Mandalay has big year despite
mild slump in fourth quarter

Mar 8, 2005 8:56 AM

Despite problems in the fourth quarter, Mandalay Resort Group (MBG) had good news to report to its shareholders and to MGM MIRAGE Inc. (MGG) the company that should complete acquisition requirements before the end of this month.

For the fiscal year that ended on Jan. 31, the company reported net income of $229.1 million or $3.31 per diluted share compared with $149.8 million or $2.31 per diluted share in the prior year.

The fourth quarter experience, however, was hampered by what the company called "record rainfall in Southern California and Nevada" as well a low hold percentage on table games at its Mandalay Bay Resort on the Las Vegas Strip. The low hold percentage, the company said, cost the company approximately $6.5 million.

Other factors that affected the fourth quarter, the company reported, were the increased gaming taxes at the company’s 53.5% owned MotorCity Casino in Detroit, and the 12% increase in medical costs due to "a surge in catastrophic claims and an increase in the number of covered employees."

There was an increase in outstanding shares for the period from 66.1 million to 70.7 million. "This reflects the issuance of shares pursuant to the exercise of employee stock options, as well as grants of restricted stock in March and April 2004," the company reported.

For the fiscal year, operating cash flow increased to $753.7 million versus last year’s $648.1 million.

Shuffle Master

Both revenue and net profit increased during the first fiscal quarter of 2005, according to a report issued by Shuffle Master Inc. (SHFL) last week.

Revenue was $25.3 million compared to $15.6 million reported in 2004 while net income increased to $0.17 per share compared to $0.11 per share a year earlier. Also increasing was the EBITDA (earnings before interest, taxes, depreciation and amortization) that went to $12.4 million, a jump of 62%.

Other first quarter accomplishments listed by the company included the purchase of two key patents from ENPAT, Inc. that relate to the use of RFID technology, and the formation of a subsidiary, Shuffle Up Production Inc. to leverage its intellectual property.

Commenting on the report, Dr. Mark Yoseloff, chairman and CEO, said, "We are continuing to strengthen our Utility and Entertainment Product categories by further diversifying our product offerings."

The company said it was targeting year-over-year growth of 25% to 30% in diluted earnings per share for both the second quarter and the full fiscal year. This would mean quarterly earnings per share of $0.17 to $0.19 and $0.77 and $0.79 for the full year.

It also advised that beginning with the quarterly period that begins on Aug. 1 it will expense the fair value of director and employee stock options and similar awards. The previous guidance, it said, does not include the impact of the new accounting procedures.