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Atlantic City Round-Up

The improved efficiencies enabled the casinos to boost gross operating profit by 10.6 percent, to $315.4 million, according to quarterly results released by the New Jersey Casino Control Commission.

The casinos cut their operating expenses by 0.2 percent during the quarter while increasing net revenue by 2.7 percent, to $1.1 billion.

This means they're finding better ways to do business. A lot of them are spending less on marketing, said Rich Perniciaro, who directs the Center for Regional Business and Research at Atlantic Cape Community College.

The industry set a quarterly record for operating-profit margin, keeping 29 cents in gross operating profit for every dollar of net revenue generated. Harrah is set an individual record with an operating margin of 42.4 percent.

Bally is ranked first in gross operating profit at $49.1 million, followed by Harrah is at $45.7 million, Caesars at $42.6 million and Trump Taj Mahal at $38.3 million.

The casinos increased their collective hotel occupancy rate to 95.1 percent during the quarter, despite having 381 more rooms to fill during the quarter compared to the same period last year.

The average room rate was $80.20, up $1.53, although rate has little meaning in Atlantic City because casinos give away two-thirds of their rooms.

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Two Trump casino entities made a $101.3 million accounting maneuver that might have dashed the hopes of certain bondholders.

Trump Atlantic City Associates, the subsidiary that owns the Trump Plaza and Trump Taj Mahal casinos, had upstreamed the amount to the parent company over the years to help pay for administrative and interest- expenses costs.

Trump Atlantic City had booked the amount as an advance, meaning the parent company was supposed to repay the amount.

But during the second quarter, Trump Atlantic City decided to reclassify the $101.3 million as a distribution, meaning the money won't be coming back. The removal of the asset, similar to a receivable, potentially lowers the value of the two casinos by that amount.

Such distributions are allowed under the bond covenants, but the move still raised concern with at least one analyst.

In a time of heightened awareness of accounting practices, perception means everything, Goldman Sachs analyst John Kempf said in a research note.

Thus, the revision does raise several questions, such as: If the company never intended for Trump Hotels to repay these advances (which we believe is the case), why were they booked as advances to affiliates as opposed to distributions? And why did the company neglect to announce this revision during its second-quarter earnings release and conference call? Kempf asked.

Frank McCarthy, chief financial officer for the Trump entities, said the amount was booked as an advance to give the companies financial flexibility. He said the earnings release and call were not the proper forums to discuss the move.

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The practice of busing gamblers to Atlantic City continues to decline as casinos cut back on coin incentives for them.

Through June, an average of 897 casino buses arrived daily in Atlantic City, down from 902 last year, according to the South Jersey Transportation Authority. The daily average has fallen every year since a five- year high of 1,093 per day in 1999.

The number of average daily passengers has also declined, to 21,712 per day this year from a five-year high of 27,631 per day in 1998.

Bus passengers now represent less than 25 percent of Atlantic City is visitation.

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The chief operating officer of Trump Hotels & Casino Resorts eliminated the two-person public relations staff that serves its three Atlantic City casinos.

Mark Brown, who has been slashing costs since he took over more than two years ago, said the move will save the company more than $100,000 per year. He said the casinos have other staff who can handle the public relations functions.

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Atlantic City is closest casino competition reported healthy increase in July slot-machine revenue.

In Connecticut, the Foxwoods and Mohegan Sun tribal casinos reported a combined slot win of $138.8 million, up 10.1 percent over the same month last year. The two casinos do not publicly report their table-games revenue.

In Delaware, the three racetracks reported slot revenue of $46.4 million, up 8.9 percent over the similar period last year, based on a comparison of daily averages

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