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Mandalay Resort Group Reports 2003 4th Qtr Net Income
Rose to $22.8 million from $4.2 million a Year-earlier;
22% Increase in RevPAR for Las Vegas Strip Hotels
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LAS VEGAS, March 4, 2004 - Mandalay Resort Group (NYSE: MBG) today announced results for its fourth quarter and fiscal year ended January 31, 2004. For the fourth quarter, the company reported net income of $22.8 million, or $.35 per diluted share, compared with $4.2 million, or $.06 per diluted share, in the prior year. For the fiscal year, the company reported net income of $149.8 million, or $2.31 per diluted share, compared with $115.6 million, or $1.65 per diluted share, in the previous year.

Results in the current year quarter include preopening expenses of $3.9 million ($.04 per diluted share) related primarily to THEhotel, the new 1,117-all-suite tower which opened at Mandalay Bay on December 17. Results for the quarter also include a gain of $3.8 million ($.04 per diluted share) representing the quarterly adjustment of the carrying value of investments associated with the company's executive retirement plan.

Results for the prior-year fourth quarter included the write-off of $5.4 million ($.08 per diluted share) of goodwill related to the Edgewater Hotel and Casino, preopening expenses of $1.3 million ($.01 per diluted share) related to the new convention center at Mandalay Bay that opened in January 2003, and a gain of $0.5 million representing the quarterly adjustment to the carrying value of the retirement plan investments.

Average diluted shares outstanding in the quarter were 66.1 million versus 67.2 million in the prior year. This reflects the company's repurchase of 3.3 million shares pursuant to the March 2003 settlement of its equity forward agreement, partially offset by the issuance of shares pursuant to the exercise of employee stock options. Total shares outstanding (excluding any dilutive effect from outstanding stock options) were 65.4 million at January 31, 2004, compared with 62.6 million at January 31, 2003.

Mandalay's operating cash flow (which is not a defined term under Generally Accepted Accounting PrinciplesBsee Note 1 below) was $136.7 million and $648.1 million for the fourth quarter and fiscal year ended January 31, 2004, compared with $120.0 million and $625.8 million in the comparable prior year periods. 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 25% in the fourth quarter compared to the prior year, driven by a 22% increase in revenue per available room ("REVPAR"). Each property reported double-digit increases in REVPAR and, with the exception of Monte Carlo, operating cash flow at each property increased more than 20% during the quarter.

Mandalay Bay, the company's flagship resort, generated operating cash flow of $36.7 million in the fourth quarter, compared with $29.7 million last year. REVPAR rose 26%, as the average room rate topped $192 with 76% occupancy. This compares to an average room rate of $181 and 64% occupancy in the previous year. "The relative strength of the convention market is evident in Mandalay Bay's rising results," noted Glenn Schaeffer, the company=s President and Chief Financial Officer. "With THEhotel, we expect to significantly increase our returns from this lucrative segment. Meanwhile, the balance of our portfolio in Las Vegas distinctly outperformed the market in the fourth quarter in terms of REVPAR."

Luxor produced operating cash flow of $28.1 million compared with $22.6 million in last year's fourth quarter. REVPAR at this property increased 18%, with an average room rate of $111 compared with $101 last year. Meanwhile, for the second consecutive quarter, Excalibur posted the largest percentage increase in operating cash flow among the company's Las Vegas Strip properties, up 35% to $20.9 million. Strong performances in the hotel and casino again contributed to these results, as REVPAR rose 20% and casino revenues increased 15%. At Circus-Circus, operating cash flow was $12.7 million in the fourth quarter, up 32% from the prior year. REVPAR at this property increased 12% compared to a year ago. For its part, Monte Carlo (50%-owned by Mandalay) reported a 5% increase in operating cash flow, to $20.3 million from $19.3 million, with REVPAR rising 16%.

OTHER NEVADA MARKETS

On a combined basis, operating cash flow declined in the fourth quarter at the company's other Nevada properties (in Reno, Laughlin, Jean and Henderson). Results at these properties reflect the continuing effects of expanded Native American gaming in California. Operating cash flow from these properties represented approximately 3% of the company's total operating cash flow in the fourth quarter and 7% in the fiscal year. Please refer to the financial schedules accompanying this release.

OTHER MARKETS

In Elgin, Illinois, operating cash flow at the 50%-owned Grand Victoria was $14.6 million in the fourth quarter, down 41% from $24.7 million in the prior year quarter. The decrease was attributable to higher gaming taxes which took effect July 1, 2003 and raised the top-end rate to 70% on gaming revenues exceeding $250 million. This tax increase impacted Mandalay's earnings by approximately $.05 per diluted share in the fourth quarter.

In Detroit, Michigan, MotorCity produced operating cash flow of $34.2 million, up 23% from $27.9 million in the previous year. The Detroit market strengthened in the latter part of the year, as MotorCity exhibited a 6% rise in casino revenues during the quarter. In Tunica County, Mississippi, operating cash flow at the company's Gold Strike Resort increased 57% to $7.5 million from $4.8 million last year, as casino revenues grew 16%.

RECENT TRANSACTIONS

On February 2, 2004, the company paid a quarterly dividend of $.27 per share to shareholders of record January 15. On March 3, 2004, the company's Board of Directors declared a dividend of $.27 per share payable May 3, 2004 to shareholders of record April 16, 2004.
 

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,

                                   2004        2003        2004        2003

    Revenues                     $604,134    $544,227  $2,491,099  $2,354,118
    Costs and expenses           (522,285)   (477,282) (2,073,611) (1,976,726)
                                   81,849      66,945     417,488     377,392

    Preopening expense             (3,858)     (1,349)     (8,230)     (4,614)
    Impairment loss                    --      (5,422)         --      (5,422)
    Write-off of
     intangible asset                  --          --          --     (13,000)
    Earnings of
     unconsolidated affiliates     15,590      20,617      81,183      97,950
    Income from operations         93,581      80,791     490,441     452,306
    Interest expense              (46,837)    (53,162)   (201,325)   (214,286)
    Loss on early extinguishment
     of debt, net of related
     gain on swap termination          --          --      (6,327)         --
    Other income (expense)          3,492        (153)      6,882      (2,036)
    Minority interest             (14,587)    (11,376)    (57,353)    (40,650)
    Income before income tax       35,649      16,100     232,318     195,334
    Income tax expense            (12,826)    (11,909)    (82,471)    (77,869)
    Income before cumulative
     effect of a change in
         accounting principle      22,823       4,191     149,847     117,465
    Cumulative effect of a
     change in accounting
         principle for
          goodwill                     --          --          --     (1,862)
    Net income                    $22,823      $4,191    $149,847    $115,603

    Basic earnings per share        $0.35       $0.06       $2.40       $1.71
    Diluted earnings per share      $0.35       $0.06       $2.31       $1.65
    Average shares outstanding
     (basic)                   65,021,467  64,992,394  62,316,945  67,555,934
    Average shares outstanding
     (diluted)                 66,149,135  67,217,193  64,881,844  70,158,204
 

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

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31
    MANDALAY BAY                           2004      2003      2004      2003

    Net Income                           $7,553    $9,207   $54,569   $51,823
      Income Tax Expense                  2,057     3,917    29,007    27,649
      Interest Expense                        6        44        23        60
      Other Expense (Income)                 (6)       10        49       (24)
    Income From Operations                9,610    13,178    83,648    79,508
      Preopening                          3,858     1,222     8,230     3,291
      Operating Lease Rent                   --     6,525    11,517    28,697
      Depreciation/Amortization          23,196     8,729    72,349    35,020
    Operating Cash Flow                 $36,664   $29,654  $175,744  $146,516

    Net Revenues                       $159,763  $129,333  $650,746  $559,628
    Casino Revenues                     $49,114   $46,613  $191,688  $185,714
    ADR                                 $192.26   $181.06   $186.39   $171.14
    Occupancy                             76.2%     64.2%     86.3%     80.1%
    REVPAR                              $146.46   $116.31   $160.79   $137.13
 

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31
    LUXOR                                  2004      2003      2004      2003

    Net Income                          $13,920   $11,288   $60,184   $51,857
      Income Tax Expense                  6,876     5,268    32,073    27,654
      Interest Expense                        3         5        14        49
      Other Expense (Income)                  4        (5)      185        21
    Income From Operations               20,803    16,556    92,456    79,581
      Preopening                             --        --        --        --
      Operating Lease Rent                    -     1,903     3,754     7,657
      Depreciation/Amortization           7,251     4,098    25,472    18,115
    Operating Cash Flow                 $28,054   $22,557  $121,682  $105,353

    Net Revenues                        $95,337   $89,116  $393,994  $381,805
    Casino Revenues                     $26,225   $26,099  $102,630  $105,123
    ADR                                 $111.33   $101.05   $105.01    $94.64
    Occupancy                             78.3%     73.2%     85.2%     83.5%
    REVPAR                               $87.14    $74.00    $89.51    $79.05
 

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31
    EXCALIBUR                              2004      2003      2004      2003

    Net Income                          $11,611    $7,852   $51,641   $42,299
      Income Tax Expense                  4,991     3,556    27,606    22,599
      Interest Expense                       18        16        21        30
      Other Expense (Income)                129        32       167        14
    Income From Operations               16,749    11,456    79,435    64,942
      Preopening                             --        --        --        --
      Operating Lease Rent                   --     1,662     3,279     6,722
      Depreciation/Amortization           4,181     2,391    14,056    11,360
    Operating Cash Flow                 $20,930   $15,509   $96,770   $83,024

    Net Revenues                        $73,112   $64,000  $308,717  $283,612
    Casino Revenues                     $28,304   $24,645  $114,726  $104,403
    ADR                                  $78.57    $69.03    $75.56    $68.59
    Occupancy                             85.0%     80.5%     90.9%     89.5%
    REVPAR                               $66.75    $55.57    $68.70    $61.39
 

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31
    CIRCUS CIRCUS - LAS VEGAS              2004      2003      2004      2003

    Net Income                           $5,448    $3,258   $27,470   $25,760
      Income Tax Expense                  2,207     1,261    14,642    13,706
      Interest Expense                        3         4         6         9
      Other Expense (Income)                182        55       172        39
    Income From Operations                7,840     4,578    42,290    39,514
      Preopening                             --        --        --        --
      Operating Lease Rent                   --       822     1,622     3,324
      Depreciation/Amortization           4,850     4,198    18,837    17,356
    Operating Cash Flow                 $12,690    $9,598   $62,749   $60,194

    Net Revenues                        $61,182   $57,588  $261,315  $254,291
    Casino Revenues                     $26,079   $24,722  $106,152  $104,240
    ADR                                  $55.86    $51.97    $55.05    $52.56
    Occupancy                             82.9%     79.4%     89.2%     89.2%
    REVPAR                               $46.33    $41.28    $49.08    $46.89
 

                                      Three Months Ended Twelve Months Ended
                                           January 31          January 31
    GOLD STRIKE-TUNICA                     2004      2003      2004      2003

    Net Income                           $3,618    $1,504   $13,857    $8,877
      Income Tax Expense                  1,684       653     7,736     4,986
      Interest Expense                       --        --        --        --
      Other Expense (Income)                (14)      165       (24)      132
    Income From Operations                5,288     2,322    21,569    13,995
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --        --
      Depreciation/Amortization           2,184     2,448     8,676    12,200
    Operating Cash Flow                  $7,472    $4,770   $30,245   $26,195

    Net Revenues                        $34,341   $29,931  $135,399  $123,957
    Casino Revenues                     $30,374   $26,080  $117,260  $105,909
    ADR                                  $49.73    $50.04    $48.78    $52.84
    Occupancy                             74.4%     68.3%     81.9%     73.4%
    REVPAR                               $37.01    $34.17    $39.96    $38.77
 

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31
    LAUGHLIN PROPERTIES                    2004      2003      2004      2003

    Net Income                            $(346)  $(5,638)   $3,010    $1,687
      Income Tax Expense                   (474)     (375)    1,427     3,637
      Interest Expense                       --        --        --        --
      Other Expense (Income)                  2        --       (25)      (29)
    Income From Operations                 (818)   (6,013)    4,412     5,295
      Impairment Loss                        --     5,422        --     5,422
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --        --
      Depreciation/Amortization           2,476     2,488     9,751    10,328
    Operating Cash Flow                  $1,658    $1,897   $14,163   $21,045

    Net Revenues                        $34,663   $32,846  $146,463  $147,683
    Casino Revenues                     $25,395   $23,214   $99,079   $99,078
    ADR                                  $26.67    $29.00    $28.82    $32.87
    Occupancy                             77.2%     63.8%     79.7%     73.0%
    REVPAR                               $20.60    $18.49    $22.96    $23.98

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31
    CIRCUS CIRCUS - RENO                   2004      2003      2004      2003

    Net Income                            $(625)    $(147)   $3,642    $8,406
      Income Tax Expense                   (517)     (310)    1,887     4,476
      Interest Expense                       34        --        61        --
      Other Expense (Income)                (13)       (8)       (8)        1
    Income From Operations               (1,121)     (465)    5,582    12,883
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --        --
      Depreciation/Amortization           1,408     1,607     5,779     7,024
    Operating Cash Flow                    $287    $1,142   $11,361   $19,907

    Net Revenues                        $22,533   $23,349  $106,792  $111,962
    Casino Revenues                     $10,855   $12,068   $51,968   $56,856
    ADR                                  $50.96    $51.74    $53.54    $52.67
    Occupancy                             62.7%     60.4%     77.1%     77.6%
    REVPAR                               $31.97    $31.26    $41.27    $40.86
 

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31
    GOLD STRIKE PROPERTIES                 2004      2003      2004      2003

    Net Income                              $72      $(32)   $1,071    $2,361
      Income Tax Expense                    (52)     (115)      507     1,208
      Interest Expense                       --        --        --        --
      Other Expense (Income)                 (8)       23        88       (87)
    Income From Operations                   12      (124)    1,666     3,482
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --        --
      Depreciation/Amortization             843       927     3,437     3,976
    Operating Cash Flow                    $855      $803    $5,103    $7,458

    Net Revenues                        $17,659   $18,089   $74,827   $80,456
    Casino Revenues                     $13,531   $14,179   $58,098   $63,555
    ADR                                  $34.36    $31.67    $32.08    $31.73
    Occupancy                             57.0%     55.6%     60.7%     61.3%
    REVPAR                               $19.59    $17.61    $19.49    $19.46
 

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31
    MOTORCITY CASINO **                    2004      2003      2004      2003

    Net Income                          $31,390   $24,479  $123,419   $87,470
      Income Tax Expense                     --        --        --        --
      Interest Expense                      169       969     2,167     4,641
      Other Expense (Income)                (37)      209      (127)     (295)
    Income From Operations               31,522    25,657   125,459    91,816
      Write-off of Intangible Asset          --        --        --    13,000
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --        --
      Depreciation/Amortization           2,716     2,210    10,087    24,880
    Operating Cash Flow                 $34,238   $27,867  $135,546  $129,696
    Net Revenues                       $103,010   $97,570  $402,183  $399,565
    Casino Revenues                     $98,404   $92,679  $383,650  $380,284
 

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31
    CONSOLIDATED                           2004      2003      2004      2003

    Net Income                          $22,823    $4,191  $149,847  $115,603
      Cumulative Effect of a
       Change in Accounting
       Principle                             --        --       --      1,862
      Income Tax Expense                 12,826    11,909    82,471    77,869
      Minority Interest                  14,587    11,376    57,353    40,650
      Interest Expense                   46,837    53,162   201,325   214,286
      Loss on Early
       Extinguishment of Debt,
         Net of Related Gain on Swap
          Termination                        --        --     6,327        --
      Other Expense (Income)             (3,492)      153    (6,882)    2,036
    Income from Operations               93,581    80,791   490,441   452,306
      Impairment Loss                               5,422        --     5,422
      Write-off of Intangible Asset          --        --        --    13,000
      Preopening                          3,858     1,349     8,230     4,614
      Operating Lease Rent                   --    10,912    20,172    49,073
      Depreciation/Amortization          50,938    30,409   175,531   144,995
      Minority Interest in MotorCity
        Operating Cash Flow             (15,921)  (12,958)  (63,029)  (60,309)
      Mandalay's Share of Depreciation
        From Unconsolidated Affiliates    4,249     4,094    16,769    16,688
    Operating Cash Flow                $136,705  $120,019  $648,114  $625,789
 

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31

    SILVER LEGACY (50% - owned) **         2004      2003      2004      2003

    Net Income                          $(1,632)    $(997)   $9,108   $16,350
      Income Tax Expense                     --        --        --        --
      Interest Expense                    4,244     4,377    16,129    14,347
      Other Expense (Income)               (118)       49       381       105
    Income From Operations                2,494     3,429    25,618    30,802
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --        --
      Depreciation/Amortization           2,695     2,635    10,743    11,706
    Operating Cash Flow                  $5,189    $6,064   $36,361   $42,508

    Net Revenues                        $31,445   $33,125  $153,345  $161,575
    Casino Revenues                     $17,373   $19,222   $87,904   $94,025
    ADR                                  $61.87    $62.27    $63.99    $64.84
    Occupancy                             67.7%     67.9%     81.8%     81.1%
    REVPAR                               $41.91    $42.28    $52.34    $52.59
 

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31
    GRAND VICTORIA (50% - owned) **        2004      2003      2004      2003

    Net Income                          $12,046   $22,537   $62,818   $99,162
      Income Tax Expense                     --        --        --        --
      Interest Expense                       --        --        --        --
      Other Expense (Income)                (40)     (114)     (221)     (594)
    Income From Operations               12,006    22,423    62,597    98,568
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --        --
      Depreciation/Amortization           2,563     2,271     9,835     8,523
    Operating Cash Flow                 $14,569   $24,694   $72,432  $107,091

    Net Revenues                        $95,680   $94,919  $379,336  $398,198
    Casino Revenues                     $93,280   $92,518  $370,303  $388,413
 

                                       Three Months Ended Twelve Months Ended
                                           January 31          January 31
    MONTE CARLO (50% - owned) **           2004      2003      2004      2003

    Net Income                          $17,035   $15,989   $76,239   $68,824
      Income Tax Expense                     --        --        --        --
      Interest Expense                       --        18         1     1,007
      Other Expense (Income)                (14)      (23)     (109)     (134)
    Income From Operations               17,021    15,984    76,131    69,697
      Preopening                             --        --        --        --
      Operating Lease Rent                   --        --        --        --
      Depreciation/Amortization           3,241     3,282    12,962    13,011
    Operating Cash Flow                 $20,262   $19,266   $89,093   $82,708

    Net Revenues                        $61,833   $61,532  $262,388  $255,753
    Casino Revenues                     $22,966   $24,803   $95,505   $99,091
    ADR                                 $116.25    $92.86   $106.56    $95.39
    Occupancy                             82.3%     88.8%     90.3%     90.8%
    REVPAR                               $95.69    $82.50    $96.17    $86.61

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

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.

This press release contains forward-looking statements within the meaning of the federal securities law, including statements concerning the expected impact of THEhotel. 

###

Contact:
Mandalay Resort Group

 
Also See: Mandalay Bay's Convention Center Investment Money Well Spent / May 2003
Mandalay Resort Group Reports Revised Development Agreement with the City of Detroit Has Been Approved by the Detroit City Council; Includes 400-room Hotel, Expanded Casino / Aug 2002
.

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