MTR Gaming Group, Inc. (NasdaqGS: MNTG) today announced financial results for the first quarter ended March 31, 2010. Current and prior-year results reflect the presentation of Running Aces Harness Park, Jackson Harness Raceway, the Ramada Inn and Speedway Casino and Binion’s Gambling Hall & Hotel as discontinued operations. See attached tables (including Reconciliation of GAAP net income (loss) to Non-GAAP Adjusted EBITDA).

For the first quarter of 2010, the Company’s net revenues from continuing operations were $99.4 million, a decline of 9% from $109.7 million in the same period of 2009. Adjusted EBITDA from continuing operations was $16.6 million (after severance costs of $0.3 million and project opening costs of $75,000 related to table games at Presque Isle Downs) compared to $19.5 million in the first quarter of 2009. The Company reported a net loss for the quarter of $3.3 million, or $0.12 per diluted share, which included incremental interest expense of $3.3 million, or $0.08 per diluted share, incurred on the Company’s $260 million 12.625% senior notes which were issued in the third quarter of 2009. Additionally, the net loss included a loss from discontinued operations in the amount of $0.1 million, or $0.01 per diluted share. In the same period last year, the Company reported net income of $752,000, or $0.03 per diluted share, which included a loss of $750,000, or $0.02 per diluted share, from discontinued operations.

Net revenues at Mountaineer Casino, Racetrack & Resort decreased 12% to $58.6 million in the first quarter of 2010 compared to $66.6 million in the first quarter of 2009. Table gaming at Mountaineer generated $11.3 million of revenues compared to $11.9 million in the prior-year period, while revenues from slots were $42.1 million, compared to revenue of $48.0 million in the same quarter in 2009. The property generated Adjusted EBITDA of $12.1 million versus $12.5 million in the comparable quarter of 2009. Adjusted EBITDA margin at Mountaineer was 20.6% compared to 18.7% in the prior-year quarter.

Net revenues at Presque Isle Downs & Casino decreased 6% to $40.6 million during the first quarter of 2010 compared to $43.0 million during the same period of 2008. The property generated Adjusted EBITDA of $7.9 million (after severance costs of $0.3 million and project opening costs related to table games of $75,000) versus $9.0 million in the comparable quarter of 2009.

“We managed costs carefully in a challenging environment, especially given the severe winter weather conditions we experienced in February,” said Robert Griffin, President and Chief Executive Officer of MTR Gaming Group.

Balance Sheet and Liquidity

As of March 31, 2010, MTR had $46.3 million in cash and $390.3 million in total debt, net of discounts, on its consolidated balance sheet. On March 18, 2010, MTR entered into a new credit agreement with Aladdin Credit Advisors, L.P., as administrative agent, which provides for a $20 million senior secured delayed-draw term loan credit facility, $10 million of which the Company has drawn.

Subsequent Events

On April 29, 2010, the Pennsylvania Gaming Control Board granted approval to the Company to conduct table gaming at Presque Isle Downs & Casino. The Company plans to begin table games operations by July 2010.

Mr. Griffin added, “We are excited about the opening of table games at Presque Isle Downs and believe that table gaming will enable us to grow our business in our existing markets.”

Reconciliation of Non-GAAP Measures to GAAP

Adjusted EBITDA represents earnings (losses) before interest, income taxes, depreciation and amortization, gain (loss) on disposal of property, loss on debt modification and extinguishment, equity in loss of unconsolidated joint venture and loss on asset impairment. Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles (“GAAP”), is unaudited and should not be considered as an alternative to, or more meaningful than, net income (loss) or income (loss) from operations as an indicator of our operating performance, or cash flows from operating activities, as a measure of liquidity. Adjusted EBITDA has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry. Management of the Company uses Adjusted EBITDA as the primary measure of the Company’s operating performance and as a component in evaluating the performance of operating personnel. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, and debt principal repayments, which can be significant. Moreover, other companies that provide EBITDA information may calculate EBITDA differently than we do. A reconciliation of GAAP income (loss) from continuing operations and income (loss) from discontinued operations to Adjusted EBITDA is included in the financial tables accompanying this release.

Conference Call

Management will conduct a conference call focusing on the financial results and corporate developments later today at 4:30 PM EDT. Interested parties may participate in the call by dialing (877) 407-4018. Please call in 10 minutes before the call is scheduled to begin and ask for the MTR Gaming call (conference ID #350126).

The conference call will be webcast live via the Investor Relations section of the Company’s website at www.mtrgaming.com. To listen to the live webcast 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 to the live call, the conference call will be archived on the Investor Relations section of the Company’s website.

About MTR Gaming Group

MTR Gaming Group, Inc., through subsidiaries, owns and operates Mountaineer Casino, Racetrack & Resort in Chester, West Virginia; Presque Isle Downs & Casino in Erie, Pennsylvania; and Scioto Downs in Columbus, Ohio. For more information, please visit www.mtrgaming.com.

Forward-Looking Statements

Except for historical information, this press release contains forward-looking statements concerning, among other things the prospects for improving the results of our gaming operations at Mountaineer and Presque Isle Downs and the successful implementation and growth of table gaming at Presque Isle Downs. 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 include, but are not limited to, the impact of new competition for Mountaineer and Presque Isle Downs, the effectiveness of our marketing programs, the enactment of future gaming legislation in the jurisdictions in which we operate (including the implementation of casino gaming in Cleveland and Columbus, Ohio which was approved on November 3, 2009 by referendum, and the implementation of table gaming in Pennsylvania), changes in, or failure to comply with, laws, regulations or the conditions of our gaming licenses, accounting standards or environmental laws, including adverse changes in the gaming tax rates that the Company currently pays in its various jurisdictions, general economic conditions, disruption (occasioned by weather conditions or work stoppages) of our operations, the success and growth of table gaming at Mountaineer, the realization of the expected benefits of non-taxable promotional credits at Mountaineer, our ability to improve our operating margins, our continued suitability to hold and obtain renewals of our gaming and racing licenses, our ability to comply with the covenants of our various debt instruments and/or our ability to obtain additional financing, if and when needed, and other factors described in the Company’s periodic reports filed with the Securities and Exchange Commission. The Company does not intend to update publicly any forward-looking statements, except as may be required by law. The cautionary advice in this paragraph is permitted by the Private Securities Litigation Reform Act of 1995.
   
MTR GAMING GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
(unaudited)
 
Three Months Ended
March 31
  2010     2009  
 
Revenues:
Gaming $ 91,859 $ 100,566
Pari-mutuel commissions 1,313 1,965
Food, beverage and lodging 6,973 7,610
Other   1,609     1,696  
Total revenues 101,754 111,837
Less promotional allowances   (2,395 )   (2,137 )
Net revenues   99,359     109,700  
 
Operating expenses:
Expenses of operating departments:
Gaming 57,440 62,782
Pari-mutuel commissions 1,800 2,285
Food, beverage and lodging 5,448 5,732
Other revenue 1,391 1,389
Marketing and promotions 2,885 4,445
General and administrative 13,672 13,614
Project opening costs 75 -
Depreciation 7,292 7,274
Loss on disposal of property   66     8  
Total operating expenses   90,069     97,529  
 
Operating income 9,290 12,171
 
Other income (expense):
Interest income 4 451
Interest expense   (13,542 )   (9,936 )
 
(Loss) income from continuing operations before income taxes (4,248 ) 2,686
Benefit (provision) for income taxes   1,111     (1,184 )
 
(Loss) income from continuing operations   (3,137 )   1,502  
 
Discontinued operations:
Loss from discontinued operations before income taxes and
non-controlling interest (219 ) (1,342 )
Benefit for income taxes   77     589  
Loss from discontinued operations before non-controlling interest (142 ) (753 )
Non-controlling interest   (1 )   3  
Loss from discontinued operations   (143 )   (750 )
 
Net loss $ (3,280 ) $ 752  
 
Net (loss) income per share - basic:
(Loss) income from continuing operations $ (0.11 ) $ 0.05
Loss from discontinued operations   (0.01 )   (0.02 )
Net (loss) income $ (0.12 ) $ 0.03  
 
Net (loss) income per share - diluted:
(Loss) income from continuing operations $ (0.11 ) $ 0.05
Loss from discontinued operations   (0.01 )   (0.02 )
Net (loss) income $ (0.12 ) $ 0.03  
 
Weighted average number of shares outstanding:
Basic   27,475,260     27,475,260  
Diluted   27,475,260     27,475,260  
 
MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
     
Three Months Ended
March 31
  2010     2009  
 
Net revenues from continuing operations:
Mountaineer Casino, Racetrack & Resort $ 58,580 $ 66,613
Presque Isle Downs & Casino 40,621 42,978
Scioto Downs 83 109
Corporate   75     -  
Consolidated net revenues from continuing operations $ 99,359   $ 109,700  
 
 
Adjusted EBITDA from continuing operations:
Mountaineer Casino, Racetrack & Resort $ 12,089 $ 12,474
Presque Isle Downs & Casino 7,864 8,956
Scioto Downs (497 ) (512 )
Corporate   (2,808 )   (1,465 )
Consolidated Adjusted EBITDA from continuing operations $ 16,648 $ 19,453
 
Adjusted EBITDA from discontinued operations:
Binion's Gambling Hall & Hotel (228 ) (459 )
Ramada Inn and Speedway Casino - 37
Jackson Racing / Jackson Harness Raceway 11 (73 )
MTR-Harness / Running Aces Harness Park   (2 )   (93 )
Consolidated Adjusted EBITDA $ 16,429   $ 18,865  
 
_______________________________________________________________________
 

The following tables set forth a reconciliation of income (loss) from continuing operations and income (loss) from discontinuedoperations, GAAP financial measures, to Adjusted EBITDA, a non-GAAP financial measure.
 
_______________________________________________________________________
 
Three Months Ended
March 31
  2010     2009  
 
ADJUSTED EBITDA FROM CONTINUING OPERATIONS:
 
Mountaineer Casino, Racetrack & Resort:
Income from continuing operations $ 6,215 $ 3,731
Interest expense, net of interest income 54 2,242
Provision for income taxes 2,212 2,932
Depreciation 3,518 3,586
Loss (gain) on disposal of property   90     (17 )
Adjusted EBITDA from continuing operations $ 12,089   $ 12,474  
 
Presque Isle Downs & Casino:
Income from continuing operations $ 3,135 $ 3,137
Interest expense, net of interest income 72 (131 )
Provision for income taxes 1,116 2,465
Depreciation 3,565 3,485
Gain on the disposal of property   (24 )   -  
Adjusted EBITDA from continuing operations $ 7,864   $ 8,956  
 
Scioto Downs:
Loss from continuing operations $ (527 ) $ (411 )
Interest expense, net of interest income 18 22
Benefit for income taxes (188 ) (324 )
Depreciation   200     201  
Adjusted EBITDA from continuing operations $ (497 ) $ (512 )
 
MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION (continued)
(dollars in thousands)
(unaudited)
 
Three Months Ended
March 31
  2010     2009  
ADJUSTED EBITDA FROM CONTINUING OPERATIONS (continued):
 
Corporate:
Loss from continuing operations $ (11,960 ) $ (4,955 )
Interest expense, net of interest income 13,394 7,352
Benefit for income taxes (4,251 ) (3,889 )
Depreciation 9 2
Loss on disposal of property   -     25  
Adjusted EBITDA from continuing operations $ (2,808 ) $ (1,465 )
 
Consolidated:
(Loss) income from continuing operations $ (3,137 ) $ 1,502
Interest expense, net of interest income 13,538 9,485
(Benefit) provision for income taxes (1,111 ) 1,184
Depreciation 7,292 7,274
Loss on disposal of property   66     8  
Adjusted EBITDA from continuing operations $ 16,648   $ 19,453  
 
 
ADJUSTED EBITDA FROM DISCONTINUED OPERATIONS:
 
Binion's Gambling Hall & Hotel:
Loss from discontinued operations $ (148 ) $ (257 )
Benefit for income taxes   (80 )   (202 )
Adjusted EBITDA from discontinued operations $ (228 ) $ (459 )
 
Ramada Inn and Speedway Casino:
Income from discontinued operations $ - $ 22
Interest income - (2 )
Provision for income taxes   -     17  
Adjusted EBITDA from discontinued operations $ -   $ 37  
 
Jackson Racing / Jackson Harness Raceway:
Income (loss) from discontinued operations $ 7 $ (41 )
Provision (benefit) for income taxes, net of non-controlling interest   4     (32 )
Adjusted EBITDA from discontinued operations $ 11   $ (73 )
 
MTR-Harness / Running Aces Harness Park:
Loss income from discontinued operations $ (2 ) $ (474 )
Interest expense 1 3
Benefit for income taxes (1 ) (372 )
Equity in loss of North Metro Harness Initiative, LLC   -     750  
Adjusted EBITDA from discontinued operations $ (2 ) $ (93 )
   
MTR GAMING GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
 
March 31 December 31
  2010     2009  
(unaudited)
ASSETS
 
Current assets:
Cash and cash equivalents $ 46,334 $ 44,755
Restricted cash 1,067 483
Accounts receivable, net of allowance for doubtful accounts

 of $457 in 2010 and $458 in 2009
1,680 2,641
Accounts receivable - West Virginia Lottery Commission 1,171 -
Inventories 3,645 3,794
Deferred financing costs 3,953 3,606
Prepaid income taxes 9,849 8,663
Deferred income taxes 39 37
Prepaid expenses and other current assets   4,177     8,181  
Total current assets 71,915 72,160
 
Property and equipment, net 326,720 332,351
Goodwill 494 494
Other intangibles 69,021 69,021
Deferred financing costs, net of current portion 10,876 10,616
Deposits and other 4,632 4,632
Non-operating real property 12,267 13,554
Assets of discontinued operations   185     185  
Total assets $ 496,110   $ 503,013  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
Accounts payable $ 1,476 $ 2,150
Accounts payable - gaming taxes and assessments 1,989 7,030
Accrued payroll and payroll taxes 3,356 3,373
Accrued interest 11,345 14,247
Other accrued liabilities 9,009 11,641
Construction project and equipment liabilities 349 583
Current portion of long-term debt and capital lease obligations 4,112 6,618
Liabilities of discontinued operations   217     237  
Total current liabilities 31,853 45,879
 
Long-term debt and capital lease obligations, net of current portion 386,211 375,885
Deferred income taxes   8,197     7,976  
Total liabilities   426,261     429,740  
 
Shareholders' equity:
Common stock - -
Additional paid-in capital 61,737 61,882
Retained earnings 8,195 11,475
Accumulated other comprehensive loss   (300 )   (300 )
Total shareholders' equity of MTR Gaming Group, Inc. 69,632 73,057
Non-controlling interest of discontinued operations   217     216  
Total shareholders' equity   69,849     73,273  
Total liabilities and shareholders' equity $ 496,110   $ 503,013  

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