Mandalay Hand Turns Cold

Mandalay Resort Group's (MBG) profits fell in the latest quarter, the result of heavy rain in California and Nevada, bad luck at its Mandalay Bay resort and higher Michigan gaming taxes.

The company, which is in the process of being acquired by MGM Mirage (MGG), said net income was $16.4 million, or 23 cents a share, for its fourth quarter, which ended Jan. 31. That was down 28.1%, from $22.8 million or 35 cents a share a year before.

The latest results included a slew of one-time items: merger-related costs of $4.3 million, or 6 cents a share; an increase in a reserve for worker's compensation claims of $3.1 million, or 3 cents a share; a decrease in casino revenue of $2.8 million, or 3 cents a share, related to jackpot reserves; a $1.2 million, or 1-cent-a-share write-off for discontinued projects; and a gain of $3.8 million, or 4 cents a share, related to investments in the company's executive retirement plan.

Excluding all those items, Mandalay Resort Group had adjusted earnings of 32 cents a share.

Revenue was $645.6 million, up 6.9% from $604.1 million a year before.

A low "hold percentage" on table games at the flagship Mandalay Bay resort cost the company about $6.5 million in the latest quarter. Meanwhile, an increase in the gaming tax rate in Michigan, which took effect last September, increased taxes at the MotorCity Casino by about $6.3 million. Mandalay holds a 53.5% stake in the casino. Also negatively impacting results were health care costs, which rose $2.8 million, or 7%. The company cited rising medical costs in general, but also a surge in so-called catastrophic claims.

Shares finished Thursday down 3 cents, or 0.04%, at $70.84.