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 Mandalay Resort Group Reports Fourth Quarter and Year-End Results
   Thursday, March 03, 2005 4:20:47 PM ET

LAS VEGAS, March 3, 2005 /PRNewswire-FirstCall / -- Mandalay Resort Group (MBG ) today announced results for its fourth quarter and fiscal year ended January 31, 2005. For the quarter, the company reported net income of $16.4 million, or $.23 per diluted share, compared with $22.8 million, or $.35 per diluted share, in the prior year. For the fiscal year, 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.

Results in the current year fourth quarter include: (1) merger related costs (which are not deductible for tax purposes) of $4.3 million ($.06 per diluted share) included in corporate expense; (2) an increase in the reserve related to worker’s compensation claims of $3.1 million ($.03 per diluted share) based upon a year-end actuarial review; (3) a revision to the change in accounting estimate for base jackpot reserves (previously recorded in the third quarter) which resulted in a decrease of $2.8 million ($.03 per diluted share) in casino revenue; (4) the write-off of approximately $1.2 million ($.01 per diluted share) in development costs related to projects that are being discontinued; and (5) a gain of $3.8 million ($.04 per diluted share) representing the quarterly noncash adjustment of the carrying value of investments associated with the company’s executive retirement plan.

Results for the fourth quarter were hampered by record rainfall in Southern California and Nevada, which contributed to lower than expected profits in January. Furthermore, for the second consecutive year, fourth quarter results were affected by a low hold percentage on table games at Mandalay Bay, which cost the company approximately $6.5 million in the fourth quarter this year. Results for the current fourth quarter also reflect the impact of an increase in the gaming tax rate in Michigan which took effect September 1, 2004, and increased gaming taxes at the company’s 53.5%-owned MotorCity Casino by approximately $6.3 million during the quarter. Current year results were also affected by health care costs, which rose $2.8 million, or 7%, in the fourth quarter and $17.8 million, or 12%, in the fiscal year due to rising medical costs in general, a surge in "catastrophic" claims and an increase in the number of covered employees.

Results for the prior-year fourth quarter include: (1) preopening expenses of $3.9 million ($.04 per diluted share) related primarily to THEhotel; and (2) a gain of $3.8 million ($.04 per diluted share) representing the quarterly adjustment to the carrying value of the company’s executive retirement plan investments.

Average diluted shares outstanding in the fourth quarter were 70.7 million versus 66.1 million in the prior year period. 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. It also includes the dilutive effect of the company’s Floating-Rate Convertible Senior Debentures due 2033, which amounted to approximately 2.3 million shares in the fourth quarter. Total shares outstanding (excluding any dilutive effect from outstanding stock options or the convertible debentures) were 67.5 million at January 31, 2005, compared with 65.4 million at January 31, 2004.

Mandalay’s operating cash flow (which is not a defined term under Generally Accepted Accounting PrinciplesBsee Note 1 below) was $129.2 million for the quarter ended January 31, 2005, compared with $136.7 million in the prior year quarter. For the fiscal year, operating cash flow was $753.7 million versus $648.1 million in the previous year. The financial schedules accompanying this release provide a reconciliation of operating cash flow to net income as required by the Securities and Exchange Commission’s Regulation G.

LAS VEGAS STRIP

Operating cash flow at the company’s Las Vegas Strip properties (including the 50%-owned Monte Carlo) increased $8.0 million, or 7%, in the fourth quarter. Revenue per available room ("REVPAR") for these properties rose 10%, the seventh consecutive quarter with a double-digit increase. (On a calendar quarter basis, that is October through December 2004, REVPAR for these Strip properties was up 20%.) For the fiscal year, REVPAR for the company’s Las Vegas Strip properties increased 17%. Operating cash flow at each of these properties was negatively affected by the previously discussed adjustments for worker’s compensation and base jackpots.

Mandalay Bay generated operating cash flow of $45.5 million in the fourth quarter, an increase of 24% from the prior year. REVPAR rose 5%, as room rates at Mandalay Bay averaged $205 with 75% occupancy during the quarter, including the additional 1,117 suites in THEhotel (which opened December 2003). Casino revenues at Mandalay Bay rose 3% during the fourth quarter, despite the subpar hold percentage discussed earlier.

Luxor produced operating cash flow of $26.4 million, a 6% decrease compared with $28.1 million last year, as a portion of its rooms were out of service for remodeling during the quarter. At Excalibur, operating cash flow increased slightly compared to a year ago, driven by an 8% increase in REVPAR. At Circus-Circus, operating cash flow declined $0.9 million, or 7%, from the prior year to $11.8 million. Higher expenses related to the previously discussed adjustments offset a 7% increase in REVPAR at this property. For its part, Monte Carlo (50%-owned by Mandalay) reported operating cash flow of $24.5 million, up 21% from the prior year quarter. REVPAR at Monte Carlo increased 8%, as did casino revenues.

OTHER NEVADA MARKETS

Combined operating cash flow at the company’s other Nevada properties (in Reno, Laughlin, Jean and Henderson) decreased slightly from the prior year fourth quarter. Please refer to the financial schedules accompanying this release for additional details by market.

OTHER MARKETS

In Detroit, Michigan, the 53.5%-owned MotorCity generated operating cash flow of $30.7 million compared with $34.2 million last year, with the decrease due to the higher gaming tax rate, as discussed previously. In Elgin, Illinois, operating cash flow at the 50%-owned Grand Victoria was $18.1 million in the fourth quarter, up 24% from $14.6 million in the prior year quarter. Meanwhile, in Tunica County, Mississippi, operating cash flow at the company’s Gold Strike Resort was $5.2 million compared with $7.5 million a year ago.

This press release contains "forward-looking statements" within the meaning of the federal securities law. The forward-looking statements in this press release involve risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements herein. Additional information concerning potential factors that could affect the company’ future financial results is included under the caption "Factors that May Affect Our Future Results" in Item 1 of the company’s annual report on Form 10-K for the year ended January 31, 2004.

Mandalay Resort Group owns and operates 11 properties in Nevada: Mandalay Bay, Luxor, Excalibur, Circus Circus, and Slots-A-Fun in Las Vegas; Circus Circus-Reno; Colorado Belle and Edgewater in Laughlin; Gold Strike and Nevada Landing in Jean and Railroad Pass in Henderson. The company also owns and operates Gold Strike, a hotel/casino in Tunica County, Mississippi. The company owns a 50% interest in Silver Legacy in Reno, and owns a 50% interest in and operates Monte Carlo in Las Vegas. In addition, the company owns a 50% interest in and operates Grand Victoria, a riverboat in Elgin, Illinois, and owns a 53.5% interest in and operates MotorCity in Detroit, Michigan.

NOTE 1: As used in this release, operating cash flow represents net income adjusted to exclude income taxes, net interest expense, minority interest, noncash expenses (principally depreciation and amortization) and certain other expenses that are not considered directly related to ongoing operations, such as operating lease rent and preopening expenses. Operating cash flow is presented as supplemental disclosure because it is widely viewed by investors as a key measure of operating performance in the gaming industry and it is also used as a principal basis for valuing gaming companies. Management utilizes operating cash flow in a similar manner to monitor and evaluate the relative performance of its various operating resorts, including the evaluation of management personnel at both the property and corporate levels. Operating cash flow is not an accepted measure under Generally Accepted Accounting Principles ("GAAP") and should not be considered an alternative to GAAP measures of performance, such as net income or income from operations, or as an alternative to GAAP measures of liquidity, such as net cash provided by operating activities. A reconciliation of net income to operating cash flow is provided, on a consolidated basis as well as by property, in the financial schedules accompanying this release. Operating cash flow is sometimes referred to as earnings before interest, taxes, depreciation and amortization ("EBITDA"). Other gaming companies that report operating cash flow or EBITDA may calculate their results in a different manner than the company.

MANDALAY RESORT GROUP
    Condensed Consolidated Statements of Income
    (Dollars in thousands, except share data)
    (UNAUDITED)

                                   Three Months Ended     Twelve Months Ended
                                      January 31,             January 31,
                                   2005        2004        2005        2004

    Revenues                     $645,612    $604,134  $2,809,143  $2,491,099

    Costs and expenses           (572,091)   (522,285) (2,278,980) (2,073,611)

                                   73,521      81,849     530,163     417,488

    Preopening expense                 --     (3,858)          --      (8,230)

    Earnings of unconsolidated
     affiliates                    17,645      15,590      83,269      81,183

    Income from operations         91,166      93,581     613,432     490,441

    Interest expense              (50,359)    (46,837)   (196,687)   (201,325)

    Loss on early
     extinguishment of debt,
     net of related gain
     on swap termination              --          --          --       (6,327)

    Other income (expense)          2,049       3,492       3,991       6,882

    Minority interest             (12,848)    (14,587)    (61,220)    (57,353)

    Income before income tax       30,008      35,649     359,516     232,318

    Income tax expense            (13,595)    (12,826)   (130,454)    (82,471)

    Net income                    $16,413     $22,823    $229,062    $149,847

    Basic earnings per share        $0.24       $0.35       $3.41       $2.40

    Diluted earnings per share      $0.23       $0.35       $3.31       $2.31

    Average shares
     outstanding (basic)       67,539,636  65,021,467  67,197,027  62,316,945

    Average shares
     outstanding (diluted)     70,700,512  66,149,135  69,157,904  64,881,844



    Mandalay Resort Group
    Reconciliation of Net Income to Operating Cash Flow and Other Information

                                            Three Months      Twelve Months
                                               Ended              Ended
                                             January 31,        January 31,
    MANDALAY BAY                          2005      2004      2005      2004

    Net Income                          $15,579    $7,553  $105,758   $54,569
      Income Tax Expense                  8,316     2,057    56,564    29,007
      Interest Expense                        6         6        23        23
      Other Expense (Income)                869        (6)    1,013        49
    Income From Operations               24,770     9,610   163,358    83,648
      Preopening                             --     3,858        --     8,230
      Operating Lease Rent                   --        --        --    11,517
      Depreciation/Amortization          20,768    23,196    78,351    72,349
    Operating Cash Flow                 $45,538   $36,664  $241,709  $175,744

    Net Revenues                       $193,075  $159,763  $829,278  $650,746
    Casino Revenues                     $50,787   $49,114  $216,691  $191,688
    ADR                                 $205.36   $192.26   $206.70   $186.39
    Occupancy                              74.7%     76.2%     84.5%     86.3%
    REVPAR                              $153.48   $146.46   $174.74   $160.79


                                            Three Months      Twelve Months
                                               Ended              Ended
                                             January 31,        January 31,
    LUXOR                                 2005      2004      2005      2004

    Net Income                          $11,895   $13,920   $73,372   $60,184
      Income Tax Expense                  6,346     6,876    39,210    32,073
      Interest Expense                        3         3        12        14
      Other Expense (Income)                658         4       593       185
    Income From Operations               18,902    20,803   113,187    92,456
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --     3,754
      Depreciation/Amortization           7,473     7,251    30,055    25,472
    Operating Cash Flow                 $26,375   $28,054  $143,242  $121,682

    Net Revenues                        $98,283   $95,337  $431,119  $393,994
    Casino Revenues                     $26,909   $26,225  $118,253  $102,630
    ADR                                 $114.96   $111.33   $113.62   $105.01
    Occupancy                              85.7%     78.3%     90.4%     85.2%
    REVPAR                               $98.47    $87.14   $102.72    $89.51


                                            Three Months      Twelve Months
                                               Ended              Ended
                                             January 31,        January 31,
    EXCALIBUR                             2005      2004      2005      2004

    Net Income                          $11,314   $11,611   $63,541   $51,641
      Income Tax Expense                  6,029     4,991    34,016    27,606
      Interest Expense                        8        18        17        21
      Other Expense (Income)                  2       129        87       167
    Income From Operations               17,353    16,749    97,661    79,435
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --     3,279
      Depreciation/Amortization           3,866     4,181    16,341    14,056
    Operating Cash Flow                 $21,219   $20,930  $114,002   $96,770

    Net Revenues                        $75,668   $73,112  $335,559  $308,717
    Casino Revenues                     $28,275   $28,304  $121,495  $114,726
    ADR                                  $84.09    $78.57    $84.57    $75.56
    Occupancy                              85.7%     85.0%     93.7%     90.9%
    REVPAR                               $72.07    $66.75    $79.26    $68.70


                                            Three Months      Twelve Months
                                               Ended              Ended
                                             January 31,        January 31,
    CIRCUS CIRCUS - LAS VEGAS             2005      2004      2005      2004

    Net Income                           $4,397    $5,448   $36,060   $27,470
      Income Tax Expense                  2,331     2,207    19,267    14,642
      Interest Expense                       (1)        3         2         6
      Other Expense (Income)                476       182       440       172
    Income From Operations                7,203     7,840    55,769    42,290
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --     1,622
      Depreciation/Amortization           4,630     4,850    18,959    18,837
    Operating Cash Flow                 $11,833   $12,690   $74,728   $62,749

    Net Revenues                        $61,211   $61,182  $279,129  $261,315
    Casino Revenues                     $25,088   $26,079  $111,401  $106,152
    ADR                                  $62.48    $55.86    $61.96    $55.05
    Occupancy                              79.0%     82.9%     90.2%     89.2%
    REVPAR                               $49.37    $46.33    $55.86    $49.08


                                            Three Months      Twelve Months
                                               Ended              Ended
                                             January 31,        January 31,
    GOLD STRIKE-TUNICA                     2005     2004      2005      2004

    Net Income                            $1,777   $3,618   $12,794   $13,857
      Income Tax Expense                   1,061    1,684     7,138     7,736
      Interest Expense                        --       --        --        --
      Other Expense (Income)                 (20)     (14)      (15)      (24)
    Income From Operations                 2,818    5,288    19,917    21,569
      Preopening                              --       --        --        --
      Operating Lease Rent                    --       --        --        --
      Depreciation/Amortization            2,351    2,184     9,189     8,676
    Operating Cash Flow                   $5,169   $7,472   $29,106   $30,245

    Net Revenues                         $34,213  $34,341  $142,086  $135,399
    Casino Revenues                      $30,259  $30,374  $124,505  $117,260
    ADR                                   $53.41   $49.73    $50.74    $48.78
    Occupancy                               75.5%    74.4%     82.8%     81.9%
    REVPAR                                $40.32   $37.01    $42.01    $39.96


                                            Three Months      Twelve Months
                                               Ended              Ended
                                             January 31,        January 31,
    LAUGHLIN PROPERTIES                     2005     2004     2005      2004

    Net Income                             $(614)   $(346)   $5,258    $3,010
      Income Tax Expense                    (365)    (474)    2,626     1,427
      Interest Expense                        --       --        --        --
      Other Expense (Income)                  --        2         9       (25)
    Income From Operations                  (979)    (818)    7,893     4,412
      Preopening                              --       --        --        --
      Operating Lease Rent                    --       --        --        --
      Depreciation/Amortization            2,267    2,476     9,231     9,751
    Operating Cash Flow                   $1,288   $1,658   $17,124   $14,163

    Net Revenues                         $34,420  $34,663  $155,832  $146,463
    Casino Revenues                      $25,288  $25,395  $108,079   $99,079
    ADR                                   $28.07   $26.67    $31.24    $28.82
    Occupancy                               69.0%    77.2%     79.3%     79.7%
    REVPAR                                $19.37   $20.60    $24.76    $22.96


                                            Three Months      Twelve Months
                                               Ended              Ended
                                             January 31,        January 31,
    CIRCUS CIRCUS - RENO                    2005     2004     2005      2004

    Net Income                           $(1,264)   $(625)   $5,658    $3,642
      Income Tax Expense                    (694)    (517)    3,028     1,887
      Interest Expense                        30       34       168        61
      Other Expense (Income)                  --      (13)      (30)       (8)
    Income From Operations                (1,928)  (1,121)    8,824     5,582
      Preopening                              --       --        --        --
      Operating Lease Rent                    --       --        --        --
      Depreciation/Amortization            1,440    1,408     5,919     5,779
    Operating Cash Flow                    $(488)    $287   $14,743   $11,361

    Net Revenues                         $20,812  $22,533  $107,351  $106,792
    Casino Revenues                       $9,987  $10,855   $52,360   $51,968
    ADR                                   $56.33   $50.96    $59.03    $53.54
    Occupancy                               54.7%    62.7%     75.0%     77.1%
    REVPAR                                $30.79   $31.97    $44.25    $41.27


                                            Three Months      Twelve Months
                                               Ended              Ended
                                             January 31,        January 31,
    GOLD STRIKE PROPERTIES                  2005      2004    2005      2004

    Net Income                              $517      $72    $3,790    $1,071
      Income Tax Expense                     245      (52)    1,994       507
      Interest Expense                        --       --        --        --
      Other Expense (Income)                 (23)      (8)      (26)       88
    Income From Operations                   739       12     5,758     1,666
      Preopening                              --       --        --        --
      Operating Lease Rent                    --       --        --        --
      Depreciation/Amortization              756      843     3,252     3,437
    Operating Cash Flow                   $1,495     $855    $9,010    $5,103

    Net Revenues                         $18,026  $17,659   $77,655   $74,827
    Casino Revenues                      $13,351  $13,531   $59,446   $58,098
    ADR                                   $38.20   $34.36    $35.87    $32.08
    Occupancy                               57.3%    57.0%     63.6%     60.7%
    REVPAR                                $21.88   $19.59    $22.81    $19.49


                                            Three Months      Twelve Months
                                               Ended              Ended
                                            January 31,         January 31,
    MOTORCITY CASINO **                   2005      2004     2005      2004

    Net Income                          $27,647   $31,390  $131,741  $123,419
      Income Tax Expense                     --        --        --        --
      Interest Expense                      736       169     1,977     2,167
      Other Expense (Income)                  8       (37)      (13)     (127)
    Income From Operations               28,391    31,522   133,705   125,459
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --        -
      Depreciation/Amortization           2,357     2,716    11,436    10,087
    Operating Cash Flow                 $30,748   $34,238  $145,141  $135,546

    Net Revenues                       $106,580  $103,010  $437,049  $402,183
    Casino Revenues                    $102,181   $98,404  $418,778  $383,650


                                            Three Months      Twelve Months
                                               Ended              Ended
                                            January 31,         January 31,
    SILVER LEGACY (50% - owned) **         2005      2004     2005      2004

    Net Income                          $(3,257)  $(1,632)   $9,284    $9,108
      Income Tax Expense                     --        --        --        --
      Interest Expense                    4,243     4,244    16,988    16,129
      Other Expense (Income)               (199)     (118)     (108)      381
    Income From Operations                  787     2,494    26,164    25,618
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --        --
      Depreciation/Amortization           2,632     2,695    10,590    10,743
    Operating Cash Flow                  $3,419    $5,189   $36,754   $36,361

    Net Revenues                        $29,696   $31,445  $153,692  $153,345
    Casino Revenues                     $16,321   $17,373   $84,101   $87,904
    ADR                                  $65.07    $61.87    $68.93    $64.30
    Occupancy                              61.5%     67.7%     81.3%     81.4%
    REVPAR                               $39.99    $41.91    $56.07    $52.34


                                            Three Months      Twelve Months
                                               Ended              Ended
                                             January 31,        January 31,
    GRAND VICTORIA (50% - owned) **        2005     2004      2005      2004

    Net Income                           $15,631  $12,046   $53,829   $62,818
      Income Tax Expense                      --       --        --        --
      Interest Expense                        --       --        --        --
      Other Expense (Income)                 (60)     (40)     (211)     (221)
    Income From Operations                15,571   12,006    53,618    62,597
      Preopening                               -        -         -         -
      Operating Lease Rent                     -        -         -         -
      Depreciation/Amortization            2,503    2,563     9,849     9,835
    Operating Cash Flow                  $18,074  $14,569   $63,467   $72,432

    Net Revenues                        $100,740  $95,680  $397,771  $379,336
    Casino Revenues                      $98,152  $93,280  $387,993  $370,303


                                            Three Months      Twelve Months
                                               Ended              Ended
                                             January 31,        January 31,
    MONTE CARLO (50% - owned) **           2005     2004      2005      2004

    Net Income                           $20,251  $17,035   $92,283   $76,239
      Income Tax Expense                      --       --        --        --
      Interest Expense                        --       --        12         1
      Other Expense (Income)                 (48)     (14)     (224)     (109)
    Income From Operations                20,203   17,021    92,071    76,131
      Preopening                              --       --        --        --
      Operating Lease Rent                    --       --        --        --
      Depreciation/Amortization            4,276    3,241    15,488    12,962
    Operating Cash Flow                  $24,479  $20,262  $107,559   $89,093

    Net Revenues                         $69,492  $61,833  $289,863  $262,388
    Casino Revenues                      $24,849  $22,966  $103,493   $95,505
    ADR                                  $113.16  $116.25   $116.65   $106.56
    Occupancy                               91.6%    82.3%     95.0%     90.3%
    REVPAR                               $103.65   $95.69   $110.83    $96.17

    ** Amounts represent 100% of totals for the property.



                                            Three Months      Twelve Months
                                               Ended              Ended
                                            January 31,         January 31,
    CONSOLIDATED                          2005      2004     2005      2004

    Net Income                          $16,413   $22,823  $229,062  $149,847
      Income Tax Expense                 13,595    12,826   130,454    82,471
      Minority Interest                  12,848    14,587    61,220    57,353
      Interest Expense                   50,359    46,837   196,687   201,325
      Loss on Early Extinguishment of
       Debt,
         Net of Related Gain on Swap
          Termination                        --        --        --     6,327
      Other Expense (Income)             (2,049)   (3,492)   (3,991)   (6,882)
    Income From Operations               91,166    93,581   613,432   490,441
      Preopening                             --     3,858        --     8,230
      Operating Lease Rent                   --        --        --    20,172
      Depreciation/Amortization          47,622    50,938   189,786   175,531
      Minority Interest in MotorCity
        Operating Cash Flow             (14,298)  (15,921)  (67,491)  (63,029)
      Mandalay’s Share of Depreciation
        From Unconsolidated Affiliates    4,706     4,249    17,964    16,769
    Operating Cash Flow                $129,196  $136,705  $753,691  $648,114

SOURCE Mandalay Resort Group

CONTACT:          Glenn Schaeffer, +1-702-632-6710, or Les Martin, +1-702-632-6820, both of Mandalay
                  Resort Group

              
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Copyright (C) 2005 PR Newswire. All rights reserved.



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