0000950131-01-503427.txt : 20011009 0000950131-01-503427.hdr.sgml : 20011009 ACCESSION NUMBER: 0000950131-01-503427 CONFORMED SUBMISSION TYPE: SC 13E3/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20010921 GROUP MEMBERS: BH ACQUISITION, INC. GROUP MEMBERS: DIVERSIFIED OPPORTUNITIES GROUP LTD GROUP MEMBERS: GAMECO, INC. GROUP MEMBERS: JEFFREY P. JACOBS GROUP MEMBERS: RICHARD E. JACOBS GROUP MEMBERS: RICHARD E. JACOBS REVOCABLE TRUST SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BLACK HAWK GAMING & DEVELOPMENT CO INC CENTRAL INDEX KEY: 0000896495 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 841158484 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-47459 FILM NUMBER: 1742021 BUSINESS ADDRESS: STREET 1: 240 MAIN ST PO BOX 21 STREET 2: SUITE 170 CITY: BLACK HAWK STATE: CO ZIP: 80422 BUSINESS PHONE: 3035821117 MAIL ADDRESS: STREET 1: 240 MAIN ST BOX S STREET 2: SUITE 400 CITY: BLACK HAWK STATE: CO ZIP: 80422 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BLACK HAWK GAMING & DEVELOPMENT CO INC CENTRAL INDEX KEY: 0000896495 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 841158484 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3/A BUSINESS ADDRESS: STREET 1: 240 MAIN ST PO BOX 21 STREET 2: SUITE 170 CITY: BLACK HAWK STATE: CO ZIP: 80422 BUSINESS PHONE: 3035821117 MAIL ADDRESS: STREET 1: 240 MAIN ST BOX S STREET 2: SUITE 400 CITY: BLACK HAWK STATE: CO ZIP: 80422 SC 13E3/A 1 dsc13e3a.txt TRANSACTION STATEMENT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 TO SCHEDULE 13E-3 (Rule 13e-100) TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 13e-3 THEREUNDER BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC. ------------------------------------ (Name of the Issuer) BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC. GAMECO, INC. BH ACQUISITION, INC. JEFFREY P. JACOBS DIVERSIFIED OPPORTUNITIES GROUP LTD. RICHARD E. JACOBS REVOCABLE TRUST RICHARD E. JACOBS ------------------------------------ (Names of Persons Filing Statement) COMMON STOCK, PAR VALUE $.001 PER SHARE ------------------------------------ (Title of Class of Securities) 092067 10 7 ------------------------------------ (CUSIP Number of Class of Securities) ------------------------------------------------------ Jeffrey P. Jacobs Richard E. Jacobs, Trustee Stephen R. Roark, President and Chief Executive Officer 25425 Center Ride Road Chief Financial Officer Gameco, Inc. Cleveland, Ohio 44145 Black Hawk Gaming & Development BH Acquisition, Inc. (440) 871-4800 Company, Inc. 1001 North U.S. Highway One, #710 240 Main Street, Box 21 Cleveland, Ohio 44113 Black Hawk, Colorado 80422 (561) 575-4006 (303) 582-1117
(Names, Addresses and Telephone Numbers of Persons Authorized to Receive Notices and Communications on Behalf of the Persons Filing Statement) -------------------------------------------------------------- COPIES TO: Edward G. Ptaszek, Jr., Esq. Samuel E. Wing, Esq. Robert A. Weible, Esq. Jones & Keller, P.C. Baker & Hostetler LLP 1625 Broadway, Suite 1600 1900 East 9/th/ Street Denver, Colorado 80202 Cleveland, Ohio 44114 (303) 573-1600 (216) 621-0200 This statement is filed in connection with (check the appropriate box): a. /x/ The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934. b. / / The filing of a registration statement under the Securities Act of 1933. c. / / A tender offer. d. / / None of the above. Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: /x/ INTRODUCTION This Amendment No. 1 to Schedule 13e-3 Transaction Statement (the "Statement") is being filed in connection with the filing by Black Hawk Gaming & Development Company, Inc. ("Black Hawk") with the Securities and Exchange Commission (the "Commission") on September 21, 2001 of an amended preliminary proxy statement on Schedule 14A (the "Proxy Statement") in connection with a special meeting of Black Hawk's shareholders. At such meeting, Black Hawk's shareholders will be asked to vote to adopt and approve an Agreement and Plan of Merger dated as of April 25, 2001 (the "Merger Agreement") by and between Black Hawk, BH Acquisition, Inc. ("BH"), a Colorado corporation, and Gameco, Inc. ("Gameco"), a Delaware corporation. Under the Merger Agreement, BH will be merged with and into Black Hawk and Black Hawk will be the surviving corporation. Gameco is the sole shareholder of BH. As a result of the merger, Black Hawk will become a wholly owned subsidiary of Gameco and Black Hawk's shareholders (other than Gameco, BH, Diversified Opportunities Group Ltd. and their affiliates) will be entitled to receive $12.00 per share in cash for their shares of Black Hawk common stock. Jeffrey P. Jacobs is the Chairman and Chief Executive Officer of Black Hawk. Jeffrey P. Jacobs, through Jacobs Entertainment Ltd., and the Richard E. Jacobs Revocable Trust (the "Trust"), are controlling persons of Diversified Opportunities Group Ltd. ("Diversified") and own equally its membership interests. Richard E. Jacobs, the sole trustee of the Trust, is Jeffrey P. Jacobs' father. Diversified owns 1,333,333 shares or 32.3% of Black Hawk's outstanding common stock. Upon consummation of the Merger, Jeffrey P. Jacobs and the Trust will own equally all of the voting equity securities of Gameco and Gameco will own all membership interests of Diversified. Information concerning each of the foregoing filing persons not included in the Proxy Statement is as follows: (a) None of Black Hawk, Gameco, BH, Jeffrey P. Jacobs, Diversified, the Trust or Richard E. Jacobs (i) has been convicted in a criminal proceeding during the past five years (excluding any traffic violation or similar misdemeanor) or (ii) has been a party to any judicial or administrative proceeding during the past five years (except for any matter that was dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining it or him from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. (b) All of the filing entities referred to above were organized under the laws of a state of the United States. Richard E. Jacobs and Jeffrey P. Jacobs are citizens of the United States. The information in the Proxy Statement, including the appendices thereto, is hereby incorporated by reference and contains all information required in response to the items of this Statement, except that the Proxy Statement does not include the information in (a) or (b) immediately above or all of the exhibits listed below. The Proxy Statement will be completed and, if appropriate, amended prior to the time it is first sent or given to Black Hawk's shareholders. This Statement will be amended to reflect such completion or amendment of the Proxy Statement. ITEM 16. EXHIBITS. The following are filed with this Amendment No. 1 to Schedule 13E-3 pursuant to Item 1016 of Regulation M-A. (a)(1) Preliminary copy of Letter to Shareholders from J. Patrick McDuff incorporated by reference to Schedule 14A filed by Black Hawk on September 21, 2001. (a)(2) Preliminary copy of Notice of Special Meeting of Shareholders incorporated by reference to Schedule 14A filed by Black Hawk on September 21, 2001. (a)(3) Preliminary Proxy Statement, incorporated by reference to Schedule 14A filed by Black Hawk on September 21, 2001 including form of proxy card. (c)(2) Presentation of Robertson Stephens, Inc. to the Special Committee dated April 23, 2001. SIGNATURES After due inquiry and to the best of its knowledge and belief, each of the undersigned hereby certifies that the information set forth in this statement is true, complete and correct. BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC. By: /s/ Stephen R. Roark ---------------------------------------- Name: Stephen R. Roark Title: President and Chief Financial Officer Date: September 21, 2001 GAMECO, INC. By: /s/ Jeffrey P. Jacobs ---------------------------------------- Name: Jeffrey P. Jacobs Title: President Date: September 21, 2001 BH ACQUISITION, INC. By: /s/ Jeffrey P. Jacobs ---------------------------------------- Name: Jeffrey P. Jacobs Title: President Date: September 21, 2001 /s/ Jeffrey P. Jacobs ------------------------------------------- Jeffrey P. Jacobs DIVERSIFIED OPPORTUNITIES GROUP LTD. By: Jacobs Entertainment Ltd., its Manager By: /s/ Jeffrey P. Jacobs ---------------------------------------- Jeffrey P. Jacobs Date: September 21, 2001 Richard E. Jacobs, Trustee ------------------------------------------- Richard E. Jacobs Revocable Trust Date: September 21, 2001 /s/ Richard E. Jacobs ------------------------------------------- Richard E. Jacobs EXHIBIT INDEX Item No. Description -------- ----------- (a)(1) Preliminary copy of Letter to Shareholders from J. Patrick McDuff incorporated by reference to Schedule 14A filed by Black Hawk on September 21, 2001. (a)(2) Preliminary copy of Notice of Special Meeting of Shareholders incorporated by reference to Schedule 14A filed by Black Hawk on September 21, 2001. (a)(3) Preliminary Proxy Statement, incorporated by reference to Schedule 14A filed by Black Hawk on September 21, 2001 including form of proxy card. (c)(2) Presentation of Robertson Stephens, Inc. to the Special Committee dated April 23, 2001. EX-99.(C)(2) 3 dex99c2.txt PRESENTATION TO THE SPECIAL COMMITTEE EXHIBIT (c)(2) -------------------------------------------------------------------------------- Presentation to the Special Committee -------------------------------------------------------------------------------- April 23 , 2001 -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investment Bankers -------------------------------------------------------------------------------- ________________________________________________________________________________ Preface ________________________________________________________________________________ These materials have been prepared by FleetBoston Robertson Stephens Inc. ("RS") as part of a presentation being made in support of our opinion as to the fairness to Black Hawk Gaming and Development Company, Inc. ("Blackjack"), from a financial point of view, of the price per share proposed to be offered by Jackpot pursuant to Jackpot's proposed acquisition of Blackjack (the "Transaction"). These materials and all analyses contained herein are confidential and are solely for the use of the Special Committee of the Board of Directors of Blackjack in connection with its evaluation of the Transaction. Any use of these materials or the analyses contained herein for any other purpose or any other publication of these materials or the analyses contained herein without the express written consent of RS is strictly prohibited. RS' opinion shall not be reproduced, summarized, described or referred to, or furnished to any party, without the prior written consent of RS. In our review and analysis, and in arriving at our opinion, we have assumed and relied upon the accuracy and completeness of all of the financial and other information provided to us (including information furnished to us orally or otherwise discussed with us by the managements of Jackpot and Blackjack) or publicly available and have neither attempted to verify, nor assumed responsibility for verifying, any of such information. We have relied upon the assurances of the management of Jackpot and Blackjack that they are not aware of any facts that would make such information inaccurate or misleading. Furthermore, we did not obtain or make, or assume responsibility for obtaining or making, any independent evaluation or appraisal of the properties or assets or liabilities (contingent or otherwise) of Jackpot or Blackjack, nor were we furnished with any such evaluations or appraisals. With respect to the financial forecasts and projections (and the assumptions and bases therefor) of Jackpot and Blackjack that we have reviewed, upon advice of the managements of Blackjack and Jackpot, we have assumed that such forecasts and projections have been reasonably prepared in good faith on the basis of reasonable assumptions and reflect the best currently available estimates and judgments as to the future financial condition and performance of Jackpot and Blackjack, respectively, and we have further assumed that such forecasts and projections will be realized in the amounts and in the time periods currently estimated. We have relied as to all legal matters relevant to rendering our opinion on the advice of counsel. Our opinion is necessarily based upon market, economic, and other conditions as in effect on, and information made available to us as of, the date hereof. It should be understood that subsequent developments may affect the conclusion expressed in the opinion and that we disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinion which may come or be brought to our attention after the date of the opinion. ________________________________________________________________________________ [LOGO] Robertson Stephens Investment Bankers 1 -------------------------------------------------------------------------------- Preface (continued) -------------------------------------------------------------------------------- Several analytical methodologies have been employed herein and no one method of analysis should be regarded as critical to the overall conclusion we have reached. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. The conclusions we have reached are based on all the analyses and factors presented herein taken as a whole and also on application of our own experience and judgment. Such conclusions may involve significant elements of subjective judgment and qualitative analysis. We therefore give no opinion as to the value or merit standing alone of any one or more parts of the material that follows. Our only opinion is the formal written and executed opinion that is to be delivered to the Special Committee of the Board of Directors of Blackjack. The form of opinion set forth herein contains other conditions and limitations which you should review in connection with these materials. -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investment Bankers 2 I. Executive Summary.............................. 4 II. Valuation Analysis............................. 7 A. Valuation Summary B. Comparable Companies Analysis C. Precedent Acquisitions Analysis D. Discounted Cash Flow Analysis III. Background of Blackjack........................ 14 Appendix....................................... 25
-------------------------------------------------------------------------------- Table of Contents -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investment Bankers -------------------------------------------------------------------------------- Executive Summary -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investment Bankers EXECUTIVE SUMMARY -------------------------------------------------------------------------------- Summary of Terms of Agreement -------------------------------------------------------------------------------- Transaction Jackpot Company ("Jackpot") to acquire all outstanding shares of common stock of Blackjack Company ("Blackjack") that it does not already own in exchange for $12.00 cash per share (the "Merger Consideration") in a going private transaction. Blackjack currently has 4,126,757 common shares outstanding of which Jackpot owns 1,333,333 or approximately 33%. All options of Blackjack will be paid out in cash for the amount the Merger Consideration is in excess of the exercise price per share. Accounting/Tax Treatment Purchase Accounting. Financing Jackpot shall deliver to Blackjack prior to the mailing of the Proxy, a fully executed "highly confident" letter from U.S. Bancorp Libra or one or more similar lending institutions. Termination Standard fiduciary outs. Termination Fee $1 million break-up fee if the transaction is terminated by Blackjack. $2 million fee payable by Jackpot to Blackjack if Jackpot fails to close, secured by a letter of credit. Indemnification Jackpot has agreed to indemnify Blackjack's directors against any litigation including litigation pursuant to this transaction. Voting Agreement Approximately 11% of Blackjack stock will be subject to a voting agreement pursuant to which such corresponding shareholder will be required to vote in favor of the Transaction. Note: Based on Draft Merger Agreement dated 4/20/01 -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investment Bankers 5 EXECUTIVE SUMMARY -------------------------------------------------------------------------------- Transaction Statistics -------------------------------------------------------------------------------- Deal Value Jackpot Offer Price Per Share $12.00 Fully Diluted Blackjack Shares Outstanding 4.431 --------------------------------------------------------- Implied Equity Value $ 53.2 --------------------------------------------------------- Enterprise Value Total Debt Outstanding (1) 57.0 Excess Cash (2) 2.4 Net Debt 54.7 --------------------------------------------------------- Enterprise Value $107.8 --------------------------------------------------------- Multiples Paid (1) (3) CY2000 EBITDA 4.7x CY2001E EBITDA 5.1x CY2002E EBITDA 5.0x CY2001E Net Income 10.1x CY2002E Net Income 10.4x Notes: Financial information based on Blackjack management guidance. (1) Adjusted to reflect Jackpot's 25% interest in Lodge property. (2) Excess cash assumes $5.0 million of cash left on balance sheet for working capital. (3) Multiples represent total capitalization (equity plus net debt) as a multiple of EBITDA and equity capitalization as a multiple of net income. -------------------------------------------------------------------------------- [LOGO] Robertson Stephens 6 Investment Bankers -------------------------------------------------------------------------------- II Valuation Analysis -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investment Bankers VALUATION ANALYSIS -------------------------------------------------------------------------------- Valuation Summary --------------------------------------------------------------------------------
Blackjack Financial Implied Aggregate Implied Equity Implied Value Methodology Statistic (1) Multiple Range Value Range Value Range (2) per Share (3) -------------------------------- -------------- -------------- ----------------- ---------------- -------------- Comparable Companies Analysis Trading Value 2001 EBITDA $21.1 4.0x - 5.5x $ 84.2 - $115.8 $29.6 - $61.1 $ 6.67 - $13.80 2002 EBITDA $21.6 3.5x - 5.0x $ 75.7 - $108.2 $21.0 - $53.5 $ 4.75 - $12.07 2001 Net Income $ 5.2 8.0x - 10.0x $ 96.6 - $107.1 $41.9 - $52.4 $ 9.47 - $11.83 2002 Net Income $ 5.1 7.0x - 9.0x $ 90.3 - $100.5 $35.6 - $45.8 $ 8.04 - $10.34 Selected Precedent Transactions LTM EBITDA (4) $22.8 4.5x - 6.0x $102.7 - $136.9 $48.0 - $82.2 $10.83 - $18.56 NTM EBITDA $21.1 4.5x - 6.0x $ 94.8 - $126.3 $40.1 - $71.7 $ 9.05 - $16.18 Premiums Paid Analysis (5) Premium Paid to 1 Month $7.00 30% - 45% $ 95.0 - $ 99.6 $40.3 - $45.0 $ 9.10 - $10.15 Prior Stock Price Premium Paid to 1 Day $6.56 20% - 35% $ 89.6 - $ 93.9 $34.9 - $39.3 $ 7.88 - $ 8.86 Prior Stock Price Discounted Cash Flow Analysis Based on a 12-15% discount rate and 5.0x-6.0x EBITDA exit multiples -- -- -- $ 90.7 - $114.7 $36.0 - $60.1 $ 8.12 - $13.56 -------------------------------------------------------------------------------------------------------------------- Mean $ 91.1 - $111.5 $36.4 - $56.8 $ 8.21 - $12.82 -------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- Jackpot Offer $107.8 $53.2 $12.00 --------------------------------------------------------------------------------------------------------------------
Notes: ----- Financial information based on Blackjack management guidance. (1) All EBITDA statistics and Net Debt adjusted for Jackpot's 25% interest in Lodge property. All NI statistics reflect a minority interest calculation. (2) Equity value excludes a net debt of $54.7 MM. Net debt is adjusted to reflect Jackpot's 25% interest in Lodge property. (3) Based on Jackpot's fully diluted treasury shares of 4.4 MM. (4) LTM figure reflects acquisition of Gold Dust West. Transaction closed January 2001. (5) Premium paid based on 2/27/01, date of Jackpot's offer to purchase Blackjack. -------------------------------------------------------------------------------- [LOGO] Robertson Stephens 8 Investment Bankers VALUATION ANALYSIS -------------------------------------------------------------------------------- Comparable Companies Analysis --------------------------------------------------------------------------------
------------------------------- ----------------------- ---------------------------------------------------- Price 52 Week Market Enterprise Price Performance Calendar EPS --------------- ----------------------- ---------------------------------------------------- Ticker 04/16/01 High Low Cap. ($mm) Value ($mm) LTM YTD MTD WTD 2000A 2001E 2002E ------------------------------- ----------------------- ---------------------------------------------------- GAMING STOCKS Small-Cap/Regional Operators Argosy AGY $25.75 $27.00- $13.00 $749 $ 966 86.4% 34.2% (1.3%) (2.4%) $1.74 1.94 2.20 Aztar Corp AZR 10.50 $16.69- $ 8.88 406 823 12.8% (18.8%) (1.0%) (0.7%) 1.05 1.19 1.28 Isle of Capri Casinos ISLE 8.69 $17.75- $ 6.44 268 1,217 (31.2%) (18.2%) (17.7%) (2.4%) 1.02 1.39 1.53 Boyd Gaming BYD 3.96 $ 6.13- $ 3.25 246 1,178 (9.5%) 15.2% 17.5% 6.2% 0.35 0.41 0.62 Pinnacle Entertainment PNK 9.27 $22.81- $ 9.07 245 545 (53.1%) (31.3%) (11.7%) (2.3%) 0.73 0.57 0.71 Hollywood Casino HWD 9.45 $11.25- $ 3.75 243 645 160.7% 2.2% 5.0% 0.4% 0.39 0.49 1.08 Penn National Gaming PENN 12.74 $18.38- $ 8.00 196 484 19.9% 25.1% 1.9% (2.0%) 1.22 1.51 1.92 Ameristar Casinos ASCA 7.38 $ 9.67- $ 3.88 153 913 78.9% 44.0% 13.3% (2.4%) NM 1.35 NA Lakes Gaming LACO 10.00 $10.63- $ 6.88 106 54 45.5% 6.7% 7.4% (1.4%) 1.86 1.85 NA Monarch Casino & Resort MCRI 5.35 $ 6.06- $ 3.94 51 125 14.1% 12.6% 9.7% 7.0% 0.10 NA NA Century Casinos CNTY 1.88 $ 2.53- $ 1.44 27 43 9.4% 11.4% 11.4% 0.5% 0.23 NA NA Riviera RIV 5.96 $ 8.13- $ 5.90 22 199 (14.9%) (16.4%) (1.5%) (0.7%) (1.05) NA NA Sands Regent SNDS 2.85 $ 3.63- $ 0.97 18 19 68.9% 26.7% 11.2% 9.8% 0.33 NA NA President Casinos PREZ 0.44 $ 1.00- $ 0.19 2 99 (35.6%) 102.3% 18.0% 13.5% (2.66) NA NA ------------------------------------------- MEAN: 25.2% 14.0% 4.4% 1.7% MEDIAN: 13.4% 12.0% 6.2% (0.7%) ------------------------------------------- ------------------------------------------------------------------------------------------------------------- Blackjack (1) $ 9.78 $10.50- $ 5.52 43 97 66.5% 44.9% 9.4% 9.9% 1.31 1.18 1.15 ------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------- Jackpot's Offer (1) $12.00 NMF- NMF 53 108 NMF NMF NMF NMF 1.31 1.18 1.15 ------------------------------------------------------------------------------------------------------------- ---------------------- -------------------- ----------------------- ---------------- Enterprise Value/ Debt/ P/E LT Growth(3) PEG EBITDA Enterprise value ---------------------- -------------------- ----------------------- ---------------- 2000A 2001E 2002E 2001E 2001E 2000A 2001E 2002E ---------------------- -------------------- ----------------------- ---------------- GAMING STOCKS Small-Cap/Regional Operators Argosy 14.8x 13.3x 11.7x 12.40% 1.07 5.0x 5.0x 5.0x 28.6% Aztar Corp 10.0 8.8 8.2 13.56 0.65 4.9 4.8 4.6 56.5% Isle of Capri Casinos 8.5 6.3 5.7 22.00 0.28 5.5 4.4 NA 84.4% Boyd Gaming 11.3 9.7 6.4 14.38 0.67 5.2 4.5 4.3 86.6% Pinnacle Entertainment 12.7 16.3 13.1 17.50 0.93 5.4 5.2 4.7 92.0% Hollywood Casino 24.2 19.3 8.8 25.00 0.77 8.6 5.7 4.6 88.0% Penn National Gaming 10.4 8.4 6.6 17.50 0.48 8.1 4.9 4.2 63.8% Ameristar Casinos NM 5.5 NM NA NM 6.0 (2) 5.9 NA 87.2% Lakes Gaming 5.4 5.4 NM NA NM 1.0 NA NA 2.8% Monarch Casino & Resort 53.5 NM NM NA NM 6.4 NA NA 64.9% Century Casinos 8.2 NM NM 25.00 NM 4.5 NA NA 44.2% Riviera NM NM NM NA NM 5.5 NA NA 117.1% Sands Regent 8.6 NM NM NA NM 1.2 NA NA 53.3% President Casinos NM NM NM NA NM 4.0 NA NA 110.2% ----------------------------------------------------------------------------------- ----------------- MEAN: 15.2x 10.3x 8.6x 16.88 0.69 5.1x 5.1x 4.6x 70.0% MEDIAN: 10.4x 8.8x 8.2x 17.50 0.67 5.3x 5.0x 4.6x 74.6% ----------------------------------------------------------------------------------- ----------------- ----------------------------------------------------------------------------------- ----------------- Blackjack (1) 7.5x 8.1x 8.5x NA NA 4.3x 4.6x 4.5x 58.6% ----------------------------------------------------------------------------------- ----------------- ----------------------------------------------------------------------------------- ----------------- Jackpot's Offer (1) 9.2x 10.1x 10.4x NA NA 4.7x 5.1x 5.0x 52.9% ----------------------------------------------------------------------------------- -----------------
Notes: Names in bold are followed by Robertson Stephens NA - Not Available NM - Not Meaningful A - Actual E - Estimate Source: Bloomberg, First Call, Company Filings, Street Research and Robertson Stephens Research Financial information based on Blackjack management guidance. (1) All EBITDA statistics and Net Debt adjusted for Jackpot's 25% interest in Lodge property. All NI statistics reflect a minority interest calculation. (2) EBITDA figure adjusted to reflect full year results of 12/20/00 acquisition of Station Casino Properties. (3) Zach's year growth rate -------------------------------------------------------------------------------- [LOGO] Robertson Stephens 9 Investment Bankers VALUATION ANALYSIS -------------------------------------------------------------------------------- Comparable Companies Analysis --------------------------------------------------------------------------------
EBITDA (in millions) F. Diluted Shares Cash Debt Net Debt Company Name Ticker 4/16/01 (in (in (in (in millions) millions) millions) millions) 2000 2001 2002 Argosy AGY $ 25.75 29.1 $ 59.4 $ 276.3 $ 217.0 $194.5 $ 192.3 $ 192.8 Aztar Corp AZR 10.50 38.7 48.1 464.6 416.5 169.4 171.0 177.0 Isle of Capri Casinos ISLE 8.69 30.9 78.4 1,027.5 949.1 219.5 275.7 NA Boyd Gaming BYD 3.96 62.2 88.1 1,019.3 931.2 225.2 261.6 272.3 Pinnacle Entertainment PNK 9.27 26.4 201.4 501.2 299.8 101.6 104.0 117.0 Hollywood Casino HWD 9.45 25.7 165.1 567.7 402.6 75.2 114.1 139.6 Penn National Gaming PENN 12.74 15.3 20.4 308.8 288.4 59.5 98.0 116.4 Ameristar Casinos ASCA 7.38 20.7 36.2 796.5 760.3 151.9 (2) 155.7 NA Lakes Gaming LACO 10.00 10.6 53.8 1.5 (52.3) 52.9 NA NA Monarch Casino & Resort MCRI 5.35 9.5 6.8 81.0 74.2 19.7 NA NA Century Casinos CNTY 1.88 14.6 3.3 19.0 15.7 9.6 NA NA Riviera RIV 5.96 3.8 56.4 233.1 176.7 35.9 NA NA Sands Regent SNDS 2.85 6.5 9.4 10.3 0.9 16.7 NA NA President Casinos PREZ 0.44 5.0 12.3 109.0 96.7 24.6 NA NA Blackjack (1) $ 9.78 4.4 $ 2.4 $ 57.0 $ 54.7 $ 22.8 $ 21.1 $ 21.6 Jackpot (1) $ 12.00 4.4
Notes: Names in bold are followed by Robertson Stephens NA - Not Available NM - Not Meaningful A - Actual E - Estimate Source: Bloomberg, First Call, Company Filings, Street Research and Robertson Stephens Research Financial information based on Blackjack management guidance. (1) All EBITDA statistics and Net Debt adjusted for Jackpot's 25% interest in Lodge property. All NI statistics reflect a minority interest calculation. (2) EBITDA figure adjusted to reflect full year results of 12/20/00 acquisition of Station Casino Properties. -------------------------------------------------------------------------------- [LOGO] Robertson Stephens 10 Investment Bankers VALUATION ANALYSIS -------------------------------------------------------------------------------- Precedent Acquisitions Analysis --------------------------------------------------------------------------------
Revenues EBITDA Date Target/ Target Business Aggregate ----------------- ----------------- Annc. Acquiror Description Value LTM NTM LTM NTM -------- ---------------------- -------------------------------------- --------- ----------------- ----------------- 12/5/00 Fitzgerald (1) All assets used in Fitzgeralds' $ 149.0 $ 193.4 $ 200.9 $ 26.2 $ 28.2 Properties / Majestic Investor, operations in Las Vegas Nevada, LLC Black Hawk Colorado, and Tunica Mississippi as well as Fitzgeralds' interest in The Freemont Street Experience LLC 10/18/00 Missouri Riverboat Riverboat Casinos of Station Casinos $ 475.0 N/A N/A $ 89.6 N/A Properties / Ameristar Casinos 7/31/00 CRC Holdings & Operator of gaming facilities; Casino $ 160.3 N/A N/A $ 30.6 N/A Louisiana Cruises / Rouge riverboat and Casino Rama Penn National Gaming Inc. 7/20/00 Fiesta Casino Hotel Casino in Las Vegas, NV $ 185.0 N/A N/A $ 24.7 N/A / Station Casinos 7/19/00 Davenport Casino & Riverboat Casino & Hotel in $ 58.2 N/A N/A $ 12.3 N/A Hotel / Isle of Davenport, Iowa Capri Casinos 1/7/00 Gold Dust West / Owns and operates a casino, $ 26.5 N/A N/A $ 5.3 N/A Black Hawk Gaming & restaurant, and motel in Reno, Development Company Nevada 12/10/99 2 Casino Properties / Boomtown-Biloxi and Casino $ 195.0 $ 156.3 $ 158.3 $ 35.3 $ 34.6 Penn National Gaming Magic-Bay St. Louis casino properties 10/6/99 Lady Luck Gaming Owns and operates Riverboat $ 223.0 N/A N/A $ 39.1 N/A Corp. / Isle of Capri Casinos in Natchez and Coahoma, Casinos MS and 50% interest in a casino and hotel in Bettendorf, IA
VALUATION ANALYSIS -------------------------------------------------------------------------------- Precedent Acquisitions Analysis --------------------------------------------------------------------------------
Consideration Premiums Paid as a multiple of: to Market: ------------------------------------------------------- Date Target/ Target Business LTM NTM LTM NTM 1 Day 1 Month Annc. Acquiror Description Revenues Revenues EBITDA EBITDA Before Before -------- ---------------------- ----------------------------------- ------------------ -------------- ------ -------- 12/5/00 Fitzgerald (1) All assets used in Fitzgeralds' 0.8x 0.7x 5.7x 5.3x N/A N/A Properties / Majestic Investor, operations in Las Vegas Nevada, LLC Black Hawk Colorado, and Tunica Mississippi as well as Fitzgeralds' interest in The Freemont Street Experience LLC 10/18/00 Missouri Riverboat Riverboat Casinos of Station Casino N/A N/A 5.3X N/A N/A N/A Properties / Ameristar Casinos 7/31/00 CRC Holdings & Operator of gaming facilities; Casi N/A N/A 5.2X N/A N/A N/A Louisiana Cruises / Rouge riverboat and Casino Rama Penn National Gaming Inc. 7/20/00 Fiesta Casino Hotel Casino in Las Vegas, NV N/A N/A 7.5X N/A N/A N/A / Station Casinos 7/19/00 Davenport Casino & Riverboat Casino & Hotel in N/A N/A 4.7X N/A N/A N/A Hotel / Isle of Davenport, Iowa Capri Casinos 1/7/00 Gold Dust West / Owns and operates a casino, N/A N/A 5.0X N/A N/A N/A Black Hawk Gaming & restaurant, and motel in Reno, Development Company Nevada 12/10/99 2 Casino Properties / Boomtown-Biloxi and Casino 1.2X 1.2X 5.5X 5.6X N/A N/A Penn National Gaming Magic-Bay St. Louis casino properties 10/6/99 Lady Luck Gaming Owns and operates Riverboat N/A N/A 5.7X N/A 47.7% 68.4% Corp. / Isle of Capri Casinos in Natchez and Coahoma, Casinos MS and 50% interest in a casino and hotel in Bettendorf, IA
-------------------------------------------------------------------------------- [LOGO 11 FOR ROBERTSON STEPHENS INVESTMENT BANKERS. VALUATION ANALYSIS -------------------------------------------------------------------------------- Precedent Acquisitions Analysis
--------------------------------------------------------------------------------------------------- Date Target/ Target Business Aggregate Revenues EBITDA -------------- ------------ Annc. Acquiror Description Value LTM NTM LTM NTM -------- ------------------ --------------------------- --------- -------------- ------------ 8/16/99 Players Owner, Developer, and $ 400.8 $315.9 $319.8 $64.6 $72.3 International / Operator of Harrah's casino-based resorts Entertainment 11/1/99 Miss Marquette Riverboat Casino in $ 41.7 $ 32.6 N/A $ 9.0 N/A Riverboat Marquette, Iowa / Lady Luck Gaming 6/28/99 Blue Chip Casino / Riverboat Casino in Michigan $ 255.0 N/A N/A $62.4 N/A Boyd Gaming Corp. City, Indiana ---------------------------------------- Mean Median High Low Stripped Mean ---------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- Consideration Premiums Paid as a multiple of: to Market: -------------------------------------------------------------- Date Target/ Target Business LTM NTM LTM NTM 1 Day 1 Month Annc. Acquiror Description Revenues Revenues EBITDA EBITDA Before Before -------- ------------------ --------------------------- -------- -------- ------ ------ ------- ------ 8/16/99 Players Owner, Developer, and 1.3x 1.3x 6.2x 5.5x 29.5% 22.5% International / Operator of Harrah's casino-based resorts Entertainment 11/1/99 Miss Marquette Riverboat Casino in 1.3x N/A 4.6x N/A N/A N/A Riverboat Marquette, Iowa / Lady Luck Gaming 6/28/99 Blue Chip Casino / Riverboat Casino in Michigan N/A N/A 4.1x N/A N/A N/A Boyd Gaming Corp. City, Indiana -------------------------------------------------------------- 1.1x 1.1x 5.4x 5.5x 38.6% 45.5% 1.3x 1.2x 5.3x 5.5x 38.6% 45.5% 1.3x 1.3x 7.5x 5.6x 47.7% 68.4% 0.8x 0.7 4.1x 5.3x 29.5% 22.5% 1.3x 1.2x 5.3x 5.5x NMF NMF --------------------------------------------------------------
Notes: ------ Sources: Company filings, research reports, news stories, and Bloomberg. (1) Revenue and EBITDA metrics exclude The Freemont Street Experience LLC. -------------------------------------------------------------------------------- [LOGO] Robertson Stephens 12 Investment Bankers VALUATION ANALYSIS 27619 SF ------------------------------------------------------------------------- Discounted Cash Flow Analysis -------------------------------------------------------------------------
Projected FYE 12/31 ------------------------------------------------------------ 2001 2002 2003 2004 2005 -------- -------- -------- -------- -------- Tax Adjusted EBIT (40% Tax Rate, when applicable) (1) $ 9.2 $ 9.4 $ 9.6 $ 9.7 $ 9.9 Plus Depreciation & Amortization 5.7 6.0 6.2 6.5 6.8 Less Increase in Net Working Capital 0.2 0.2 0.2 0.2 0.2 -------- -------- -------- -------- -------- Operating Cash Flow $ 15.1 $ 15.6 $ 16.0 $ 16.5 $ 16.9 Less Capital Expenditures ($7.0) ($5.5) ($5.5) ($5.5) ($5.5) Plus A/T Interest Income 0.0 0.0 0.0 0.0 0.0 -------- -------- -------- -------- -------- Free Cash Flow $ 8.1 $ 10.1 $ 10.5 $ 11.0 $ 11.4 DISCOUNT ASSUMPTIONS EXIT MULTIPLE ASSUMPTIONS Base Discount Rate: 12.0% EBITDA Exit Multiple: 5.0 Incremental Discount Rate: 1.5% Incremental Exit EBITDA Multiple: 0.5 Exit Year 2005 Exit EBITDA: $23.3 Shares Outstanding 4.4 12.0% Discount Rate 13.5% Discount Rate 15.0% Discount Rate EBITDA Multiple 5.0x 5.5x 6.0x 5.0x 5.5x 6.0x 5.0x 5.5x 6.0x --------------------------- -------------------------- ---------------------------- Terminal Value $116.5 $128.1 $139.8 $116.5 $128.1 $139.8 $116.5 $128.1 $139.8 Present Value of Terminal Value 66.1 72.7 79.3 61.8 68.0 74.2 57.9 63.7 69.5 Present Value of Cash Flows 36.2 36.2 36.2 34.8 34.8 34.8 33.5 33.5 33.5 ------ ------ ------ ------ ------ ------ ------ ------ ------ Enterprise Value $102.3 $108.9 $115.5 $ 96.7 $102.9 $109.0 $ 91.5 $ 97.2 $103.0 Excess Cash $ 2.4 $ 2.4 $ 2.4 $ 2.4 $ 2.4 $ 2.4 $ 2.4 $ 2.4 $ 2.4 Long-term Debt 57.0 57.0 57.0 57.0 57.0 57.0 57.0 57.0 57.0 Short-term Debt 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 ------ ------ ------ ------ ------ ------ ------ ------ ------ Implied Equity Value $ 46.9 $ 53.5 $ 60.1 $ 41.2 $ 47.4 $ 53.6 $ 36.0 $ 41.8 $ 47.6 ------ ------ ------ ------ ------ ------ ------ ------ ------ Implied Price per Share $10.58 $12.07 $13.56 $ 9.30 $10.70 $12.10 $ 8.12 $ 9.43 $10.74 ------ ------ ------ ------ ------ ------ ------ ------ ------ Enterprise Value as Multiple of: 2000 EBITDA 4.5x 4.8x 5.1x 4.2x 4.5x 4.8x 4.0x 4.3x 4.5x 2001 EBITDA 4.9x 5.2x 5.5x 4.6x 4.9x 5.2x 4.3x 4.6x 4.9x Implied Exit P/E Multiple 17.7x 19.5x 21.3x 17.7x 19.5x 21.3x 17.7x 19.5x 21.3x Implied Perpetual Growth Rate 2.0% 2.8% 3.5% 3.3% 4.2% 4.9% 4.7% 5.6% 6.3% % in Free Cash Flows 35.4% 33.3% 31.4% 36.0% 33.9% 32.0% 36.7% 34.5% 32.6% % in Terminal Value 64.6% 66.7% 68.6% 64.0% 66.1% 68.0% 63.3% 65.5% 67.4%
Notes: ----- Financial information based on Blackjack management guidance. (1) All EBIT and EBITDA statistics adjusted for Jackpot's 25% interest in Lodge property. -------------------------------------------------------------------------------- [LOGO] Robertson Stephens 13 Investment Bankers -------------------------------------------------------------------------------- III Background of Blackjack -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investments Bankers
BACKGROUND OF Blackjack ------------------------------------------------------------------------------------------------------------------------------------ Company Overview ------------------------------------------------------------------------------------------------------------------------------------ General Information Description Name Blackjack Blackjack is an owner, developer and Headquarters 240 Main Street operator of gaming properties in Black Hawk, CO 80422 Black Hawk, Colorado and Reno, Nevada. Telephone (303) 582-1117 ------------------------------------------------------------------------------------ Management Recent Developments Products & Services Jeffrey P. Jacobs 4.13.01 - Blackjack said it had received a second offer to The Company owns Gilpin Hotel Casino, which Chairman, Chief buy the company, just three weeks after the deadline for the it developed and has operated since 1992. Executive Officer chief executive officer and part-time owner to buy remaining Along with its strategic partner, Jacobs shares had been withdrawn. Entertainment Ltd., the Company developed Stephen R. Roark and co-manages The Lodge Casino at Black President, Chief Hawk, a $74 million hotel/casino/parking Financial Officer, complex completed in the second quarter of Director 3.26.01 - Blackjack said on Monday a deadline for chief executive 1998. The Company owns, through a limited officer part-owner Jeffrey Jacobs to buy remaining shares of the liability company, a 75% interest in The company had been withdrawn. The company said Jacobs, who last Lodge Casino, and affiliates of Jacobs Frank B. Day month offered to buy outstanding shares in the company for $11 a Entertainment own the remaining 25%. Vice President, share, retained the right to withdraw his offer -- previously set Through the operation of the Gilpin Hotel Director for withdrawal on March 26 -- at any time. Casino and the Lodge Casino at Black Hawk, the Company is the largest gaming operator Stanley Politano in Black Hawk, Colorado with approximately Vice President, 1,300 slot machines and 30 table games. The Treasurer, Company also recently purchased the Gold Secretary 3.7.01 - Blackjack announced today that it has been served with a Dust West Casino in Reno, Nevada, which has complaint brought by a person claiming to be a shareholder. The 478 slots and a motel with 108 rooms. lawsuit purports to be a class action and was filed in the Colorado District Court in Gilpin County, Colorado. Blackjack's directors were also named in the action. Analyst Coverage McDonald Investments Dennis I. Forst ------------------------------------------------------------------------------------------------------------------------------------ [LOGO] Robertson Stephens 15 Investment Bankers
BACKGROUND OF Blackjack 27619 SF ------------------------------------------------------------------------- Price Volume Graph ------------------------------------------------------------------------- For the Period 4.14.00 - 4.16.01 [GRAPH] ---------------------------------------------------------------------- Trading Statistics (Price) ---------------------------------------------------------------------- High (04/16/01) $ 9.78 Low (04/19/00) 5.69 Average 6.98 Standard Deviation 0.99 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Moving Averages (Price) ---------------------------------------------------------------------- 20 - Day $ 8.51 30 - Day 8.74 60 - Day 7.91 90 - Day 7.51 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Trading Stats. (000's) (Daily Vol.) ---------------------------------------------------------------------- High (02/27/01) 135 Low (04/28/00) 0 Average 7 Standard Deviation 15 ---------------------------------------------------------------------- Sources: FactSet, Bloomberg. ------------------------------------------------------------------------------ [LOGO] Robertson Stephens Investment Bankers 16 BACKGROUND OF Blackjack 27619 SF ------------------------------------------------------------------------------ Price Volume Graph - Annotations ------------------------------------------------------------------------------ ----------------------------------------------------------------------------- A 5/2/00 - Blackjack announces record results for Q1 '00: net income increased 87 percent to $1.8mm compared to $963,000 for Q1 '99. B 8/7/00 - Blackjack announces results for Q2 '00: net income increased 66 percent in comparison to Q2 '99. C 8/23/00 - Blackjack and Park Place Entertainment submit expressions of interest to buy Claridge Hotel and Casino Corp. D 11/8/00 - Blackjack announces Board has engaged McDonald Investments to evaluate strategic alternatives. E 11/21/00 - Blackjack announces resignation of Antone R. Cook, VP of Gaming Operations. F 1/4/01 - Blackjack announces that the Company has closed on its acquisition of the Gold Dust West Casino in Reno, Nevada for $26.5mm. G 2/27/01 - Blackjack CEO, Jeffrey Jacobs, offers to buy the Company for $11.00 per share. H 2/28/01 - Jeffrey Jacobs, Chairman and CEO of Colonial Holdings, offers to buy Colonial for a cash purchase price of $1.00 per share. I 4/13/01 - Former Blackjack CEO Robert Greenlee submits offer to buy the Company for $12.00 per share. -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investment Bankers 17 BACKGROUND OF Blackjack 27619 SF -------------------------------------------------------------------------------- Price Volume Graph -------------------------------------------------------------------------------- For the Period 5.14.93 (IPO) - 4.16.01 Jackpot Chronology A 12.15.94 - Blackjack signs joint venture agreement with Jackpot to develop casino/hotel/parking structure complex in Black Hawk, Colorado B 11.12.96 - Blackjack sells to Diversified Opportunities Group ("D.O.G"), a Jacobs affiliate, 190,476 shares common stock and issues $1.5 MM convertible note C 1.13.97 Blackjack issues $6.0MM convertible note to D.O.G and cancels original $1.5MM convertible note D 1.22.97 - Amendment to operating agreement related to management fee is made by and among Blackjack, BH Entertainment, and D.O.G E 12.31.97 - D.O.G converts $6.0 MM convertible note into 1,142,857 shares common stock F 2.27.01 - Jackpot makes offer to buy shares not already owned by Jackpot for $11.00 per share ----------------------------------------------------- Trading Statistics (Price) ----------------------------------------------------- High (6/01/93) $ 21.50 Low (5/09/97) $ 4.13 Average $ 8.23 Standard Deviation $ 2.73 ----------------------------------------------------- Moving Averages (Price) ----------------------------------------------------- 30-Day $ 8.99 60-Day $ 8.18 90-Day $ 7.72 180-Day $ 7.18 ----------------------------------------------------- Trading Stats. (000's) (Daily Vol.) ----------------------------------------------------- High (5/14/93) 465 Low (5/31/94) 0 Average 14 Standard Deviation 28 -------------------------------------------------------------------------------- [LOGO] Robertson Stephens 18 Investment Bankers BACKGROUND OF Blackjack --------------------------------------------------------------------------------------------------------------------------------- Historical Trading Performance --------------------------------------------------------------------------------------------------------------------------------- For the Period 4.16.00 - 4.16.01 ---------------------------------------------------------------------------------------------------------------------------------- [GRAPH] $5.50-6.00 $6.00-6.50 $6.50-7.00 $7.00-7.50 $7.50-8.00 $8.00-8.50 $8.50-9.00 $9.00-9.50 $9.50-10.00 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------- Trading Vol as % of Total Vol Traded 3.6% 3.6% 36.3% 20.7% 0.3% 4.5% 4.9% 9.5% 16.6% Cum. Vol as % of Total Vol Traded 3.6% 7.2% 43.5% 64.2% 64.4% 68.9% 73.8% 83.4% 100.0% Trading Vol as % of Total Shares 1.6% 1.6% 16.0% 9.1% 0.1% 2.0% 2.2% 4.2% 7.4% Cumulative Vol as % of Total Shares 1.6% 3.2% 19.2% 28.4% 28.5% 30.4% 32.6% 36.8% 44.2% Trading Vol as % of Float 3.6% 3.6% 36.2% 20.6% 0.3% 4.5% 4.9% 9.5% 16.6% Cumulative Vol as % of Float 3.6% 7.2% 43.3% 63.9% 64.2% 68.7% 73.6% 83.1% 99.7% ---------------------------------------------------------------------------------------------------------------------------------
[LOGO] Robert Stephens Investment Bankers 19 BACKGROUND OF Blackjack -------------------------------------------------------------------------------- Projected Income Statement --------------------------------------------------------------------------------
Actual Projected FYE 12/31 ---------- ------------------------------------------------------------------------------- 2000 2001 2002 2003 2004 2005 2006 ---- ---- ---- ---- ---- ---- ---- Gross Revenue $ 112.7 $ 113.1 $ 115.9 $ 118.8 $ 121.8 $ 124.8 $ 127.9 Less Promotions (7.4) (7.3) (7.5) (7.7) (7.9) (8.1) (8.3) ------- --------------------------------------------------------------------------- Net Revenue 105.2 105.8 108.4 111.1 113.9 116.7 119.6 Expenses (78.7) (81.0) (83.0) (85.1) (87.2) (89.4) (91.6) ------- --------------------------------------------------------------------------- EBITDA 26.5 24.8 25.4 26.0 26.7 27.4 28.0 Less Jacobs' 25% Interest in Lodge (3.7) (3.7) (3.8) (3.9) (4.0) (4.1) (4.2) ------- --------------------------------------------------------------------------- Adjusted EBITDA 22.8 21.1 21.6 22.2 22.7 23.3 23.9 Depreciation (7.1) (4.3) (4.6) (4.8) (5.1) (5.4) (5.7) Amortization of Goodwill 0.0 (1.4) (1.4) (1.4) (1.4) (1.4) (1.4) ------- --------------------------------------------------------------------------- EBIT 19.4 19.1 19.4 19.8 20.2 20.6 21.0 ------- --------------------------------------------------------------------------- Total Interest Expense (4.5) (8.5) (8.3) (7.7) (7.1) (6.4) (5.5) Other Income/(Expenses) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Minority Interest (2.1) (1.8) (2.6) (2.8) (3.0) (3.2) (3.4) ------- --------------------------------------------------------------------------- Pre-tax Income 12.9 8.8 8.6 9.3 10.1 11.0 12.1 Income Taxes 5.2 3.5 3.4 3.7 4.0 4.4 4.8 Tax Rate: 40% ------- --------------------------------------------------------------------------- Net Income $ 7.7 $ 5.3 $ 5.1 $ 5.6 $ 6.1 $ 6.6 $ 7.3 ======= ===========================================================================
Notes: (1) Financial information based on Blackjack management guidance. (2) FY 2000 actual and 2001 projections adjusted to include full year results from Gold Dust West acquisition that closed on 1/4/01. (3) Adjusted EBITDA figures reflect Jackpot's 25% ownership of the Lodge. -------------------------------------------------------------------------------- [LOGO] Robertson Stephens 20 Investment Bankers BACKGROUND OF Blackjack -------------------------------------------------------------------------------- Financial Overview of Blackjack Properties --------------------------------------------------------------------------------
Lodge Actual FYE 12/31 Projected FYE 12/31 ------------------------------------------------------------------------------- 2000 2001 2002 2003 2004 2005 2006 ---- ---- ---- ---- ---- ---- ---- Gross Revenue $ 66.4 $ 68.7 $ 70.5 $ 72.2 $ 74.0 $ 75.9 $ 77.8 --------- -------------------------------------------------------------- Net Revenue 61.9 64.1 65.5 67.2 68.9 70.6 72.3 --------- -------------------------------------------------------------- EBITDA 14.8 14.9 15.1 15.5 15.8 16.2 16.6 Less Jackpot's 25% Interest 3.7 3.7 3.8 3.9 4.0 4.1 4.2 --------- -------------------------------------------------------------- Adjusted EBITDA 11.1 11.2 11.3 11.6 11.9 12.2 12.5 --------- -------------------------------------------------------------- Pre-tax Income 8.3 1.8 10.4 11.1 11.8 12.6 13.5 --------- -------------------------------------------------------------- Net Income $ 8.3 $ 1.8 $ 10.4 $ 11.1 $ 11.8 $ 12.6 $ 13.5 --------- --------------------------------------------------------------
Actual FYE 12/31 Projected FYE 12/31 ------------------------------------------------------------------------------- Gilpin 2000 2001 2002 2003 2004 2005 2006 ---- ---- ---- ---- ---- ---- ---- Gross Revenue $ 26.8 $ 24.9 $ 25.5 $ 26.1 $ 26.8 $ 27.5 $ 28.2 ---------- -------------------------------------------------------------- Net Revenue 24.7 23.0 23.7 24.3 24.9 25.5 26.2 ---------- -------------------------------------------------------------- EBITDA 5.5 5.2 5.5 5.6 5.7 5.9 6.0 ---------- -------------------------------------------------------------- Pre-tax Income 2.9 1.4 3.7 4.0 4.2 4.5 4.8 ---------- -------------------------------------------------------------- Net Income $ 1.9 $ 0.9 $ 2.4 $ 2.6 $ 2.7 $ 2.9 $ 3.1 ---------- --------------------------------------------------------------
Gold Dust West Actual FYE 12/31 Projected FYE 12/31 ------------------------------------------------------------------------------ 2000 2001 2002 2003 2004 2005 2006 ----- ---- ---- ---- ---- ---- ---- Gross Revenue $ 19.5 $ 19.5 $ 19.9 $ 20.4 $ 21.0 $ 21.5 $ 22.0 ---------- -------------------------------------------------------------- Net Revenue 18.6 18.6 18.5 19.0 19.5 20.0 20.5 ---------- -------------------------------------------------------------- EBITDA 6.2 4.7 4.3 4.4 4.5 4.6 4.7 ---------- -------------------------------------------------------------- Pre-tax Income 3.7 0.9 0.4 0.5 0.6 0.7 5.9 ---------- -------------------------------------------------------------- Net Income $ 2.4 $ 0.6 $ 0.2 $ 0.3 $ 0.4 $ 0.5 $ 3.8 ---------- -------------------------------------------------------------- Financial information based on Blackjack management guidance. ----------------------------------------------------------------------------------------------------------------------
21 [LOGO] Robertson Stephens Investment Bankers BACKGROUND OF Blackjack ------------------------------------------------------------------------------- Analysis of Shareholdings -------------------------------------------------------------------------------
Common % of Dilutive Common & % of Common Institutional and 5% Ownership (1) Shares Common Securities Equivalents & Equivalents ---------------------------------- --------- ------ ---------- ----------- ------------- Robert Greenlee 483,113 11.7% - 483,113 10.2% Dimensional Fund Advisors 163,300 4.0% - 163,300 3.4% Axa Financial 77,400 1.9% - 77,400 1.6% Legg Mason 54,600 1.3% - 54,600 1.2% Vanguard Group 29,400 0.7% - 29,400 0.6% Loeb Arbitrage Management 25,900 0.6% - 25,900 0.5% David L. Babson & Co. 8,000 0.2% - 8,000 0.2% --------- ------ ---------- ----------- ------------- Total Institutional Ownership 841,713 20.4% - 841,713 17.7% Insiders (2) ------------ Jeffrey Jacobs (3) 1,333,333 32.3% 85,000 1,418,333 29.9% Frank Day 476,922 11.6% 20,000 496,922 10.5% Stephen Roark 28,571 0.7% 182,500 211,071 4.5% Robert Hughes 1,701 0.0% 15,000 16,701 0.4% J. Patrick McDuff 1,513 0.0% 13,250 14,763 0.3% Timothy Knudsen 1,102 0.0% 1,000 2,102 0.0% Stanley Politano 619 0.0% 75,000 75,619 1.6% Stephen Owendoff, Esq. 419 0.0% - 419 0.0% --------- ------ ---------- ----------- ------------- Total Insider Ownership 1,844,180 44.7% 391,750 2,235,930 47.1% Total Other Ownership 1,440,864 34.9% 224,300 1,665,164 35.1% --------- ------ ---------- ----------- ------------- Total Outstanding 4,126,757 (4) 100.0% 616,050 (5) 4,742,807 100.0% ========= ====== ========== =========== =============
Notes: ----- (1) Source: CDA Spectrum as of 3/31/01 and 10K dated 12/31/00. (2) Source: Blackjack 10K dated 12/31/00. (3) Per Blackjack 10K dated 12/31/00, shares are held by Diversified Opportunities Group, Ltd., an affiliate of Mr. Jacobs', and are therefore deemed beneficially owned by him. (4) Source: Blackjack 10K dated 12/31/00. (5) Source: Blackjack 10K dated 12/31/00. Total options outstanding. -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investment Bankers 22 BACKGROUND OF Blackjack 27619 SF -------------------------------------------------------------------------------- Background of Directors and Officers --------------------------------------------------------------------------------
Name Position Background -------------------- ------------------------ -------------------------------------------------------------------------------- Jeffrey P. Jacobs Chairman, Chief Jeffrey P. Jacobs, from 1995 to present, served as Chairman and Chief Executive Executive Officer Officer of Jacobs Entertainment, Inc., a company based in Cleveland, Ohio that has investments in gaming companies and ventures, including the Company and Colonial Downs Holdings, Inc., which operates a horse-racing track and satellite wagering facilities. From 1975 to present, he has also served as President and Chief Executive Officer of Jacobs Investments, Inc., a company engaged in the development, construction and operation of residential and commercial real estate and entertainment projects in Ohio. Mr. Jacobs also served in the Ohio House of Representatives from 1982 until 1986. He is also Chairman and Chief Executive Officer of Colonial Downs Holdings, Inc. which is a reporting company under the Securities Exchange Act of 1934. Mr. Jacobs became the Company's Chief Executive Officer and Co-Chairman of the Company on November 12, 1996 and became Chairman on December 31, 1997. Stephen R. Roark President, Chief Stephen R. Roark, has been employed as Chief Financial Officer since August Financial Officer, 1993. Mr. Roark became a director in 1994. He was elected as President in Director September 1995. Prior to that time he has been an independent consultant in the Denver area rendering financial and accounting assistance to companies in the public marketplace. Mr. Roark has 17 years of public accounting experience having served as a partner with a large local accounting firm and as a partner with a national accounting firm. Mr. Roark was with Hanifen, Imhoff and Prudential Securities, Inc. for three years and is a member of the American Institute of Certified Public Accountants and the Colorado Society of Certified Public Accountants. Mr. Roark obtained his B.S.B.A. in Accounting from the University of Denver in 1973. Frank B. Day * Vice President, Frank B. Day, Chairman of the Board, Chief Executive Officer and President of Director Rock Bottom Restaurants, Inc., a publicly traded company, has been employed since January 1980 as President of Concept Restaurants, Inc., and Managing General Partner of the Hotel Boulderado in Boulder, Colorado since August 1982. Concept Restaurants, Inc. owns or operates twelve full service restaurants in Colorado front range communities. From 1959 to present, Mr. Day has owned and operated food service and hospitality facilities in Illinois, Michigan, Wisconsin, and Colorado. He attended Harvard University from 1950 to 1956 and received B.A. and M.B.A. degrees. Mr. Day is also an active real estate investor and is active in many civic and nonprofit organizations, having served as a director of the Boulder Chamber of Commerce (September 1988 to September 1991) and Downtown Boulder, Inc. (from June 1987 to June 1990). Mr. Day has been a vice president and a director since 1992. Stanley Politano Vice President, Stanley Politano, has been Vice President since August 1994 and was a former Treasurer, Secretary director. He was appointed Secretary and Treasurer in April 1998. He received his B.S. degree in Business, majoring in finance, from the University of Colorado in 1972. He has 22 years of experience in the securities industry, working in both retail and wholesale capacities. He has worked for Rauscher Pierce Securities Corporation and Prudential Securities, Inc. and was a vice president with E.F. Hutton & Company, Inc. and Hanifen Imhoff Securities Corporation. He has served as Treasurer for Mission Corps International, a non- profit organization.
* Indicates member of Special Committee -------------------------------------------------------------------------------- [LOGO] Robertson Stephens 23 Investment Bankers
BACKGROUND OF Blackjack -------------------------------------------------------------------------------- Background of Directors and Officers -------------------------------------------------------------------------------- Name Position Background ------ ---------- ------------ Robert H. Hughes Director Robert H. Hughes, served as Chief Financial Officer of Jacobs Investments, Inc. from 1993 until May 1999 when he retired. Mr. Hughes was a partner in charge of the audit department of the Cleveland office of the accounting firm of Deloitte & Touche LLP until his retirement in 1991. Mr. Hughes is a certified public accountant (retired). Mr. Hughes serves as a member of the Board of Directors of Colonial Downs Holdings, Inc., a reporting company under the Securities Exchange Act of 1934. Mr. Hughes has been a director since November 12, 1996. Timothy Knudsen * Director Timothy Knudsen, has been associated with Knudsen, Gardner & Howe, a Cleveland, Ohio based marketing communications agency for 21 years. He was elected President of the agency in 1984. Mr. Knudsen holds a B.S. degree in Marketing from Dyke Business College and has studied toward an advanced degree at Cleveland State University. Mr. Knudsen was elected as a director in February, 1998. J. Patrick McDuff * Director J. Patrick McDuff, has been the Northern Region President for Vectra Bank Colorado since October 1996. Prior to assuming those duties he was President, Chief Executive Officer and director of one of Vectra's subsidiary banks from July 1987 through October 1996. From 1972 through July 1987, Mr. McDuff worked for IntraWest Bank of Boulder, ending his employment as Senior Vice President and Senior Loan Officer. He attended the University of Arkansas from 1966 to 1972 and received a B.S.B.A. degree in Finance and Commercial Banking. Mr. McDuff is also active in many civic and non-profit organizations, having served as a director of Boulder Center Y.M.C.A. (from January 1987 to December 1992), Boulder Valley Rotary Club (from April 1985 to June 1988) and Longs Peak Council of the Boy Scouts of America (from January 1991 to March 1993). Mr. McDuff's employer, Vectra Bank Colorado, is a wholly owned subsidiary of Zions Bancorporation, a reporting company under the Securities Exchange Act of 1934. Mr. McDuff became a director in 1994.
* Indicates member of Special Committee -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investment Bankers 24 -------------------------------------------------------------------------------- APPENDIX -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investment Bankers APPENDIX
----------------------------------------------------------------------------------------------------------------------------------- Premiums Paid Analysis - Public to Public, October 2000 to Present, US Targets ----------------------------------------------------------------------------------------------------------------------------------- Premiums Paid ---------------------------- Date Transaction Announced Target Acquiror Value One Day Prior 4 Weeks Prior -------------------------------------------------------------------------------------------------------------------------- 10/02/00 Crescendo Pharmaceuticals Corp ALZA Corp $98.0 (1.1%) (2.3%) 10/03/00 Zapme Corp Gilat Satellite Networks Ltd 53.4 28.0 6.1 10/04/00 Integ Inc Inverness Medical Technology 55.8 112.3 216.4 10/11/00 BT Financial Corp BT Financial Corp (Johnstown, PA) 33.7 9.9 9.1 (Johnstown, PA) 10/13/00 Microwave Power Devices Inc LM Ericsson Telefon AB 95.1 45.0 16.0 10/17/00 JPS Packaging Co Pechiney SA 45.5 69.9 146.6 10/19/00 First Tennessee National Corp First Tennessee National Corp 96.6 0 (3.4) 10/27/00 SeraNova Inc Silverline Technologies Ltd 97.0 25.2 5.8 10/30/00 Chesapeake Biological Labs Inc Cangene Corp 36.5 8.2 4.4 11/03/00 Jade Financial Corp PSB Bancorp (Philadelphia, PA) 25.4 0.2 0.1 11/03/00 Southwest Securities Group Inc Southwest Securities Group Inc 27.9 (0.0) 10.6 11/03/00 Timken Co Timken Co 58.0 0 5.9 11/03/00 Getty Petroleum Marketing Inc LUKoil Holdings 71.1 45.5 33.3 11/06/00 kforce.com Inc kforce.com Inc 55.0 23.1 81.4 11/06/00 Equinox Systems Inc Avocent Corp 56.9 39.3 73.3 11/07/00 ShowCase Corp SPSS Inc 97.5 49.7 33.2 11/08/00 Pro-Dex Inc DENTSPLY International Inc 29.2 21.1 64.7 11/09/00 Willis Lease Finance Corp SAirGroup Holding AG 28.6 101.5 214.3 11/09/00 Metro One Telecommunications Sonera Corp 68.0 10.6 36.0 11/16/00 Cendant Corp Liberty Media Group (AT&T Corp) 50.6 12.8 26.6 11/22/00 CBRL Group Inc CBRL Group Inc 42.4 0 43.0 11/22/00 Varian Semiconductor Equipment Varian Semiconductor Equipment 45.0 0 7.2 12/18/00 Citizens Community Bancorp Inc FNB Corp, Hermitage, PA 38.0 97.5 49.8 12/19/00 Loislaw.com Inc Wolters Kluwer NV 92.9 190.3 298.1 12/22/00 Southern Mineral Corp PetroCorp Inc 85.0 33.4 30.8 12/28/00 Staten Island Bancorp Inc, NY Staten Island Bancorp Inc, NY 36.7 0 10.2 01/08/01 Prime Response Inc Chordiant Software Inc 33.0 17.2 3.2 01/17/01 Peoples BancTrust (Selma, AL) South Alabama Bancorp, AL 60.8 0.5 (6.4) 01/18/01 Intercontinental Life Corp Financial Industries Corp 48.6 4.9 25.3 01/25/01 Viad Corp Viad Corp 68.6 0 (4.4) 02/05/01 Women.com Networks iVillage Inc 25.9 (20.9) 24.3 02/07/01 American Financial Holdings American Financial Holdings 26.0 (0.0) (4.2) 02/07/01 New York Community Bancorp Inc New York Community Bancorp Inc 39.0 0 12.0 02/09/01 Men's Wearhouse Inc Men's Wearhouse Inc 53.3 3.2 (2.9) 02/16/01 Capstead Mortgage Corporation Capstead Mortgage Corporation 63.8 (0.1) 2.0 02/22/01 Oshman's Sporting Goods Inc Gart Sports Co 76.1 (35.3) (35.5) 02/26/01 Fourth Shift Corp AremisSoft Corp 40.0 64.4 111.4 03/09/01 Barringer Technologies Inc Smiths Group PLC 81.7 10.5 11.2 03/20/01 IDT Corp AT&T Corp 75.0 64.4 72.4 03/22/01 Saks Inc Saks Inc 65.1 0 14.2 03/30/01 Community Financial (Olney, IL) First Financial (Terre Haute, IN) 33.2 27.7 25.0 ----------------------------------------- MEAN 32.5% 41.0% MEDIAN 21.1% 14.7% -----------------------------------------
Source: SDC Platinum -------------------------------------------------------------------------------- [LOGO] Robertson Stephens 26 Investment Bankers APPENDIX 27619 SF -------------------------------------------------------------------------------- Premiums Paid Analysis - Selected Going Private Transactions --------------------------------------------------------------------------------
Premiums Paid ---------------------------------- Date Transaction Announced Target Acquiror Value One Day Prior 4 Weeks Prior -------------------------------------------------------------------------------------------------------------------------------- 01/21/1998 Thermadyne Holdings Corp DLJ Merchant Banking Partners II $790.0 19.5% 18.5% 02/03/1999 St John Knits Inc Vestar Capital Partners 513.8 42.9 50.0 05/17/1999 CORT Business Services Corp Brook Furniture Rental Inc 474.5 67.2 69.1 11/08/1999 Autocam Corp Aurora Capital Partners LP 123.3 44.2 14.9 11/15/1999 Kroll-O'Gara Co Blackstone Capital 319.0 8.0 34.0 12/09/1999 Gleason Corp Vestar Capital Partners 320.5 27.8 31.0 12/27/1999 VDI Multimedia Bain Capital 139.4 22.4 7.6 ------------------------------------------------ MEAN 33.1% 32.2% MEDIAN 27.8% 31.0% ------------------------------------------------
Source: SDC Platinum -------------------------------------------------------------------------------- [LOGO] Robertson Stephens 27 Investment Bankers APPENDIX 27619 SF ------------------------------------------------------------------------------- Weighted Average Cost of Capital -------------------------------------------------------------------------------
Equity Market Equity/ Debt/ Unlevered Comparable Companies Beta (1) Value Debt Value Value Asset Beta -------------------- -------- ------- ---- ----- ----- ---------- 4.16.01 Harrah's Entertainment 0.63 $ 3,490.0 $ 3,181.8 52.31% 47.69% 0.33 Mandalay Resort Group 0.82 $ 1,640.0 $ 2,704.3 37.75% 62.25% 0.31 MGM Mirage 0.89 $ 3,890.0 $ 710.0 84.57% 15.43% 0.75 Park Place Entertainment 0.75 $ 3,010.0 $ 5,398.0 35.80% 64.20% 0.27 ----------------------------------------------------------------------------------------------- Average 0.77 $ 3007.5 $ 2998.5 52.61% 47.39% 0.42 -----------------------------------------------------------------------------------------------
Risk Free Market Risk Avg. Cost Capital Structure Levered Cost of --------------------- Rate (2) Premium (3) of Debt Debt/AV Equity/AV Beta (4) Equity (5) WACC (6) -------- ----------- ------- ------- --------- -------- ---------- -------- 5.30% 8.00% 8.00% 0.0% 100.0% 0.42 11.22% 11.22% 5.30% 8.00% 8.00% 20.0% 80.0% 0.52 12.05% 10.60% 5.30% 8.00% 8.00% 40.0% 60.0% 0.69 13.43% 9.98% 5.30% 8.00% 8.00% 60.0% 40.0% 1.04 16.20% 9.36% 5.30% 8.00% 8.00% 80.0% 20.0% 2.08 24.50% 8.74% Tax Rate: 40.0% Size Premium 2.60%
Notes: ----- (1) Projected Betas as of 4/9/01 from Bloomberg. (2) Yield of US Govt. 30-Year bond as of 4/9/01. (3) "Stocks, Bonds, Bills and Inflation -- 1999 Yearbook" - Ibbotson Associates. (4) Levered Beta = [Mean Unlevered Asset Beta * (1+ debt/equity)] (5) Cost of Equity = Risk Free Rate + (Levered Beta * Market Risk Premium) +Size Premium (6) WACC = Cost of Debt * (Debt/AV) * (1-Tax Rate) + Cost of Equity * (Equity/AV) -------------------------------------------------------------------------------- [LOGO] Robertson Stephens Investment Bankers 28 APPENDIX -------------------------------------------------------------------------------- Jackpot's Other Transactions -------------------------------------------------------------------------------- On July 18, 2000 Jalou, an affiliate of Jackpot formed for the purpose of the acquisition, entered into option agreements to acquire several Louisiana video poker truckstops, some of which are existing and some of which are under development. Additionally, Jalou entered into a proposed management contract with Colonial Downs Holdings through which Colonial Downs will manage the truckstops for a fee based on total revenue and EBITDA. As of April 2001, three truckstops have been acquired and Jalou maintains the option to acquire five others. Amite Truck Plaza (1)(2) --------------------------------------------------------------------------- Contains 50 gaming machines, a 50 seat restaurant, a convenience store and a fuel center. Revenue $ 11,000,000 EBITDA $ 4,600,000 Win/Device/Day $ 425 Amite Forest Gold (1)(2) --------------------------------------------------------------------------- Provides for excess gaming demand at the adjacent Amite Truck Plaza. Contains 3 video poker machines and a restaurant. Houma Truck Plaza (1)(2) --------------------------------------------------------------------------- Contains 50 gaming machines, a 50 seat restaurant, a convenience store and a fuel center. Revenue $ 4,400,000 EBITDA $ 900,000 Win/Device/Day $ 196 Winner's Choice (1)(2) --------------------------------------------------------------------------- Contains 50 gaming machines, a 50 seat restaurant, a convenience store, a billiards room and a fuel center. Revenue $ 6,500,000 EBITDA $ 1,000,000 Win/Device/Day $ 130 Cash's Casino (1)(2)(3) --------------------------------------------------------------------------- Contains 50 gaming machines, a 50 seat restaurant, a convenience store and a fuel center. Revenue $ 1,700,000 EBITDA $ 1,700,000 Win/Device/Day $ 353 Notes: ----- (1) All Revenue and EBITDA figures reflect twelve month period ended September 30, 2000. (2) All Win/Device/Day figures reflect quarter ended September 30, 2000. (3) At Cash's Casino, Jalou will own a management contract entitling the Company to 40% of the video poker revenue after gaming tax. On February 28, 2001 Jackpot, the CEO and Chairman of Colonial Holdings, Inc., proposed to purchase all shares of the Company that he does not currently control for $1.00 cash per share. Colonial Holdings posesses the state of Virginia's only parimutel racetrack license. Total Colonial Holdings Shares Outstanding --------------------------------------------------------------------------- 5,025,239 Class A 2,242,500 Class B ---------- 7,267,739 Total shares Jackpot's Shares of Colonial Holdings --------------------------------------------------------------------------- 1,155,000 Class A (1) 2,010,000 Class B ---------- 3,165,000 Total Jackpot shares 43.5% Jackpot stock ownership Jackpot's Offer (2/28/01) --------------------------------------------------------------------------- 4,102,739 Shares to be purchased in proposed transaction $ 1.00 Cash offer per share ----------- $ 4,102,739 Equity value of proposed transaction $26,715,000 Net Debt (2) ---------- $30,817,739 Aggregate value of proposed transaction 1.1x Aggregate value / LTM Revenue (3) 20.1x Aggregate value / LTM EBITDA (4) Notes: ----- Source: Colonial Holdings 10K dated 12/31/00 and press release dated 2/28/01. (1) Class A shares figure does not include 20,000 stock options. (2) Net Debt calculated as (Debt-Cash). Debt figure includes $25,737,937 credit facility payable to CD Entertainment, a Jackpot affiliate. (3) Based on 2000 revenue figure of $29,202,000. (4) Based on 2000 EBITDA figure of $1,530,000. ________________________________________________________________________________ [LOGO] Robertson Stephens 29 Investment Bankers