42,354,751 
     Rooms                                                -       4,088,511                -         4,088,511 
     Food and beverage                                    -       5,096,101                -         5,096,101 
     Other                                                -         888,490                -           888,490 
                                             ---------------  --------------  ---------------    --------------

          Gross revenues                                  -      52,427,853                -        52,427,853 

          Less promotional allowances                     -      (6,123,455)               -        (6,123,455)
                                             ---------------  --------------  ---------------    --------------

          Net revenues                                    -      46,304,398                -        46,304,398 
                                             ---------------  --------------  ---------------    --------------

COSTS AND EXPENSES:                                                                                            
     Casino                                               -      18,026,159                -        18,026,159 
     Rooms                                                -       1,768,500                -         1,768,500 
     Food and beverage                                    -       2,770,118                -         2,770,118 
     Other                                                -         378,654                -           378,654 
     Gaming taxes                                         -       5,019,754                -         5,019,754 
     Advertising and promotion                            -       3,296,536                -         3,296,536 
     General and administrative                       4,205       6,156,989                -         6,161,194 
     Depreciation and amortization                  626,347       2,760,668                -         3,387,015 
     Pre-opening expenses                             7,287               -                -             7,287 
                                             ---------------  --------------  ---------------    --------------

          Total costs and expenses                  637,839      40,177,378                -        40,815,217 
                                             ---------------  --------------  ---------------    --------------

          Operating income (loss)                  (637,839)      6,127,020                -         5,489,181 
                                             ---------------  --------------  ---------------    --------------

OTHER INCOME (EXPENSE):                                                                                        
     Interest income                                 16,512          15,096                -            31,608 
     Interest expense                            (4,507,026)         (8,361)               -        (4,515,387)
     Gain on sale of assets                               -           6,542                -             6,542 
     Other non-operating expense                    (17,492)              -                -           (17,492)
     Equity in net income of subsidiaries         6,140,297               -       (6,140,297)(a)             - 
                                             ---------------  --------------  ---------------    --------------
          Total other income (expense)            1,632,291          13,277       (6,140,297)       (4,494,729)
                                             ---------------  --------------  ---------------    --------------

          Net income                         $      994,452   $   6,140,297   $   (6,140,297)    $     994,452 
                                             ===============  ==============  ===============    ==============

(a) To eliminate equity in net income of subsidiaries.                          

14

10-Q
17th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 17th
 MAJESTIC INVESTOR HOLDINGS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED     
MARCH 31, 2003                                                                  
(UNAUDITED)                                                                     

                                                        [Enlarge/Download Table]


                                                                 MAJESTIC INVESTOR   GUARANTOR     ELIMINATING     CONSOLIDATED  
                                                                   HOLDINGS, LLC    SUBSIDIARIES     ENTRIES           TOTAL     
                                                                   -------------    ------------     -------           -----     

                                                                                                                                 
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES              $       (7,965)  $    6,640,323  $          -   $     6,632,358 
                                                                 ---------------  --------------  -------------  ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                            
      Acquisition of property, equipment and vessel improvements              -      (1,063,123)             -        (1,063,123)
      Increase in restricted cash                                      (250,000)              -              -          (250,000)
      Proceeds from sale of equipment                                         -          15,000              -            15,000 
                                                                 ---------------  --------------  -------------  ----------------
          Net cash used in investing activities                        (250,000)     (1,048,123)             -        (1,298,123)
                                                                 ---------------  --------------  -------------  ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                            
      Payment of 11.653% Senior Secured Notes issuance costs             (2,337)              -              -            (2,337)
      Cash paid to reduce long-term debt                                      -         (75,209)             -           (75,209)
      Repayment of loan to Barden Development, Inc.                     700,000               -                          700,000 
      Cash advances (to) from affiliates                              5,200,000      (5,200,000)             -                 - 
      Distribution to Barden Development, Inc.                         (864,294)              -              -          (864,294)
                                                                 ---------------  --------------  -------------  ----------------

          Net cash provided by (used in) financing activities         5,033,369      (5,275,209)             -          (241,840)
                                                                 ---------------  --------------  -------------  ----------------

Net increase in cash and cash equivalents                             4,775,404         316,991              -         5,092,395 
Cash and cash equivalents, beginning of period                        1,007,660      14,976,164              -        15,983,824 
                                                                 ---------------  --------------  -------------  ----------------
Cash and cash equivalents, end of period                         $    5,783,064   $  15,293,155    $         -   $    21,076,219 
                                                                 ===============  ==============  =============  ================

15

10-Q
18th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 18th
 MAJESTIC INVESTOR HOLDINGS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED     
MARCH 31, 2002                                                                  
(UNAUDITED)                                                                     

                                                        [Enlarge/Download Table]


                                                                 MAJESTIC INVESTOR   GUARANTOR      ELIMINATING        CONSOLIDATED 
                                                                   HOLDINGS, LLC    SUBSIDIARIES      ENTRIES              TOTAL    
                                                                   -------------    ------------      -------              -----    

                                                                                                                                    
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES              $     (288,761)  $   7,253,171   $       1,180 (a) $     6,965,590 
                                                                 ---------------  --------------  -------------     ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                               
      Payment of acquisition related costs                             (796,649)              -              -             (796,649)
      Proceeds from sale of equipment                                         -           6,542              -                6,542 
      Acquisition of property, equipment and vessel improvements              -      (1,171,782)             -           (1,171,782)
                                                                 ---------------  --------------  -------------     ----------------
          Net cash used in investing activities                        (796,649)     (1,165,240)             -           (1,961,889)
                                                                 ---------------  --------------  -------------     ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                               
      Payment of 11.653% Senior Secured Notes issuance costs           (505,136)              -              -             (505,136)
      Cash advances (to) from affiliates                              7,351,278      (7,185,528)        (1,180)(a)          164,570 
      Line of credit, net                                            (4,800,000)              -              -           (4,800,000)
      Distribution to Barden Development, Inc.                         (188,242)              -              -             (188,242)
      Cash paid to reduce long-term debt                                      -         (55,182)             -              (55,182)
                                                                 ---------------  --------------  -------------     ----------------

          Net cash provided by (used in) financing activities         1,857,900      (7,240,710)        (1,180)          (5,383,990)
                                                                 ---------------  --------------  -------------     ----------------

Net increase (decrease) in cash and cash equivalents                    772,490      (1,152,779)             -             (380,289)
Cash and cash equivalents, beginning of period                          498,363      17,206,452              -           17,704,815 
                                                                 ---------------  --------------  -------------     ----------------
Cash and cash equivalents, end of period                         $    1,270,853   $  16,053,673   $          -       $    17,324,526
                                                                 ===============  ==============  =============     ================

(a)   To eliminate intercompany receivables and payables.                       

16

10-Q
19th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 19th
 MAJESTIC INVESTOR HOLDINGS, LLC

 CONSOLIDATING BALANCE SHEETS AS OF MARCH 31, 2003
 (UNAUDITED)

                                                        [Enlarge/Download Table]


                                                             Barden        Barden       Barden                                      
                                                           Mississippi    Colorado      Nevada                                      
                                               Parent      Gaming, LLC   Gaming, LLC  Gaming, LLC    Elimination      Consolidated  
                                             ------------  -----------  ------------- ------------ -------------      ------------- 
                                                                                                                                    
ASSETS                                                                                                                              
Current Assets:                                                                                                                     
    Cash and cash equivalents               $  5,783,064  $ 8,279,526   $  2,268,826    $4,744,803    $        -       $  21,076,219
    Restricted cash                              500,000            -              -             -             -             500,000
    Accounts receivable (net)                          -      451,720         54,399       575,011             -           1,081,130
    Inventories                                        -      423,896        219,194       285,747             -             928,837
    Prepaid expenses and other                   103,519      426,092        226,154       915,121             -           1,670,886
    Receivable from related party                175,643            -            254           150      (176,047) (a)              -
                                             ------------  -----------  -------------  ------------ -------------      -------------
            Total current assets               6,562,226    9,581,234      2,768,827     6,520,832      (176,047)         25,257,072
                                             ------------  -----------  -------------  ------------ -------------      -------------

Property and equipment, net                            -   66,227,021     21,605,832    27,938,804             -         115,771,657
Intangible assets, net                         5,200,000    6,730,091      3,512,905     1,850,000             -          17,292,996
Goodwill                                               -    3,997,904      1,924,494             -             -           5,922,398
                                                                                                                               -    
Other Assets:                                                                                                                      -
    Deferred financing costs, net              6,368,564            -              -             -             -           6,368,564
    Restricted cash                                    -            -              -     1,000,000             -           1,000,000
    Due from related parties                 115,904,126            -              -             -  (115,904,126) (a)              -
    Other assets and deposits                          -      450,618        141,363     1,056,874             -           1,648,855
    Investment in subsidiaries                25,986,523            -              -             -   (25,986,523) (b)              -
                                             ------------  -----------  -------------  ------------ -------------      -------------
            Total other assets               148,259,213      450,618        141,363     2,056,874  (141,890,649)          9,017,419
                                             ------------  -----------  -------------  ------------ -------------      -------------

            Total Assets                    $160,021,439  $86,986,868   $ 29,953,421   $38,366,510  $(142,066,696)     $ 173,261,542
                                             ============  ===========  =============  ============ =============      =============

LIABILITIES AND MEMBER'S  DEFICIT                                                                                                   
Current Liabilities:                                                                                                                
    Current maturities of long-term debt    $          -  $         -   $          -   $    79,406  $          -       $      79,406
    Accounts payable                                   -      647,141        443,409       704,972             -           1,795,522
    Other accrued liabilities:                                                                                                      
            Payroll and related                        -    2,052,290        806,891     1,744,979             -           4,604,160
            Interest                           5,895,144            -              -             -             -           5,895,144
            Progressive jackpots                       -      803,266      1,266,752       261,844             -           2,331,862
            Slot club liabilities                      -      247,310        344,513       239,566             -             831,389
            Other accrued liabilities            110,439    1,999,361        640,950     1,038,965      (176,047) (a)      3,613,668
                                             ------------  -----------  -------------  ------------ -------------      -------------
            Total current liabilities          6,005,583    5,749,368      3,502,515     4,069,732      (176,047)         19,151,151
                                             ------------  -----------  -------------  ------------ -------------      -------------

Due to related parties                                 -   61,700,000     17,842,454    36,361,672  (115,904,126) (a)              -
Long-term debt, net of current maturities    145,848,510            -              -        94,535             -         145,943,045
                                             ------------  -----------  -------------  ------------ -------------      -------------

            Total Liabilities                151,854,093   67,449,368     21,344,969    40,525,939  (116,080,173)        165,094,196

Member's  Equity                               8,167,346   19,537,500      8,608,452    (2,159,429)  (25,986,523) (b)      8,167,346
                                             ------------  -----------  -------------  ------------ -------------      -------------

    Total Liabilities and Member's  Equity  $160,021,439  $86,986,868   $ 29,953,421    38,366,510  (142,066,696)      $ 173,261,542
                                             ============  ===========  =============  ============ =============      =============

(a) To eliminate intercompany receivables and payables.                         
(b) To eliminate intercompany accounts and investment in subsidiaries.          

17

10-Q
20th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 20th
 MAJESTIC INVESTOR HOLDINGS, LLC

CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 2002
 (UNAUDITED)

                                                        [Enlarge/Download Table]


                                                                Barden        Barden       Barden                                  
                                                              Mississippi    Colorado      Nevada                                  
                                                 Parent       Gaming, LLC   Gaming, LLC  Gaming, LLC  Elimination     Consolidated 
                                               ------------  -------------  ------------ -----------  -----------     ------------ 
                                                                                                                                   
ASSETS                                                                                                                             
Current Assets:                                                                                                                    
    Cash and cash equivalents                 $  1,007,660   $  7,852,914   $ 2,727,644  $ 4,395,606 $           -     $ 15,983,824
    Restricted cash                                250,000              -             -            -             -          250,000
    Accounts receivable (net)                       52,695        547,541        48,168      592,779             -        1,241,183
    Inventories                                          -        426,658       183,439      319,029             -          929,126
    Prepaid expenses and other                     125,620        420,317       161,487      976,444             -        1,683,868
    Receivable form related party                4,748,371         15,670             -        1,760    (4,765,801)(a)            -
    Note receivable from related party             700,000              -             -            -             -          700,000
                                               ------------  -------------  ------------ ------------ ------------     ------------
            Total current assets                 6,884,346      9,263,100     3,120,738    6,285,618    (4,765,801)      20,788,001
                                               ------------  -------------  ------------ ------------ ------------     ------------

Property and equipment, net                              -     67,655,754    21,646,773   27,994,979             -      117,297,506
Intangible assets, net                           5,200,000      6,939,404     3,634,842    1,917,500             -       17,691,746
Goodwill                                                 -      3,997,904     1,924,494            -             -        5,922,398

Other Assets:                                                                                                                      
    Deferred financing costs, net                6,714,902              -             -            -             -        6,714,902
    Restricted cash                                      -              -             -    1,000,000             -        1,000,000
    Due from related parties                   116,816,043              -             -            -  (116,816,043)(a)            -
    Other assets, prepaid lease and deposits             -        450,616       141,363    1,032,380             -        1,624,359
    Investment in subsidiaries                  19,959,009              -             -            -   (19,959,009)(b)            -
                                               ------------  -------------  ------------ ------------ ------------     ------------
            Total other assets                 143,489,954        450,616       141,363    2,032,380  (136,775,052)       9,339,261
                                               ------------  -------------  ------------ ------------ ------------     ------------

            Total Assets                      $155,574,300   $ 88,306,778   $30,468,210  $38,230,477 $(141,540,853)    $171,038,912
                                               ============  =============  ============ ============ =============    ============

LIABILITIES AND MEMBER'S  DEFICIT                                                                                                  
Current Liabilities:                                                                                                               
    Current maturities of long-term debt      $          -   $          -   $         -  $   134,084 $           -     $    134,084
    Accounts payable                                     -        574,366       457,238    1,104,765             -        2,136,369
    Other accrued liabilities:                                                                                                     
            Payroll and related                          -      2,929,467       984,890    2,034,918             -        5,949,275
            Accrued interest                     1,473,785              -             -            -             -        1,473,785
            Progressive jackpots                         -        760,975     1,475,807      239,761             -        2,476,543
            Slot club liabilities                        -        268,737       343,048      126,774             -          738,559
            Other accrued liabilities              486,662      2,258,123       965,151      691,442             -        4,401,378
                                               ------------  -------------  ------------ ------------ ------------     ------------
            Total current liabilities            1,960,447      6,791,668     4,226,134    4,331,744             -       17,309,993
                                               ------------  -------------  ------------  ----------- ------------     ------------

Due to related parties                                   -     66,543,493    18,864,947   36,173,404  (121,581,844)(a)            -
Long-term debt, net of current maturities      145,531,448              -             -      115,066             -      145,646,514
                                               ------------  -------------  ------------ ------------ ------------     ------------

            Total Liabilities                  147,491,895     73,335,161    23,091,081   40,620,214  (121,581,844)     162,956,507

Member's  Equity:                                8,082,405     14,971,617     7,377,129   (2,389,737)  (19,959,009)(b)    8,082,405
                                               ------------  -------------  ------------ ------------ -------------    ------------

    Total Liabilities and Member's  Equity    $155,574,300   $ 88,306,778   $30,468,210  $38,230,477 $(141,540,853)    $171,038,912
                                               ============  =============  ============ ============ ============     ============

18

(a) To eliminate intercompany receivables and payables.                         
(b) To eliminate intercompany accounts and investment in subsidiaries.          

10-Q
21st Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 21st
MAJESTIC INVESTOR HOLDINGS, LLC 

CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2003
 (UNAUDITED)

                                                        [Enlarge/Download Table]


                                                          BARDEN       BARDEN        BARDEN                                  
                                                        MISSISSIPPI   COLORADO       NEVADA                                  
                                           PARENT       GAMING, LLC  GAMING, LLC   GAMING, LLC   ELIMINATION    CONSOLIDATED 
                                         ------------   -----------  ------------  ------------  -----------    -------------

                                                                                                                             
REVENUES:                                                                                                                    
    Casino                               $         -   $21,810,069   $ 8,113,961   $ 9,511,677   $        -     $ 39,435,707 
    Rooms                                          -     1,925,669             -     1,873,116            -        3,798,785 
    Food and beverage                              -     2,344,891       483,385     2,032,664            -        4,860,940 
    Other                                          -       302,121        62,246       436,471            -          800,838 
                                         ------------   ------------ ------------  ------------  -----------    -------------

        Gross revenues                             -    26,382,750     8,659,592    13,853,928            -       48,896,270 

        Less promotional allowances                -    (3,417,392)     (744,095)   (1,455,624)           -       (5,617,111)
                                         ------------   ------------ ------------  ------------  -----------    -------------

        Net revenues                               -    22,965,358     7,915,497    12,398,304            -       43,279,159 
                                         ------------   ------------  -----------  ------------  -----------    -------------

COSTS AND EXPENSES:                                                                                                          
    Casino                                         -     8,904,877     2,569,572     4,084,269            -       15,558,718 
    Rooms                                          -       602,837             -       943,059            -        1,545,896 
    Food and beverage                              -       634,685       282,056     1,581,459            -        2,498,200 
    Other                                          -        81,218       170,953       157,437            -          409,608 
    Gaming taxes                                   -     2,561,820     1,273,028       740,465            -        4,575,313 
    Advertising and promotion                      -     1,271,478       715,475     1,264,466            -        3,251,419 
    General and administrative                     -     2,455,879     1,261,388     2,720,426            -        6,437,693 
    Depreciation and amortization            665,738     1,904,968       411,702       671,052            -        3,653,460 
                                         ------------   ------------  -----------  ------------  -----------    -------------

        Total costs and expenses             665,738    18,417,762     6,684,174    12,162,633            -       37,930,307 
                                         ------------   ------------ ------------  ------------  -----------    -------------

        Operating income (loss)             (665,738)    4,547,596     1,231,323       235,671            -        5,348,852 
                                         ------------   ------------ ------------  ------------  -----------    -------------

OTHER INCOME (EXPENSE):                                                                                                      
    Interest income                           18,298         3,287             -         1,358            -           22,943 
    Interest expense                      (4,421,360)            -             -        (6,730)           -       (4,428,090)
    Gain on sale of assets                         -        15,000             -             -            -           15,000 
    Other non-operating expense               (9,479)            -             -             -            -           (9,479)
    Equity in net income of subsidiaries   6,027,505             -             -             -   (6,027,505)(a)            - 
                                         ------------   ------------ ------------  ------------  -----------    -------------
        Total other income (expense)       1,614,964        18,287             -        (5,372)  (6,027,505)      (4,399,626)
                                         ------------   ------------ ------------  ------------  -----------    -------------

        Net income                       $   949,226   $ 4,565,883    $1,231,323   $   230,299  $(6,027,505)    $    949,226 
                                         ============  ============  ============  ============  ===========    =============

(a) To eliminate equity in net income of subsidiaries.                          

19

10-Q
22nd Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 22nd
MAJESTIC INVESTOR HOLDINGS, LLC 

CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2002
(UNAUDITED) 

                                                        [Enlarge/Download Table]


                                                               BARDEN       BARDEN       BARDEN                               
                                                             MISSISSIPPI   COLORADO      NEVADA                               
                                                 PARENT      GAMING, LLC  GAMING, LLC  GAMING, LLC  ELIMINATION  CONSOLIDATED 
                                             --------------- -----------  -----------  ------------ -----------  -----------  

                                                                                                                              
REVENUES:                                                                                                                     
       Casino                                $            -  $23,356,959  $ 9,217,305   $ 9,780,487 $         -   $42,354,751 
       Rooms                                              -    2,085,520            -     2,002,991           -     4,088,511 
       Food and beverage                                  -    2,475,101      506,060     2,114,940           -     5,096,101 
       Other                                              -      335,979       58,584       493,927           -       888,490 
                                              --------------  -----------  -----------  ------------ -----------   -----------

              Gross revenues                              -   28,253,559    9,781,949    14,392,345           -    52,427,853 

              Less promotional allowances                 -   (3,906,023)    (820,172)   (1,397,260)          -    (6,123,455)
                                              --------------  -----------  -----------  ------------ -----------   -----------

              Net revenues                                -   24,347,536    8,961,777    12,995,085           -    46,304,398 
                                              --------------  -----------  -----------  ------------ -----------   -----------

COSTS AND EXPENSES:                                                                                                           
       Casino                                             -    9,908,991    3,544,498     4,572,670           -    18,026,159 
       Rooms                                              -      721,768            -     1,046,732           -     1,768,500 
       Food and beverage                                  -      678,916      271,120     1,820,082           -     2,770,118 
       Other                                              -       85,040      166,416       127,198           -       378,654 
       Gaming taxes                                       -    2,779,336    1,483,083       757,335           -     5,019,754 
       Advertising and promotion                          -    1,365,791      733,390     1,197,355           -     3,296,536 
       General and administrative                     4,205    2,399,475    1,141,057     2,616,457           -     6,161,194 
       Depreciation and amortization                626,347    1,779,913      363,668       617,087           -     3,387,015 
       Pre-opening expenses                           7,287            -            -             -           -         7,287 
                                              --------------  -----------  -----------  ------------ -----------   -----------

              Total costs and expenses              637,839   19,719,230    7,703,232    12,754,916           -    40,815,217 
                                              -------------  -----------  -----------  ------------  -----------   -----------

              Operating income (loss)              (637,839)   4,628,306    1,258,545       240,169           -     5,489,181 
                                              --------------  -----------  -----------  ------------ -----------   -----------

OTHER INCOME (EXPENSE):                                                                                                       
       Interest income                               16,512        6,894        3,633         4,569           -        31,608 
       Interest expense                          (4,507,026)           -            -        (8,361)          -    (4,515,387)
       Gain on sale of assets                             -        6,542            -             -           -         6,542 
       Other non-operating expense                  (17,492)           -            -             -                   (17,492)
       Equity in net income of subsidiaries       6,140,297            -            -             -  (6,140,297)(a)         - 
                                              --------------  -----------  -----------  ------------ -----------   -----------
              Total other income (expense)        1,632,291       13,436        3,633        (3,792) (6,140,297)   (4,494,729)
                                              --------------  -----------  -----------  ------------ -----------   -----------

              Net income                     $      994,452  $ 4,641,742  $ 1,262,178    $  236,377 $(6,140,297)  $   994,452 
                                             ===============  ===========  ==========  ============  ===========   ===========

(a) To eliminate equity in net income of subsidiaries.                          

20

10-Q
23rd Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 23rd
MAJESTIC INVESTOR HOLDINGS, LLC 

CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2003
 (UNAUDITED)

                                                        [Enlarge/Download Table]


                                                                    BARDEN       BARDEN      BARDEN                                 
                                                                  MISSISSIPPI   COLORADO     NEVADA                                 
                                                       PARENT     GAMING, LLC  GAMING, LLC GAMING, LLC   ELIMINATION   CONSOLIDATED 
                                                    ------------- ------------ ----------- ------------  -----------   -------------

                                                                                                                                    
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                               
Net income                                          $    949,226  $ 4,565,883  $1,231,323  $   230,299  $(6,027,505)(a) $   949,226 
Adjustments to reconcile net income to net cash                                                                                     
   provided by operating activities:                                                                                                
   Depreciation                                                -    1,695,655     289,765      603,552            -       2,588,972 
   Amortization                                          665,738      209,313     121,937       67,500            -       1,064,488 
   Income from wholly-owned subsidiaries              (6,027,505)           -           -            -    6,027,505 (a)           - 
   Gain on sale of assets                                      -      (15,000)          -            -            -         (15,000)
Changes in operating assets and liabilities:                                                                                        
   (Increase) decrease in accounts receivable, net        52,695       95,820      (6,231)      17,768            -         160,052 
   (Increase) decrease in inventories                          -        2,761     (35,755)      33,282            -             288 
   (Increase) decrease  in prepaid expenses               22,101       (5,775)    (49,917)      61,323            -          27,732 
   Increase in other assets                                    -            -     (14,749)     (24,485)           -         (39,234)
   Increase (decrease) in accounts payable                     -       72,775     (13,829)    (399,793)           -        (340,847)
   Increase (decrease) in amounts due to related          68,342      (28,923)   (422,527)     198,487            -        (184,621)
     parties, net                                                                                                                   
   Decrease in accrued payroll and other expenses              -     (877,177)   (178,000)    (289,939)           -      (1,345,116)
   Increase in accrued interest                        4,421,359            -           -            -            -       4,421,359 
   Increase (decrease) in other accrued liabilities     (159,921)    (336,798)   (632,011)     473,789            -        (654,941)
                                                    ------------- ------------ ----------- ------------  -----------     -----------

     Net cash provided by (used in) operating             (7,965)   5,378,534     290,006      971,783            -       6,632,358 
       activities                                   ------------- ------------ ----------- ------------  -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                               
   Acquisition of property, equipment and                      -     (266,922)   (248,824)    (547,377)           -      (1,063,123)
     improvements                                                                                                                   
   Increase in restricted cash                          (250,000)           -           -            -            -        (250,000)
   Proceeds from sale of equipment                             -       15,000           -            -            -          15,000 
                                                    ------------- ------------ ----------- ------------  -----------     -----------
     Net cash used in investing activities              (250,000)    (251,922)   (248,824)    (547,377)           -      (1,298,123)
                                                    ------------- ------------ ----------- ------------  -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                               
   Payment of 11.653% Senior Secured Notes                                                                                          
     issuance costs                                       (2,337)           -           -            -            -          (2,337)
   Cash paid to reduce long-term debt                          -            -           -      (75,209)           -         (75,209)
   Repayment of loan to Barden Development, Inc.         700,000            -           -            -            -         700,000 
   Cash advances (to)/from affiliates, net             5,200,000   (4,700,000)   (500,000)           -            -               - 
   Distribution to Barden Development, Inc.             (864,294)           -           -            -            -        (864,294)
                                                    ------------- ------------ ----------- ------------  -----------     -----------

     Net cash provided by (used in) financing          5,033,369   (4,700,000)   (500,000)     (75,209)           -        (241,840)
       activities                                   ------------- ------------ ----------- ------------  -----------     -----------

Net increase (decrease) in cash and cash equivalents   4,775,404      426,612    (458,818)     349,197            -       5,092,395 
Cash and cash equivalents, beginning of period         1,007,660    7,852,914   2,727,644    4,395,606            -      15,983,824 
                                                    ------------- ------------ ----------- ------------  -----------     -----------

Cash and cash equivalents, end of period            $  5,783,064  $ 8,279,526  $2,268,826  $ 4,744,803   $        -     $21,076,219 
                                                    ============= ============ =========== ============  ===========     ===========

(a) To eliminate intercompany investment in subsidiaries.                       

21

10-Q
24th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 24th
MAJESTIC INVESTOR HOLDINGS, LLC 
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2002
(UNAUDITED) 

                                                        [Enlarge/Download Table]


                                                                BARDEN        BARDEN         BARDEN                                 
                                                             MISSISSIPPI     COLORADO        NEVADA                                 
                                                   PARENT    GAMING, LLC    GAMING, LLC   GAMING, LLC   ELIMINATION     CONSOLIDATED
                                               ------------ -------------  ------------  -------------  ------------    ------------

                                                                                                                                    
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                               
Net income                                      $  994,452    $4,641,742   $ 1,262,178   $    236,377   $(6,140,297)(a) $   994,452 
Adjustments to reconcile net income to net cash                                                                                     
   provided by operating activities:                                                                                                
   Depreciation                                          -     1,570,600       241,730        550,511             -       2,362,841 
   Amortization                                    626,347       209,313       121,938         66,576             -       1,024,174 
   Gain on sale of assets                                -        (6,542)            -              -             -          (6,542)
   Income from wholly-owned subsidiaries        (6,140,297)            -             -              -     6,140,297  (a)          - 
Changes in operating assets and liabilities:                                                                                        
   (Increase) decrease  in accounts receivable,     68,670      (109,786)      (12,955)       (24,001)            -         (78,072)
       net                                                                                                                          
   (Increase) decrease in inventories                    -        (3,933)       13,600         61,415             -          71,082 
   (Increase) decrease  in prepaid expenses          1,999      (146,395)     (267,916)        42,966             -        (369,346)
   Increase in other assets                              -        (2,711)      (26,731)      (575,534)            -        (604,976)
   Increase (decrease) in accounts payable               -      (149,454)      148,661       (395,448)            -        (396,241)
   Increase (decrease) in amounts due to                 -           711             -        (33,951)        1,180  (b)    (32,060)
      related parties, net                                                                                                          
   Increase in accrued interest                  4,437,005             -             -              -             -       4,437,005 
   Decrease in accrued payroll and related               -      (488,682)      (24,196)      (175,910)            -        (688,788)
     expenses                                                                                                                       
   Increase (decrease) in other accrued           (276,937)     (520,666)      870,824        178,840             -         252,061 
     liabilities                               ------------ -------------  ------------  -------------  ------------    ------------

      Net cash provided by (used in) operating    (288,761)    4,994,197     2,327,133        (68,159)        1,180       6,965,590 
        activities                             ------------ -------------  ------------  -------------  ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                               
   Payment for acquisition related costs          (796,649)            -             -              -             -        (796,649)
   Proceeds from sale of equipment                       -         6,542             -              -             -           6,542 
   Acquisition of property, equipment and                -      (512,590)     (103,777)      (555,415)            -      (1,171,782)
     improvements                              ------------ -------------  ------------  -------------  ------------    ------------

        Net cash used in investing activities     (796,649)     (506,048)     (103,777)      (555,415)            -      (1,961,889)
                                               ------------ -------------  ------------  -------------  ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                               
   Payment of 11.653% Senior Secured Notes        (505,136)            -             -              -             -        (505,136)
     issuance costs                                                                                                                 
   Cash advances (to) from affiliates            7,351,278    (4,900,067)   (2,914,233)       628,772        (1,180) (b)    164,570 
   Line of credit, net                          (4,800,000)            -             -              -             -      (4,800,000)
   Distribution to Barden Development, Inc.       (188,242)            -             -              -             -        (188,242)
   Cash paid to reduce long-term debt                    -             -       (22,965)       (32,217)            -         (55,182)
                                               ------------ -------------  ------------  -------------  ------------    ------------

     Net cash provided by (used in) financing    1,857,900    (4,900,067)   (2,937,198)       596,555        (1,180)     (5,383,990)
       activities                              ------------ -------------  ------------  -------------  ------------    ------------

Net increase (decrease)  in cash and cash          772,490      (411,918)     (713,842)       (27,019)            -        (380,289)
  equivalents                                                                                                                       
Cash and cash equivalents, beginning of period     498,363     8,452,344     3,795,722      4,958,386             -      17,704,815 
                                               ------------ -------------  ------------  -------------  ------------    ------------

Cash and cash equivalents, end of period        $1,270,853   $ 8,040,426   $ 3,081,880   $  4,931,367   $         -     $17,324,526 
                                               ============ =============  ============  =============  ============    ============

(a) To eliminate intercompany investment in subsidiaries.                       
(b) To eliminate intercompany receivables and payables.                         

22

10-Q
25th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 25th
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS                                                                   

STATEMENT OF FORWARD-LOOKING INFORMATION                                        

  This report includes statements that 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, and
are subject to the safe harbor provisions of those sections and the Private     
Securities Litigation Reform Act of 1995. Words such as "believes",             
"anticipates", "estimates", "plans", "intends", "expects", "will" or "could"    
used in the Company's reports filed with the Securities and Exchange Commission 
are intended to identify forward-looking statements. All forward-looking        
statements involve risks and uncertainties. Although the Company believes its   
expectations are based upon reasonable assumptions within the bounds of its     
current knowledge of its business and operations, there can be no assurances    
that actual results will not materially differ from expected results. The       
Company cautions that these and similar statements included in this report and  
in previously filed periodic reports are further qualified by important factors 
that could cause actual results to differ materially from those in the          
forward-looking statements. Such factors include, without limitation: the       
ability to fund planned development needs and to service debt from existing     
operations and from new financing; increased competition in existing markets or 
the opening of new gaming jurisdictions; a decline in the public acceptance of  
gaming; the limitation, conditioning or suspension of our gaming licenses;      
increases in or new taxes imposed on gaming revenues and gaming devices;        
admission taxes; a finding of unsuitability by regulatory authorities with      
respect to the Company or its officers or key employees; loss and/or retirement 
of key employees; significant increase in fuel or transportation prices; adverse
economic conditions in the Company's markets; severe and unusual weather in our 
markets; adverse results of significant litigation matters; non-renewal of the  
Company's gaming licenses from the appropriate governmental authorities in      
Nevada, Mississippi and Colorado; and continuing effects of terrorist attacks   
and any future occurrences of terrorist attacks or other destabilizing events.  

         For more information on these and other factors, see the Company's most
recently filed Form 10-K. We caution readers not to place undue reliance on     
forward-looking statements, which speak only as of the date hereof. All         
subsequent written and oral forward-looking statements attributable to us are   
expressly qualified in their entirety by the cautionary statements and factors  
that may affect future results contained throughout this report. The Company    
undertakes no obligation to publicly release any revisions to such              
forward-looking statements to reflect events or circumstances after the date    
hereof.                                                                         

     The following discussion should be read in conjunction with, and is
qualified in its entirety by, our financial statements, including the notes     
thereto listed in Item 1.                                                       

OVERVIEW                                                                        

       The Company was formed on September 14, 2001, commenced operations of
the Fitzgeralds casinos on December 7, 2001, and accordingly has a limited      
operating history. The discussion of operations herein will focus on events and 
the Company's revenues and expenses during the three month periods ended March  
31, 2003 and 2002.                                                              

        The gaming operations of the Company's properties may be seasonal and,
depending on the location and other circumstances, the effects of such          
seasonality could be significant. The properties' results are affected by       
inclement weather in relevant markets. For example, the                         

23

10-Q
26th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 26th
Fitzgeralds Black Hawk site, located in the Rocky Mountains of Colorado, is     
subject to snow and icy road conditions during the winter months. Any such      
severe weather conditions may discourage potential customers from visiting the  
Black Hawk facilities. Also, at Fitzgeralds Las Vegas, business levels are      
generally weaker from Thanksgiving through the middle of January (except during 
the week between Christmas and New Year's) and throughout the summer, and       
generally stronger from mid-January through Easter and from mid-September       
through Thanksgiving. At Fitzgeralds Tunica and Fitzgeralds Black Hawk, business
levels are typically weaker from Thanksgiving through the end of the winter and 
typically stronger from mid-June to mid-November. Accordingly, the Company's    
results of operations are expected to fluctuate from quarter to quarter and the 
results for any fiscal quarter may not be indicative of results for future      
fiscal quarters.                                                                

RESULTS OF OPERATIONS                                                           

  The following discussion provides a comparison of the results of
operations of the Company and its subsidiaries on a consolidated basis, for the 
three months ended March 31, 2003, with the three months ended March 31, 2002.  
On a consolidated basis, gross revenues decreased approximately $3,532,000 or   
6.7% to approximately $48,896,000 during the three months ended March 31, 2003, 
compared to $52,428,000 during the three months ended March 31, 2002.           

24

10-Q
27th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 27th
       The following table sets forth information derived from the Company's
consolidated statements of operations for the three-month periods ended March   
31, 2003 and 2002, expressed as a percentage of gross revenues.                 

 CONSOLIDATED STATEMENTS OF OPERATIONS - SUMMARY INFORMATION
(IN THOUSANDS)

                                                                [Download Table]


                     FOR THE THREE MONTHS ENDED   FOR THE THREE MONTHS ENDED
                            MARCH 31,                      MARCH 31,        
                              2003                           2002           
                  ---------------------------    -------------------------- 
                                                                            
Gross revenues     $  48,896                       $  52,428                
Operating income   $   5,349                       $   5,489                
EBITDA (1)         $   9,002                       $   8,876                

CONSOLIDATED STATEMENTS OF OPERATIONS - PERCENTAGE OF GROSS REVENUES

                                                        [Enlarge/Download Table]


                                         FOR THE THREE MONTHS ENDED   FOR THE THREE MONTHS ENDED
                                                  MARCH 31,                     MARCH 31,       
                                                    2003                          2002          
                                        ---------------------------  -------------------------- 
                                                                                                
REVENUES:                                                                                       
     Casino                                   80.7 %                        80.8 %              
     Rooms                                     7.8 %                         7.8 %              
     Food and beverage                         9.9 %                         9.7 %              
     Other                                     1.6 %                         1.7 %              
                                           --------                      --------               
          Gross revenues                     100.0 %                       100.0 %              
          Less promotional allowances        (11.5)%                       (11.7)%              
                                           --------                      --------               
          Net revenues                        88.5 %                        88.3 %              
COSTS AND EXPENSES:                                                                             
     Casino                                   31.8 %                        34.4 %              
     Rooms                                     3.2 %                         3.4 %              
     Food and beverage                         5.1 %                         5.3 %              
     Other                                     0.8 %                         0.7 %              
     Gaming taxes                              9.4 %                         9.6 %              
     Advertising and promotion                 6.6 %                         6.3 %              
     General and administrative               13.2 %                        11.7 %              
     Depreciation and amortization             7.5 %                         6.4 %              
     Pre-opening expenses                        - %                           - %              
                                           --------                      --------               
          Total costs and expenses            77.6 %                        77.8 %              
                                           --------                      --------               
          Operating income                    10.9 %                        10.5 %              
OTHER INCOME (EXPENSE):                                                                         
     Interest income                             - %                           - %              
     Interest expense                         (9.0)%                        (8.6)%              
     Gain on disposal of assets                  - %                           - %              
     Other non-operating expense                 - %                           - %              
                                           --------                      --------               
          Total other income (expense)        (9.0)%                        (8.6)%              
                                           --------                      --------               

          Net income                           1.9 %                         1.9 %              
                                           ========                      ========               
          EBITDA (1)                          18.4 %                        16.9 %              

(1)  EBITDA is defined as earnings from operations before interest, taxes,      
     depreciation and amortization. EBITDA is presented solely as a supplemental
    disclosure because management believes that it is a widely used measure of
 operating performance in the gaming industry, and a principal basis for
valuation of gaming companies. Other companies may calculate EBITDA   
     differently. Management uses EBITDA as a measure of the Company's operating
    performance. 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 operating activities, as a measure of  
 liquidity, or any other measure determined in accordance with generally
  accepted accounting principles. The Company has significant uses of cash
     including capital expenditures, interest payments, taxes and debt principal
repayments, which are not reflected in EBITDA. A reconciliation of    
operating income to EBITDA follows:                                   

RECONCILIATION OF OPERATING INCOME TO EBITDA

 (IN MILLIONS)

                                                        [Enlarge/Download Table]

                                    FOR THE THREE MONTHS ENDED   FOR THE THREE MONTHS ENDED
                                              MARCH 31,                    MARCH 31,       
                                                2003                         2002          
                                    ---------------------------  --------------------------
                                                                                           
Operating income                      $     5.3                     $      5.5             
     Depreciation and amortization          3.7                            3.4             
                                        --------                       --------            

     EBITDA                           $     9.0                     $      8.9             
                                        ========                       ========            

25

10-Q
28th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 28th
THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS ENDED MARCH 31, 2002 

       Consolidated gross revenues for the three months ended March 31, 2003
amounted to approximately $48,896,000, a decrease of approximately $3,532,000 or
6.7% from consolidated gross revenues recorded in the three months ended March  
31, 2002. The 6.7% decrease in consolidated gross revenues was primarily        
attributable to a $2,690,000 or 7.2% decrease in slot revenues. For the three   
months ended March 31, 2003, gross revenues for Fitzgeralds Tunica accounted for
$26,383,000, or 54.0% of total revenues, Fitzgeralds Black Hawk accounted for   
$8,659,000, or 17.7% of total revenues, and Fitzgeralds Las Vegas accounted for 
$13,854,000, or 28.3% of total revenues, compared to $28,254,000, or 53.9%,     
$9,782,000, or 18.7% and $14,392,000, or 27.4%, respectively for the three month
period ended March 31, 2002.                                                    

The Company's business can be separated into four operating   
departments: casino, rooms (except Fitzgeralds Black Hawk), food and beverage,  
and other. Consolidated casino revenues for the three months ended March 31,    
2003 totaled $39,436,000, or 80.7% of consolidated gross revenues, of which     
$34,561,000 or 87.6% were derived from slot machine revenues, and $4,875,000 or 
12.4% were derived from table game revenues, compared to consolidated casino    
revenues of $42,354,000 or 80.8% of consolidated gross revenues, of which       
$37,251,000 or 87.9% were derived from slot machine revenues, and $5,103,000 or 
12.1% were derived from table games revenues for the three months ended March   
31, 2002. Casino revenues attributed to Fitzgeralds Tunica were $21,810,000, or 
82.7% of its gross revenues, of which $19,677,000 or 90.2% were derived from    
slot machine revenues, and $2,133,000 or 9.8% were derived from table games     
revenues for the three months ended March 31, 2003, compared to casino revenues 
of $23,357,000 or 82.7% of its gross revenues, of which $20,867,000 or 89.3%    
were derived from slot machine revenues, and $2,490,000, or 10.7%, were derived 
from table games revenues for the three months ended March 31, 2002. During the 
three month period ended March 31, 2003, slot revenues in the Northern River    
Region, which includes the Fitzgeralds Tunica, eight other casinos in Tunica    
County, Mississippi, and gaming operations in Lula, Mississippi, were down 7.1% 
over the same three-month period in 2002. During this same comparative period,  
Fitzgeralds Tunica's slot revenues were down 5.7%. As a result, Fitzgeralds     
Tunica's slot market share improved to 7.7% during the three-month period ended 
March 31, 2003 as compared to 7.6% during the three-month period ended March 31,
2002. The Company feels that the weakness in its revenues, particularly slot    
revenues, can be attributed to a slow economy, attention drawn to the conflict  
with Iraq, and periods of poor weather. Casino revenues attributed to           
Fitzgeralds Black Hawk were $8,114,000, or 93.7% of its gross revenues, of which
$7,969,000, or 98.2%, were derived from slot machine revenues and $145,000 or   
1.8% were derived from table game revenues for the three months ended March 31, 
2003, compared to casino revenues of $9,217,000, or 94.2% of its gross revenues,
of which $9,020,000 or 97.9% were derived from slot machine revenues and        
$197,000, or 2.1%, were derived from table games                                

26

10-Q
29th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 29th
revenues for the three months ended March 31, 2002. The Company feels that      
part of the year over year decline in casino revenues at Fitzgeralds Black Hawk 
can be attributed to poor weather and a soft Denver economy. During a three day 
period in mid-March access to Fitzgeralds Black Hawk was virtually closed due to
heavy snows in and around the Denver/Black Hawk area. Casino revenues attributed
to Fitzgeralds Las Vegas were $9,512,000, or 68.7% of its gross revenues, of    
which $6,915,000, or 72.7%, were derived from slot machine revenues and         
$2,597,000, or 27.3%, were derived from table game revenues for the three months
ended March 31, 2003, compared to casino revenues of $9,780,000, or 68.0% of its
gross revenues, of which $7,364,000, or 75.3%, were derived from slot machine   
revenues and $2,416,000, or 24.7%, were derived from table game revenues for the
three months ended March 31, 2002.                                              

         The consolidated average number of slot machines in operation was 2,833
during the three months ended March 31, 2003, compared to 2,915 during the three
months ended March 31, 2002. Fitzgeralds Tunica accounted for 1,348, or 47.6%,  
Fitzgeralds Black Hawk accounted for 592, or 20.9% and Fitzgeralds Las Vegas    
accounted for 893, or 31.5%. The consolidated average win per slot machine per  
day was approximately $136 for the three months ended March 31, 2003, with an   
average of approximately $162, $150 and $86 at Fitzgeralds Tunica, Fitzgeralds  
Black Hawk and Fitzgeralds Las Vegas, respectively, compared to the consolidated
average win per slot machine per day of $142 for the three months ended March   
31, 2002 with an average of approximately $168, $169 and $87, respectively. The 
consolidated average number of table games in operation during the three months 
ended March 31, 2003 was 65, of which Fitzgeralds Tunica accounted for 34, or   
52.3%, Fitzgeralds Black Hawk accounted for 6, or 9.2%, and Fitzgeralds Las     
Vegas accounted for 25, or 38.5%. The consolidated average win per table game   
per day during the three months ended March 31, 2003 was approximately $786,    
with an average of approximately $697, $270, and $1,020 at Fitzgeralds Tunica,  
Fitzgeralds Black Hawk and Fitzgeralds Las Vegas, respectively, compared to the 
consolidated average win per table game per day of $848 for the three months    
ended March 31, 2002 with an average of approximately $814, $365 and $1,023 at  
Fitzgeralds Tunica, Fitzgeralds Black Hawk and Fitzgeralds Las Vegas,           
respectively. With respect to Fitzgeralds Black Hawk the maximum wager is       
limited to $5.00.                                                               

      Consolidated room revenues for the three months ended March 31, 2003
was $3,799,000, or 7.8% of consolidated gross revenues, compared to $4,089,000, 
or 7.8% of consolidated gross revenues for the three months ended March 31,     
2002. Of this amount, Fitzgeralds Tunica accounted for $1,926,000, or 50.7%,    
with 507 rooms and Fitzgeralds Las Vegas accounted for $1,873,000, or 49.3%,    
with 638 rooms, compared to $2,086,000, or 51.0%, with 507 rooms at Fitzgeralds 
Tunica and $2,003,000, or 49.0%, with 638 rooms at Fitzgeralds Las Vegas during 
the three months ended March 31, 2002. During the three months ended March 31,  
2003, at Fitzgeralds Tunica the average daily rate was $47 and the occupancy    
rate was 90.3% and at Fitzgeralds Las Vegas the average daily rate was $40 and  
the occupancy rate was 81.8%, compared to $48 and 95.5%, respectively, at       
Fitzgeralds Tunica and $41 and 84.4%, respectively, at Fitzgeralds Las Vegas    
during the three months ended March 31, 2002.                                   

    Consolidated food and beverage revenues for the three months ended
March 31, 2003 amounted to $4,861,000, or 9.9% of consolidated gross revenues,  
compared to $5,096,000, or 9.7% of consolidated gross revenues for the three    
months ended March 31, 2002. Of this amount, Fitzgeralds Tunica accounted for   
$2,345,000, or 48.3%, Fitzgeralds Black Hawk accounted for $483,000, or 9.9% and
Fitzgeralds Las Vegas accounted for $2,033,000, or 41.8%, compared to           
$2,475,000, or 48.6%, $506,000, or 9.9%, and $2,115,000, or 41.5%, respectively,
during the three months ended March 31, 2002.                                   

27

10-Q
30th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 30th
   Other consolidated revenues consisted primarily of commission and
retail income and totaled approximately $800,000, or 1.6% of consolidated gross 
revenues for the three months ended March 31, 2003, compared to $889,000, or    
1.7% of consolidated gross revenues for the three months ended March 31, 2002.  
Of this amount, Fitzgeralds Tunica accounted for $302,000 or 37.7%, Fitzgeralds 
Black Hawk accounted for approximately $62,000 or 7.8%, and Fitzgeralds Las     
Vegas accounted for $436,000, or 54.5% during the three months ended March 31,  
2003, compared to $336,000, or 37.8%, $59,000, or 6.6%, and $494,000, or 55.6%, 
respectively, during the three months ended March 31, 2002.                     

        Consolidated promotional allowances included in the consolidated gross
revenues for the three months ended March 31, 2003, were $5,617,000, or 11.5% of
consolidated gross revenues compared to $6,123,000, or 11.7% of consolidated    
gross revenues during the three months ended March 31, 2002. Of this amount,    
Fitzgeralds Tunica accounted for $3,417,000, or 60.9%, Fitzgeralds Black Hawk   
accounted for $744,000, or 13.2%, and Fitzgeralds Las Vegas accounted for       
$1,456,000, or 25.9% during the three months ended March 31, 2003, compared to  
$3,906,000, or 63.8%, $820,000, or 13.4%, and $1,397,000, or 22.8%,             
respectively, during the three months ended March 31, 2002. The decline in      
promotional allowances is directly associated with the decline in casino        
revenues. The most substantial portion of the decline in promotional allowances 
comes from reduced complimentaries to our casino guests.                        

         Consolidated casino operating expenses for the three months ended March
31, 2003, were $15,559,000, or 31.8% of consolidated gross revenues and 39.5% of
consolidated casino revenues, compared to $18,026,000, or 34.4% of consolidated 
gross revenues and 42.6% of consolidated casino revenues. For the three months  
ended March 31, 2003 and March 31, 2002, these expenses were primarily comprised
of salaries, wages and benefits, and operating expenses of the casinos. Of the  
consolidated casino operating expenses, Fitzgeralds Tunica accounted for        
$8,905,000, or 57.2%, Fitzgeralds Black Hawk accounted for $2,570,000, or 16.5%,
and Fitzgeralds Las Vegas accounted for $4,084,000, or 26.3% during the three   
months ended March 31, 2003, compared to $9,909,000 or 55.0%, $3,544,000 or     
19.6% and $4,573,000 or 25.4%, respectively, during the three months ended March
31, 2002. The decline in casino operating expenses is the result of lower direct
mail cash offers to patrons of $1,260,000, a decline in gaming equipment lease  
and wide area progressive expenses of $370,000, a reduction in progressive      
expense of $280,000 and lower payroll and related expenses of $100,000.         

        Consolidated rooms expenses for the three months ended March 31, 2003,
were $1,546,000, or 3.2% of consolidated gross revenues, compared to $1,768,000,
or 3.4% of consolidated gross revenues during the three months ended March 31,  
2002. These expenses were primarily comprised of salaries, wages and benefits,  
and operating expenses of the hotels. Of the consolidated rooms operating       
expenses, Fitzgeralds Tunica accounted for $603,000 or 39.0% and Fitzgeralds Las
Vegas accounted for $943,000 or 61.0% during the three months ended March 31,   
2003, compared to $722,000 or 40.8% and $1,046,000 or 59.2%, respectively,      
during the three months ended March 31, 2002. Room expenses were generally lower
in the three-month period ended March 31, 2003, versus the same period in 2002  
due to lower room occupancies at both Fitzgeralds Tunica and Fitzgeralds Las    
Vegas.                                                                          

    Consolidated food and beverage expenses for the three months ended
March 31, 2003, were $2,498,000, or 5.1% of consolidated gross revenues,        
compared to $2,770,000, or 5.3% of consolidated gross revenues during the three 
months ended March 31, 2002. Of the consolidated food and beverage expenses,    
Fitzgeralds Tunica accounted for $ 635,000, or 25.4%, Fitzgeralds Black Hawk    
accounted for $282,000, or 11.3% and Fitzgeralds Las Vegas accounted for        
$1,581,000, or 63.3% during the three months ended March 31, 2003, compared to  
$679,000, or                                                                    

28

10-Q
31st Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 31st
24.5%, $271,000, or 9.8% and $1,820,000, or 65.7%, respectively, during the     
three months ended March 31, 2002. The primary decline in food and beverage     
expenses comes from our Fitzgeralds Las Vegas property. Payroll and related     
costs are down $125,000. In addition, on January 1, 2003, Fitzgeralds Las Vegas 
started allocating the costs of operating its employee cafeteria to departments 
at the property. This accounted for $270,000 of reduced expenses.               

       Consolidated gaming taxes totaled $4,575,000, or 9.4% of consolidated
gross revenues and 11.6% of consolidated casino revenues for the three months   
ended March 31, 2003, compared to $5,020,000, or 9.6% of consolidated gross     
revenues and 11.9% of consolidated casino revenues during the three months ended
March 31, 2002. During the three months ended March 31, 2003, Fitzgeralds Tunica
accounted for $2,562,000, or 56.0%, Fitzgeralds Black Hawk accounted for        
$1,273,000, or 27.8%, and Fitzgeralds Las Vegas accounted for $740,000, or      
16.2%, compared to $2,780,000, or 55.4%, $1,483,000, or 29.5% and $757,000, or  
15.1%, respectively, during the three months ended March 31, 2002. The decline  
in gaming taxes is directly associated with the decline in casino revenues.     

        Consolidated advertising and promotion expenses totaled $3,251,000, or
6.6% of consolidated gross revenues for the three months ended March 31, 2003,  
compared to $3,297,000, or 6.3% of consolidated gross revenues during the three 
months ended March 31, 2002. Fitzgeralds Tunica accounted for $1,271,000, or    
39.1%, Fitzgeralds Black Hawk accounted for $715,000, or 22.0%, and Fitzgeralds 
Las Vegas accounted for $1,265,000 or 38.9%, respectively, during the three     
months ended March 31, 2003, compared to $1,366,000, or 41.4%, $734,000, or     
22.3% and $1,197,000, or 36.3%, respectively, during the three months ended     
March 31, 2002.                                                                 

       Consolidated general and administrative expenses for the three months
ended March 31, 2003 were $6,438,000, or 13.2% of consolidated gross revenues,  
compared to $6,161,000, or 11.7% for the three months ended March 31, 2002.     
During the three months ended March 31, 2003, Fitzgeralds Tunica accounted for  
$2,456,000, or 38.1%, Fitzgeralds Black Hawk accounted for $1,261,000, or 19.6%,
and Fitzgeralds Las Vegas accounted for $2,721,000, or 42.3%, compared to       
$2,399,000, or 39.0%, $1,141,000, or 18.5% and $2,617,000, or 42.5%,            
respectively, for the three months ended March 31, 2002. Also, unallocated      
corporate expenses accounted for $4,000 during the three months ended March 31, 
2002.                                                                           

       Consolidated depreciation and amortization for the three months ended
March 31, 2003 were approximately $3,654,000, or 7.5% of consolidated gross     
revenues, compared to $3,387,000, or 6.4% of consolidated gross revenues during 
the three months ended March 31, 2002. Fitzgeralds Tunica accounted for         
$1,905,000, or 52.1%, Fitzgeralds Black Hawk accounted for $412,000, or 11.3%,  
and Fitzgeralds Las Vegas accounted for $671,000 or 18.4% during the three      
months ended March 31, 2003, compared to $1,780,000, or 52.6%, $364,000, or     
10.7% and $617,000, or 18.2%, respectively, during the three months ended March 
31, 2002. Corporate amortization of deferred financing costs and the discount on
the Investor Holdings Senior Secured Notes accounted for $666,000, or 18.2% of  
consolidated depreciation and amortization during the three months ended March  
31, 2003 compared to $626,000, or 18.5% during the three months ended March 31, 
2002. Of the consolidated depreciation and amortization expense, $2,589,000, or 
70.9%, is depreciation expense, and $1,065,000, or 29.1% is amortization expense
during the three months ended March 31, 2003, compared to $2,363,000, or 69.8%  
$1,024,000, or 30.2%, respectively, during the three months ended March 31,     
2002.                                                                           

         Consolidated operating income for the three months ended March 31, 2003
was $5,349,000, or 10.9% of consolidated gross revenues compared to $5,489,000, 
or 10.5% of consolidated gross revenues during the three months ended March 31, 
2002. The $140,000, or                                                          

29

10-Q
32nd Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 32nd
2.6% decrease was primarily attributed to reduced casino revenues               
offset by expense reductions as previously discussed. Fitzgeralds Tunica        
accounted for operating income of $4,548,000, or 85.0%, Fitzgeralds Black Hawk  
accounted for operating income of $1,231,000, or 23.0% and Fitzgeralds Las Vegas
accounted for operating income of $236,000, or 4.4% and the unallocated         
corporate loss principally for amortization was $666,000 or (12.4%) of          
consolidated operating income for the three months ended March 31, 2003,        
compared to $4,628,000, or 84.3%, $1,258,000, or 22.9%, $240,000, or 4.4% and   
the unallocated corporate loss principally for amortization expense was         
$637,000, or (11.6)% of consolidated operating income, respectively, for the    
three months ended March 31, 2002.                                              

        Consolidated net interest expense for the three months ended March 31,
2003 was $4,405,000, or 9.0% of consolidated gross revenues compared to         
$4,484,000, or 8.6% of consolidated gross revenues during the three months ended
March 31, 2002. Fitzgeralds Tunica accounted for interest income of $3,000,     
Fitzgeralds Las Vegas accounted for net interest expense of $5,000 and the      
unallocated corporate net interest expense primarily associated with the        
Company's 11.653% Senior Secured Notes was $4,403,000 during the three months   
ended March 31, 2003, compared to net interest income of $7,000 at Fitzgeralds  
Tunica, net interest income of $4,000 at Fitzgeralds Black Hawk and net interest
expense of $4,000 at Fitzgeralds Las Vegas and unallocated corporate net        
interest expense primarily associated with the Company's 11.653% Senior Secured 
Notes was approximately $4,491,000 during the three months ended March 31, 2002.

     As a result of the foregoing, the Company realized consolidated net
income of $949,000 for the three months ended March 31, 2003, compared to a     
consolidated net income of $994,000 for the three months ended March 31, 2002.  
Fitzgeralds Tunica accounted for net income of $4,566,000, Fitzgeralds Black    
Hawk accounted for net income of $1,231,000 and Fitzgeralds Las Vegas accounted 
for net income of $230,000 during the three months ended March 31, 2003,        
compared to $4,642,000, $1,262,000, $236,000, respectively, during the three    
months ended March 31, 2002.                                                    

     EBITDA (defined as earnings from operations before interest, taxes,
depreciation and amortization) for the three months ended March 31, 2003 was    
$9,002,000 compared to $8,876,000 for the three months ended March 31, 2002, an 
improvement of approximately $126,000. Fitzgeralds Tunica accounted for         
$6,453,000, Fitzgeralds Black Hawk accounted for $1,643,000 and Fitzgeralds Las 
Vegas accounted for $907,000 during the three months ended March 31, 2003,      
compared to $6,408,000, $1,622,000 and $857,000, respectively, during the three 
months ended March 31, 2002. EBITDA is presented solely as a supplemental       
disclosure because management believes that it is a widely used measure of      
operating performance in the gaming industry, and a principal basis for         
valuation of gaming companies. Other companies may calculate EBITDA differently.
Management uses EBITDA as a measure of the Company's operating performance.     
EBITDA should be not construed as an alternative to operating income, as an     
indicator of the Company's operating performance, or as an alternative to cash  
flows from operating activities, as a measure of liquidity, or as any other     
measure determined in accordance with generally accepted accounting principles. 
The Company has significant uses of cash including capital expenditures,        
interest payments, taxes and debt principal repayments, which are not reflected 
in EBITDA. A reconciliation of operating income/(loss) to EBITDA is included in 
the Consolidated Statements of Operations Summary Information.                  

30

10-Q
33rd Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 33rd
LIQUIDITY AND CAPITAL RESOURCES                                                 

 At March 31, 2003, the Company had cash and cash equivalents of
approximately $21,076,000. Cash and cash equivalents included $5,783,000 at the 
Company, $8,279,000 at Fitzgeralds Tunica, $2,269,000 at Fitzgeralds Black Hawk 
and $4,745,000 at Fitzgeralds Las Vegas.                                        

       The Company has met its capital requirements to date through net cash
from operations, capital contributions and equipment loans. For the three months
ended March 31, 2003, net cash provided by operating activities totaled         
approximately $6,632,000 and cash used by investing activities totaled          
approximately $1,298,000. The Company invested $1,063,000 primarily for gaming  
and non-gaming equipment and restricted cash in the amount of $250,000 as       
collateral for a Letter of Credit associated with worker's compensation         
insurance. For the three months ended March 31, 2002, cash provided by operating
activities totaled approximately $6,966,000 and cash used by investing          
activities totaled approximately $1,962,000. The Company invested $1,172,000    
primarily for gaming and non-gaming equipment and $797,000 for the payment of   
professional fees related to the acquisition. For the three months ended March  
31, 2003, cash used in financing activities totaled $242,000. The primary       
financing activities were $864,000 paid to BDI pursuant to the Company's        
management agreement with BDI and $700,000 received from BDI in satisfaction of 
principal and accrued interest on an outstanding note. For the three months     
ended March 31, 2002, cash used in financing activities totaled $5,384,000. The 
primary financing activities were $4,800,000 repaid on the Company's credit     
facility, $505,000 expended for professional fees related to the issuance of the
Company's 11.653% Senior Secured Notes, $188,000 paid to BDI pursuant to the    
Company's management agreement with BDI and $165,000 for cash advances from     
affiliates.                                                                     

      Management believes that the Company's cash flow from operations and
its current lines of credit will be adequate to meet the Company's anticipated  
future requirements for working capital, its capital expenditures and scheduled 
payments of interest and principal on the Company's 11.653% Senior Secured Notes
and other permitted indebtedness for the year 2003. If necessary and to the     
extent permitted under the Company's Indenture, the Company will seek additional
financing through borrowings and debt or equity financing. There can be no      
assurance that additional financing, if needed, will be available to the        
Company, or that, if available, the financing will be on terms favorable to the 
Company. In addition, there is no assurance that the Company's estimate of its  
reasonably anticipated liquidity needs is accurate or that unforeseen events    
will not occur, resulting in the need to raise additional funds.                

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS                                       

In April 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 145 ("SFAS 145"). Among
other matters, SFAS 145 addresses the presentation for gains and losses on early
retirements of debt in the statement of operations. SFAS 145 is effective for   
fiscal years beginning after May 15, 2003. Adoption of SFAS 145 is not          
anticipated to have a material impact on our financial condition, results of    
operations or cash flows.                                                       

        In November 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure        
Requirements for Guarantees, Including Guarantees of Indebtedness of Others."   
FIN 45 elaborates on the disclosures to be made by a guarantor in its interim   
and annual financial statement about its obligations under certain guarantees   
that it has issued. It also clarifies (for guarantees issued after              

31

10-Q
34th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 34th
January 1, 2003) that a guarantor is required to recognize at the inception of a
guarantee, a liability for the fair value of the obligations undertaken in      
issuing the guarantee. At March 31, 2003, the Company did not have any          
guarantees outside of its consolidated group and accordingly does not expect the
adoption of FIN 45 to have a material impact on its financial condition, results
of operations or cash flows.                                                    

       In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities."
FIN 46 addresses the requirements for business enterprises to consolidate       
related entities in which they are determined to be the primary economic        
beneficiary as a result of their variable economic interests. FIN 46 is intended
to provide guidance in judging multiple economic interest in an entity and in   
determining the primary beneficiary. FIN 46 outlines disclosure requirements for
"Variable Interest Entities ("VIE")" in existence prior to January 31, 2003, and
outlines consolidation requirement for VIEs created after January 31, 2003. The 
Company has reviewed its major relationships and its overall economic interests 
with other companies consisting of related parties, companies in which it has an
equity position and other suppliers to determine the extent of its variable     
economic interest in these parties. The review has not resulted in a            
determination that the Company would be judged to be the primary economic       
beneficiary in any material relationships, or that any material entities would  
be judged to be VIEs of the Company. The Company believes it has appropriately  
reported the economic impact and its share of risks of its commercial           
relationships through its equity accounting along with appropriate disclosure of
its commitments.                                                                

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             

      There have been no material changes from the information reported in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 
2002.                                                                           

ITEM 4.  CONTROLS AND PROCEDURES                                                

  Within the 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the participation of  
the Company's management, including its Chief Executive Officer and Chief       
Financial Officer, of the effectives of the design and operation of the         
Company's disclosure controls and procedures pursuant to Rule 15d-15 of the     
Securities Exchange Act of 1934. Based upon that evaluation, the Company's Chief
Executive Officer and Chief Financial Officer concluded that the Company's      
disclosure controls and procedures are adequate and effective. There have been  
no significant changes in the Company's internal controls or in other factors   
which could significantly affect internal controls subsequent to the date the   
Company carried out its evaluation.                                             

 PART II OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS                                                  

              Various legal proceedings are pending against the Company.
Management considers all such pending proceedings, comprised primarily of       
personal injury and equal employment opportunity (EEO) claims, to be routine    
litigation incidental to the Company's business. Management believes that the   
resolution of these proceedings will not individually or in the aggregate, have 
a material effect on the Company's financial condition or results of operations.

32

10-Q
35th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 35th
ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K                                     

(a)  The following exhibits are filed as part of this report:                   

Exhibit No.       Description of Document                                       
-----------       -----------------------                                       
99.1              Certification Pursuant to 18 U.S.C. Section 1350, as Adopted  
             Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.2              Certification Pursuant to 18 U.S.C. Section 1350, as Adopted  
             Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)  There were no reports on Form 8-K filed during the three months ended March
31, 2003.                                                                       

33

10-Q
36th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 36th
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange  
Act of 1934, the Registrant has duly caused this report to be signed on its     
behalf by the undersigned, thereunto duly authorized.                           

MAJESTIC INVESTOR HOLDINGS, LLC                                                 

By: /s/ Don H. Barden                                              May 15, 2003 
------------------------------------------------------                    
Don H. Barden, Member, Chairman, President and Chief Executive Officer    

By: /s/ Jon S. Bennett                                             May 15, 2003 
------------------------------------------------------                    
Jon S. Bennett, Vice President and Chief Financial Officer                
(Principal Financial and Accounting Officer)                              

MAJESTIC INVESTOR CAPITAL CORP.                                                 

By: /s/ Don H. Barden                                              May 15, 2003 
------------------------------------------------------                    
Don H. Barden, Chairman, President and Chief Executive Officer            

   /s/ Jon S. Bennett                                             May 15, 2003
------------------------------------------------------                    
Jon S. Bennett, Vice President and Chief Financial Officer                
(Principal Financial and Accounting Officer)                              

34

10-Q
37th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 37th
CERTIFICATIONS

I, Don H. Barden, certify that:                                                 

1.   I have reviewed this quarterly report on Form 10-Q of Majestic Investor    
Holdings, LLC and Majestic Investor Capital Corp.;                    

2.   Based on my knowledge, this quarterly report does not contain any untrue   
statement of a material fact necessary to make the statements made, in
light of the circumstances under with such statements were made, not  
 misleading with respect to the period covered by this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial       
information included in this quarterly report, fairly present in all  
   material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this 
quarterly report;                                                     

4.   The registrant's other certifying officer and I are responsible for        
     establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: 

        a)   designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
             consolidated subsidiaries, is made known to us by others within
          those entities, particularly during the period in which this
quarterly report is being prepared;               

   b)   evaluated the effectiveness of the registrant's disclosure
              controls and procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

     c)   presented in this quarterly report our conclusions about the
              effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;         

5.   The registrant's other certifying officer and I have disclosed, based on   
our most recent evaluation, to the registrant's auditors and the audit
 committee of registrant's board of directors (or persons performing the
equivalent functions):                                                

   a)   all significant deficiencies in the design or operation of
             internal controls which could adversely affect the registrant's
             ability to record, process, summarize and report financial data
            and have identified for the registrant's auditors any material
weaknesses in internal controls; and              

        b)   any fraud, whether or not material, that involves management or
             other employees who have a significant role in the registrant's
internal controls; and                            

6.   The registrant's other certifying officer and I have indicated in this     
quarterly report whether there were significant changes in internal   
controls or in other factors that could significantly affect internal 
  controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
weaknesses.                                                           

Date:  May 15, 2003                                                             

/s/ Don H. Barden                                                               
-----------------------------------------------                                 

Don H. Barden                                                                   
Member, Chairman, President and Chief Executive Officer                         

35

10-Q
38th Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 38th
I, Jon S. Bennett, certify that:                                                

1.   I have reviewed this quarterly report on Form 10-Q of Majestic   
Investor Holdings, LLC and Majestic Investor Capital Corp.; 

2.   Based on my knowledge, this quarterly report does not contain any
        untrue statement of a material fact necessary to make the statements
       made, in light of the circumstances under with such statements were
   made, not misleading with respect to the period covered by this
quarterly report;                                           

   3.   Based on my knowledge, the financial statements, and other financial
        information included in this quarterly report, fairly present in all
        material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                                      

  4.   The registrant's other certifying officer and I are responsible for
       establishing and maintaining disclosure controls and procedures (as
       defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:                                                   

             a.   designed such disclosure controls and procedures to ensure
             that material information relating to the registrant,
                    including its consolidated subsidiaries, is made known to us
                by others within those entities, particularly during the
                period in which this quarterly report is being prepared;

             b.   evaluated the effectiveness of the registrant's disclosure
                    controls and procedures as of a date within 90 days prior to
                 the filing date of this quarterly report (the "Evaluation
Date"); and                             

               c.   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures
          based on our evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on   
our most recent evaluation, to the registrant's auditors and the audit
 committee of registrant's board of directors (or persons performing the
equivalent functions):                                                

             a.   all significant deficiencies in the design or operation of
          internal controls which could adversely affect the
              registrant's ability to record, process, summarize and
         report financial data and have identified for the
                 registrant's auditors any material weaknesses in internal
controls; and                           

               b.   any fraud, whether or not material, that involves management
             or other employees who have a significant role in the
registrant's internal controls; and     

6.   The registrant's other certifying officers and I have indicated in this    
quarterly report whether there were significant changes in internal   
controls or in other factors that could significantly affect internal 
  controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
weaknesses.                                                           

Date: May 15, 2003                                                              

/s/ Jon S. Bennett                                                              
-----------------------------------------                                       

Jon S. Bennett                                                                  
Vice President and Chief Financial Officer                                      

36

10-Q
Last Page of 39
TOC
1st
Previous
Next
↓Bottom
Just 39th
 EXHIBIT INDEX

Exhibit No.    Description of Document                                          
-----------    -----------------------                                          

99.1     Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant  
to Section 906 of the Sarbanes-Oxley Act of 2002              

99.2     Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant  
to Section 906 of the Sarbanes-Oxley Act of 2002              

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-Q’ Filing		Date		First		Last			Other Filings
Filed on:		5/15/03		7		38
For Period End:		3/31/03		1		35			10-K
		3/17/03		12
		1/31/03		7		34
		1/1/03		7		34
		12/31/02		2		34			10-K
		12/12/02		12
		3/31/02		2		33			10-Q,  10-Q/A
		12/7/01		25
		12/6/01		12
		12/5/01		12
		9/19/01		12
		9/14/01		6		25
									List all Filings