Second-Quarter Earnings Off 38% : MCA Approves 3-for-2 Stock Split

Directors of MCA, the Los Angeles-based entertainment conglomerate, on Tuesday approved a 3-for-2 stock split.

The announcement was coupled with the declaration of a quarterly cash dividend of 22 cents per share of common stock. The directors said they intend to increase the dividend in the third quarter--despite the fact that second-quarter earnings, also reported Tuesday, lagged 38% behind the 1984 quarter, while earnings for 1985’s first half were off 25% from a year earlier.

Revenue set records for both the quarter--$416.4 million--and the first half--$848 million. Quarterly earnings declined to $12.3 million from 1984’s $20 million; six-month earnings dropped to $30.7 million from $41 million a year earlier.

Chairman Lew R. Wasserman attributed the earnings decline to a higher estimated effective annual income tax rate--19.6% for the first half, compared to 5.1% a year ago--and “disappointing” results from several films released by MCA’s Universal Pictures division.

Wasserman said he expects third-quarter earnings to rebound, thanks to proceeds from what he called the “highly successful” release of the film “Back to the Future” and revenue from previously announced domestic television syndication agreements.

The second-quarter dividend will apply to the common stock before the scheduled 3-for-2 split and will be paid Sept. 16 to shareholders of record Aug. 28, the company said.

The directors also indicated their intention to set the next quarterly dividend at 17 cents a share for the expanded number of shares after the split. (The 22-cent distribution equates to 14.67 cents per share after the split.)

Harold M. Haas, chief financial officer, said the split is consistent with MCA policy to maintain its stock prices at an attractive level. (MCA closed at $63.125 in trading on the New York Stock Exchange, where its price in the last year ranged from $38.25 to $69.25.)

Separately, the company said it completed its exchange offer for the remaining outstanding shares of New York-based LJN Toys Ltd., marking MCA’s entry in the booming toy business.

By the offer’s expiration Monday night, MCA had increased its stake to 97% of LJN, which had 1984 earnings of $6.7 million on sales of $77.8 million.

MCA, which had acquired 62.8% of LJN stock last May, said the toy firm will become a wholly owned subsidiary.