Thursday, April 29, 2010

Mohegan Gaming Authority Reports Lower Earnings

Feather News
Updated

The Mohegan Tribal Gaming Authority reported a net income, or profit, of about $20 million for the three months of January through March, a decline of nearly 40 percent from the same three month period last year.

It should be noted that for the same three month period in 2009, the roughly $33 million in profits included a one-time $8 million gain on paying off some bonds.

The amount of money lost by customers from January through March was $319 million, a decline of slightly less than one percent from last year, which was the net result of a 2.3 percent decrease in slot revenues and a 4.3 percent increase, yes increase, in table game revenue.

No doubt a large reason for the slower decline in gaming revenues was due to about $14 million in free slot play that was given out to customers for the quarter compared to nearly $4.5 million in free slot play redeemed by customers during the same three month period in 2009.

The press release issued by MTGA today also noted a 9.7 percent decrease in adjusted EBITDA (adjusted means they found more things to deduct, like some expenses related to the buyout of the former management partners, in addition to the standard interest, taxes, depreciation and amortization).

Non-gaming revenues, before any expenses are factored in, increased by about 10 percent.

Pocono Downs' income from operations, which does not take into account interest expense on the money borrowed to buy, expand and fund the continuing losses, was about $3.9 million for the three-month period, compared to about 3.5 million the year before. Pocono Downs is still losing substantial money when interest expenses are factored into these numbers.

MTGA's total debt remained at $1.64 billion while interest expense on that debt is now running about $10 million a month.

MTGA provided an update on the suspended hotel project on the reservation:
"In September 2008, the Authority announced the suspension of the hotel, retail and new parking garage elements of Project Horizon due to a slowdown in business volumes and uncertainties in the financial markets resulting from the national economic recession. The costs incured for the suspended elements were related to excavation and foundation work for the planed podium and hotel tower, as well as professional fees for design and architectural work. The Authority is currently evaluating its options with respect to the development of the suspended elements, including the new hotel; however, it can provide no assurance as to if or when the suspended elements wil resume. As of March 31, 2010, $75.9 milion of assets related to the suspended elements were included within constrction in process."

No updates were given on the $47 million hallway, which is also known as the Winter Entrance and food court.

The entire set of financial statements - the income statement, balance sheet and statement of cash flows - are expected to be released in a few weeks which will allow us to better analyze the quarter's results.

The headlines in Connecticut's newspapers about the earnings report were the following:

Mohegan Sun Reports Large Decline In Profits (Hartford Courant)

Mohegan Sun's Fortunes Changing - losses slow as economy begins to recover (Norwich Bulletin) The Norwich Bulletin cites 'income from earnings,' a term that we are totally unfamiliar with and don't believe exists.

Sun profits down, but revenues 'stabilizing' (The Day)