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Majestic Star Reports Loss Shrinks

LAS VEGAS – (PRESS RELEASE) -- The Majestic Star Casino, LLC ("MSC") today announced financial results for the three- and twelve-month periods ended December 31, 2004. MSC is a multi-jurisdictional gaming company that directly owns and operates one dockside gaming facility located in Gary, Indiana ("Majestic Star"), and through its wholly owned subsidiary, Majestic Investor Holdings, LLC ("MIH"), two Fitzgeralds brand casinos located in Tunica, Mississippi ("Fitzgeralds Tunica" or with respect to the operating subsidiary "Barden Mississippi Gaming, LLC") and Black Hawk, Colorado ("Fitzgeralds Black Hawk" or with respect to the operating subsidiary "Barden Colorado Gaming, LLC"). The assets of Barden Colorado Gaming, LLC are held for sale and are being reported as discontinued operations. MSC also provides management services to Barden Nevada Gaming, LLC ("BNG" or "Fitzgeralds Las Vegas") for a fee. BNG is owned by Barden Development, Inc. ("BDI"), the parent of MSC. Unless indicated otherwise, the "Company" refers to The Majestic Star Casino, LLC and all of its direct and indirect subsidiaries. This press release incorporates reclassifications of certain cash based promotional activities.

Consolidated Results-Three Month Period Ended December 31, 2004

Net revenues, for the Company's continuing operations, for the three-month period ended December 31, 2004 were $52.7 million, compared to $50.7 million in the same three-month period last year, an increase of $2.0 million or 3.9%. Casino revenues increased to $55.6 million from $53.2 million in the year ago period.

For the three-month period ended December 31, 2004, the Company had a loss from continuing operations of $1.6 million compared to a loss from continuing operations of $35.2 million for the comparable quarter in 2003. The Company took a charge of $32.0 million in the fourth quarter of 2003 when it refinanced substantially all of its debt. For comparability purposes, after adjusting for the charges related to the refinancing, loss from continuing operations in the fourth quarter of 2003 was $3.2 million.

Including discontinued operations, the Company expects to report net income of $0.6 million compared to a net loss of $43.9 million for the same period in 2003. Discontinued operations for the fourth quarter of 2004 reflects the results of the Company's Black Hawk operation which is held for sale, as compared to the 2003 period, which reflects the results of both the Black Hawk operation and BNG prior to its spin-off. BNG was spun off to BDI on December 31, 2003. Our 2003 net loss was impacted by the $32.0 million refinancing charge discussed previously and a $10.0 million charge related to the write down of the BNG assets to fair market value at spin-off. Adjusting for these two items, for comparability purposes, our 2003 net loss would have been $2.0 million.

For the three-month period ended December 31, 2004, adjusted EBITDA from continuing operations was $10.4 million, compared to $8.6 million in the same period last year, an increase of $1.8 million or 21.5%. Including Fitzgeralds Black Hawk, the Company's adjusted EBITDA was $12.6 million, compared to $10.7 million in the same period last year, an increase of $1.9 million or 17.6%. Adjusted EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation, amortization, and other non-operating expenses (primarily non- usage fees on the credit facility)), adjusted for loss on investment in Buffington Harbor Riverboats, LLC (which is all comprised of depreciation) and certain non-recurring charges as identified in the table at the end of this press release reconciling net income (loss) to EBITDA and adjusted EBITDA. See note 2 for a detailed explanation as to the usefulness and limitations of using EBITDA and adjusted EBITDA as a financial measure.

Don H. Barden, the Company's Chairman, Chief Executive Officer and President stated "the Company's fourth quarter performance was a great way to finish the year and the various programs that were put in place to generate our much improved adjusted EBITDA should be a catalyst for 2005."

Consolidated Results-Twelve Month Period Ended December 31, 2004

Net revenues of the Company's continuing operations, for the twelve-month period ended December 31, 2004, were $224.3 million, compared to $213.0 million in the same twelve-month period last year, an increase of $11.3 million or 5.3%. Majestic Star contributed $11.8 million of the increase. Casino revenues increased to $236.1 million from $220.9 million in the year ago period.

For the twelve-month period ended December 31, 2004, the Company had a loss from continuing operations of approximately $4.9 million compared to a loss from continuing operations of $39.0 million for the comparable twelve-month period in 2003. For comparability purposes, excluding the $32.0 million in refinancing charges discussed previously, the Company's loss from continuing operations in 2003 was $7.0 million. Impacting net loss from continuing operations in the twelve-month period ended December 31, 2004 is a non-recurring charge at Majestic Star for retroactive real property taxes. A charge of $2.2 million was taken in the first quarter of this year but was subsequently adjusted downward by $0.3 million as the Company has changed its estimate for retroactive real property tax liabilities for the year 2003. Included in net loss from continuing operations for the twelve-month period ended December 31, 2003 is a non-recurring $2.1 million charge reflecting the one-time retroactive impact of a change in law relating to casino gaming taxes.

The Company paid 24.4% of its casino revenues for gaming and economic incentive taxes in 2004. This compares to 23.5% in 2003 (before the retroactive gaming tax charge). The increase is due to the higher marginal tax rates experienced at Majestic Star as a result of higher casino revenues. Before consideration of the 2003 gaming tax charge for the change in law, gaming and economic incentive taxes increased $5.5 million over 2003. General and administrative expenses increased $3.8 million principally due to the net $1.9 million retroactive real property tax charge as previously discussed, increased payroll and benefits, greater current year property taxes, principally at Majestic Star, and insurance and regulatory costs.

Interest expense declined by $2.7 million or approximately 8.5% in the twelve-month period ended December 31, 2004 as compared to the same period in 2003. The reduced interest expense is the result of refinancing substantially all of the Company's outstanding debt in October 2003.

Including our discontinued operations the Company expects to report net income of $5.0 million compared to net loss of $43.9 million for the same period in 2003. Net loss for the 2003 period includes the refinancing charges and the write down of BNG assets to fair market value discussed previously. For comparability purposes, net loss for the year 2003, before charges related to the Company's refinancing and BNG asset write down, was $1.9 million.

"Our record net income of $5.0 million is a significant milestone for the Company," stated Mr. Barden. "The refinancing of our high interest debt in October 2003, which significantly reduced the Company's interest expense, along with our improved net revenues were primary contributors to our record net income."

For the twelve-month period ended December 31, 2004, adjusted EBITDA from continuing operations was $45.1 million, compared to $44.5 million in the same period last year, an increase of $0.6 million. Including Fitzgeralds Black Hawk, the Company's adjusted EBITDA was $56.1 million, compared to $53.4 million in the same period last year, an increase of $2.7 million. See note 2 for a detailed explanation as to the usefulness and limitations of using EBITDA and adjusted EBITDA as a financial measure.

At December 31, 2004, the Company had $16.7 million of available cash, as compared to approximately $22.1 million at December 31, 2003. The Company also had approximately $39.0 million in available borrowing capacity under its credit facility at December 31, 2004.

Total debt outstanding at December 31, 2004 was $316.9 million as compared to $301.7 million at December 31, 2003, an increase of $15.2 million. Total debt outstanding at December 31, 2004 consisted of $260.0 million of 91/2% senior secured notes, $15.9 million (net of original issue discount) of 11.653% notes and $41.0 million drawn on the Company's $80.0 million credit facility. The Company spent $38.8 million on capital expenditures during the twelve-month period ended December 31, 2004. The Company's capital expenditures included the acquisition of 170 acres of land adjacent to the Buffington Harbor and Majestic Star facilities, the purchase of new gaming and related equipment, computer systems and software, expansion of the casino floor at Fitzgeralds Tunica and construction of new administration buildings at Majestic Star and Fitzgeralds Tunica. The Company anticipates spending $12.0 million in capital expenditures in 2005. Principal purchases will be for new slot machines and the continued conversion of our existing slot machines to ticket in ticket out or TITO.

Majestic Star (property operations only)

Net revenues were $33.3 million for the three-month period ended December 31, 2004, an increase of $2.3 million or 7.4% over the same three-month period in 2003. Net revenues improved in the fourth quarter 2004 due to the continued marketing and promotional activities started earlier in the year. Net revenues were $141.1 million for the twelve-month period ended December 31, 2004, an increase of $11.8 million or 9.1% over the same period in the prior year.

Casino revenues at Majestic Star increased to $35.5 million and $149.6 million for the three- and twelve-month periods ended December 31, 2004 from $33.1 million and $136.6 million in the same periods in 2003.

Mr. Barden stated, "Majestic Star's 9.5% casino revenue growth for 2004 led the northwest Indiana market, which showed a casino revenue growth of 5.6%. As a result, Majestic Star increased its market share to 12.3% in 2004 from 11.9% in 2003. Majestic Star's casino revenue growth is attributed to our advertising campaign using former Chicago Bears player and coach Mike Ditka as the property's celebrity spokesperson, the re-branding of the property as "The Winning Place to Play (TM)", the establishment of a new players club loyalty program, the remodeling of our VIP lounge, the Monte Carlo Room, and the opening of Don and Mike's Sports Bar."

For the three- and twelve-month periods ended December 31, 2004, table game revenues increased 21.6% and 24.4%, respectively, and slot revenues increased 4.5% and 6.7%, respectively. Table games handle increased 12.2% and 15.4%, respectively, during the fourth quarter and twelve-month period, and the table games win percentage increased to 15.9% in the fourth quarter from 14.6% in the same period last year. Year to date table games win percentage increased to 16.6% from 15.4% in the same twelve-month period in the prior year. Slot coin-in increased 3.3% during the fourth quarter of 2004 from the fourth quarter of 2003, and 7.1% for the twelve-month period ended December 31, 2004 from the similar prior year period.

Net loss for the three- and twelve-month periods ended December 31, 2004 was $1.9 million and $10.4 million, respectively, compared to a net loss of $13.9 million and a net loss of $10.2 million for the three- and twelve-months ended December 31, 2003. Included in Majestic Star's net loss in both the three- and twelve-months ended December 31, 2003 is a $10.0 million loss on early extinguishment of debt. After adjusting for the early extinguishment of debt charge, Majestic Star's net loss for the three- and twelve-month periods ended December 31, 2003, for comparability purposes, was $3.8 million and $0.2 million, respectively. Contributing to Majestic Star's net loss during the twelve-month period ended December 31, 2004 is $9.4 million of additional interest expense as substantially all of the Company's $316.9 million of debt now is issued by Majestic Star and then lent to its affiliates as non-interest bearing advances. From January 1, 2003 to October 7, 2003, there was $151.8 million of debt on MIH's balance sheet, of which all but $16.3 million was purchased and retired by the Company in October 2003. Also, as explained under our consolidated results, Majestic Star's December 31, 2004 net loss includes a non-recurring charge of $1.9 million for retroactive real property taxes, and the property's net loss for the year ended December 31, 2003 includes a non-recurring charge of $2.1 million for the one time impact of a change in gaming taxes.

Adjusted EBITDA at Majestic Star was $7.2 million and $28.6 million for the three- and twelve-month periods ended December 31, 2004, compared to $5.1 million and $27.4 million for the three- and twelve-month periods ended December 31, 2003. Property adjusted EBITDA margins (defined as adjusted EBITDA divided by net revenues) improved to 21.5% in the fourth quarter of 2004 from 16.4% in the fourth quarter of 2003. For the twelve-month period ended December 31, 2004, the property's adjusted EBITDA margin was 20.3% compared to 21.2% in the prior year twelve-month period. Adjusted EBITDA reflects property operations only, is exclusive of corporate overhead, and is adjusted for retroactive real property taxes in both the three- and twelve- month periods ended December 31, 2004, refinancing and early extinguishment of debt charges in the three- and twelve month periods ended December 31, 2003, and retroactive gaming taxes in the twelve-month period ended December 31, 2003 (see the accompanying table).

"Our ability to control costs while sustaining our revenue growth resulted in a significant improvement in quarterly adjusted EBITDA" stated Mr. Barden. "As a result of our strong fourth quarter adjusted EBITDA, the property's full year 2004 adjusted EBITDA was a property record. In addition, our full year 2004 net revenues and casino revenues were also records."

Majestic Star continues to add more ticket in ticket out ("TITO") slot machines to its casino floor. At this time the casino floor has 1,162 TITO slot machines or approximately 71% of slot machines are equipped with this technology.

Fitzgeralds Tunica (property operations only)

Net revenues declined $0.2 million to $19.5 million for the three-month period ended December 31, 2004. Net revenues were $83.2 million for the twelve-month period ended December 31, 2004, a decrease of $0.5 million or 0.5% over the same period in the prior year.

Casino revenues at Fitzgeralds Tunica were $20.1 million for the three-month period ended December 31, 2004, and $86.5 million for the twelve-month period ended December 31, 2004, as compared to $20.1 million and $84.4 million, respectively, in the same periods in 2003. For the three- and twelve-month periods ended December 31, 2004, table game revenues decreased 9.3% to $1.9 million and 6.8% to $7.7 million, respectively. Slot revenues increased to $18.3 million and $78.9 million, respectively, for the three- and twelve-month periods ended December 31, 2004 from $18.1 million and $76.1 million, respectively, in the same periods in 2003.

Net income for the three- and twelve-month periods ended December 31, 2004 was $1.8 million and $11.5 million, respectively. This compares to net income of $2.5 million and $13.0 million for the three- and twelve-month periods ended December 31, 2003. Our net income for both the three- and twelve-months ended December 31, 2004 was impacted by higher promotional costs, greater payroll and benefit expenses in our administration areas and increased depreciation expense due to capital expenditures made during 2004.

EBITDA at Fitzgeralds Tunica was $4.1 million and $20.3 million for the three- and twelve-month periods ended December 31, 2004, compared to $4.5 million and $20.8 million for the three- and twelve-month periods ended December 31, 2003. EBITDA margins (defined as EBITDA divided by net revenues) declined to 21.3% in the fourth quarter of 2004 from 22.6% in the fourth quarter of 2003. The year to date EBITDA margin declined to 24.4% in the twelve-month period ended December 31, 2004 from 24.9% in the same period last year. EBITDA reflects property operations only and is exclusive of corporate overhead. There were no adjustments to EBITDA in the three- and twelve-month periods ended December 31, 2004 or the same periods in 2003.

Mr. Barden, commenting on the Fitzgeralds Tunica operation, stated, "the Tunica market remains very competitive and casino revenue growth in the area has been minimal. As a means to increase our profitability, we will strive to direct our focus on projects that will make our casino operation more efficient. This includes the implementation of TITO and various other slot-marketing programs to create greater incentive for gamblers to visit our facility. During the fourth quarter of 2004, the property began installing TITO on selected slot machines. At this time the property has 158 TITO games operational with the goal of having 540 TITO slot machines in operation by year-end. With TITO, we should be able to redeploy our slot workforce toward better guest service while giving our slot guests greater play time on our slot machines."

Fitzgeralds Black Hawk-Discontinued Operation of Property Held for Sale

Net revenues improved to $8.9 million for the three-month period ended December 31, 2004 from $8.0 million from the three-month period ended December 31, 2003. Despite snowstorms in November, the property was able to improve its net revenues by 11.4% over the prior year quarter. Net revenues were $36.2 million for the twelve-month period ended December 31, 2004, an increase of $4.2 million or 13.3% over the same prior year period. The significant increase in net revenues is attributable to expanded marketing programs, management's continued focus on maximizing yield on marketing and promotional activities, displacement of customers from a competitor that is undergoing remodeling and construction, which is anticipated to continue until the spring of 2005, and enhancements to our slot product.

Casino revenues at Fitzgeralds Black Hawk increased to $9.4 million and $38.7 million, respectively, for the three- and twelve-month periods ended December 31, 2004 from $8.5 million and $34.5 million, respectively, in the same periods in 2003. For the three- and twelve-month periods ended December 31, 2004, slot revenues increased 10.8% and 12.0%, respectively. Slot coin-in increased 7.9% and 8.8%, respectively, during the fourth quarter and twelve-month period.

In November 2004, the so-called "Southern Access Road," was completed. The road provides another route to Black Hawk, through Central City. For those casino customers that choose to take the new road, Fitzgeralds Black Hawk will be one of the first properties encountered when entering Black Hawk.

Net income for the three- and twelve-month periods ended December 31, 2004 was $2.2 million and $10.0 million, respectively. This compares to net income of $1.7 million and $7.1 million for the three- and twelve-month periods ended December 31, 2003.

EBITDA at Fitzgeralds Black Hawk was $2.2 million and $11.0 million for the three- and twelve-month periods ended December 31, 2004, compared to $2.2 million and $8.9 million for the three- and twelve-month periods ended December 31, 2003. EBITDA margins were 24.9% and 30.3%, respectively; compared to 27.1% and 27.7% in the three- and twelve-month periods ended December 31, 2003. EBITDA reflects property operations only and is exclusive of corporate overhead. There were no adjustments to EBITDA in the three- and twelve-month periods ended December 31, 2004 or the same periods in 2003.

"Similar to Majestic Star, Fitzgeralds Black Hawk's 2004 EBITDA, net revenues and casino revenue are records," stated Mr. Barden. "While the fourth quarter's EBITDA was flat with the prior year, poor weather, particularly during the Thanksgiving holiday weekend, negatively impacted our results."

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