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Atlantic City Casinos Report Tepid Revenue Gain

20 August 2002

ATLANTIC CITY, New Jersey – As reported by the Press of Atlantic City: "While the casino industry was reporting tepid monthly revenue gains of about 2 percent last spring, it also was racking up big gains in gross operating profit.

"The dozen casinos posted second-quarter gross operating profit of $315.4 million, up 10.6 percent over the same period last year, according to figures released Monday by the state Casino Control Com-mission.

"…The casinos managed a cash-flow gain of $30.2 million even though net revenue increased only $28.3 million, or 2.7 percent, to $1.1 billion.

"…Casino executives credit the increased profits to lower cash incentives for gamblers, industry consolidation that reduces overhead costs, and travel and economic concerns that keep people closer to home.

"Harrah's set a record for operating margin by retaining 42.4 cents in cash flow for every dollar of revenue generated. As an industry, the casinos set a quarterly record for operating margin at 29 percent.

"…Two Trump casinos led the city in cash-flow growth, with Trump Marina up 53.5 percent and Trump Plaza up 39.7 percent. Leaner, smarter operations and better cooperation among the company's three casinos caused the big gain, Trump officials said last month.

"Sands reported the biggest cash-flow decline, down 14.8 percent. New management junked more than half the table games during the quarter and began installing 400 more slots in a bid to boost profitability.

"The casinos spent $771.3 million on operating costs last quarter, 0.2 percent less than the year-earlier period.

"At the bottom line, the industry reported net income of $74.1 million, almost double what they did a year earlier. For most of the casinos, net income means little because it includes nonoperating costs, such as management fees and debt payments, that can be imposed by the parent companies…"

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