LV firm swings to a profit

Friday, March 7, 2003 | 11 a.m.

SUN STAFF AND WIRE REPORTS

Mandalay Resort Group, owner of casino resorts including Mandalay Bay and Luxor in Las Vegas, swung to a profit in the fourth quarter from a loss a year earlier as more gamblers visited its properties a year after the Sept. 11 attacks.

Mandalay had earnings of $4.2 million, or 6 cents a share, in the quarter ended Jan. 31, compared with a loss of $48.2 million, or 66 cents a share, in the year-earlier fourth quarter.

The year-ago quarter's loss was caused largely by a $52 million writedown of the value of its Gold Strike and Nevada Landing casinos in Jean, just south of Las Vegas.

Revenue rose 5.1 percent to $542 million, President and Chief Financial Officer Glenn Schaeffer said on a conference call with analysts and investors Thursday.

Mandalay in January said profit wouldn't meet analysts' forecasts because fewer gamblers visited over the holidays. This month's bookings will likely fall from March 2002, when a large convention sold out hotel rooms, Schaeffer said. A lackluster economy and the threat of an Iraq war may keep gamblers away, analysts said.

"Trading a war for a town-filling convention is not good," Schaeffer said. Las Vegas bookings were higher in February than a year earlier, and reservations after this month are stronger, he said.

Excluding a write down of the value of goodwill for its Edgewater casino in Laughlin by $5.4 million and $1.3 million in costs associated with the opening of a convention center at the company's Mandalay Bay casino, Mandalay earned 15 cents a share in the most recent quarter.

On that basis, which isn't in accordance with generally accepted accounting principles, earnings exceeded Wall Street's expectation of 13 cents a share, based on the median estimate of analysts polled by Thomson First Call.

The year-ago loss before the writedowns was 10 cents per share.

The company also authorized the repurchase of as many as 10 million shares of common stock.

Mandalay gets two-thirds of its profit from its Las Vegas casinos including the Excalibur, Circus Circus and its 50-percent interest in the Monte Carlo. Profit at the company's Detroit casino, of which it owns 53.5 percent, fell 9.5 percent to $27.9 million. Profit at the Grand Victoria casino in Elgin, Ill., of which Mandalay owns 50 percent, fell 31 percent to $23.8 million because of a higher tax rate in Illinois.

Mandalay revised its outlook for the fourth quarter twice -- once to say it would earn less than analysts expected and the second time to increase its profit outlook.

The company opened a $235 million convention center attached to its Mandalay Bay casino in January to boost its occupancy rates during the middle of the week. A 1,122-room hotel tower costing $200 million will open later this year at Mandalay.

Mandalay shelved a $300 million bond sale in the quarter because the company wasn't willing to offer the yield demanded by investors.

Shares of Mandalay jumped 8 percent, or $1.99, in New York Stock Exchange composite trading today. They've fallen 23 percent so far this year. Earnings were released after the close of trading.