MOHEGAN SUN CASINO POSTS QUARTERLY PROFIT

Mohegan gaming posts quarterly profit
By Brian Hallenbeck

Publication: The Day
Published 02/06/2010 12:00 AM

Cost-cutting offsets decline in revenues

Mohegan - Continued belt-tightening during the last three months of 2009 helped the Mohegan Tribal Gaming Authority post a quarterly profit of $4.4 million, authority officials said Friday during a conference call with gaming industry analysts and investors.

The authority operates Mohegan Sun and Mohegan Sun at Pocono Downs, a racetrack casino in Wilkes-Barre, Pa.

Although gaming and nongaming revenues at the facilities were down 5.2 and 11.9 percent, respectively, for the quarter, the authority's adjusted EBITDA - earnings before interest, income taxes, depreciation and amortization - was up 15.2 percent over the same three months in 2008. The authority's fiscal year runs from Oct. 1 to Sept. 30.

"Despite the significant improvement in adjusted EBITDA, we continue to be challenged by reduced spending per patron, especially at Mohegan Sun in Connecticut," Mitchell Etess, the authority's chief executive officer, said in a statement released prior to the call. "However, I am very pleased with our ongoing efforts to manage our properties effectively and efficiently, as reflected in our cost savings during the quarter."

A cost-containment program adopted by the authority on Feb. 1, 2009 called for salary reductions and the suspension of annual pay increases for all casino employees, as well as other cutbacks. The annual increases were reinstated this month, Etess said during an interview earlier in the week.

Slot-machine revenue in the quarter was down 8.1 percent at Mohegan Sun but up 6.5 percent at Pocono Downs. Table-games revenue at Mohegan Sun was down 5.7 percent, a decline Etess attributed in part to less "high-end" play, defined as wagering by players who "drop" $100,000 or more per quarter.

Etess and Jeffrey Hartmann, the authority's chief operating officer, highlighted positive trends during January, including a near-flattening of the month's slot "win" at Mohegan Sun compared to January 2009. Actual slot results won't be released until mid-February. Hartmann also said hotel bookings related to group sales, or convention business, were up last month.

The authority continues to seek a developer/owner for a planned 300-room hotel at its Pocono Downs facility, where it is preparing to introduce table games. Mohegan Sun at Pocono Downs is, in fact, the first casino operator to seek authorization for table games since the Pennsylvania legislature approved them last month. Hartmann said Pocono Downs will install 82 table games, including 16 poker tables in addition to blackjack, roulette and craps. The necessary renovations will cost $17.9 million, and the authority will have to pay a $16.5 million table-games authorization fee by June 1.

The authority also reported a quarterly distribution of $27.3 million to the Mohegan Tribe. Distributions are expected to total between $59 million and $64 million in fiscal 2010.