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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

Commission file number: 0-26518

FITZGERALDS GAMING CORPORATION
(Exact name of registrant as specified in its charter)

Nevada		88-0329170
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

3097 E. Warm Springs Rd. Suite 100, Las Vegas, NV 89120
(Address of principal executive offices) (Zip Code)

(702) 940-2000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Shares outstanding of each of the registrant’s classes of common stock as of August 13, 2002

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FITZGERALDS GAMING CORPORATION (DEBTOR-IN-POSSESSION)

FORM 10-Q

INDEX

PART I

FINANCIAL INFORMATION

Item 1

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited Condensed Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001

4

Unaudited Condensed Consolidated Statements of Operations for the Quarters and Two Quarters Ended June 30, 2002 and July 1, 2001

6

Unaudited Condensed Consolidated Statements of Cash Flows for the Two Quarters Ended June 30, 2002 and July 1, 2001

7

Unaudited Notes to the Condensed Consolidated Financial Statements

8

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3

Quantitative and Qualitative Disclosures About Market Risk

28

PART II

OTHER INFORMATION

29

SIGNATURES

33

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PART I

FINANCIAL INFORMATION

Item 1

Condensed Consolidated Financial Statements

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FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Balance Sheets
June 30, 2002 and December 31, 2001

(continued)

See Unaudited Notes to the Condensed Consolidated Financial Statements

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FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Balance Sheets (continued)
June 30, 2002 and December 31, 2001

See Unaudited Notes to the Condensed Consolidated Financial Statements

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FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Statements of Operations
For the Quarters and Two Quarters Ended June 30, 2002 and July 1, 2001

See Unaudited Notes to the Condensed Consolidated Financial Statements

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FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Statements of Cash Flows
For the Two Quarters Ended June 30, 2002 and July 1, 2001

See Unaudited Notes to the Condensed Consolidated Financial Statements

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Fitzgeralds Gaming Corporation (Debtor-In-Possession)

Unaudited Notes to the Condensed Consolidated Financial Statements

1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements of Fitzgeralds Gaming Corporation (the “Company”) (Debtor-In-Possession) have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the interim condensed consolidated financial statements have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2001. The results of operations for the two quarters ended June 30, 2002 are not necessarily indicative of the results to be expected for the year ending December 31, 2002 and, because of the sale of three of the Company’s operating properties on December 6, 2001, are not comparable to prior periods.

The Company utilizes a “4-4-5” (weeks) financial reporting period which maintains a December 31 year-end. This method of reporting results in 13 weeks in each quarterly accounting period. The first and fourth accounting periods will have a fluctuating number of days resulting from the maintenance of a December 31 year end, whereas the second and third periods will have the same number of days each year.

Certain amounts in the 2001 condensed consolidated financial statements have been reclassified to conform to the 2002 method of presentation.

2. PETITION FOR RELIEF UNDER CHAPTER 11

General

On December 5, 2000, the Company commenced cases under Chapter 11 of the Bankruptcy Code (collectively, the “Bankruptcy Cases”) in the United States Bankruptcy Court for the Northern District of Nevada (the “Bankruptcy Court”). The Bankruptcy Cases are jointly administered and coordinated under Case No. BK-N-00-33467 GWZ. The Bankruptcy Cases were commenced in accordance with an Agreement Regarding Pre-Negotiated Restructuring, dated as of December 1, 2000 (the “Restructuring Agreement”), with the holders (the “Consenting Noteholders”) of a majority in interest of the Company’s 12.25% Senior Secured Notes (the “Notes”) issued under an indenture dated December 30, 1997 (the “Indenture”).

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The Restructuring Agreement contemplates an expeditious and orderly sale of all of the Company’s operating assets and properties as going concerns.

The Restructuring Agreement provides a vehicle for liquidating the assets of the Company in the Bankruptcy Court through Chapter 11 of the Bankruptcy Code. Upon execution of the Restructuring Agreement and before commencement of the Bankruptcy Cases, the Company distributed $13.0 million in Excess Cash (as that term is defined in the Restructuring Agreement) to the trustee under the Indenture (the “Indenture Trustee”) to be applied to unpaid and accrued Indenture Trustee’s fees and expenses incurred and as partial payment of accrued and unpaid interest and principal as provided in the Indenture.

Pursuant to the Restructuring Agreement and an order entered by the Bankruptcy Court, the Company was required to distribute unrestricted cash (which includes cash in net assets held for sale) in excess of $24.8 million to holders of its Notes within 45 days after the end of each quarter. In May, August and November 2001, the Company distributed $1.8 million, $7.7 million and $7.2 million, respectively, in Excess Cash to the Indenture Trustee to be applied to accrued and unpaid interest and principal as provided in the Indenture. On December 6, 2001, the Company sold substantially all of the assets and related liabilities of its Fitzgeralds Las Vegas, Fitzgeralds Mississippi and Fitzgeralds Black Hawk properties to Majestic Investors Holding, LLC (“Majestic”). At that time, approximately $133.3 million was distributed to the Indenture Trustee from the proceeds of the December 6, 2001 sale to Majestic. The Company and the Informal Committee are currently engaged in discussions to establish a new threshold for cash reserves subsequent to the December 6, 2001 sale to Majestic. As part of the Restructuring Agreement, the Consenting Noteholders and Indenture Trustee have agreed to forbear from exercising certain of their rights otherwise allowable under the Notes and the Indenture.

As of the commencement of the Bankruptcy Cases, the parties to the Restructuring Agreement each concluded that the fair market value of the Company’s real and personal property given as collateral for the Notes was less than the total outstanding principal and interest due under the Notes, and that the fair market value of the real and personal property not securing the Notes was less than the amount of the unsecured deficiency claim of the holders of the Notes. As a result, it was not then and is still not expected that any distribution will be made to holders of the existing capital stock of the Company. The Restructuring Agreement requires that as part of the liquidation process, all of the existing common stock and preferred stock of the Company is to be canceled and extinguished without payment therefor.

In accordance with the Restructuring Agreement, an auction sale was to be scheduled for no later than June 15, 2001 in the Bankruptcy Court with respect to those operating assets and properties not sold pursuant to negotiated sales agreements such as the purchase agreement with Majestic, as referred to below. With the consent of the Consenting Noteholders, the auction sale was not conducted and the Company and the Consenting Noteholders are preparing an amendment to the Restructuring Agreement to conduct the auction sale of the one remaining operating asset, Fitzgeralds Reno, during 2002, although no assurance can be

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given as to if or when the Fitzgeralds Reno property will be sold or as to the amount that will be realized.

Under the terms of the Restructuring Agreement, upon the closing of each sale of the Company’s assets, the net proceeds of the collateral for the Notes, less certain reserves for management incentives and other liabilities, must be distributed to the Indenture Trustee for the benefit of and distribution to the holders of the Notes in accordance with the Indenture. All of the Company’s assets remaining after such sales, including any notes received as part of the consideration for the sales of the Company’s assets and payment of remaining liabilities of the Company, will be transferred to a liquidating trust created for the benefit of the holders of the Notes and others under a plan of reorganization to be consistent with the terms of the Restructuring Agreement.

In light of the regulatory approvals needed to accomplish the liquidations, and recognizing the need to retain senior management in order to insure continuity and compliance with all gaming regulations and licensing requirements in the Company’s operations during the process, the Restructuring Agreement required implementation of a senior management incentive and retention program. After obtaining Bankruptcy Court approval in December 2000, this program was adopted by the Company in order to retain Philip D. Griffith, Michael E. McPherson, Max L. Page and Paul H. Manske, (the “Senior Management”) each an officer, director and/or senior executive of the Company, as key executives and to compensate them for their continued employment with the Company during the process.

For further information concerning the sale to Majestic, please refer to our Current Report on Form 8-K, dated December 6, 2001, as filed with the Securities and Exchange Commission.

Reorganization Items

For the quarter and the two quarters ended June 30, 2002 and July 1, 2001, the Company incurred the following expenses subsequent to the filing of the Bankruptcy Cases:

Liabilities Subject to Compromise

At June 30, 2002 and December 31, 2001 liabilities subject to compromise consisted of the following:

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3. RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 141 (“SFAS 141”), Business Combinations, which requires the purchase method of accounting for business combinations initiated after June 30, 2001 and prohibits the use of the pooling-of-interest method. Adoption of this statement did not have a material impact on the Company’s financial condition or results of operation.

In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 142 (“SFAS 142”) Goodwill and Other Intangible Assets, which is effective January 1, 2002. SFAS 142 requires that goodwill and other intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually. The Company discontinued recording the amortization of its goodwill included in net assets held for sale subsequent to filing the Bankruptcy Cases. As of December 6, 2001, the Company wrote-down $13.0 million of its goodwill due to the sale of Fitzgeralds Black Hawk to Majestic.

Also in June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations, which is effective for financial statements issued for fiscal years beginning after June 15, 2002. This statement establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. Adoption of this statement did not have a material impact on the Company’s financial condition or results of operation.

In August 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which is effective for financial statements issued for fiscal years beginning after December 15, 2001, and the interim periods within those fiscal years. This statement addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of, and supersedes Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and For Long-Lived Assets to be Disposed of. Adoption of this statement did not have a material impact on the Company’s financial condition or results of operation.

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4. NET ASSETS HELD FOR SALE

In December 2000, the Company entered into the Restructuring Agreement with the Consenting Noteholders. The Restructuring Agreement contemplates an expeditious and orderly sale of all of the Company’s operating assets and properties. In accordance with the provisions of the Restructuring Agreement, on December 6, 2001 substantially all the assets and liabilities of the Fitzgeralds Las Vegas, Fitzgeralds Mississippi and Fitzgeralds Black Hawk properties were sold to Majestic. The purchase price for the Assets was $149.0 million, subject to certain adjustments and holdbacks specified in the purchase agreement with Majestic, which resulted in net proceeds prior to distributions of approximately $146.9 million. The Company is actively seeking a buyer for the Fitzgeralds Reno property.

As of June 30, 2002 and December 31, 2001 assets included in net assets held for sale of $12.2 million and $12.0 million, respectively consist mainly of property and equipment transferable upon the sale of Fitzgeralds Reno.

5. LONG TERM DEBT

The Notes bear interest at a fixed annual rate of 12.25% payable on June 15 and December 15 of each year, commencing June 15, 1998. The Notes stated maturity date is on December 15, 2004. The Company has not paid the regularly scheduled interest payments of $12.5 million that were due and payable June 15, 1999. Under the Note Indenture, an Event of Default occurred on July 15, 1999, and continued until the Company filed the Bankruptcy Cases. Failure to make the scheduled interest payment on June 15, 1999 resulted in a 1.0% increase in the interest rate to 13.25%, effective June 16, 1999 until the Company filed the Bankruptcy Cases. Upon execution of the Restructuring Agreement and before commencement of the Bankruptcy Cases, the Company distributed $13.0 million in Excess Cash (as that term is defined in the Restructuring Agreement) to the Indenture Trustee to be applied to unpaid and accrued Indenture Trustee’s fees and expenses incurred and as partial payment of accrued and unpaid interest as provided in the Indenture. Pursuant to the Restructuring Agreement and an order entered by the Bankruptcy Court, the Company was required to distribute unrestricted cash (which includes cash in net assets held for sale) in excess of $24.8 million to holders of its Notes within 45 days after the end of each quarter. In May, August and November 2001, the Company distributed $1.8 million, $7.7 million and $7.2 million, respectively, in Excess Cash to the Indenture Trustee to be applied to accrued and unpaid interest and principal as provided in the Indenture. The Company and the Informal Committee are currently engaged in discussions to establish a new threshold for cash reserves subsequent to the December 6, 2001 sale of Fitzgeralds Las Vegas, Fitzgeralds Mississippi and Fitzgeralds Black Hawk to Majestic. On December 6, 2001, approximately $133.3 million was distributed to the Indenture Trustee from the proceeds of the December 6, 2001 sale to Majestic.

7. SEGMENT INFORMATION

The Company is a gaming holding company that until December 6, 2001 owned and operated four Fitzgeralds-brand casino-hotels, in downtown Las Vegas, Nevada, Reno, Nevada,

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Tunica, Mississippi, and Black Hawk, Colorado. Until the Company sold substantially all of the assets and related liabilities of its Fitzgeralds Las Vegas, Fitzgeralds Mississippi and Fitzgeralds Black Hawk properties to Majestic on December 6, 2001, the Company identified its business in four segments based on geographic location. The Company marketed, prior to December 6, 2001, in each of its segments, and currently markets Fitzgeralds Reno, primarily to middle-market customers, emphasizing its Fitzgeralds brand and its “Fitzgeralds Irish Luck” theme. The major products offered prior to December 6, 2001, in each segment were and currently offered at Fitzgeralds Reno are: casino and hotel (except for Fitzgeralds Black Hawk) and food and beverage.

The accounting policies of each business segment were, and in the case of Fitzgeralds Reno, are the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2001. There are minimal inter-segment sales. The Company continues to evaluate its business segment performance based on the Company’s earnings before interest, income taxes, depreciation and amortization (“EBITDA”). The Company has not changed its basis of segmentation from the year ended December 31, 2001.

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Reconciliation of total business segment operating income to consolidated net income (loss) before income tax:

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Reconciliation of total business segment operating income to consolidated net income (loss) before income tax:

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Item 2

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. The following discussion should be read in conjunction with, and is qualified in its entirety by, the Condensed Consolidated Financial Statements and the Notes thereto included in this report. The following discussion and other material in this Quarterly Report on Form 10-Q contain certain forward-looking statements. The forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company, and upon assumptions with respect to future business decisions which are subject to change. Risks to which the Company is subject include, but are not necessarily limited to, its efforts to restructure its indebtedness and capital structure, the ability to successfully sell its assets and the successful conclusion of the Bankruptcy Cases, competition, high level of indebtedness, the need for additional financing, development and construction risks, market fluctuations, gaming, liquor and other regulatory matters, geographic concentration in Reno since December 6, 2001, limited operations since December 6, 2001, the uncertainties and possible disruption as a result of the ReTrac Project, the proliferation of Indian gaming facilities in California and elsewhere, taxation, the availability and retention of key management, environmental matters and other factors discussed in the Company’s other filings with the Securities and Exchange Commission. Accordingly, actual results could differ materially from those contemplated by such forward-looking statements.

General

Fitzgeralds Gaming Corporation (the “Company”) is a gaming holding company that until December 6, 2001 owned and operated four Fitzgeralds-brand casino-hotels, in downtown Las Vegas, Nevada (“Fitzgeralds Las Vegas”), Reno, Nevada (“Fitzgeralds Reno”), Tunica, Mississippi (“Fitzgeralds Tunica”), and Black Hawk, Colorado (“Fitzgeralds Black Hawk”), collectively referred to as (the “Operating Properties”). On December 6, 2001, the Company sold substantially all of the assets and related liabilities of its Fitzgeralds Las Vegas, Fitzgeralds Tunica and Fitzgeralds Black Hawk properties to Majestic and currently has only one Operating Property — Fitzgeralds Reno.

The Company currently conducts substantially all of its business through wholly owned subsidiaries: Fitzgeralds Reno, Inc. (“FRI”); Fitzgeralds South, Inc. (“FSI”); and Fitzgeralds Incorporated (“FI”). FRI directly owns and operates Fitzgeralds Reno; FSI owns the residual assets and liabilities of Fitzgeralds Las Vegas (“FLVI”) and Fitzgeralds Tunica (“FMI”) through wholly owned subsidiaries; and FI owns the residual assets and liabilities of Fitzgeralds Black

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Hawk through wholly-owned subsidiaries, including 101 Main Street Limited Liability Company.

Unless the context otherwise requires, the “Company” refers to Fitzgeralds Gaming Corporation and its subsidiaries. The Company was incorporated in Nevada in 1994 to serve as a holding company. The executive office of the Company is located at 3097 E. Warms Springs Rd. Suite 100, Las Vegas, Nevada 89120; telephone (702) 940-2000; facsimile (702) 940-2207.

In the narrative discussion below, the “2002 Q2 Period” is defined as the quarter ended June 30, 2002 and the “2001 Q2 Period” is defined as the quarter ended July 1, 2001. The “Cumulative 2002 Period” is defined as the two quarters ended June 30, 2002 and the “Cumulative 2001 Period” is defined as the two quarters ended July 1, 2001. The comparison of the 2002 Q2 Period to the 2001 Q2 Period and the comparison of the Cumulative 2002 Period to the Cumulative 2001 Period will not be meaningful due to the December 6, 2001 sale of substantially all of the assets of Fitzgeralds Las Vegas, Fitzgeralds Tunica and Fitzgeralds Black Hawk. Operating results for the Cumulative 2002 Period and the 2002 Q2 Period reflect the ongoing operating results for Fitzgeralds Reno, corporate expenses and administrative expenses associated with the residual assets and liabilities of the operations sold on December 6, 2001. Unless otherwise noted, the narrative discussion below is focused on the results of the Company’s Operating Properties which are collectively referred to as (the “Properties”) and excludes Nevada Club, which was sold in June 1999, and in management’s opinion, is not material to the ongoing operations of the Company. Corporate expense of $0.25 million was allocated to each of the four Operating Properties for each of the two quarters during 2001. In the Cumulative 2002 Period the Company did not allocate any corporate expense to the Operating Properties, however Fitzgeralds Reno incurred $0.2 million of net expense for services previously provided by the Company. Such expenses are included in selling, general and administrative expenses at the Operating Properties. The remainder of the unallocated corporate expense is included in the selling, general and administrative expenses of Other Operations of the Properties. See Note 1 of Statement of Operations Data.

Quarter Ended June 30, 2002 Comparison to Quarter Ended July 1, 2001

The table below sets forth Net Operating Revenues, Income (Loss) from Operations, EBITDA, Adjusted EBITDA and other financial data for the 2002 Q2 Period and the 2001 Q2 Period. EBITDA for the Properties was $(0.3) million and $8.0 million for the 2002 and 2001 Q2 Periods, respectively. Adjusted EBITDA, which the Company uses as a reasonable measure of its ability to generate cash from operating activities and as a means to compare the Company’s performance with that of its competitors, decreased from $8.9 million for the 2001 Q2 Period to $0.004 million for the 2002 Q2 Period. For a definition of EBITDA and Adjustments to EBITDA, see Notes 2 and 3, respectively, of Statement of Operations Data.

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(4)

Includes financial results of Nevada club for both periods presented.

Operating Revenues

Total revenues for the Operating Properties were $11.3 million and net operating revenues were $10.2 million for the 2002 Q2 Period, representing decreases of 82.0% and 81.0%, respectively, over total revenues of $62.7 million and net operating revenues of $53.9 million for the 2001 Q2 Period. The decrease is due to the sale of the Fitzgeralds Las Vegas, Fitzgeralds Tunica and Fitzgeralds Black Hawk properties to Majestic on December 6, 2001. Total net revenue for Fitzgeralds Reno decreased 6.4% to $10.2 million for the 2002 Q2 Period from $10.9 million for the 2001 Q2 Period.

The Company’s business can be separated into four operating departments: casino, food and beverage, rooms and other. Casino revenues for the Operating Properties represented 72.9% and 78.7% of total revenues for the Operating Properties for the 2002 and 2001 Q2 Periods, respectively. Casino revenues for the Operating Properties (of which approximately 76.5% and 86.9% were derived from slot machine revenues for the 2002 and 2001 Q2 Periods, respectively) decreased 83.3% to $8.2 million for the 2002 Q2 Period from $49.4 million for the 2001 Q2 Period. Casino revenues at Fitzgeralds Reno decreased 6.2% to $8.2 million for the 2002 Q2 Period from $8.8 million for the 2001 Q2 Period.

Room revenues for the Operating Properties (12.0% and 9.2% of total revenues for the operating Properties for the 2002 and 2001 Q2 Periods, respectively) decreased 76.5% from the 2001 Q2 Period. Fitzgeralds Reno room revenues decreased 14.3% due to a decrease in the average daily rate of 6.4% and a decrease in the average occupancy rate to 87.6% for the 2002 Q2 Period from 95.0% for the 2001 Q2 Period.

Food and beverage revenues for the Operating Properties (13.4% and 10.3% of total revenues for the Operating Properties for the 2002 and 2001 Q2 Periods, respectively) decreased 76.6% to $1.5 million for the 2002 Q2 Period. Fitzgeralds Reno decreased 4.1% to $1.5 million for the 2002 Q2 Period from $1.6 million for the 2001 Q2 Period.

Other revenues for the Operating Properties decreased 83.4% or $1.0 million for the 2002 Q2 Period.

Promotional allowances for the Operating Properties decreased $7.8 million or 88.3% for the 2002 Q2 Period primarily as a result of the sale to Majestic. Promotional allowances for Fitzgeralds Reno decreased 13.8% to $1.0 million for the 2002 Q2 Period from $1.2 million for the 2001 Q2 Period.

Operating Costs and Expenses

Total operating costs and expenses for the Operating Properties decreased 76.8% to $10.6 million for the 2002 Q2 Period from $45.9 million for the 2001 Q2 Period primarily due to the sale of the Fitzgeralds Las Vegas, Fitzgeralds Tunica and Fitzgeralds Black Hawk properties to

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Majestic on December 6, 2001. Total operating expenses for Fitzgeralds Reno decreased 2.5% to $9.3 million for the 2002 Q2 Period from $9.6 million for the 2002 Q2 Period.

Casino expenses for the Operating Properties were $4.4 million for the 2002 Q2 Period, an 80.9% decrease from $22.9 million for the 2001 Q2 Period. Food and beverage expenses for the Operating Properties decreased 72.8% to $1.1 million for the 2002 Q2 Period from $4.0 million for the 2001 Q2 Period. Room expenses for the Operating Properties decreased 86.4% to $0.5 million for the 2002 Q2 Period from $3.1 million for the 2001 Q2 Period. Selling, general and administrative expenses for the Operating Properties decreased 70.2% to $4.3 million for the 2002 Q2 Period from $14.5 million for the 2001 Q2 Period. Professional fees and expenses incurred in conjunction with the ongoing development, negotiation and implementation of the Company’s restructuring were $0.4 million for the 2002 Q2 Period and $0.9 million for the 2001 Q2 Periods, respectively. Such expenses also include professional fees and expenses paid by the Company for the financial and legal advisors to the Committee, the Indenture Trustee, and the administrative fees paid to the U.S. Trustee in connection with the Bankruptcy Cases.

Personnel expenses for the Operating Properties decreased 79.2% to approximately $4.4 million for the 2002 Q2 Period from approximately $21.2 million for the 2001 Q2 Period. Such expenses are included in the operating departmental expense to which they relate on the consolidated statement of operations.

Marketing expenses for the Operating Properties, which include advertising, promotional material, special events and the operations of the Fitzgeralds player-tracking card, decreased 74.0% or $2.8 million for the 2002 Q2 Period. Such expenses are included in selling, general and administrative expenses on the consolidated statements of operations.

Depreciation and amortization expenses for the Operating Properties increased to approximately $0.009 million for the 2002 Q2 Period from $0.008 million for the 2001 Q2 Period.

Income from Operations

Loss from operations for the Operating Properties was $0.4 million for the 2002 Q2 Period compared to income from operations of $8.0 million for the 2001 Q2 Period. Income from operations for Fitzgeralds Reno decreased to $0.9 million for the 2002 Q2 Period from $1.4 million for the 2001 Q2 Period.

Net Interest Expense

Interest expense for the Operating Properties (net of interest income), decreased 37.2% to $0.3 million for the 2002 Q2 Period from $0.5 million for the 2001 Q2 Period. Section 506(b) of the Bankruptcy Code permits the allowance of interest on an allowed secured claim secured by property, the value of which is greater than the amount of the claim. Inasmuch as the parties to the Restructuring Agreement have concluded that the fair market value of the collateral securing the Notes is less than the outstanding principal of the Notes, concurrently with the filing of the Bankruptcy Cases on December 5, 2000 the Company ceased accruing interest on the Notes.

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Net Income

Net loss for the Properties was $0.7 million in the 2002 Q2 Period compared to a net income of $7.6 million in the 2001 Q2 Period primarily as a result of the sale to Majestic. Fitzgerald Reno’s net income decreased to $0.8 million for the 2002 Q2 Period from $1.2 million for the 2001 Q2 Period.

Two Quarters Ended June 30, 2002 Comparison to Two Quarters Ended July 1, 2001

The table below sets forth Net Operating Revenues, Income (Loss) from Operations, EBITDA, Adjusted EBITDA and other financial data for the Cumulative 2002 Period and the Cumulative 2001 Period. EBITDA for the Properties was $(2.3) million and $15.8 million for the Cumulative 2002 and 2001 Periods, respectively. Adjusted EBITDA, which the Company uses as a reasonable measure of its ability to generate cash from operating activities and as a means to compare the Company’s performance with that of its competitors, decreased from $17.4 million for the Cumulative 2001 Period to $(1.3) million for the Cumulative 2002 Period. For a definition of EBITDA and Adjustments to EBITDA, see Notes 2 and 3, respectively, of Statement of Operations Data.