MGM Grand earnings plummet

MGM Grand Inc. today said second-quarter earnings fell more than 55 percent, to $14.4 million, or 26 cents a diluted share; from $33 million or 56 cents in the 1997 quarter.

The decline was expected. Revenue fell to $185.4 million from $209.1 million, MGM said.

The company attributed the earnings drop to a lower-than-average table game win percentage at the MGM Grand hotel-casino and to lower earnings at its 50 percent owned New York-New York resort.

MGM said the latest results also suffered from comparison with the 1997 quarter, which included a heavyweight title fight between Evander Holyfield and Mike Tyson.

The company said operating cash flow fell 33 percent in the latest quarter, to $48.9 million from $73.3 million in the 1997 period.

Gaming analysts use cash flow, or earnings before interest, taxes, depreciation and amortization, to assess a company's financial performance.

Cash flow at the MGM Grand fell to $36 million from $56.4 million, though the hotel occupancy rate rose to 98 percent from 95.2 percent in the 1997 quarter.

Average revenue per available room was $95 in the latest quarter, down from $96 a year earlier.

Cash flow at New York-New York, MGM's joint venture with Primadonna Resorts Inc., also declined in the quarter, to $25.1 million from $35.5 in the 1997 period.

"These results obscure the fact that, excluding the Holyfield-Tyson boxing event held during June 1997, customer activity by almost any measure is ahead of last year's record pace," MGM President Alex Yemenidjian said in a statement.

"This is evidenced by higher table-games volume, hotel occupancy and restaurant and showroom attendance, while our slot volume continues to keep pace with last year's levels," he said.

MGM is in the midst of a $35 per share cash tender offer to buy back up to 6 million shares of its common stock. The offer began three weeks ago and ends next Friday, unless extended.

MGM hasn't disclosed how many shares have been tendered of the approximately 18 million not held by financier Kirk Kerkorian, who owns 63 percent of the company.

archive