FOR IMMEDIATE RELEASE
MTR GAMING GROUP ANNOUNCES RECORD THIRD QUARTER RESULTS
NET INCOME UP 36% ON 24% REVENUE INCREASE
CHESTER, WV - October 30, 2001 - MTR Gaming Group, Inc. (Nasdaq
National Market:MNTG) today announced record financial results
for the third quarter ended September 30, 2001. The third quarter
represents the Company's best quarter ever. See attached tables.
Third Quarter Financial Highlights - versus fiscal 2000 third
quarter
- Total revenues were up by 24% to $61.5 million.
- EBITDA rose 36% to $13.3 million.
- Operating income increased 40% to $11.4 million
- Net income grew 36% to $6.8 million or $.25 per diluted
share.
Nine-Month
Financial Highlights - versus the first nine months of fiscal
2000
- Total revenues increased 29% to $164.3 million
- EBITDA grew 30% to $33.9 million
- Operating income rose 29% to $27.6 million
- Net income was up 28% to $16.3 million or $.63 per diluted
share
Edson R. (Ted) Arneault, President and CEO of MTR Gaming Group,
stated, "The Company's continued growth during these difficult
economic times is a testament to Mountaineer's unique offerings
and demographics. We achieved these results despite supplier
delays in both the installation of the 595 additional slot
machines approved by the Lottery Commission on July 31 and
the full implementation of the increased maximum wager of $5.00.
Accordingly, we postponed the corresponding marketing campaign.
Nonetheless, net win from slot operations at Mountaineer rose
28% to $52.1 million in the third quarter from the same quarter
last year, while net win-per-day-per-machine was $263 with
an average of 2,149 machines, compared to $266 with 1,905 machines
in the third quarter of 2000.
"Although the events of September 11th affected our operations,
the impact has been limited in comparison to gaming destinations
such as the Las Vegas Strip that rely heavily on air travel.
The vast majority of Mountaineer's customer base travels by
car or bus to the complex from Ohio, Pennsylvania and West
Virginia, where there are approximately 10 million people within
a two-hour drive."
Mr. Arneault continued, "The transformation of Mountaineer
into a destination resort and diversified entertainment complex
is moving along according to plan. We are seeing strong interest
in our new convention center, which will be fully efficient
once supported by our new hotel, on schedule to open with 260
rooms and suites in the second quarter of 2002. The grand opening
of our latest gaming room, which now houses 956 new slot machines
and brings our total to 2,476, took place last week and attracted
many customers. Overall, 707 of our machines now accept the
new maximum wager.
"Export simulcasting of Mountaineer thoroughbred horse
races continues to broaden and produce increased revenues.
We added two new outlets during the quarter, bringing the total
to more than 250, while export revenues increased 11% over
the second quarter to reach $867,000. Our average daily live
handle, including export, was $1,026,000 in the third quarter,
up 23% over the second quarter of this year. Importantly, on
October 18th, when the Nevada Gaming Commission renewed our
unrestricted gaming license with respect to the Speedway Casino
for a two-year term, it also granted Mountaineer permission
to participate in export simulcasting revenues from Nevada
outlets. Beginning in the first quarter of 2002, when existing
flat fee contracts expire, this new license should result in
increased export simulcast revenue.
"For the third quarter, total revenues at our Speedway
Property in North Las Vegas were up 8% to $2.1 million from
the third quarter of 2000, but the property reduced the Company's
earnings by $256,000 or $.01 per share. Of note, the Speedway
is expected to be cash flow positive for the month of October,
and we expect this trend to continue. With regard to our Reno
property, as a result of closing the casino at the end of July
2001, revenues decreased 59% from last year's third quarter
to $630,000, and the operating loss declined to $705,000 compared
to $1,009,000 during the third quarter of 2000."
Mr. Arneault concluded, "We remain enthusiastic about
MTR's prospects for growth. While the economic slowdown and
uncertainty may continue to impact Mountaineer somewhat, we
believe we have several factors working in our favor; namely,
a core customer base of retirees who use disposable income
for entertainment, lack of reliance on air travel, additional
machines and a higher bet limit to be fully implemented, and
unique offerings that we continue to expand. We also expect
our marketing/promotions activities to be more efficient and
more effective as we fully implement our new automated player-tracking
system. Additionally, we continue to pursue regulatory approval
to build Presque Isle Downs, a state-of-the-art racetrack in
Erie, Pennsylvania, as well as seek expansion by acquiring
other racing and parimutuel businesses."
Due to management's positive outlook, during the third quarter
MTR repurchased 171,100 shares of the Company's Common Stock
in accordance with the Securities and Exchange Commission's
September 14, 2001 emergency order and an additional 10,000
shares thus far during the fourth quarter, bringing the total
repurchased pursuant to the Company's April 2000 buyback program
to 415,600 shares for a cost of $3.0 million. Additionally,
the Company has obtained permission from its bankers to increase
the amount of stock it may repurchase from $3 million to $8
million as long as the Company's 12-month trailing EBITDA ("Qualifying
EBITDA") equals or exceeds $40 million, and to $10 million
when Qualifying EBITDA equals or exceeds $50 million. Currently,
the Company's Qualifying EBITDA is $41,838,000. Accordingly,
the Company may repurchase additional shares.
Conference Call
Edson R. (Ted) Arneault, President and CEO, will conduct a
conference call focusing on the financial results and the
progress of the Company's expansion in West Virginia at 10:00
a.m. ET on Tuesday, October 30, 2001. Interested parties
may participate in the call by dialing 212-346-6384 approximately
10 minutes before the call is scheduled to begin. The conference
call will be broadcast live over the Internet via the Investor
Relations section of the Company's web site at www.mtrgaming.com.
To listen to the live call please go to the website at least
15 minutes early to register, download and install any necessary
audio software. If you are unable to listen live, the conference
call will be archived and can be accessed for approximately
90 days. A recorded phone replay of the call will also be
available from 12:00 pm ET on Tuesday, October 30, 2001 to
12:00 pm ET on Wednesday, October 31, 2001. Listeners may
dial 800-633-8284 (858-812-6440 for international callers)
and use the code 19931141 for the phone replay.
About MTR Gaming Group
MTR Gaming Group owns and operates the Mountaineer Casino Racetrack and Resort in Chester, West Virginia, which currently encompasses
a thoroughbred racetrack with off-track betting and export
simulcasting, 3,200 slot machines, 359 hotel rooms, golf course,
spa & fitness center, theater and events center, convention
center and fine dining and entertainment. The Company also
owns and operates the Ramada Inn and Speedway Casino in North
Las Vegas, and holds a license to build a new thoroughbred
racetrack with parimutuel wagering in Erie, Pennsylvania. MTR
is included on the Russell 2000® and Russell® 3000
Indexes. For more information, please visit www.mtrgaming.com.
Except for historical information, this
press release contains forward-looking statements concerning,
among other things, the acquisition of Scioto Downs, Inc.
Such statements are based on MTR’s current plans and
expectations. Such statements are subject to a number of
risks and uncertainties that could cause the statements made
to be incorrect and/or for actual results to differ materially.
Those risks and uncertainties are described in the Company’s
periodic reports filed with the Securities and Exchange Commission,
and with respect to the Scioto Downs acquisition are described
in the Merger Agreement, as amended, which is attached as
exhibits to the Company’s reports on Forms 8-K filed
December 24, 2002, March 5, 2003, and May 7, 2003. MTR’s
plans to build a racetrack in Erie, Pennsylvania remain subject
to the possibility of a legal challenge to the July 17, 2003
decision of the Pennsylvania State Horse Racing Commission
reinstating the license (which was originally granted in
late 2002) and the risks associated with land acquisition,development,
construction and integration of new operations. The Company
does not intend to update publicly any forward-looking statements,
except as may be required by law.
MTR
GAMING GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
|
Three
Months Ended
September 30 |
Nine
Months Ended
September 30 |
|
|
|
|
|
|
2001 |
2000 |
2001 |
2000 |
|
|
|
|
|
REVENUES |
|
|
|
|
Gaming |
$53,771,000 |
$42,648,000 |
$143,905,000 |
$111,061,000 |
Parimutuel |
2,167,000 |
1,445,000 |
5,937,000 |
3,827,000 |
Food,
beverage and lodging |
4,326,000 |
3,942,000 |
11,747,000 |
10,132,000 |
Other |
1,231,000 |
1,448,000 |
2,755,000 |
2,614,000 |
|
|
|
|
|
Total
revenues |
61,495,000
|
49,483,000 |
164,344,000 |
127,634,000 |
|
|
|
|
|
| COSTS
OF REVENUE |
|
|
|
|
Cost
of gaming terminals |
31,651,000 |
24,743,000 |
83,734,000 |
64,272,000 |
Cost
of parimutuel |
1,678,000 |
1,569,000 |
4,888,000 |
4,256,000 |
Cost
of food, beverage and lodging |
4,055,000 |
4,179,000 |
11,745,000 |
9,881,000 |
Cost
of other revenues |
1,641,000 |
1,365,000 |
3,593,000 |
2,351,000 |
|
|
|
|
|
Total
costs of revenues |
39,025,000 |
31,856,000 |
103,960,000 |
80,760,000 |
|
|
|
|
|
Gross
Profit |
22,470,000 |
17,627,000 |
60,384,000 |
46,874,000 |
|
|
|
|
|
| SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES: |
|
|
|
|
Marketing
and promotions |
2,858,000 |
2,691,000 |
8,690,000 |
6,792,000 |
General
and administrative |
6,307,000 |
5,175,000 |
17,785,000 |
14,085,000 |
Depreciation
and amortization |
1,942,000 |
1,662,000 |
6,277,000 |
4,627,000 |
|
|
|
|
|
Total
selling, general and
administrative expenses |
11,107,000 |
9,528,000 |
32,752,000 |
25,504,000 |
|
|
|
|
|
Operating
income |
11,363,000 |
8,099,000 |
27,632,000 |
21,370,000 |
|
|
|
|
|
Interest
income |
63,000 |
64,000 |
178,000 |
200,000 |
Interest
expense |
(1,070,000) |
(636,000) |
(3,032,000) |
(2,017,000) |
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations before
cumulative effect of accounting change
and provision for income taxes |
10,356,000
|
7,527,000 |
24,778,000 |
19,553,000 |
Provision
for income taxes |
3,518,000
|
2,503,000 |
8,419,000 |
6,844,000 |
|
|
|
|
|
Income
from continuing operations before
cumulative effect of accounting change |
6,838,000
|
5,024,000
|
16,359,000
|
12,709,000
|
Cumulative
effect of change in method of
accounting for derivatives, net of tax
benefits |
0
|
0 |
(92,000) |
0 |
|
|
|
|
|
NET
INCOME |
$6,838,000
|
$5,024,000 |
$16,267,000 |
$12,709,000 |
|
|
|
|
|
NET
INCOME PER SHARE - BASIC |
0.27 |
0.23 |
0.69 |
0.59 |
| Net
Income per Share - (Assuming
Dillution)
NET INCOME AFTER INCOME TAXES |
0.25
|
0.19
|
0.63
|
0.51
|
| Weighted
average number of shares outstanding: |
|
|
|
|
Basic |
25,322,008
|
22,081,656 |
23,505,264 |
21,631,230 |
|
|
|
|
|
Diluted |
27,814,521
|
26,178,627 |
25,850,455 |
24,893,740 |
|
|
|
|
|
MTR GAMING
GROUP, INC.
CONSOLIDATED BALANCE SHEET
(unaudited)
|
September
30
2001 |
December
31,
2000 |
|
|
|
ASSETS |
|
|
Current
Assets: |
|
|
| Cash
and cash equivalents |
$10,641,000 |
$10,564,000 |
Restricted
cash |
745,000 |
505,000 |
Accounts
receivable, net of allowance for doubtful
accounts of $50,000 and $37,000
|
4,152,000 |
3,044,000 |
Accounts
receivable - Lottery Commission |
0 |
1,073,000 |
Inventories |
1,636,000 |
1,083,000 |
Deferred
financing costs |
620,000 |
555,000 |
Prepaid
taxes |
1,218,000 |
2,410,000 |
Other
current assets |
2,109,000 |
1,678,000 |
|
|
|
Total
current assets |
21,121,000 |
20,912,000 |
|
|
|
Property
and equipment, net |
127,293,000 |
90,501,000 |
Other
assets: |
|
|
Excess
of cost of investments over net assets acquired, net
of Accumulated amortization of $2,219,000, and $2,030,000
|
1,555,000
|
1,744,000
|
Deferred
income taxes |
13,000 |
13,000 |
Deferred
financing costs, net of current portion |
1,689,000 |
1,860,000 |
Deposits
and other |
1,270,000 |
655,000 |
|
|
|
Total
assets |
$152,941,000 |
$115,685,000 |
|
|
|
| LIABILITIES |
|
|
Current
liabilities: |
|
|
| Accounts
payable |
$2,583,000 |
$1,370,000 |
West
Virginia Lottery Commission payable |
856,000 |
646,000 |
Accrued
payroll and payroll taxes |
2,073,000 |
1,227,000 |
Other
accrued liabilities |
5,037,000 |
1,755,000 |
Current
portion of capital leases |
3,329,000 |
3,269,000 |
Current
portion of long-term debt |
353,000 |
334,000 |
|
|
|
Total
current liabilities
|
14,231,000 |
8,601,000 |
|
|
|
| Long-term
debt, less current portion |
66,826,000 |
56,021,000 |
Capital
lease obligations, net of current portion |
3,530,000 |
3,849,000 |
Deferred
income tax |
3,948,000 |
1,766,000 |
|
|
|
Total
liabilities |
88,535,000 |
70,237,000 |
|
Shareholders' equity:
|
|
|
| Common
stock |
-- |
-- |
| Paid-in-capital |
$45,421,000 |
$39,014,000 |
Shareholders'
receivable |
(3,630,000) |
(1,243,000) |
Retained
earnings |
22,615,000 |
7,677,000 |
|
|
|
Total
shareholders' equity |
64,406,000 |
45,448,000 |
|
|
|
Total
liabilities and shareholders' equity |
$152,941,000 |
$115,685,000 |
|
|
|
|
