Accountants, executives and spin

I have suggested to a reporter that he write an article on spin control, and the relationship to accounting. For instance look at these two articles. Which company made a profit.

(1) Wynn Resorts sees profit in first quarter
(2) Las Vegas Sands narrows loss in first quarter

The accountant asks "How much do you want it to be?" but the reporter just prints the answer that he was given.

Quote: DOW JONES NEWSWIRES

Wynn last week reported it swung to a profit--only its second in the past year and a half--on strong revenue growth in Macau and a smaller increase in its Las Vegas operations. The Chinese gambling enclave has set gross gambling revenue records in recent months.

Meanwhile, MGM Mirage (MGM) earlier Thursday said it swung to loss following a prior-year divestiture gain as its latest results were hurt by losses and write-downs at its $8.5 billion CityCenter resort on the Las Vegas Strip.

For the latest quarter, Sands reported a profit of $17.6 million compared with a year-earlier loss of $34.6 million. After paying preferred dividends, Sands had a loss of 4 cents a share, compared with a prior-year loss of 12 cents.

-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; Kathy.Shwiff@dowjones.com

The Dow Jones newswires reported the Sands as making a profit. Sure enough if you read the entire press releases Wynn made a profit of $28 million, and Sands made a profit of $17.5 million. The difference is that Wynn paid the common stockholder 22 cents a share. Sands paid it's (1) preferred stock dividends: $23 million and (2) paid an accretion to redemption value of preferred stock issued to Principal Stockholder's family: $23 million. The result was a net loss for common stockholders of $28 million.

As far as spin control it is easier to say Sands lost money instead of it made a small profit, but after paying preferred dividends the common stockholder took a loss. The Sands corporation only instituted this change about 14 months ago. There was no mention of this line of accounting before the end of 2008.

It's just an example of spin control and creative accounting. If you read enough of these reports, sometimes it is amazing at how they get a positive headline out of what looks like bad news.

For instance Boyd gaming released their quarterly release. They dropped in total revenue and in cash flow in all four of their divisions. (1)Downtown Las Vegas, (2)Locals Las Vegas, (3) Midwest (riverboats and racino division), and (4) half share of Borgata in Atlantic City. But in the same quarter of last year they wrote down goodwill assessment on a Jai Lai facility they purchased in Florida. Since there was no equivalent write down in 2010 they showed an improvement on their bottom line . If you read the article Boyd Gaming returns to profit it is very difficult to tell that every line of business dropped.

I noticed one comment to the Boyd article that said the numbers given are confusing. He wondered what kind of cost cutting was done. The answer is none.