Mohegan Tribal Gaming Authority announces Q3 operating results

UNCASVILLE, Connecticut -- (PRESS RELEASE) -- The Mohegan Tribal Gaming Authority, or the Authority, announced today its operating results for the third fiscal quarter ended June 30, 2011. The Authority is an instrumentality of the Mohegan Tribe of Indians of Connecticut, or the Tribe, and the owner and operator of a gaming and entertainment complex located in Uncasville, Connecticut, known as Mohegan Sun, and a gaming and entertainment facility located in Plains Township, Pennsylvania, known as Mohegan Sun at Pocono Downs.

“The growth in Adjusted EBITDA and continued margin improvements at both properties are a direct result of the outstanding efforts by each and every one of our employees.”
Consolidated operating results for the third quarter ended June 30, 2011:

Net income attributable to the Authority of $29.1 million, a 150.9% increase over the third quarter of fiscal 2010
Income from operations of $60.1 million, a 36.8% increase over the third quarter of fiscal 2010
Adjusted EBITDA, a non-GAAP measure described below, of $83.2 million, a 19.9% increase over the third quarter of fiscal 2010
Net revenues of $361.4 million, a 2.1% increase over the third quarter of fiscal 2010
Gaming revenues of $328.3 million, a 2.2% increase over the third quarter of fiscal 2010
Gross slot revenues of $233.0 million, a 5.4% decrease from the third quarter of fiscal 2010
Table games revenues of $90.9 million, a 28.8% increase over the third quarter of fiscal 2010
Non-gaming revenues of $60.7 million, a 0.6% decrease from the third quarter of fiscal 2010
The growth in consolidated net income attributable to the Authority, income from operations and Adjusted EBITDA for the quarter ended June 30, 2011 was primarily attributable to higher table games revenues at Mohegan Sun and the addition of table game and poker revenues from the July 2010 opening of table game and poker operations at Mohegan Sun at Pocono Downs. Consolidated results for the quarter ended June 30, 2011 also reflect the continued focus on managing expenses at both Mohegan Sun and Mohegan Sun at Pocono Downs.

“We are extremely pleased with our results for the third quarter,” said Mitchell Grossinger Etess, Chief Executive Officer of the Authority. “The growth in Adjusted EBITDA and continued margin improvements at both properties are a direct result of the outstanding efforts by each and every one of our employees.”

The increases in income from operations and Adjusted EBITDA were primarily attributable to lower operating costs and expenses, including payroll costs and promotional expenditures, resulting, in part, from cost containment initiatives implemented in September 2010 and the continued success of our targeted marketing programs. Income from operations and Adjusted EBITDA also reflect higher table games revenues. These results were partially offset by lower slot revenues due to increased competition from competitors in the Northeast region, the continued weakness in consumer discretionary spending and an adjustment of $3.7 million related to prior periods. Operating margin increased by 400 basis points to 19.8% for the quarter ended June 30, 2011 from 15.8% in the third quarter of fiscal 2010. Adjusted EBITDA margin increased by 390 basis points to 25.9% for the quarter ended June 30, 2011 from 22.0% in the third quarter of fiscal 2010.

Slot revenues at Mohegan Sun declined primarily as a result of increased competition and aggressive promotional programs from competitors in the Northeast region. The reduction in slot revenues at Mohegan Sun also reflects the continued weakness in consumer discretionary spending. We believe the decreases in Mohegan Sun’s slot win market share and efficiency in the Northeast slot gaming market also were the result of increased competition and aggressive promotional programs. The decline in Mohegan Sun’s slot win efficiency in the Connecticut slot gaming market was primarily the result of a reduction in Foxwoods Resort Casino’s weighted average number of slot machines during the quarter.

The growth in table games revenues was attributable to the significant increase in table games hold, partially offset by lower table games drop during the quarter. The decline in table games drop likely reflects patrons in the State of New York choosing to visit expanded gaming facilities in the Commonwealth of Pennsylvania.

The decline in food and beverage revenues was primarily attributable to a $3.3 million decrease in food revenues resulting from the reduction in the number of meals served at Mohegan Sun-owned food and beverage outlets. The reduction in the number of meals served reflects the consolidation and replacement of certain Mohegan Sun-owned food and beverage outlets with third-party operators.

The decrease in hotel revenues was primarily attributable to a shift in hotel occupancy from transient guests to group and casino business, which had the effect of lowering the average daily room rate during the quarter. The decline in the average daily room rate was partially offset by the increase in the occupancy rate.

The growth in retail, entertainment and other revenues was primarily due to a $1.7 million increase in entertainment revenues. The growth in entertainment revenues resulted from the increase in the average price per Arena ticket due to an increase in headliner shows held at the Mohegan Sun Arena during the quarter.