las vegas railway express, inc.. click to edit master title style confidential – may not reproduce...

Las Vegas Railway Express, Inc.

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Confidential – May not reproduce or distributewithout permission of Las Vegas Railway Express, Inc.

Executive Summary

Las Vegas Railway Express, Inc. (the “Company”, “LVRE”) will operate the “X” Train, a luxury

passenger train, on a 330 mile route between Los Angeles and Las Vegas and will offer a

compelling alternative to current travel options

Trains Outfitted With First Class Accommodations

− Deluxe first class cars with executive seats, multiple flat screens in each car, bar and five-star food service, smoking cars, limited card

games (for hotel credit—no gambling) , corporate suites and door-to-door hotel transfers upon arrival in Las Vegas

Concierge Reservation Services: Pre- and post-boarding at discounted prices from hotels, restaurants, shows

− Non-train booking income provides supplementary growth opportunity

Procure Operating rights for passenger train service over existing Union Pacific (“UP”) and Burlington Northern

Santa Fe (“BNSF”) rail systems

− LVRE to provide market rate fees to railroads to for financial incentive to give priority to LVRE trains

− LVRE has negotiated right-of-way over longer and slower UP freight trains

− UP has agreed to a 90% on-time arrival guarantee

Quick Train Statistics

Average Speed – 65 mph

Trip Time – 5 hours

Fare – $99/passenger (one-way)

2



Market and Competition

Driving is cheapest and most popular mode of travel, but route congestion and safety are prevalent and

growing problems

12MM individuals drive between Los Angeles and Las Vegas each year

Single highway (I-15) drive over mountain pass (plus intersections)

– On peak travel days (which coincide with Las Vegas as entertainment destination) the drive can take 6+ hours

– Drive takes ~4.5 hours on uncongested days (Monday afternoon, Tuesday and Wednesday)

I-15 between Los Angeles and Las Vegas is the most dangerous highway in the country (according to U.S. DOT)

Typical trip costs: ~$68/one way (17 gallons of gas)

Flying is more expensive and door-to-door transit time only marginally faster than driving

2MM individuals fly to Las Vegas each year from one of four Los Angeles airports

Tickets are $280-$320 per person one way

Flying has its own issues:

– 1 hour actual flight time, plus drive time in traffic to airport

– Incur additional parking fees

– Must endure check-in and airport security procedures

– Additional waiting time in advance of flight

– Total time: ~4.5 hours

3

Flying is generally an uncomfortable experience given driving to airport through congestion, airport procedures, uncomfortable seats due to small plane configuration, lack of carry-on baggage space, limited service and Las Vegas hotel transfer



Compelling Opportunity

Ample demand exists in current market to make LVRE a winner

Las Vegas Municipal RTC Survey estimated 4MM individuals would use rail if a viable option existed

Other surveys estimate that 30% of the 12MM individuals which travel to Las Vegas do so for

entertainment alone (gambling, shows, world-class dining, shopping, etc.—excludes travel for business,

conventions, athletic events, etc.)

Non-train booking services will generate a high-margin, supplemental and diversified revenue

stream

Online booking platform and concierge reservation service offer travelers an easy and convenient

solution for lodging and entertainment booking

Opportunity to capture additional fee income from current train passengers

LVRE team of experienced Las Vegas leisure and gaming experts possess deep relationships with top

Vegas hotels and casinos and intimate knowledge of the market

Conservative non-train revenue forecast means greater upside exists beyond current projections

LVRE need only capture a small fraction of the overall market to achieve profitability

Break even projected at 120,000 passengers per year

Year 1 – Two trains making two round trips 2 days a week (Thursday, Friday –Sunday)

– Travel Thursday, Friday & Sunday (most popular travel days and most highly congested highway times)

– Overall capacity of 1,200 passengers on a train of 15 cars

4



Non-Train Revenues

High-Margin Supplementary Revenue Stream

Booking platform will be sole channel to purchase “X” Train tickets

– In discussions with Navitaire Rail to build custom tailored ticketing and reservation portal

LVRE will offer packages and specials to bundle with train tickets

– High hit bookings: Hotel rooms, shuttle transfers (model assumes 40-50% capture rate)

– Specialty bookings: Golf packages, shows, club bookings etc. (model assumes ~20% capture rate)

Projections calculated using a full bottom-up model for each bucket of non-train revenue

White-Glove Concierge Booking and Reservation Service

Sales team will proactively call customers after booking to upsell bundled packages

Onboard concierge to book hotels, restaurant reservations, golf and other packages

Attractive Upside Potential

Current model assumes very conservative capture rate

Management’s hospitality experience suggests actual upsell rates could meaningfully exceed

forecasted assumptions

Potential volume discounts from hotels, restaurants, shows, etc. currently not reflected in the model

– Discounts passed on to customers to further encourage bundling

5



Financial Metrics

6

Las Vegas Railway Express 5 Year Financial Plan

Year 1 Yr 1 Exit Rate Year 2 Year 3 Year 4 Year 5

TOTAL TRAIN REVENUES 63,212,326$ 67,663,898$ 140,818,446$ 228,704,957$ 326,871,861$ 435,319,156$ TOTAL TRAIN EXPENSES 55,330,506$ 56,054,193$ 106,254,411$ 157,125,222$ 208,601,521$ 260,605,959$

TRAIN OPERATING INCOME 7,881,820$ 11,609,706$ 34,564,035$ 71,579,735$ 118,270,340$ 174,713,197$

NET INCOME 4,762,001 7,222,406 22,033,289 46,093,494 76,442,388 113,130,245

Full Operating Ratio 87.53% 82.84% 75.45% 68.70% 63.82% 59.87%



Financial Metrics

7

Las Vegas Railway Express 5 Year Financial Plan

1 Train 1 Train Add 1 Train-YE 2 Add 2 Trains-YE 4 Add 2 Trains-YE 6 Add 2 Trains-YE 8

Year 1 Yr 1 Exit Rate Year 2 Year 3 Year 4 Year 5Xtrain Metrics and Financial Statistics

Number of Trains at Beginning of Yr 0 0 2 4 6 8New Trains Added 2 2 2 2 2 2Annual Ridership 227,058 243,048 470,106 713,154 956,202 1,199,250 Ridership Growth 107% 52% 34% 25%Annual Round Trips 208 208 416 624 832 1,040 Avg # of Riders per Round Trip 1,092 1,169 1,130 1,143 1,149 1,153

Market Penatration (vs 12,000,000) 1.9% 2.0% 3.9% 5.9% 8.0% 10.0%

Avg Ticket Price per Rider 198.00$ 198.00$ 218.00$ 238.00$ 258.00$ 278.00$ Average Revenue per Customer 278.40$ 278.40$ 299.55$ 320.70$ 341.84$ 362.99$

Revenues 63,212,326 67,663,898 140,818,446 228,704,957 326,871,861 435,319,156

Operating Expenses: TrainC.O.G.S. 4,096,127$ 4,384,587$ 8,480,714$ 12,865,300$ 17,249,887$ 21,634,473$

Train Payroll 1,921,200$ 1,921,200$ 3,746,580$ 5,727,587$ 7,738,105$ 9,914,447$ Other Train Operating Expenses 45,531,529$ 45,966,756$ 89,792,126$ 133,816,856$ 178,467,488$ 223,529,497$ Total Train Operating Expenses 51,548,856$ 52,272,543$ 102,019,420$ 152,409,744$ 203,455,480$ 255,078,417$

Train Operating Ratio 82% 77% 72% 67% 62% 59%


Project Status



Operating Agreement with Union Pacific Railroad

Union Pacific Railroad

Rail access agreement to run trains on UP route from Las Vegas to Daggett, California

Market Rate fee structure

Right of way agreement to pass slower freight trains

– Guarantee 90% On- Time arrival

– LVRE will pay competitive market rate—incentivizing freight rail companies to give priority to LVRE trains

Sole Right to run privately operated passenger service on Daggett to Las Vegas rail corridor for 5 years

Provisions for running additional trains in future years

Capital Improvements to be paid for by LVRE for capacity improvement

UPRR completed RTC capacity planning

Agreement finalized

9



Union Pacific Project Team

10

Union PacificJohn Rebensdorf VP Operations Omaha, NE

Jerry Wilmoth General Manager Network Infrastructure Roseville, CA

Don Caldwell Real Estate Group Rancho Cucamonga, CA

Terry M Tate Director Transportation Services – West Salt Lake City. UT

David D Orrell, PE Director Construction/Public Projects Omaha, NE

Rick Durrant Director Quality Services – West Roseville, CA

Neil ScottSuperintendent Transportation SVCS – Utah

Salt Lake City, UT

James MarshallProgram Manager – Commuter Engineering Salt Lake City, UT

Simon J Hjelm Capacity Planning Omaha, NE



BNSF Operating Agreement Summary

Market Rate $142 per train mile

Guarantee 90% on time operations

Priority scheduling over freight

BNSF dispatch Fullerton to Daggett, California

Operations commence while construction on Cap Ex is underway

Economic Benefits to BNSF Direct LVRE

» Year 1 $9,746,880 Year 2

$19,493,760

» Year 3 $38,987,520

» Year 4 $58,481,280

» Year 5 $77,975,040

11



Project Team BNSF

12

Burlington Northern Santa FeMatt Rose Chairman/CEO Ft. Worth, TX

Carl Ice President/COO Ft. Worth, TX

Rollin Bredenberg VP Capacity Planning Ft. Worth, TX

DJ Mitchell AVP Passenger Rail Ft. Worth, TX

Rich Wessler Director Passenger Rail Operations Ft. Worth, TX

Gary Agnew General Director Resource Planning Ft. Worth, TX

Rick L Depler Asst. Director Passenger Operations Ft. Worth, TX



Haulage Agreement with Amtrak

13

Operating train crews and scheduling

Experienced crew and maintenance teams

Familiar with the Los Angeles to Las Vegas route on the BNSF and UP rail lines

Established security and safety procedures

Efficient operating performance record



Amtrak Project Team

14

AmtrakJoe McHugh VP Policy & Development Washington, DC.

Stephen Gardner VP Policy & Development Washington, DC.

Jonathan Hutchinson Director – Corridor Development Oakland, CA.

Don Kushto Principal – Host Railroads Philadelphia, PA.

William Sheridan Chief, Service Planning/Strategy Washington, DC.

Paul Vilter AVP – Host Railroads Philadelphia, PA.

Suzanne Fike Principal Officer – Strategic Partnerships Oakland, CA.



Rail Car Procurement & Refit

Agreement in place to acquire 24 Bi-Level Budd 7600 Series passenger cars from Transportation Management Services

BRC Coach & Transit of Las Vegas Nevada to complete refit and refurbishment of rail cars

Don Primi of Rail Enterprises serves as Owner’s representative on refit & FRA, UPRR and BNSF compliance

Interior design by Carpenter Sellers DelGatto, architects

15

Southern California Terminal

Metrolink Feeder System12 million passengers a year ride this system

These are examples of specifications and drawing disclosures of the train concept that will help you understand what constitutes a complete design of the train, which are provided as examples only. Actual designs will vary from these illustrations.

Las Vegas Station Site


Vegas Station Design Concept

jmzilliken

Need Disclaimer at the bottom

LV Station Design Phase 1(All station Designs subject to final approval by UPRR)


Capacity up to 3 trains & 700,000 riders annually

LV Station Phase 2(All station Designs subject to final approval by UPRR)


Capacity up to 8 trains and 2 million riders annually



Development Timeline

Uses of Proceeds

The Company estimates that it will require $35MM to begin Phase I operations in the 1st year

– Use of proceeds include:

» Railcar purchase, design, refurbishment and outfitting

» Las Vegas Depot design and construction

» UP & BSNF mileage fees

» Salaries and other professional fees (legal, marketing/PR, etc.)

» IT and corporate infrastructure development

Anticipated Timeline of Significant Events

23

1Q 2012 1Q 20134Q 20123Q 20122Q 2012

Close $35MM Round

Retrofit Design Work Refurbishment and Outfitting

Site Design Depot and Station Construction

Rail Cars

Las Vegas Depot

BNSF & UP Fees

Financing

Mileage Fees

Completion

andLaunch

Mezzanine Financing



Organizational Chart

24

President/CEOMichael A. Barron

Human ResourcesVicki DiBernardo

Training & Development

Legal

Operations ChiefJim Wilson

DirectorMaintenance Operations

DirectorLogistics

Safety Officer

Station DevelopmentDianne Barron

Passenger ServicesPenny Stegeman

DirectorFood & Beverage

Bartenders

Waitstaff

support

ChefsCooks

Support

On Board Operations

(2)

Housekeeping

Engineering Support

Security

DirectorRetail Sales

VP Sales & Marketing

Don Adams

Director Marketing

Social media

DirectorSales

Ticket Manager

ManagerCall Center Operations

ManagerCorporate Sales

CIOBob Gottesman

Website Development

On Board technicalOperations

Corporate SystemsInfrastructure

VP Asset Development

Joe Cosio-Barron

Rail Car

Locomotives

CFOWanda

Witoslawski

Controller

Senior Accountant

Investor RelationsMike Mason



Key Personnel

Gilbert H. Lamphere – Chairman of the Board

Mr. Lamphere serves on the Board of Directors of CSX Corporation ($25bn, 23,000 mile railroad) and has served on

the board of Canadian National Railway ($25bn, 15,000 mile transcontinental railroad), Chaired the Board of the

Illinois Central Railroad ($2.5bn, 1,000 mile Class 1 railroad between Chicago and New Orleans) and served on the

board of Florida East Coast Railway ($2.8bn railroad, 350 miles down East Coast of Florida). He was also

instrumental in the investment and oversight of Mid South Rail. Mid South, Illinois Central and Canadian National

became successively the most efficient railroads with the lowest operating ratios in North America.

Michael Barron – President/CEO

Mr. Barron has been a developer of new business enterprises for nearly 30 years. Trained as a City & Regional

Planner, Mr. Barron was responsible for Monterey California’s downtown redevelopment project of famous Cannery

Row and Fisherman’s Wharf. Mr. Barron founded Citidata, the first electronic provider of computerized real estate

multiple listing service (MLS) information in the nation. He led the business development team at TRW that acquired

11 companies and became the world’s largest repository of real estate property information - Experian. He founded

and served as President, Finet Holdings Corporation (NASDAQ:FNCM), a publicly traded mortgage banking business

specializing in e-mortgage financing on site in real estate offices. The company maintained a market capitalization of

$500mm. Mr. Barron pioneered the first nationwide commercially deployed video conference mortgage financing

platform for Intel Corporation operating in 20 states and funded over $1bn in closed loans annually. He was CEO for

Shearson Home Loans and founded Liberty Capital, a $100mm asset management company based in Las Vegas,

Nevada.

Wanda Witoslawski - Chief Financial Officer

Ms. Witoslawski has served in progressively responsible financial positions for public companies over the past twelve

years. She served as Controller for Ocean West Enterprises until its acquisition by Shearson Home Loans in 2005

where she managed the accounting function for a staff of 1,350 employees and $200mm credit facility. Upon

Shearson’s exit from mortgage banking in 2007, she joined the principals Mr. Barron and Mr. Cosio-Barron as

Controller at Liberty Capital Asset Management, an investor in acquiring defaulted mortgage pools, managing public

accounting documents for SEC filings and the financial supervision over the liquidation of over 4,000 mortgage loans

the company had acquired. 25



Key Personnel (cont.)

Joseph A. Cosio-Barron –Vice President – Asset Development

Mr. Cosio-Barron currently serves as LVRE’s Executive Vice President and has over 35 years of experience in real

estate investment and development. Previously, Mr. Cosio-Barron was President of Shearson Home Loans and co-

founded Liberty Capital, a $100 million asset management company based in Las Vegas. He has also served as the

Managing Partner and President of CBS Consultants, Inc. a financial firm offering highly specialized services in

securities compliance, development and lending for hotels, resorts, casinos and entertainment, as Executive Vice

President of Finet Holdings Corporation, President of Terra West Construction, Senior Vice-President of Multi-Financial

Corporation.

John H. Marino, Vice President –Rail Operations (interim)

Mr. Marino currently serves as Vice President – Rail Operations where he supervises the Company’s activities with the

Class 1 railroads, railcar procurement, and railset maintenance. Mr. Marino also serves as President of Transportation

Management Services, Inc., and was previously President and Chief Operating Officer of Rail America (NYSE:RA), co-

founder of Huron & Eastern Railway Company, Inc., President of Huron Transportation Group, President and Chief

Executive Officer of several short line railroads, as an officer of the Reading Railroad and with the United States

Railway Association.

26



Key Personnel (cont.)

Donald J. Adams, Vice President, Sales & Marketing

Mr. Adams currently serves as Vice President of Sales & Marketing for the LVRE. Mr. Adams has spent the last 35

years as Founder and Chief Executive Officer of Allstate Ticketing in Las Vegas. Allstate ticketing is the oldest

and largest broker of sightseeing tours in Nevada, with over 20 (and growing) locations including the Flamingo,

Harrah's, Hoover Dam, Las Vegas Convention and Visitors Authority and McCarran International airport. Mr.

Adams and Allstate were pioneers in using the web-based platforms for the industry and in 2005 sold Allstate to

Travelocity, Inc. Prior to founding Allstate, Mr. Adams served in executive roles for many Las Vegas gaming

companies.

Dianne D. David-Barron, Stations Development Manager

Ms. David-Barron serves as LVRE’s Stations Development Manager. Ms. David-Barron has been an executive in the

real estate and mortgage industries for 38 years. She is currently responsible for the construction and

operations of the Las Vegas, Nevada, X Train Railway Station and for the integration of the service in Fullerton,

California Station. Ms. David-Barron was previously the VP of the REO Department for Liberty Capital Asset

Management, where she he managed a portfolio in excess of 4,000 loans located in 23 states. Ms. David-Barron

has also served as Vice President of Residential Lending for Shearson Home Loans, Sales Manager for Virtual

Mortgage Network, Vice President of Lender Services for Finet Corporation and as President of the Lender

Services Division of American Financial Network.

27



Team Board Members and Consultants

LVRE is supported by a team of experienced consultants and advisors whose specialties include

railroad operations, investment banking, legal, insurance, real estate development, and

marketing

28

John McPherson President Illinois Central Railroad (ret)President – Florida East Coast Railway (ret.) Board Member - LVRE

Tom Mulligan Director, Passenger Ops. – Union Pacific (ret.)Board Member - LVRE

John Marino President Rail America (ret)

Board Member - LVRE

Mark Schulte Managing Director Dahlman Rose

Investment Bankers

Rob Pek President – BRC Coach and Transit

Brian Harrington Harrington Group LLC - Insurance

Mike DelGatto CSD Architects

Dave Sundaram Odyssey Real Estate Capital – Commercial RE

Chet Opheikens R&O Construction – General Contractor

Phil Cherry Lamar Advertising

Daniel T. Behr Jordan, Knauff & Co

Jody Walker Walker Engineering – Civil Engineers

Las Vegas Railway Express, Inc.

las vegas railway express, inc.. click to edit master title style confidential – may not reproduce...

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