MTR Gaming Group Announces Third Quarter Results

CHESTER, W. Va., Nov 04, 2009 (BUSINESS WIRE) --
MNTG | Quote | Chart | News | PowerRating -- MTR Gaming Group, Inc. (NasdaqGS: MNTG | Quote | Chart | News | PowerRating) today announced financial
results for the third quarter and nine months ended September 30, 2009.
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 EBITDA).

For the third quarter of 2009, the Company's net revenues from
continuing operations were $119.5 million, a decline of 9% from $130.8
million in the same period of 2008. EBITDA from continuing operations
was $17.2 million, down 24% (after a severance charge of $0.1 million
and strategic costs associated with lobbying and gaming efforts in Ohio
of $3.7 million) compared to $22.7 million in the third quarter of 2008.
The decrease in EBITDA from continuing operations is directly
attributable to the strategic costs associated with Ohio, as well as
increased marketing costs at MTR's West Virginia property in response to
increased competition, primarily from the opening of the Rivers Casino
in downtown Pittsburgh, Pennsylvania.

During the third quarter of 2009, corporate operating expenses
(exclusive of the $3.7 million of strategic costs associated with Ohio)
decreased 35% to $2.2 million compared to $3.5 million in the third
quarter of 2008 as a result of cost containment efforts.

The Company reported net income of $577,000 or $0.02 per diluted share,
which included a $2.8 million pre-tax loss associated with MTR's debt
refinancing and the aforementioned $3.7 million of strategic costs
associated with lobbying and gaming efforts in Ohio, or $0.20 per
diluted share in the aggregate. Additionally, net income included income
from discontinued operations in the amount of $2.7 million or $0.10 per
diluted share, resulting from the reversal of a $2.9 million deferred
tax asset valuation allowance associated with certain impairment losses
that were recorded in the third quarter of 2008. In the same period last
year, the Company reported a net loss of $8.2 million or $0.30 per
share, of which a loss of $11.7 million or $0.43 per share was from
discontinued operations.

Net revenues at Mountaineer Casino, Racetrack & Resort decreased 11% to
$68.9 million in the third quarter of 2009 compared to $77.3 million in
the third quarter of 2008. Table gaming at Mountaineer generated $11.4
million of revenues compared to $13.2 million in the prior-year period,
while revenues from slots decreased by $3.7 million compared to the same
quarter in 2008. The decrease in revenue is primarily attributable to
competitive pressures and weak economic conditions. The property
generated EBITDA of $13.0 million versus $15.5 million in the comparable
quarter of 2008.

Net revenues at Presque Isle Downs & Casino decreased 5% to $49.2
million during the third quarter of 2009 compared to $51.5 million
during the same period of 2008. The property generated EBITDA of $10.3
million versus $10.8 million in the comparable quarter of 2008. The
decrease in EBITDA is attributable to the decline in revenue and $0.4
million of incremental real estate tax expense resulting from an
increase in the property's assessed value, partially offset by
operational efficiencies.

"The voters of Ohio approved Issue 3 yesterday, which will increase the
competition in our regional markets starting around 2013," said Robert
Griffin, President and Chief Executive Officer of MTR Gaming Group. "We
are considering several different alternatives in order to proactively
prepare for the new competition. Although this may appear to be a
negative, we believe that it may result in slots at tracks, as the
Governor has proposed, with better economic terms than were originally
discussed. To that end we are working diligently to have this initiative
reintroduced in the state. In terms of our current operations, we are
delighted with the results we have seen thus far at Mountaineer since
adding free play on September 1, which has enhanced its competitive
position in the Ohio Valley."

For the first nine months of 2009, MTR's total net revenues decreased 5%
to $350.3 million from $369.5 million in the first nine months of 2008.
However, EBITDA from continuing operations decreased less than 1% to
$56.6 million (after severance costs of $0.4 million and strategic costs
associated with lobbying and gaming efforts in Ohio of $4.1 million)
from $57.0 million in the same period last year. Absent these one-time
charges, EBITDA from continuing operations was up 7% from the prior-year
period.

The 2009 year-to-date net income was $1.7 million or $0.06 per diluted
share, of which income of $1.4 million or $0.05 per diluted share was
from discontinued operations. In the same period last year, the Company
reported a net loss of $13.2 million or $0.48 per share, which included
a loss of $13.5 million or $0.49 per share from discontinued operations.

Mr. Griffin further added, "We remain focused on increasing revenue and
maximizing profits at our current operations, and we believe the advent
of free play at Mountaineer is having a positive effect. Looking into
next year, we hope that Ohio voters will approve the referendum allowing
for video lottery terminals at racetracks."

Balance Sheet and Liquidity

During the third quarter, MTR successfully completed its offering of
$250 million of 12.625% senior secured notes due 2014 at an issue price
of 95.248%, with the proceeds used to pay down outstanding debt. On
October 13, 2009, MTR completed an additional $10 million offering of
the same senior secured notes at an issue price of 96%, and amended its
senior secured credit facility to reduce the borrowing capacity from $20
million to $10 million.

Conference Call

Management will conduct a conference call focusing on the financial
results and corporate developments at 4:30 PM EST on Thursday, November
5, 2009. 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 #334841).

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.

Reconciliation of Non-GAAP Measures to GAAP

EBITDA represents earnings (losses) before interest, income taxes,
depreciation and amortization, gain (loss) on disposal of property, loss
on debt modification and equity in loss of unconsolidated joint venture.
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 or income from operations as an indicator of
our operating performance, or cash flows from operating activities, as a
measure of liquidity. 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. Uses of cash flows that are
not reflected in EBITDA include capital expenditures, interest payments,
income taxes, and debt principal repayments. 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 EBITDA is included in
the financial tables accompanying this release.

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.

Except for historical information, this press release contains
forward-looking statements concerning, among other things the prospects
for improving the results of our operations at Mountaineer and Presque
Isle Downs and the prospects for video lottery gaming at Scioto 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 recent referendum to permit casino gaming in
Ohio), 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            Nine Months Ended
                                                                   September 30                  September 30
                                                                      2009           2008           2009           2008
Revenues:
Gaming                                                             $  106,408     $  114,135     $  315,904     $  327,737
Pari-mutuel commissions                                               4,574          5,151          10,665         11,900
Food, beverage and lodging                                            9,181          10,648         25,284         28,610
Other                                                                 2,285          2,995          6,550          7,343
Total revenues                                                        122,448        132,929        358,403        375,590
Less promotional allowances                                           (2,970  )      (2,145  )      (8,093  )      (6,076  )
Net revenues                                                          119,478        130,784        350,310        369,514
Operating expenses:
Expenses of operating departments:
Gaming                                                                66,078         71,427         197,459        207,717
Pari-mutuel commissions                                               4,160          4,672          10,280         11,498
Food, beverage and lodging                                            6,323          7,942          18,210         22,666
Other revenue                                                         1,698          2,612          4,894          6,888
Marketing and promotions                                              5,689          4,322          16,637         12,423
General and administrative                                            18,291         17,156         46,223         51,301
Depreciation                                                          7,443          7,396          22,031         22,394
Loss on disposal of property                                          31             1              169            1
Total operating expenses                                              109,713        115,528        315,903        334,888
Operating income                                                      9,765          15,256         34,407         34,626
Other income (expense):
Other                                                                 (39     )      -              (39     )      -
Interest income                                                       9              53             448            196
Interest expense                                                      (11,849 )      (10,216 )      (31,729 )      (30,891 )
Loss on debt modification and extinguishment                          (2,773  )      -              (2,773  )      (3,356  )
(Loss) income from continuing operations before income taxes          (4,887  )      5,093          314            575
Benefit (provision) for income taxes                                  2,779          (1,622  )      (3      )      (261    )
(Loss) income from continuing operations                              (2,108  )      3,471          311            314
Discontinued operations:
Loss from discontinued operations before income taxes and             (292    )      (12,567 )      (2,294  )      (15,143 )
non-controlling interest
Benefit for income taxes                                              2,983          841            3,664          1,625
Income (loss) from discontinued operations before non-controlling     2,691          (11,726 )      1,370          (13,518 )
interest
Non-controlling interest                                              (6      )      15             -              30
Income (loss) from discontinued operations                            2,685          (11,711 )      1,370          (13,488 )
Net income (loss)                                                  $  577         $  (8,240  )   $  1,681       $  (13,174 )
Net income (loss) per share - basic:
(Loss) income from continuing operations                           $  (0.08   )   $  0.13        $  0.01        $  0.01
Income (loss) from discontinued operations                            0.10           (0.43   )      0.05           (0.49   )
Net income (loss)                                                  $  0.02        $  (0.30   )   $  0.06        $  (0.48   )
Net income (loss) per share - diluted:
(Loss) income from continuing operations                           $  (0.08   )   $  0.13        $  0.01        $  0.01
Income (loss) from discontinued operations        0.10           (0.43      )    0.05           (0.49      )
Net income (loss)                               $ 0.02         $ (0.30      )  $ 0.06         $ (0.48      )
Weighted average number of shares outstanding:
Basic                                             27,475,260     27,475,260      27,475,260     27,475,260
Diluted                                           27,475,260     27,475,260      27,475,260     27,475,260

MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
                                                      Three Months Ended                    Nine Months Ended
                                                      September 30                          September 30
                                                           2009               2008               2009               2008
Net revenues from continuing operations:
Mountaineer Casino, Racetrack & Resort                $    68,882        $    77,255        $    207,716       $    226,663
Presque Isle Downs & Casino                                49,173             51,497             139,985            139,237
Scioto Downs                                               1,402              2,029              2,579              3,605
Corporate                                                  21                 3                  30                 9
Consolidated net revenues from continuing operations  $    119,478       $    130,784       $    350,310       $    369,514
EBITDA from continuing operations:
Mountaineer Casino, Racetrack & Resort                $    12,987        $    15,452        $    37,804        $    41,279
Presque Isle Downs & Casino                                10,333             10,755             29,443             26,809
Scioto Downs                                               (154    )          (87     )          (986    )          (1,074  )
Corporate                                                  (5,927  )          (3,467  )          (9,654  )          (9,993  )
Consolidated EBITDA from continuing operations        $    17,239        $    22,653        $    56,607        $    57,021
EBITDA from discontinued operations:
Binion's Gambling Hall & Hotel                             (277    )          (32     )          (937    )          (1,543  )
Ramada Inn and Speedway Casino                             -                  (5      )          43                 (755    )
Jackson Racing / Jackson Harness Raceway                   480                (213    )          315                (457    )
MTR-Harness / Running Aces Harness Park                    (55     )          (11     )          (265    )          (55     )
Consolidated EBITDA                                   $    17,387        $    22,392        $    55,763        $    54,211
_______________________________________________________________________
The following tables set forth a reconciliation of income (loss)
from continuing operations and income (loss) from discontinued
operations, GAAP financial measures, to EBITDA, a non-GAAP financial
measure.
_______________________________________________________________________
                                                      Three Months Ended                    Nine Months Ended
                                                      September 30                          September 30
                                                           2009               2008               2009               2008
EBITDA FROM CONTINUING OPERATIONS:
Mountaineer Casino, Racetrack & Resort:
Income from continuing operations                     $    14,314        $    6,651         $    20,410        $    16,093
Interest expense, net of interest income                   1,056              2,253              5,522              6,771
(Benefit) provision for income taxes                       (6,858  )          2,902              127                7,264
Depreciation                                               3,672              3,646              10,849             11,151
Loss on disposal of property                               30                 -                  123                -
Loss on debt modification and extinguishment               773                -                  773                -
EBITDA from continuing operations                     $    12,987        $    15,452        $    37,804        $    41,279
Presque Isle Downs & Casino:
Income from continuing operations                     $    12,889        $    4,833         $    18,476        $    10,524
Interest expense, net of interest income                   170                361                292                1,221
(Benefit) provision for income taxes                       (6,287  )          2,122              115                4,751
Depreciation                                               3,561              3,439              10,560             10,313
EBITDA from continuing operations                     $    10,333        $    10,755        $    29,443        $    26,809
Scioto Downs:
Loss from continuing operations           $ (1,093 )  $ (368 )  $ (1,692 )  $ (1,265 )
Interest expense, net of interest income    22          27        70          83
Provision (benefit) for income taxes        675         27        (11    )    (571   )
Depreciation                                203         227       608         679
Other                                       39          -         39          -
EBITDA from continuing operations         $ (154   )  $ (87  )  $ (986   )  $ (1,074 )

MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION (continued)
(dollars in thousands)
(unaudited)
                                                               Three Months Ended           Nine Months Ended
                                                               September 30                 September 30
                                                                  2009           2008          2009           2008
EBITDA FROM CONTINUING OPERATIONS (continued):
Corporate:
Loss from continuing operations                                $  (28,218 )   $  (7,645 )   $  (36,883 )   $  (25,038 )
Interest expense, net of interest income                          10,592         7,522         25,397         22,620
Provision (benefit) for income taxes                              9,691          (3,429 )      (228    )      (11,183 )
Depreciation                                                      7              84            14             251
Loss on disposal of property                                      1              1             46             1
Loss on debt modification and extinguishment                      2,000          -             2,000          3,356
EBITDA from continuing operations                              $  (5,927  )   $  (3,467 )   $  (9,654  )   $  (9,993  )
Consolidated:
(Loss) income from continuing operations                       $  (2,108  )   $  3,471      $  311         $  314
Interest expense, net of interest income                          11,840         10,163        31,281         30,695
(Benefit) provision for income taxes                              (2,779  )      1,622         3              261
Depreciation                                                      7,443          7,396         22,031         22,394
Loss on disposal of property                                      31             1             169            1
Other                                                             39             -             39             -
Loss on debt modification and extinguishment                      2,773          -             2,773          3,356
EBITDA from continuing operations                              $  17,239      $  22,653     $  56,607      $  57,021
EBITDA from discontinued operations:
Binion's Gambling Hall & Hotel:
(Loss) from discontinued operations                            $  (181    )   $  (21    )   $  (616    )   $  (1,308  )
Interest income, net of interest expense                          -              -             -              (29     )
Benefit for income taxes                                          (96     )      -             (321    )      (879    )
(Gain) loss on disposal of property                               -              (11    )      -              673
EBITDA from discontinued operations                            $  (277    )   $  (32    )   $  (937    )   $  (1,543  )
Ramada Inn and Speedway Casino:
(Loss) Income from discontinued operations                     $  (1      )   $  (11    )   $  29          $  1,477
Interest (income) expense                                         -              -             (1      )      163
Provision (benefit) for income taxes                              1              (7     )      15             1,009
Depreciation                                                      -              -             -              199
Loss (gain) on disposal of property                               -              13            -              (3,603  )
EBITDA from discontinued operations                            $  -           $  (5     )   $  43          $  (755    )
Jackson Racing / Jackson Harness Raceway:
Income (loss) from discontinued operations                     $  24          $  (1,937 )   $  (85     )   $  (2,225  )
Interest expense, net of interest income and non-controlling      -              1             -              3
interest
Provision (benefit) for income taxes, net of non-controlling      12             (872   )      (44     )      (1,005  )
interest
Depreciation, net of non-controlling interest                     -              9             -              25
Loss on disposal of property, net of non-controlling interest     115            -             115            159
Other                                                             153            -             153            -
Impairment loss                                                   176            2,586         176            2,586
EBITDA from discontinued operations                            $  480         $  (213   )   $  315         $  (457    )
MTR-Harness / Running Aces Harness Park:
Income (loss) from discontinued operations                     $  2,843       $  (9,742 )   $  2,042       $  (11,432 )
Interest expense, net of interest income                 2           6          7           8
(Benefit) provision for income taxes                     (2,900 )    43         (3,314 )    (738   )
Equity in loss of North Metro Harness Initiative, LLC    -           9,682      1,000       12,107
EBITDA from discontinued operations                    $ (55    )  $ (11   )  $ (265   )  $ (55    )

MTR GAMING GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
                                                                      September 30       December 31
                                                                           2009              2008
                                                                      (unaudited)
ASSETS
Current assets:
Cash and cash equivalents                                             $    35,895        $   29,011
Restricted cash                                                            373               929
Accounts receivable, net of allowance for doubtful accounts of             3,713             7,717
$302 in 2009 and $125 in 2008
Accounts receivable - West Virginia Lottery Commission                     1,210             -
Inventories                                                                3,929             4,445
Deferred financing costs                                                   4,027             4,444
Prepaid income taxes                                                       1,702             7,059
Deferred income taxes                                                      346               1,397
Prepaid expenses and other current assets                                  5,578             4,528
Assets held for deferred compensation                                      -                 11,529
Assets of discontinued operations                                          -                 36
Total current assets                                                       56,773            71,095
Property and equipment, net                                                356,054           367,769
Goodwill                                                                   1,985             1,985
Other intangibles                                                          68,923            68,819
Deferred financing costs, net of current portion                           11,036            2,499
Deposits and other                                                         14,638            14,815
Assets of discontinued operations                                          234               728
Total assets                                                          $    509,643       $   527,710
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                                                      $    4,953         $   6,869
Accounts payable - gaming taxes and assessments                            4,549             6,848
Accrued payroll and payroll taxes                                          3,433             3,220
Accrued interest                                                           8,693             4,932
Other accrued liabilities                                                  11,404            14,486
Construction project and equipment liabilities                             2,852             1,048
Deferred compensation                                                      -                 11,547
Current portion of long-term debt and capital lease obligations            8,685             20,498
Liabilities of discontinued operations                                     414               1,240
Total current liabilities                                                  44,983            70,688
Long-term debt and capital lease obligations, net of current portion       365,628           357,112
Long-term deferred compensation                                            339               663
Deferred income taxes                                                      1,324             3,644
Total liabilities                                                          412,274           432,107
Shareholders' equity:
Common stock                                                               -                 -
Additional paid-in capital                                                 61,859            61,774
Retained earnings                                                          35,694            34,013
Accumulated other comprehensive loss                                       (386    )         (386    )
Total shareholders' equity of MTR Gaming Group, Inc.                       97,167            95,401
Non-controlling interest of discontinued operations                        202               202
Total shareholders' equity                                                 97,369            95,603
Total liabilities and shareholders' equity                            $    509,643       $   527,710

SOURCE: MTR Gaming Group, Inc.

MTR Gaming Group, Inc. 
David R. Hughes, 724-933-8122 
Corporate Executive VP and Chief Financial Officer 
dhughes@mtrgaming.com 
www.mtrgaming.com

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