FITZGERALDS GAMING CORP - 10-Q Quarterly Report

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 September 29, 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 November 1, 2002


Class	Outstanding as of November 1, 2002

Common stock, $.01 par value		5,508,082

TABLE OF CONTENTS


PART I FINANCIAL INFORMATION
	Item 1 Condensed Consolidated Financial Statements
		Unaudited Condensed Consolidated Balance Sheets
		Unaudited Condensed Consolidated Statements of Operations
		Unaudited Condensed Consolidated Statements of Cash Flows
		Unaudited Notes to the Condensed Consolidated Financial Statements
	Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3 Quantitative and Qualitative Disclosures About Market Risk
	Item 4 Controls and Procedures
PART II OTHER INFORMATION
SIGNATURES
EXHIBIT 99.1
EXHIBIT 99.2

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 September 29, 2002 and
December 31, 2001
  4

Unaudited Condensed Consolidated Statements of Operations for the Quarters and
Three Quarters Ended September 29, 2002 and September 30, 2001
  6

Unaudited Condensed Consolidated Statements of Cash Flows for the Three Quarters
Ended September 29, 2002 and September 30, 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 29

Item 4 Controls and Procedures 29

PART II OTHER INFORMATION 30

SIGNATURES 34

PART I

FINANCIAL INFORMATION

Item 1

Condensed Consolidated Financial Statements

FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Balance Sheets
September 29, 2002 and December 31, 2001


				Sept. 29, 2002		Dec. 31, 2001

ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	23,675,070	$	25,609,012
	Accounts receivable, net of allowance for doubtful accounts of $34,233 and $49,000				440,876		455,759
	Inventories				416,762		493,020
	Prepaid expenses:
		Gaming taxes			787,511		1,316,804
		Other			738,842		1,628,389

			Total current assets		26,059,061		29,502,984

PROPERTY AND EQUIPMENT, net					70,639		55,397

OTHER ASSETS:
	Net assets held for sale				12,254,321		12,000,000
	Restricted cash				4,355,464		8,184,732
	Other assets				1,473,281		1,629,020

			Total other assets		18,083,066		21,813,752

TOTAL				$	44,212,766	$	51,372,133

(continued)

See Unaudited Notes to the Condensed Consolidated Financial Statements

Page 4 of 37

FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Balance Sheets (continued)
September 29, 2002 and December 31, 2001


				Sept. 29, 2002			Dec. 31, 2001

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
LIABILITIES NOT SUBJECT TO COMPROMISE
CURRENT LIABILITIES:
	Current portion of long-term debt			$	126,985		$	110,791
	Accounts payable				1,249,837			1,248,228
	Accrued and other:
		Payroll and related			1,323,203			2,567,982
		Progressive jackpots			72,002			73,458
		Outstanding chips and tokens			197,937			170,835
		Other			710,638			638,193
	Due to Majestic				—			3,812,945

			Total current liabilities		3,680,602			8,622,432
LONG-TERM DEBT, net of current portion					2,205,237			2,295,588

			Total liabilities not subject to compromise		5,885,839			10,918,020
LIABILITIES SUBJECT TO COMPROMISE					97,983,662			97,335,321

			Total liabilities		103,869,501			108,253,341

CUMULATIVE REDEEMABLE PREFERRED STOCK, $.01 par value; $25 stated value; 800,000 shares authorized, issued and outstanding; liquidation preference $20,000,000 stated value plus accrued dividends of $34,309,384 and $28,630,707 recorded at liquidation preference, net of unamortized offering costs and discount of $4,040,262 and $4,728,546, respectively					50,269,122			43,902,161

STOCKHOLDERS’ DEFICIENCY:
	Common stock, $.01 par value; 29,200,000 shares authorized; 5,508,082 shares issued and outstanding				55,080			55,080
	Additional paid-in capital				23,675,511			23,675,511
	Accumulated deficit				(133,656,448	)		(124,513,960	)

			Total stockholders’ deficiency		(109,925,857	)		(100,783,369	)

TOTAL				$	44,212,766		$	51,372,133

See Unaudited Notes to the Condensed Consolidated Financial Statements

Page 5 of 37

FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Statements of Operations
For the Quarters and Three Quarters Ended September 29, 2002 and September 30, 2001


			Quarters Ended						Three Quarters Ended

			Sept. 29, 2002			Sept. 30, 2001			Sept. 29, 2002			Sept. 30, 2001

OPERATING REVENUES:
	Casino		$	8,729,895		$	50,386,116		$	23,873,404		$	147,735,696
	Food and beverage			1,758,238			6,592,446			4,599,961			19,534,317
	Rooms			1,652,602			5,530,584			4,020,078			16,611,631
	Other			175,676			1,114,946			572,734			3,524,194

		Total		12,316,411			63,624,092			33,066,177			187,405,838
	Less promotional allowances			1,860,696			9,978,874			4,089,009			27,755,687

		Net		10,455,715			53,645,218			28,977,168			159,650,151

OPERATING COSTS AND EXPENSES:
	Casino			3,952,995			22,308,080			12,120,612			67,281,777
	Food and beverage			1,123,775			3,937,306			3,095,572			11,682,637
	Rooms			491,626			3,157,567			1,340,482			9,512,196
	Other operating expense			88,935			575,038			261,910			1,615,819
	Selling, general and administrative			4,181,149			14,322,633			12,830,357			42,899,657
	Depreciation and amortization			7,031			6,742			24,646			26,276
	Reorganization items			83,542			702,978			1,144,140			2,276,663

		Total		9,929,053			45,010,344			30,817,719			135,295,025

INCOME (LOSS) FROM OPERATIONS				526,662			8,634,874			(1,840,551	)		24,355,126
OTHER INCOME (EXPENSE):
	Interest income			3,902			16,497			46,786			94,162
	Interest expense (contractual interest for the quarter and three quarters ended Sept. 29, 2002 was $5,039,176 and $15,859,549, respectively and for the quarter and three quarters ended Sept. 30, 2001 was $9,360,532 and $27,212,076, respectively)			(327,493	)		(502,929	)		(979,911	)		(1,518,030	)
	Other income (expense)			12,100			(94,289	)		(1,851	)		(128,732	)

NET INCOME (LOSS)				215,171			8,054,153			(2,775,527	)		22,802,526
PREFERRED STOCK DIVIDENDS AND ACCRETION OF DISCOUNT				(2,200,913	)		(1,905,550	)		(6,366,961	)		(5,516,879	)

NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS			$	(1,985,742	)	$	6,148,603		$	(9,142,488	)	$	17,285,647

EARNINGS (LOSS) PER COMMON SHARE — BASIC AND DILUTED			$	(0.36	)	$	1.12		$	(1.66	)	$	3.14

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING				5,508,082			5,508,082			5,508,082			5,508,082

See Unaudited Notes to the Condensed Consolidated Financial Statements

Page 6 of 37

FITZGERALDS GAMING CORPORATION (Debtor-In-Possession)
Unaudited Condensed Consolidated Statements of Cash Flows
For the Three Quarters Ended September 29, 2002 and September 30, 2001


		Sept. 29, 2002			Sept. 30, 2001

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(1,563,725	)	$	15,708,234

CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from sale of assets		—			55,405
	Acquisition of property and equipment		(148,791	)		(1,390,148	)
	Increase in restricted cash		—			(350,822	)

	Net cash used in investing activities		(148,791	)		(1,685,565	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Repayment of long-term debt		(221,426	)		(296,499	)

	Net cash used in financing activities		(221,426	)		(296,499	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(1,933,942	)		13,726,170
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			25,609,012			8,181,388
CASH AND CASH EQUIVALENTS INCLUDED IN NET ASSETS HELD FOR SALE, BEGINNING OF PERIOD			—			10,111,872
CASH AND CASH EQUIVALENTS INCLUDED IN NET ASSETS HELD FOR SALE, END OF PERIOD			—			(9,807,467	)

CASH AND CASH EQUIVALENTS, END OF PERIOD		$	23,675,070		$	22,211,963

CASH PAID FOR INTEREST		$	176,908		$	9,793,090

SUMMARY OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired through issuance of debt		$	147,269		$	—
Accretion of discount on preferred stock			688,284			615,763
Accrual of preferred stock dividends			5,678,677			4,901,116

See Unaudited Notes to the Condensed Consolidated Financial Statements

Page 7 of 37

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 three quarters ended September 29, 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 four 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”).

Page 8 of 37

   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 subsequently established a new threshold for cash reserves of $16.5 million, which was tentatively approved by the Bankruptcy Court on November 1, 2002 and which will become fully approved upon entry of the Bankruptcy Court’s Order approving the amendment to the Restructuring Agreement. As of the filing date the Order has not been entered, however at the November 1, 2002 hearing, the Court stated that upon its entry, the Order would be effective November 1, 2002. 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 expected 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 executed an amendment to the Restructuring Agreement which was approved by the Bankruptcy Court on November 1, 2002 to conduct the auction sale of the one remaining operating property,

Page 9 of 37

   Fitzgeralds Reno, during 2002, although no assurance can be 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 three quarters ended September 29, 2002 and September 30, 2001, the Company incurred the following expenses subsequent to the filing of the Bankruptcy Cases:


		Quarter Ended						Three Quarters Ended

		Sept. 29, 2002			Sept. 30, 2001			Sept. 29, 2002			Sept. 30, 2001

Reorganization items:
	Post-petition professional fees	$	331,195		$	664,084		$	1,204,294		$	2,430,592
	U. S. trustee fees		10,000			48,725			93,917			181,000
	Loss (gain) on sale of assets		(158,725	)		—			131,978			132,605
	Other		—			132,605			—			—
	Interest earned on accumulated cash resulting from the bankruptcy proceedings		(98,928	)		(142,436	)		(286,049	)		(467,534	)

		$	83,542		$	702,978		$	1,144,140		$	2,276,663

Page 10 of 37

Liabilities Subject to Compromise

At September 29, 2002 and December 31, 2001 liabilities subject to compromise consisted of the following:


		2002			2001

Liabilities subject to compromise:
	Notes	$	99,733,642		$	99,733,642
	Discount on the Notes		(345,431	)		(613,709	)
	Debt offering costs on the Notes		(1,526,254	)		(2,054,572	)
	Unsecured creditors		121,705			269,960

		$	97,983,662		$	97,335,321

3.    RECENTLY ISSUED OR ADOPTED 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

Page 11 of 37

   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.

   In April 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 145 (“SFAS 145”), Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. The most significant provisions of this statement relate to the rescission of Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt and it also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. Under this new statement, any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods that does not meet certain defined criteria must be reclassified. The provisions of this Statement, related to the rescission of Statement 4, should be applied in fiscal years beginning after May 15, 2002. Generally, SFAS 145 is effective for the Company’s fiscal year 2003. The Company has not elected to adopt the SFAS early. In addition the Company has not yet determined the impact of SFAS 145 on the Company’s financial position or results of operations.

   In June 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 146 (“SFAS 146”), Accounting for Costs Associated with Exit or Disposal Activities. This statement address financial accounting and reporting for costs associated with exit or disposal activities and supercedes EITF No. 94-3 Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The statement requires that a liability for a cost associated with an exit or disposal activity is recognized when the liability is incurred. A fundamental conclusion reached by the FASB in SFAS 146 is an entity’s commitment to a plan, by itself, does not create a present obligation to others that meets the definition of a liability. This statement also establishes that fair value is the objective for initial measurement of the liability. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002 with early application encouraged. The Company currently does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements.

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.

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   As of September 29, 2002 and December 31, 2001 assets included in net assets held for sale of $12.3 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 subsequently established a new threshold for cash reserves of $16.5 million, which was tentatively approved by the Bankruptcy Court on November 1, 2002 and which will become fully approved upon entry of the Bankruptcy Court’s Order approving the amendment to the Restructuring Agreement. As of the filing date the Order has not been entered, however at the November 1, 2002 hearing, the Court stated that upon its entry, the Order would be effective November 1, 2002. 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, 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, rooms (except for Fitzgeralds Black Hawk), 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

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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.


			For the Quarters Ended

			Sept. 29, 2002			Sept. 30, 2001

			(in thousands)
Net operating revenues:
	Fitzgeralds Las Vegas		$	—		$	12,675
	Fitzgeralds Tunica			—			21,113
	Fitzgeralds Reno			10,451			10,342
	Fitzgeralds Black Hawk			—			9,525
	Other			5			(10	)

Total			$	10,456		$	53,645

Income (loss) from operations:
	Fitzgeralds Las Vegas		$	159		$	(186	)
	Fitzgeralds Tunica			(94	)		5,249
	Fitzgeralds Reno			1,574			1,636
	Fitzgeralds Black Hawk			(54	)		2,649
	Other			(1,034	)		(715	)

		Total Properties		551			8,633
	Nevada Club			(24	)		2

Total			$	527		$	8,635

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


Total segment operating income		$	1,585		$	9,348
	Nevada Club		(24	)		2
	Other		(1,034	)		(716	)
	Eliminations		(1,500	)		(12,362	)
	Interest income		4			16
	Interest expense		(324	)		(503	)
	Other expense		1,508			12,270

Net income		$	215		$	8,055

Page 14 of 37


			For the Three Quarters Ended

			Sept. 29, 2002			Sept. 30, 2001

			(in thousands)
Net operating revenues:
	Fitzgeralds Las Vegas		$	—		$	40,600
	Fitzgeralds Tunica			—			63,176
	Fitzgeralds Reno			28,948			29,933
	Fitzgeralds Black Hawk			—			25,916
	Other			29			25

Total			$	28,977		$	159,650

Income (loss) from operations:
	Fitzgeralds Las Vegas		$	(136	)	$	2,318
	Fitzgeralds Tunica			(242	)		15,579
	Fitzgeralds Reno			2,255			2,928
	Fitzgeralds Black Hawk			(439	)		6,245
	Other			(3,239	)		(2,670	)

		Total Properties		(1,801	)		24,400
	Nevada Club			(40	)		(45	)

Total			$	(1,841	)	$	24,355

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


Total segment operating income		$	1,438		$	27,069
	Nevada Club		(40	)		(45	)
	Other		(3,238	)		(2,670	)
	Eliminations		(1,274	)		(30,144	)
	Interest income		47			94
	Interest expense		(980	)		(1,518	)
	Other expense		1,271			30,017

Net income (loss)		$	(2,776	)	$	22,803

Page 15 of 37

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 remaining 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

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 “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 Property — Fitzgeralds Reno. See Note 2 to Unaudited Notes to the Condensed Consolidated Financial Statements.

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

Page 16 of 37

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 Q3 Period” is defined as the quarter ended September 29, 2002 and the “2001 Q3 Period” is defined as the quarter ended September 30, 2001. The “Cumulative 2002 Period” is defined as the three quarters ended September 29, 2002 and the “Cumulative 2001 Period” is defined as the three quarters ended September 30, 2001. The comparison of the 2002 Q3 Period to the 2001 Q3 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 Q3 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 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 Properties for each of the three quarters during 2001. In the Cumulative 2002 Period the Company did not allocate any corporate expense to the Properties, however Fitzgeralds Reno incurred $0.3 million of net expense for services previously provided by the Company. Such expenses are included in selling, general and administrative expenses at the Properties. The remainder of the unallocated corporate expense is included in the selling, general and administrative expenses of Other Operations. See Note 1 of Statement of Operations Data.

Quarter Ended September 29, 2002 Comparison to Quarter Ended September 30, 2001

The table below sets forth Net Operating Revenues, Income (Loss) from Operations, EBITDA, Adjusted EBITDA and other financial data for the 2002 Q3 Period and the 2001 Q3 Period. EBITDA for the Properties was $0.5 million and $8.0 million for the 2002 and 2001 Q3 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 $9.1 million for the 2001 Q3 Period to $0.6 million for the 2002 Q3 Period. For a definition of EBITDA and Adjustments to EBITDA, see Notes 2 and 3, respectively, of Statement of Operations Data.

Page 17 of 37

For the Quarters Ended

Sept. 29, 2002 Sept. 30, 2001

(in thousands)

Statement of Operations Data

Net Operating Revenues:

Fitzgeralds Las Vegas
$ — $ 12,675

Fitzgeralds Tunica
— 21,113

Fitzgeralds Reno
10,451 10,342

Fitzgeralds Black Hawk
— 9,525

Other
5 (10 )

Total
$ 10,456 $ 53,645

Income (Loss) from Operations:

Fitzgeralds Las Vegas
$ 159 $ (186 )

Fitzgeralds Tunica
(94 ) 5,249

Fitzgeralds Reno
1,574 1,636

Fitzgeralds Black Hawk
(54 ) 2,649

Other (1)
(1,034 ) (715 )

Total Properties
551 8,633

Nevada Club
(24 ) 2

Total
$ 527 $ 8,635

Other Data

EBITDA (2):

Fitzgeralds Las Vegas
$ 159 $ (148 )

Fitzgeralds Tunica
(94 ) 5,200

Fitzgeralds Reno
1,574 1,674

Fitzgeralds Black Hawk
(54 ) 2,641

Other (1)
(1,027 ) (1,323 )

Total Properties
558 8,044

Nevada Club
(24 ) 2

Total EBITDA
534 8,046

Adjustments to EBITDA (3)
108 1,038

Adjusted EBITDA
$ 642 $ 9,084

(1)		Other includes corporate expenses not allocated to the Properties for the 2002 and 2001 Q3 Periods, which includes $0.3 and $0.7 million of post-petition professional fees and expenses included in reorganization items for the 2002 and 2001 Q3 Periods, respectively.




(2)		EBITDA is a supplemental financial measurement used by the Company in the evaluation of its gaming business and by many gaming industry analysts. EBITDA is calculated by adding depreciation and amortization expense to income from operations. At any property, EBITDA is calculated after the allocation of corporate costs. However, EBITDA should only be read in conjunction with all of the Company’s financial data summarized above and its financial statements prepared in accordance with GAAP appearing elsewhere herein, and should not be construed as an alternative either to income from operations (as determined in accordance with GAAP) as an indication of the Company’s operating performance or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity. This presentation of EBITDA may not be comparable to similarly titled measures reported by other companies.




(3)		Adjustments to EBITDA include (i) exclusion of EBITDA for Nevada Club for both periods presented; (ii) exclusion of post-petition professional fees and expenses net of interest income included as reorganization items of $0.08 million for the 2002 Q3 Period and $0.7 million for the 2001 Q3 Period.

Page 18 of 37

Operating Revenues

Total revenues for the Properties were $12.3 million and net operating revenues were $10.5 million for the 2002 Q3 Period, representing decreases of 80.6% and 80.5%, respectively, over total revenues of $63.6 million and net operating revenues of $53.6 million for the 2001 Q3 Period. The decrease was 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 increased 1.1% to $10.5 million for the 2002 Q3 Period from $10.3 million for the 2001 Q3 Period.

The Company’s business can be separated into four operating departments: casino, food and beverage, rooms and other. Casino revenues for the Properties represented 70.9% and 79.2% of total revenues for the Properties for the 2002 and 2001 Q3 Periods, respectively. Casino revenues for the Properties (of which approximately 76.2% and 87.4% were derived from slot machine revenues for the 2002 and 2001 Q3 Periods, respectively) decreased 82.7% to $8.7 million for the 2002 Q3 Period from $50.4 million for the 2001 Q3 Period. Casino revenues at Fitzgeralds Reno remained approximately the same at $8.7 million for both the 2002 and 2001 Q3 Periods.

Room revenues for the Properties (13.4% and 8.7% of total revenues for the Properties for the 2002 and 2001 Q3 Periods, respectively) decreased 70.1% from the 2001 Q3 Period. Fitzgeralds Reno room revenues increased 2.1% due to an increase in the average daily rate of 1.0% offset by a decrease in the average occupancy rate to 91.5% for the 2002 Q3 Period from 92.4% for the 2001 Q3 Period.

Food and beverage revenues for the Properties (14.3% and 10.4% of total revenues for the Properties for the 2002 and 2001 Q3 Periods, respectively) decreased 73.3% to $1.8 million for the 2002 Q3 Period. Food and beverage revenue at Fitzgeralds Reno increased 9.3% to $1.8 million for the 2002 Q3 Period from $1.6 million for the 2001 Q3 Period, as a result of increases in casino volume.

Other revenues for the Properties decreased 84.2% or $0.9 million for the 2002 Q3 Period.

Promotional allowances for the Properties decreased $8.1 million or 81.4% for the 2002 Q3 Period primarily as a result of the sale to Majestic. Promotional allowances for Fitzgeralds Reno increased 2.0% to $1.9 million for the 2002 Q3 Period from $1.8 million for the 2001 Q3 Period.

Operating Costs and Expenses

Total operating costs and expenses for the Properties decreased 78.0% to $9.9 million for the 2002 Q3 Period from $45.0 million for the 2001 Q3 Period primarily due to the sale of the Fitzgeralds Las Vegas, Fitzgeralds Tunica and Fitzgeralds Black Hawk properties to Majestic on December 6, 2001. Total operating expenses for Fitzgeralds Reno increased 2.0% to $8.9 million for the 2002 Q3 Period from $8.7 million for the 2001 Q3 Period.

Page 19 of 37

Casino expenses for the Properties were $4.0 million for the 2002 Q3 Period, a 82.3% decrease from $22.3 million for the 2001 Q3 Period. Food and beverage expenses for the Properties decreased 71.5% to $1.1 million for the 2002 Q3 Period from $3.9 million for the 2001 Q3 Period. Room expenses for the Properties decreased 84.4% to $0.5 million for the 2002 Q3 Period from $3.2 million for the 2001 Q3 Period. Selling, general and administrative expenses for the Properties decreased 71.0% to $4.2 million for the 2002 Q3 Period from $14.3 million for the 2001 Q3 Period. Professional fees and expenses incurred in conjunction with the ongoing development, negotiation and implementation of the Company’s restructuring were $0.08 million for the 2002 Q3 Period and $0.7 million for the 2001 Q3 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 Properties decreased 79.1% to approximately $4.4 million for the 2002 Q3 Period from approximately $21.1 million for the 2001 Q3 Period. Such expenses are included in the operating departmental expense to which they relate on the consolidated statement of operations. Personnel expenses at Fitzgeralds Reno remained approximately the same at $4.4 million for both the 2002 and 2001 Q3 Periods.

Marketing expenses for the Properties, which include advertising, promotional material, special events and the operations of the Fitzgeralds player-tracking card, decreased 76.4% or $2.5 million for the 2002 Q3 Period. Such expenses are included in selling, general and administrative expenses on the consolidated statements of operations. Marketing expense at Fitzgeralds Reno remained approximately the same at $0.8 million for both the 2002 and 2001 Q3 Periods.

Depreciation and amortization expenses for the Properties remained approximately the same at $0.007 million for the 2002 and 2001 Q3 Periods.

Income from Operations

Income from operations for the Properties was $0.6 million for the 2002 Q3 Period compared to income from operations of $8.6 million for the 2001 Q3 Period. Income from operations for Fitzgeralds Reno remained approximately the same at $1.6 million for both the 2002 and 2001 Q3 Periods.

Net Interest Expense

Interest expense for the Properties (net of interest income), decreased 33.5% to $0.3 million for the 2002 Q3 Period from $0.5 million for the 2001 Q3 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.

Page 20 of 37

Net Income

Net income for the Properties was $0.2 million in the 2002 Q3 Period compared to a net income of $7.8 million in the 2001 Q3 Period primarily as a result of the sale to Majestic. Fitzgerald Reno’s net income decreased to $1.5 million for the 2002 Q3 Period from $1.6 million for the 2001 Q3 Period for the reasons discussed above.

Three Quarters Ended September 29, 2002 Comparison to Three Quarters Ended September 30, 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 $(1.8) million and $23.8 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 $26.4 million for the Cumulative 2001 Period to $(0.6) 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.

For the Three Quarters Ended

Sept. 29, 2002 Sept. 30, 2001

(in thousands)

Statement of Operations Data

Net Operating Revenues:

Fitzgeralds Las Vegas
$ — $ 40,600

Fitzgeralds Tunica
— 63,176

Fitzgeralds Reno
28,948 29,933

Fitzgeralds Black Hawk
— 25,916

Other
29 25

Total
$ 28,977 $ 159,650

Income (Loss) from Operations:

Fitzgeralds Las Vegas
$ (136 ) $ 2,318

Fitzgeralds Tunica
(242 ) 15,579

Fitzgeralds Reno
2,255 2,928

Fitzgeralds Black Hawk
(439 ) 6,245

Other (1)
(3,239 ) (2,670 )

Total Properties
(1,801 ) 24,400

Nevada Club
(40 ) (45 )

Total
$ (1,841 ) $ 24,355

Page 21 of 37

For the Three Quarters Ended

Sept. 29, 2002 Sept. 30, 2001

(in thousands)

Other Data

EBITDA (2):

Fitzgeralds Las Vegas
$ (136 ) $ 2,356

Fitzgeralds Tunica
(242 ) 15,530

Fitzgeralds Reno
2,255 2,965

Fitzgeralds Black Hawk
(439 ) 6,238

Other (1)
(3,214 ) (3,258 )

Total Properties
(1,776 ) 23,831

Nevada Club
(40 ) (45 )

Total EBITDA
(1,816 ) 23,786

Adjustments to EBITDA (3)
1,184 2,657

Adjusted EBITDA
$ (632 ) $ 26,443

Net Cash Provided by (Used in) (4):

Operating Activities
$ (1,564 ) $ 15,708

Investing Activities
(149 ) (1,686 )

Financing Activities
(221 ) (296 )

Depreciation and Amortization
25 26

Capital Expenditures
296 1,390

Earnings to Fixed Charges (5):
— 10.0x

(1)		Other includes corporate expenses not allocated to the Properties for the 2002 and 2001 Q3 Periods, which includes $1.2 and $2.4 million of post-petition professional fees and expenses included in reorganization items for the Cumulative 2002 and 2001 Periods, respectively.




(2)		EBITDA is a supplemental financial measurement used by the Company in the evaluation of its gaming business and by many gaming industry analysts. EBITDA is calculated by adding depreciation and amortization expense to income from operations. At any property, EBITDA is calculated after the allocation of corporate costs. However, EBITDA should only be read in conjunction with all of the Company’s financial data summarized above and its financial statements prepared in accordance with GAAP appearing elsewhere herein, and should not be construed as an alternative either to income from operations (as determined in accordance with GAAP) as an indication of the Company’s operating performance or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity. This presentation of EBITDA may not be comparable to similarly titled measures reported by other companies.




(3)		Adjustments to EBITDA include (i) exclusion of EBITDA for Nevada Club for both periods presented; (ii) exclusion of post-petition professional fees and expenses, net of interest income included as reorganization items of $2.3 million for the Cumulative 2001 Period and $1.1 million for the Cumulative 2002 Period.




(4)		Includes financial results of Nevada Club for both periods presented.




(5)		For the Ratio of Earnings to Fixed Charges, earnings are defined as earnings before income taxes, interest on indebtedness, imputed interest on capital lease obligations and the portion of rent expense deemed to represent interest. Fixed charges consist of interest on indebtedness, imputed interest on capital lease obligations and the portion of rent expense deemed to represent interest. The Fixed Charged Coverage Ratio was 10.0x for the Cumulative 2001 Period, primarily as a result of the reduction in depreciation and amortization and interest expense; however, earnings were insufficient to cover fixed charges by $2.8 million for the Cumulative 2002 Period.

Operating Revenues

Total revenues for the Properties were $33.1 million and net operating revenues were $29.0 million for the Cumulative 2002 Period, representing 82.4% and 81.8% decreases, respectively,

Page 22 of 37

over total revenues of $187.4 million and net operating revenues of $159.7 million for the Cumulative 2001 Period. The decreases were 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 3.3% to $28.9 million for the Cumulative 2002 Period from $29.9 million for the Cumulative 2001 Period.

The Company’s business can be separated into four operating departments: casino, food and beverage, rooms and other. Casino revenues for the Properties represented 72.2% and 78.8% of total revenues for the Properties for the Cumulative 2002 and 2001 Periods, respectively. Casino revenues for the Properties (of which approximately 75.5% and 86.8% were derived from slot machine revenues for the Cumulative 2002 and 2001 Periods, respectively) decreased 83.8% to $23.9 million for the Cumulative 2002 Period from $147.7 million for the Cumulative 2001 Period. Fitzgeralds Reno casino revenue decreased 2.5%.

Room revenues for the Properties (12.2% and 8.9% of total revenues for the Properties for the Cumulative 2002 and 2001 Periods, respectively) decreased 75.8% from the Cumulative 2001 Period. Fitzgeralds Reno room revenues decreased 6.6% due to a 3.3% decrease in the average daily rate and a decrease in the average occupancy rate to 86.6% for the Cumulative 2002 Period from 89.6% for the Cumulative 2001 Period.

Food and beverage revenues for the Properties (13.9% and 10.4% of total revenues for the Properties for the Cumulative 2002 and 2001 Periods, respectively) decreased approximately $14.9 million or 76.5% for the Cumulative 2002 Period. Food and beverage revenue for Fitzgeralds Reno increased 1.3% to $4.6 million for the Cumulative 2002 Period from $4.5 million for the Cumulative 2001 Period.

Other revenues for the Properties decreased 83.7% or $3.0 million for the Cumulative 2002 Period.

Promotional allowances for the Properties decreased $23.7 million or 85.3% for the Cumulative 2002 Period primarily as a result of the sale to Majestic. Promotional allowances for Fitzgeralds Reno increased 1.7% to $4.1 million for the Cumulative 2002 Period compared to $4.0 million for the Cumulative 2001 Period.

Operating Costs and Expenses

Total operating costs and expenses for the Properties decreased 77.2% to $30.8 million for the Cumulative 2002 Period from $135.3 million for the Cumulative 2001 Period primarily due to the sale of the Fitzgeralds Las Vegas, Fitzgeralds Tunica and Fitzgeralds Black Hawk properties to Majestic on December 6, 2001. Total operating expenses for Fitzgeralds Reno decreased 1.2% to $26.7 million for the Cumulative 2002 Period from $27.0 million for the Cumulative 2001 Period.

Casino expenses for the Properties were $12.1 million for the Cumulative 2002 Period, an 82.0% decrease from $67.3 million for the Cumulative 2001 Period. Food and beverage expenses for the

Page 23 of 37

Properties decreased 73.5% to $3.1 million for the Cumulative 2002 Period from $11.7 million for the Cumulative 2001 Period. Room expenses for the Properties decreased 85.9% to $1.3 million for the Cumulative 2002 Period from $9.5 million for the Cumulative 2001 Period. Selling, general and administrative expenses for the Properties decreased 70.2% to $12.8 million for the Cumulative 2002 Period from $42.9 million for the Cumulative 2001 Period. Professional fees and expenses incurred in conjunction with the ongoing development, negotiation and implementation of the Company’s restructuring were $1.1 million and $2.3 million for the Cumulative 2002 and 2001 Periods, respectively. Such expenses also include professional fees and expenses paid by the Company for the financial and legal advisors to the Committee and the Indenture Trustee, and administrative expenses paid to the U.S. Trustee in connection with the Bankruptcy Cases.

Personnel expenses for the Properties decreased 79.5% to approximately $13.0 million for the Cumulative 2002 Period from approximately $63.2 million for the Cumulative 2001 Period. Such expenses are included in the operating departmental expense to which they relate on the consolidated statements of operations. Personnel expenses at Fitzgeralds Reno remained approximately the same at $12.9 million for both the Cumulative 2002 and 2001 periods.

Marketing expenses for the Properties, which include advertising, promotional material, special events and the operations of the Fitzgeralds player-tracking card, decreased $7.6 million or 73.1% for the Cumulative 2002 Period. Such expenses are included in selling, general and administrative expenses on the consolidated statements of operations. Marketing expense at Fitzgeralds Reno remained approximately the same at $2.8 million for the Cumulative 2002 and 2001 periods.

Depreciation and amortization expenses for the Properties remained approximately the same at $0.026 million for the Cumulative 2002 and 2001 Periods.

Income from Operations

Loss from operations for the Properties was $1.8 million for the Cumulative 2002 Period compared to net income from operation of $24.4 million for the Cumulative 2001 Period. Income from operations for Fitzgeralds Reno decreased 23.0% to $2.3 million for the Cumulative 2002 Period from $2.9 million for the Cumulative 2001 Period.

Net Interest Expense

Interest expense for the Properties (net of interest income), decreased 34.5% to $0.9 million for the Cumulative 2002 Period from $1.4 million for the Cumulative 2001 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.

Page 24 of 37

Net Income

Net loss for the Properties was $2.8 million in the Cumulative 2002 Period compared to a net income of $22.7 million in the Cumulative 2001 Period. The decrease is primarily due to the sale of Fitzgeralds Las Vegas, Fitzgeralds Tunica and Fitzgeralds Black Hawk properties to Majestic on December 6, 2001. Fitzgerald Reno’s net income decreased to $2.0 million for the Cumulative 2002 Period from $2.6 million for the Cumulative 2001 Period for the reasons discussed above.

Liquidity and Capital Resources

At September 29, 2002, the Company had unrestricted cash of $23.7 million, compared to $25.6 million at December 31, 2001. The Company’s net cash used in operating activities was $1.6 million during the Cumulative 2002 Period. Net cash used in investing activities was $0.1 million for the Cumulative 2002 Period and $1.7 million for the Cumulative 2001 Period. Net cash used in financing activities was $0.2 million and $0.3 million for the Cumulative 2002 and 2001 Periods, respectively.

The Company’s principal sources of capital have historically consisted of cash from operations and vendor or third party financing of gaming and other equipment. However, its relatively high degree of leverage had prevented it from making the level of capital expenditures required to maintain and enhance the competitive position of its properties. Management and the Board of Directors did not see any way to resolve this problem without restructuring the Company’s indebtedness. An Event of Default under the Indenture pursuant to which the Notes were issued occurred on July 15, 1999.

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. On December 5, 2000, the Company commenced the Bankruptcy Cases in the Bankruptcy Court. For further information concerning the Bankruptcy Cases and related matters, see Note 2 to the Unaudited Notes to Condensed Consolidated Financial Statements.

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 until the closing of the sale to Majestic. 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 subsequently established a new threshold for cash reserves of $16.5 million, which was tentatively approved by the Bankruptcy Court on November 1, 2002 and which will become fully approved upon entry of the Bankruptcy Court’s Order approving the amendment to the Restructuring Agreement. As of the filing date the Order has not been entered, however at the November 1, 2002 hearing, the Court stated that upon its entry, the Order would be effective November 1, 2002.

Page 25 of 37

As part of the Restructuring Agreement, the Consenting Noteholders and Indenture Trustee agreed to forbear from exercising certain of their rights otherwise allowable under the Notes and the Indenture.

By suspending the interest payments on the Notes other than the Post-petition Distributions and sales proceeds of collateral for the Notes until such time as the liquidation of the remainder of the Company’s assets contemplated by the Restructuring Agreement has been completed, the Company believes that its liquidity and capital resources will be sufficient to maintain normal operations at Fitzgeralds Reno at current levels during the pendency of the Bankruptcy Cases and does not anticipate any adverse impact on operations, customers or employees at Fitzgeralds Reno. However, costs incurred and to be incurred in connection with the Bankruptcy Cases have been and will continue to be substantial and, in any event, there can be no assurance that the Company will be able to successfully consummate the Restructuring Agreement or that its liquidity and capital resources will be sufficient to maintain normal operations at Fitzgeralds Reno during the pendency of the Bankruptcy Cases.

EBITDA and Adjusted EBITDA

The Company’s EBITDA was $(1.8) million for the Cumulative 2002 Period and $23.8 million for the Cumulative 2001 Period. EBITDA is calculated by adding depreciation and amortization expenses to income from operations. The Company’s Adjusted EBITDA was $(0.7) million for the Cumulative 2002 Period and $26.4 million for the 2001 Period. Adjusted EBITDA is determined based on the adjustments described in Note 3 to Statement of Operations Data. However, EBITDA should only be read in conjunction with all of the Company’s financial data summarized above and its financial statements prepared in accordance with GAAP appearing elsewhere herein, and should not be construed as an alternative either to income from operations (as determined in accordance with GAAP) as an indication of the Company’s operating performance or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity. This presentation of EBITDA may not be comparable to similarly titled measures reported by other companies.

Ratio of Earnings to Fixed Charges

The ratio of earnings to fixed charges measures the extent by which earnings, as defined, exceed certain fixed charges. Earnings are defined as earnings before income taxes, interest on indebtedness, imputed interest on capital lease obligations and the portion of rent expense deemed to represent interest. Fixed charges consist of interest on indebtedness, imputed interest on capital lease obligations and the portion of rent expense deemed to represent interest. The Fixed Charge Coverage Ratio was 10.0x for the 2001 Period, however earnings were insufficient to cover fixed charges by $2.8 million for the 2002 Period.

Business Seasonality and Severe Weather

The gaming operations of the Company are seasonal and could be significant. At Fitzgeralds Reno business levels are typically weaker from Thanksgiving through the end of the winter and

Page 26 of 37

typically stronger from mid-June to mid-November. In addition, because of its proximity to a mountainous region, Reno is subject to severe weather, particularly during the winter months, that can and often does have an adverse impact on business.

Recently Issued or Adopted 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.

In April 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 145 (“SFAS 145”), Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. The most significant provisions of this statement relate to the rescission of Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt and it also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. Under this new statement, any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods that does not

Page 27 of 37

meet certain defined criteria must be reclassified. The provisions of this Statement, related to the rescission of Statement 4, should be applied in fiscal years beginning after May 15, 2002. Generally, SFAS 145 is effective for the Company’s fiscal year 2003. The Company has not elected to adopt the SFAS early. In addition the Company has not yet determined the impact of SFAS 145 on the Company’s financial position or results of operations.

In June 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 146 (“SFAS 146”), Accounting for Costs Associated with Exit or Disposal Activities. This statement address financial accounting and reporting for costs associated with exit or disposal activities and supercedes EITF No. 94-3 Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The statement requires that a liability for a cost associated with an exit or disposal activity is recognized when the liability is incurred. A fundamental conclusion reached by the FASB in SFAS 146 is than an entity’s commitment to a plan, by itself, does not create a present obligation to others that meets the definition of a liability. This statement also establishes that fair value is the objective for initial measurement of the liability. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002 with early application encouraged. The Company currently does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements.

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Item 3

Quantitative and Qualitative Disclosures About Market Risk

The fair market value of the Company’s fixed debt obligations was $51.9 million at December 31, 2001. Due to the Company’s bankruptcy filing, subsequent sale of a substantial portion of its assets, interim payments on the aggregate balance of accrued interest and principal on the Notes, as well as delays encountered in selling the Company’s remaining operating casino, the Company believes it is no longer possible to accurately determine the fair market value of its fixed debt obligations at September 29, 2002. The majority of the Company’s fixed debt obligations are comprised of the Company’s Notes. See Note 5 of Item 1. Long Term Debt, and Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.

Item 4

Controls and Procedures

Based on the Chief Executive Officer and the Chief Financial Officer (the “Officers”), evaluations of the Company’s internal controls, disclosure controls and procedures within 90 days of the filing date of this report, the Officers have concluded that the effectiveness of such controls and procedures is satisfactory. Furthermore, there were not any significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

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PART II
OTHER INFORMATION

Item 1. Legal Proceedings.

Reno Transportation Rail Access Corridor (ReTRAC) Project

In October 1998, the Reno City Council approved a special assessment district to finance a portion of the costs to lower the railroad tracks that run through downtown Reno, Nevada (the “ReTRAC Project”). Plans for the ReTRAC Project provide for the construction of a temporary rail bypass that will be used to divert rail traffic around the main railroad during construction. The City of Reno (the “City”) estimates that a period of more than three years will be required to complete the ReTRAC Project. The southern boundary of the bypass will extend out into the middle of Commercial Row, the street where Fitzgeralds Reno hotel entrance, valet parking area and hotel loading zone are situated.

Based on plans prepared by the City, Fitzgeralds Reno would expect to lose permanently approximately 3,802 square feet of land and temporarily 22,979 square feet of land through eminent domain, several parking spaces, the current valet parking area, an outdoor billboard structure advertising available rooms and a building used to house administrative offices, and may be required to relocate the hotel entrance currently on Commercial Row. The City has also indicated that the ReTRAC Project might require the demolition of the Fitzgeralds Reno Rainbow Skyway if underpinning during construction of the ReTRAC Project cannot preserve the structure. Implementation of the ReTRAC Project under these circumstances would cause the Company to suffer significant and permanent loss in business revenue and income; certain operating efficiencies from demolished or impaired physical structures; and a portion of its existing customer base as a result of the construction and operation of the proposed rail bypass.

On November 30, 1998, the Company filed a lawsuit against the City to challenge the method by which the special assessment to be levied against the Company was determined. The City of Reno filed an answer to the Company’s lawsuit on January 19, 1999. Subsequent thereto, George Karadanis and Robert Maloff d/b/a Sundowner Hotel and Casino (the “Sundowner”) were permitted by court order to file a Complaint in Intervention. Notwithstanding that intervention, on December 22, 1999, the court granted the City of Reno’s Motion for Summary Judgment against the Sundowner which motion was joined in by the Company. After hearing oral arguments and considering the parties’ briefs, the Court concluded that there was insufficient evidence before the Reno City Council to support a finding that the ReTRAC Project confers a special benefit on Fitzgeralds Reno as is required by statute before a special assessment may be imposed. The Court remanded the matter to the Reno City Council and directed the council to conduct a new hearing to consider evidence as to whether Fitzgeralds Reno would receive a special benefit from the proposed project.

On June 20, 2001, the Reno City Council commenced a public hearing in compliance with the remand order of the Court. That public hearing was recessed and continued to November 29, 2001. After resuming the hearing on November 29, 2001, the Reno City Council again recessed

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and continued the proceedings to January 4, 2002, at which time the hearing was completed and the matter was submitted for decision of the Reno City Council. On February 19, 2002, the Reno City Council voted on the matter. By a 4-3 decision, the Reno City Council concluded that the ReTRAC Project would confer a special benefit on Fitzgeralds Reno. On a 5-2 decision, however, the Reno City Council determined that the value of the special benefit in light of the evidence presented was $1.00.

On February 27, 2001, the Reno City Council voted to continue the process of determining the actual cost of construction of the ReTRAC Project, which the City has estimated to be recently $282 million. On May 24, 2001, Fitzgeralds Reno commenced an action, CV-N-01-0329-PMP-RAM, in the United States District Court for the District of Nevada, against the Federal Highway Administration (“FHWA”), the Nevada Department of Transportation (“NDOT”), and the City (collectively, the “Defendants”) for violations of the National Environmental Policy Act (“NEPA”), codified at 42 U.S.C. §§ 4321-4327. The claims against all Defendants allege a violation of 42 U.S.C. § 4332 (Violation of NEPA: Failure to Consider Reasonable Alternatives & Failure to Consider and Provide Adequate Mitigation Measures). Specifically, Fitzgeralds Reno asserts the Defendants failed to consider the Partial Cover and Cut Tunnel Alternative and the use of the Feather River Route on a temporary basis, and failed to include a plan for mitigating the adverse environmental impacts, including construction disruption, loss of operating facilities, noise and vibration impacts, that will be caused by the ReTRAC Project and incurred by Fitzgeralds Reno and others.

On or about June 12, 2001, NDOT filed a motion to dismiss the Company’s NEPA complaint based on a claim of sovereign immunity and the Company moved to amend its complaint to substitute as a defendant the Director of NDOT, Thomas E. Stephens, for the Defendant NDOT, in lieu of considering NDOT’s Eleventh Amendment immunity claim. This unopposed motion was granted by the Court on August 17, 2001, and the Company filed its amended complaint on August 23, 2001. Defendant FHWA filed its answer to the Complaint on September 6, 2001 and Defendant Stephens filed his answer on October 3, 2001. The City filed a motion to dismiss the amended complaint so far as it named the City as defendant on September 6, 2001. On February 15, 2002, the United States District Court held a hearing to consider the City’s motion to dismiss. At the hearing, the Defendant FHWA and the Defendant NDOT joined the City’s motion to dismiss. The City’s motion to dismiss was fully argued and submitted to the Court for a ruling. On March 11, 2002, the Court issued an order dismissing all of the Company’s claims against the City. The Court ruled the ReTRAC Project must comply with NEPA but the specific federal aid statute under which the City is receiving funding for the ReTRAC Project does not explicitly require the local government body to consent to suit under NEPA. Accordingly, the Court found the City was not a proper party in the case. The Court, however, denied the motions to dismiss by FHWA and NDOT stating the Company is entitled to proceed on the claims against those agencies for a violation of NEPA. The Court has approved a procedural schedule that provides for the parties to submit legal briefs on the remaining NEPA claims against FHWA and NDOT. This schedule calls for the parties to file opening briefs by December 2, 2002, and answering briefs by January 17, 2003.

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The City completed its construction cost analysis in July 2002. Construction contracts for the ReTRAC Project were awarded by the City Council on July 16, 2002. Preliminary construction activities have commenced and the Company has been informed by the City that eminent domain proceedings will be commenced at some time in the future to acquire from the Company fee title to approximately 3,802 square feet of land and a 4,524 square foot administrative office building owned and used by the Company, as well as temporary easements for approximately 22,979 square feet of land to facilitate construction of the ReTRAC Project.

Other Litigation - The Company is a party to various lawsuits relating to routine matters incidental to its business. Except as noted below, the Company does not believe that the outcome of such litigation, individually or in the aggregate, will have any material adverse effect on its financial condition.

Reliance - From April 1, 1998 through September 30, 1999, the Company’s general liability insurance and worker’s compensation insurance carrier was Reliance Insurance Company (“Reliance”). On May 29, 2001, a Pennsylvania court placed Reliance under the control of the Pennsylvania Insurance Department for rehabilitation. Thereafter, on October 3, 2001, the Reliance Insurance Company was declared insolvent and placed under an order of liquidation by the Pennsylvania Commonwealth Court at the request of the Pennsylvania Insurance Department. The Pennsylvania Insurance Department is now referring claims incurred in Mississippi, Nevada and Colorado from April 1, 1998 through September 30, 1999 to the Mississippi Insurance Guaranty Association, the Nevada Insurance Guaranty Association and the Colorado Insurance Guaranty Association, respectively. Each state’s Guaranty Insurance Association will investigate the claims incurred in their jurisdictions to determine if any of these claims are eligible for any insurance coverage under the respective Insurance Guaranty Association. The Company has not incurred any material amounts for liability claims or workers compensation claims that would be subject to reimbursement by Reliance. However, the statute of limitation has not expired for filing claims and it is unclear at this time what the insurance coverage would be from Reliance, if any, in the event that a future claim is filed that would be large enough to result in an insurance reimbursement from Reliance or any state Insurance Guaranty Association, or if there is insurance coverage for an existing claim that is currently under the threshold level for reimbursement, but increases in the future to an amount eligible for reimbursement. The reimbursement threshold per claim is $25,000 and $100,000 for liability claims and worker compensation claims, respectively. At the present time, the Company is unable to determine what effect this action may have on liability and worker’s compensation claims which arose during the coverage period for which Reliance was the Company’s insurance carrier or whether any limitations on coverage would have a material adverse effect on the Company’s financial condition.

Holiday Inn - Upon notification by Majestic of its intent to not enter into a new franchise agreement with Holiday Inn Franchising, Inc. (“Inn”), the Company filed a motion with the Bankruptcy Court on October 26, 2001 to remove its pre-petition franchise and other agreements with Inns from the list of agreements to be assumed and assigned to Majestic. On October 26, 2001, the Bankruptcy Court granted the motion. On or about July 9, 2002, the Bankruptcy Court entered an order granting the Company’s motion for an order authorizing the rejection of the

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franchise agreement. Inn disagreed with the rejection and subsequently filed an unsecured claim in Bankruptcy Court based upon the liquidated damage provision of the franchise agreement for $1.8 million. While the Company is contesting the allowance of such a claim by the Bankruptcy Court, the Company cannot predict the Bankruptcy Court’s ultimate resolution of such a claim.

Item 2. Changes in Securities and Use of Proceeds.

Not Applicable

Item 3. Defaults Upon Senior Securities.

(a) As previously reported in its Report on Form 8-K filed July 22, 1999 and elsewhere in this Form 10-Q, the Company is in default on its $205.0 million Senior Secured Notes.

Item 4. Submission of Matters to a Vote of Security Holders.

Not Applicable

Item 5. Other Information.

The Company files monthly operating statements with the Bankruptcy Court. These filings are available for public inspection at the office of the clerk of the Bankruptcy Court at 300 Booth Street, Reno, Nevada 89509 or on the internet at www.nvb.uscourts.gov.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits



99.1		Certification pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.2		Certification pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

None

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: November 12, 2002

FITZGERALDS GAMING CORPORATION
(DEBTOR-IN-POSSESSION)

/s/ Michael E. McPherson
Michael E. McPherson
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer, Principal
Financial Officer and Principal
Accounting Officer)

CERTIFICATIONS

I, Philip D. Griffith, certify that:

1)    I have reviewed this quarterly report on Form 10-Q of Fitzgeralds Gaming Corporation (the “Registrant”)

2)    Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to sate a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.

3)    Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in the report.

4)    The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

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        a)    designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

        b)    evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

        c)    presented in this quarterly report, our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5) The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and to the audit committee and the audit committee of Registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

6) The Registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses

Dated: November 12, 2002

/s/ Philip D. Griffith
Philip D. Griffith
President and Chief Executive Officer

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CERTIFICATIONS

I, Michael E. McPherson, certify that:

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Dated: November 12, 2002

/s/ Michael E. McPherson
Michael E. McPherson
Executive Vice President and
Chief Financial Officer

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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 three quarters ended September 29, 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 four 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”).

		Fitzgeralds Reno, during 2002, although no assurance can be 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 three quarters ended September 29, 2002 and September 30, 2001, the Company incurred the following expenses subsequent to the filing of the Bankruptcy Cases:

		*Liabilities Subject to Compromise*

		At September 29, 2002 and December 31, 2001 liabilities subject to compromise consisted of the following:

		As of September 29, 2002 and December 31, 2001 assets included in net assets held for sale of $12.3 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 subsequently established a new threshold for cash reserves of $16.5 million, which was tentatively approved by the Bankruptcy Court on November 1, 2002 and which will become fully approved upon entry of the Bankruptcy Court’s Order approving the amendment to the Restructuring Agreement. As of the filing date the Order has not been entered, however at the November 1, 2002 hearing, the Court stated that upon its entry, the Order would be effective November 1, 2002. 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, 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, rooms (except for Fitzgeralds Black Hawk), 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


			For the Quarters Ended

			Sept. 29, 2002			Sept. 30, 2001

			(in thousands)
Statement of Operations Data
Net Operating Revenues:
	Fitzgeralds Las Vegas		$	—		$	12,675
	Fitzgeralds Tunica			—			21,113
	Fitzgeralds Reno			10,451			10,342
	Fitzgeralds Black Hawk			—			9,525
	Other			5			(10	)

		Total	$	10,456		$	53,645

Income (Loss) from Operations:
	Fitzgeralds Las Vegas		$	159		$	(186	)
	Fitzgeralds Tunica			(94	)		5,249
	Fitzgeralds Reno			1,574			1,636
	Fitzgeralds Black Hawk			(54	)		2,649
	Other (1)			(1,034	)		(715	)

		Total Properties		551			8,633
	Nevada Club			(24	)		2

		Total	$	527		$	8,635

Other Data
EBITDA (2):
	Fitzgeralds Las Vegas		$	159		$	(148	)
	Fitzgeralds Tunica			(94	)		5,200
	Fitzgeralds Reno			1,574			1,674
	Fitzgeralds Black Hawk			(54	)		2,641
	Other (1)			(1,027	)		(1,323	)

		Total Properties		558			8,044
	Nevada Club			(24	)		2

		Total EBITDA		534			8,046
	Adjustments to EBITDA (3)			108			1,038

		Adjusted EBITDA	$	642		$	9,084


			For the Three Quarters Ended

			Sept. 29, 2002			Sept. 30, 2001

			(in thousands)
Statement of Operations Data
Net Operating Revenues:
	Fitzgeralds Las Vegas		$	—		$	40,600
	Fitzgeralds Tunica			—			63,176
	Fitzgeralds Reno			28,948			29,933
	Fitzgeralds Black Hawk			—			25,916
	Other			29			25

		Total	$	28,977		$	159,650

Income (Loss) from Operations:
	Fitzgeralds Las Vegas		$	(136	)	$	2,318
	Fitzgeralds Tunica			(242	)		15,579
	Fitzgeralds Reno			2,255			2,928
	Fitzgeralds Black Hawk			(439	)		6,245
	Other (1)			(3,239	)		(2,670	)

		Total Properties		(1,801	)		24,400
	Nevada Club			(40	)		(45	)

		Total	$	(1,841	)	$	24,355

1)		I have reviewed this quarterly report on Form 10-Q of Fitzgeralds Gaming Corporation (the “Registrant”)

2)		Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to sate a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.

3)		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in the report.

4)		The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

	a)		designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b)		evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c)		presented in this quarterly report, our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

	a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and