Profit declines for Sun International

Thursday, Aug. 3, 2000 | 10:32 a.m.

PARADISE ISLAND, Bahamas -- Sun International Hotels Ltd., operator of casinos in the Bahamas and Atlantic City, reported a second quarter profit before one-time items of $19.2 million or 58 cents per share, down from $23.3 million or 68 cents in the year-ago quarter.

Including non-recurring items and real estate sales, quarterly net income was $70.5 million or $2.14 compared to $22.2 million or 65 cents.

Sun International earlier this year canceled its agreement to buy the Desert Inn resort in Las Vegas. And a special committee of its board members rejected a takeover offer from Sun International Investments Ltd., which already controls 54 percent of the company and is led by Sun International Chairman Sol Kerzner. Sun International later agreed to buy back 5 million of its shares at $24 per share.

Operating earnings for the quarter declined primarily due to the termination of the management agreement between the Mohegan Sun and Trading Cove Associates, a partnership in which Sun International holds a 50 percent interest.

The Mohegan Sun Casino in Connecticut generated gross operating revenues of $202.8 million, up 10 percent. Sun International's share of Mohegan Sun income was $5.5 million for the quarter compared to $9.5 million in the prior year. While the management agreement was terminated, Trading Cove will receive 5 percent of the Mohegan Sun's gross revenues under a 15-year contract.

The company said its flagship Paradise Island operations generated cash flow EBITDA of $36.4 million compared to $38.1 million in the same period last year.

Sun's Resorts Atlantic City generated cash flow EBITDA of $7.9 million for the quarter, compared to $4.9 million for the same period last year, when there were construction disruptions, and $9.6 million for the same period in 1998.