The Mohegan Tribal Gaming Authority reported a $26.3 million loss for the fourth quarter of fiscal 2010.
The fourth quarter is the period of July 1 through September 30, the busiest three months of the year for the gaming company.
Last year, MTGA reported a profit of $66.4 million for the same three months.
Three unusual transactions had a material effect on the bottom line number:
1) This year's loss includes a $58.1 million impairment charge related to halting the hotel construction. The pit of steel and cement in the ground that was to be a hotel was basically written off, finally.
2) MTGA expensed $9.9 million during the quarter that related to severance packages resulting from the mass layoffs that took place over the summer.
3) The loss would have been $52 million and not $26.3 million had it not been for the accounting treatment of the Trading Cove contract, which allowed MTGA to add $26.5 million to the fourth quarter's bottom line under the assumption that Trading Cove (which is paid 5 percent of Mohegan Sun's revenues, not including revenues generated in the Casino of the Wind area or anything off the reservation) will be paid less over the course of the 15-year contract that ends on December 31, 2014.
Had MTGA not booked the above three transactions, MTGA would have ended up with a profit of about $15 million for the quarter. This figure is comparable to last year's fourth quarter where profits were reported at $66.4 million but that figure included a $45.7 million adjustment related Trading Cove. Had that annual adjustment of $45.7 million not been included, then profits in the fourth quarter of 2009 would have been $20.7 million.
Distributions from MTGA to the tribal government are not taken into account when determining MTGA's profits and losses. The distributions reduce a balance sheet item, retained earnings, and are not deducted as an expense. "Distributions to the Tribe totaled $61.5 million and $71.5 million for the fiscal years ended September 30, 2010 and 2009, respectively," according to the press release.
Here is what the report said about the stalled hotel project on the reservation: "During the quarter ended September 30, 2010, the Authority re-evaluated its options with respect to the new hotel element of the project, and based on a modified plan, which encompasses a smaller hotel to be located closer to the existing hotel, determined that certain assets did not have any future benefit to the Authority. Accordingly, the Authority recorded a $58.1 million impairment charge during the quarter ended September 30, 2010."
Gaming revenue at Mohegan Sun fell 1.1 percent to $265 million and non-gaming revenue was abourt $64 million, an increase of 8.1 percent over the same three-month period in the prior year. A decline in slot revenue at Mohegan Sun was bolstered by an increase in table game revenue for the quarter. At Pocono Downs, slot revenue increased 1.6 percent over the fourth quarter in 2009.
Total debt was reported at $1.64 billion and interest expense for the entire fiscal year was $116 million.
The figures in the press release are not audited yet. The fourth quarter's financial statements, which will be audited and also include the balance sheet and statement of cash flows, are expected to be released at the end of December.
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