MGM MIRAGE (NYSE: MGG) today reported record third quarter diluted earnings per share of 51 cents before preopening expenses, restructuring, write-downs and impairments and extraordinary item compared with 19 cents in the 2001 quarter. Income before preopening expenses, restructuring, write-downs and impairments and extraordinary item was $81.8 million for the three months ended September 30, 2002, compared with $30.1 million in the prior year's quarter. Including these items, net income was $69.6 million or 43 cents per diluted share during the 2002 third quarter, compared with a net loss of $14.4 million or a 9 cent loss per diluted share in the 2001 third quarter. These results represent all-time third quarter highs in terms of net income and earnings per share.
Net revenue in the 2002 third quarter grew 2% to $1.01 billion from $993 million in the 2001 quarter. For the three months ended September 30, 2002, earnings before interest, taxes, depreciation and amortization, restructuring, preopening expenses, write-downs and impairments and corporate expense ("EBITDA") was $306.3 million, up 30% when compared with $236.5 million in the year-ago period. The Company achieved a 30.3% EBITDA margin in the 2002 third quarter, up from 23.8% in the 2001 third quarter.
Third Quarter Company Highlights
-- Net revenue and EBITDA were $1.01 billion and $306.3 million,
respectively;
-- Produced all-time record high net income and earnings per share;
-- Reduced debt by $150 million during the quarter (including
$43.5 million at Monte Carlo), resulting in total debt reductions of
$454 million this year and $1.4 billion since the acquisition of
Mirage Resorts, Incorporated in May 2000;
-- Repurchased 1,014,600 shares of Company common stock during the
quarter;
-- Successfully launched our Players Club affinity program at MGM Grand
Detroit and MGM Grand Las Vegas;
-- Construction of Borgata, our 50% owned resort, continues on schedule
for a summer 2003 opening;
-- Entered into a new Development Agreement with the City of Detroit for
the development of a permanent hotel and casino complex;
-- Announced an ambitious $375 million expansion at Bellagio, which
includes the addition of a 925-room spa tower, significant expansion
of the spa and salon as well as new meeting space and retail and
restaurant outlets;
Quarterly comparisons are unique in this period due to the impact of the events of September 11, 2001. Results prior to September 11 were very strong, while the events of September 11 had an immediate and profound impact on the Company's operating performance.
"The strength of our third quarter demonstrates the resilience of MGM MIRAGE, the power of our brands and the unwavering commitment of our people," said MGM MIRAGE Chairman and CEO Terry Lanni. "Our Company is uniquely positioned to build on this momentum as we focus on deploying capital to maximize returns at our existing resorts and pursue new growth opportunities as they materialize," Mr. Lanni said.
The Company's 2002 third quarter operating results continue to show improvement led by increased non-casino revenues, up 4% compared with the 2001 third quarter, and slightly higher casino revenue in the 2002 quarter. Room revenue continued to strengthen as hotel occupancy rose from 87.7% in the 2001 third quarter to 89.2% in the 2002 third quarter. For the three months ended September 30, 2002, the average daily room rate ("ADR") was $97, up $3 when compared with the third quarter 2001. As a result, revenue per available room ("REVPAR") increased 5% to $87 in the 2002 third quarter when compared with the prior year's quarter and showed continued improvement versus a 10% and 2% year-over-year decline in the 2002 first and second quarter, respectively. Occupancy, ADR and REVPAR were 94.6%, $95 and $89, respectively, in the comparable 2000 quarter. These improving hotel trends continue to have a positive impact on food and beverage, entertainment and retail revenue.
Casino revenue was up slightly in the 2002 third quarter versus the 2001 quarter. Table game volume and hold percentages were both down slightly from prior year offset by an increase in slot revenues.
"We once again generated substantial free cash flow from operations which we utilized to materially reduce debt as well as repurchase shares. Our financial flexibility has never been greater. Our balance sheet is stronger today than at any time since the combination of MGM Grand and Mirage Resorts," said MGM MIRAGE President, CFO and Treasurer Jim Murren. "We will continue to maximize our free cash flow by driving growth through technology initiatives and selective investments in our resorts while we continue to focus on our industry leading operating margins," Mr. Murren said.
Las Vegas Strip Resorts
Bellagio, MGM Grand Las Vegas, The Mirage, Treasure Island, New York - New York and the Boardwalk (collectively, the "Las Vegas Strip Resorts") recorded net revenue and EBITDA of $716.9 million and $232.2 million, respectively, in the 2002 third quarter when compared with net revenue of $697.3 million and EBITDA of $157.4 million in the 2001 quarter. Quarterly EBITDA margin for these resorts was 32.4% for the three months ended September 30, 2002, versus 22.6% in the 2001 third quarter.
The increases in net revenue and EBITDA at these resorts were principally attributable to a 4% improvement in non-casino revenue accompanied by a 9% reduction in operating expenses. The increase in non-casino revenue reflected the substantial decline in business volumes in the prior-year quarter following the events of September 11. The decline in operating expenses reflects the continuation of cost containment strategies implemented in late 2001. In addition, operating expenses for the third quarter of 2001 included charges relating to increases in bad debt and inventory reserves following September 11. Stronger than anticipated receivable collections in the 2002 third quarter resulted in a reversal of previously recorded bad debt expense. Even after this reversal, the Company's reserves remain consistent with those maintained throughout the year, at levels management considers appropriate given current global economic conditions.
The Las Vegas Strip Resorts were again led by Bellagio, which recorded its second highest quarterly EBITDA of $91.3 million in the 2002 third quarter, up 46% from the $62.3 million recorded in the 2001 third quarter and 5% from the $86.7 million achieved in the third quarter of 2000. EBITDA margins reached 37.1% in the 2002 third quarter, a record for this four-year old resort. MGM Grand Las Vegas posted another strong quarter with EBITDA of $53.5 million, an increase of 74% from the $30.8 million reported in the prior-year quarter and 6% from the $50.3 million achieved in the 2000 third quarter. Similar strong results were achieved at the The Mirage, where third quarter EBITDA of $43.1 million increased by 60% and 7% over the $26.9 million and $40.4 million posted in the third quarter of 2001 and 2000, respectively.
Other Nevada Resorts
Primm Valley Resorts reported net revenue of $55.5 million and EBITDA of $8.3 million during the 2002 third quarter, compared with $54.7 million and $11.2 million in the prior year's quarter, as increased energy and marketing costs affected operating margins at these resorts. The Golden Nugget properties in downtown Las Vegas and in Laughlin generated combined net revenue of $51.5 million in the 2002 quarter, consistent with the 2001 third quarter, while combined EBITDA was $3.2 million versus $4.1 million in the 2001 period. For the three months ended September 30, 2002, Monte Carlo reported EBITDA of $16.7 million on net revenue of $61.6 million, compared with EBITDA of $20.3 million on net revenue of $64.9 million in the year-ago period. The Company's 50% share of this joint venture contributed $6.7 million to operating results for the 2002 third quarter, versus $8.9 million in the prior year's quarter.
MGM Grand Detroit
Despite the impact from the closure of the Lodge Freeway during the 2002 third quarter, net revenue at MGM Grand Detroit grew by 7% to $93.4 million from the 2001 quarter, while EBITDA increased 6% to $35.1 million. EBITDA margin was strong at 38% in each period.
Beau Rivage
Net revenue and operating expenses at Beau Rivage declined by 8% and 9%, respectively, as compared to the third quarter of 2001, resulting in EBITDA of $16.4 million versus $16.9 million in the prior period. Results for 2002 were affected by Tropical Storm Isidore, which closed all casino/barge activities for a 43-hour period in late September.
Other Factors Affecting Third Quarter Results
Net interest expense was $71.5 million for the three months ended September 30, 2002, compared with $84.2 million in the prior-year quarter. The decrease in interest expense is due to lower debt levels and a significant reduction in interest rates on the Company's credit facilities. During the 2002 third quarter, the Company repaid approximately $106 million of credit facility borrowings, bringing year-to-date debt reductions to $410 million. Additionally during the 2002 third quarter, the Company contributed $43.5 million to the Monte Carlo joint venture in connection with the venture's retirement of the final $87 million of its outstanding debt. Since the May 2000 acquisition of Mirage Resorts, Incorporated, the Company has reduced total outstanding indebtedness by $1.4 billion.
The Company repurchased just over one million shares of its common stock during the quarter at an average price of $33.66 per share as part of its previously authorized 10 million share repurchase program. Since the inception of the program, the Company has purchased approximately 4.2 million shares at an average price of $27.21 per share.
Third quarter diluted earnings per share as reported of 51 cents was before the following items:
-- Write-downs and impairments of $12.6 million (or 5 cents per share
after tax) related to physical damage to Beau Rivage resulting from
Tropical Storm Isidore as well as the write-off of certain costs
related to the previous Detroit development agreement.
-- Preopening expenses of $5.7 million (or 3 cents per share after tax)
for the Company's start-up activities principally related to its 50%
interest in Borgata, the introduction of its Players Club affinity
program and its online development efforts.
MGM MIRAGE is an entertainment, hotel and gaming company headquartered in Las Vegas, Nevada, which owns and/or operates through subsidiaries 15 casino properties. Its U.S. holdings include: Bellagio, the MGM Grand Hotel and Casino - The City of Entertainment, The Mirage, Treasure Island, New York - New York Hotel and Casino, the Boardwalk Hotel and Casino and 50% of Monte Carlo, all located on the Las Vegas Strip; the Golden Nugget in Downtown Las Vegas; Whiskey Pete's, Buffalo Bill's, the Primm Valley Resort and two championship golf courses at the California/Nevada state line; the exclusive Shadow Creek golf course in North Las Vegas; the Golden Nugget in Laughlin, Nevada; the Beau Rivage resort on the Mississippi Gulf Coast; and the MGM Grand Detroit Casino in Detroit, Michigan. The Company is a joint venture partner in Borgata at Renaissance Pointe, a resort under development in Atlantic City, New Jersey. Internationally, MGM MIRAGE owns and operates the MGM Grand Hotel and Casino in Darwin, Australia.
For more information on MGM MIRAGE and its operating subsidiaries, visit our website at www.mgmmirage.com .
Statements in this release which are not historical facts are "forward looking" statements and "safe harbor statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and/or uncertainties, including risks and/or uncertainties as described in the company's public filings with the Securities and Exchange Commission.
MGM MIRAGE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
Revenues:
Casino $554,066 $551,698 $1,656,137 $1,676,131
Rooms 203,632 194,491 634,447 655,605
Food and
beverage 184,969 174,559 567,378 557,627
Entertainment,
retail and
other 168,730 165,775 510,289 502,725
Income from
unconsolidated
affiliate 6,720 8,909 25,093 30,269
1,118,117 1,095,432 3,393,344 3,422,357
Less:
promotional
allowances 106,809 102,543 319,675 309,020
1,011,308 992,889 3,073,669 3,113,337
Expenses:
Casino 273,698 287,339 826,890 857,208
Rooms 56,997 59,727 169,476 181,507
Food and
beverage 107,673 105,021 312,011 318,088
Entertainment,
retail and
other 111,146 120,538 324,851 339,091
Provision for
doubtful
accounts (2,349) 27,008 20,736 58,745
General and
administrative 157,848 156,755 453,302 453,760
Corporate expense 10,620 8,408 32,185 29,607
Preopening
expenses 5,723 1,091 12,352 3,071
Restructuring
costs (credit) -- 19,896 (10,421) 19,896
Write-downs and
impairments 12,578 47,384 12,578 47,384
Depreciation and
amortization 96,029 98,697 296,967 292,034
829,963 931,864 2,450,927 2,600,391
Operating Income 181,345 61,025 622,742 512,946
Non-Operating
Income (Expense):
Interest income 1,121 1,408 3,584 5,188
Interest expense,
net (71,498) (84,185) (213,212) (274,197)
Interest expense
from
unconsolidated
affiliate (8) (482) (596) (1,992)
Other, net (2,749) (1,440) (8,283) (2,911)
(73,134) (84,699) (218,507) (273,912)
Income (Loss)
Before Income
Taxes and
Extraordinary
Item 108,211 (23,674) 404,235 239,034
Benefit
(Provision) for
income taxes (38,323) 9,321 (150,516) (92,129)
Income (Loss)
Before
Extraordinary
Item 69,888 (14,353) 253,719 146,905
Extraordinary Item:
Loss on Early
Extinguishment
of Debt, net (328) -- (328) (778)
Net Income (Loss) $69,560 $(14,353) $253,391 $146,127
Per Share Of
Common Stock:
Basic:
Income (Loss)
Before
Extraordinary
Item $0.44 $(0.09) $1.60 $0.92
Extraordinary
Item, net -- -- -- --
Net Income (Loss)
Per Share $0.44 $(0.09) $1.60 $0.92
Weighted Average
Shares
Outstanding
(000's) 158,497 159,198 158,626 159,255
Diluted:
Income (Loss)
Before
Extraordinary
Item $0.43 $(0.09) $1.58 $0.91
Extraordinary
Item, net -- -- -- --
Net Income (Loss)
Per Share $0.43 $(0.09) $1.58 $0.91
Weighted Average
Shares
Outstanding
(000's) 160,575 159,198 160,881 161,424
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
Net Income (Loss) $69,560 $(14,353) $253,391 $146,127
Preopening expenses,
net 3,720 709 8,029 1,996
Restructuring costs
(credit), net -- 12,932 (6,774) 12,932
Write-downs and
impairments, net 8,176 30,800 8,176 30,800
Management agreement
termination fee, net -- -- (7,419) --
Extraordinary item,
net 328 -- 328 778
Income Before
Preopening,
Restructuring,
Write-downs and
impairments,
Management
agreement
termination fee
and Extraordinary
item $81,784 $30,088 $255,731 $192,633
Per Share Of Common Stock:
Basic:
Net Income (Loss) $0.44 $(0.09) $1.60 $0.92
Preopening expenses,
net 0.03 0.01 0.05 0.02
Restructuring costs
(credit), net -- 0.08 (0.04) 0.08
Write-downs and
impairments, net 0.05 0.19 0.05 0.19
Management agreement
termination fee, net -- -- (0.05) --
Extraordinary item,
net -- -- -- --
Income Before
Preopening,
Restructuring,
Write-downs and
impairments,
Management
agreement
termination fee
and Extraordinary
item $0.52 $0.19 $1.61 $1.21
Weighted Average
Shares Outstanding
(000's) 158,497 159,198 158,626 159,255
Diluted:
Net Income (Loss) $0.43 $(0.09) $1.58 $0.91
Preopening expenses,
net 0.03 0.01 0.05 0.01
Restructuring costs
(credit), net -- 0.08 (0.04) 0.08
Write-downs and
impairments, net 0.05 0.19 0.05 0.19
Management agreement
termination fee, net -- -- (0.05) --
Extraordinary item,
net -- -- -- --
Income Before
Preopening,
Restructuring,
Write-downs and
impairments,
Management
agreement
termination fee
and Extraordinary
item $0.51 $0.19 $1.59 $1.19
Weighted Average
Shares Outstanding
(000's) 160,575 159,198 160,881 161,424
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA - PROPERTY OPERATING RESULTS
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
NET REVENUES:
Bellagio $ 245,819 $ 233,390 $ 738,704 $ 734,096
MGM Grand Las
Vegas 176,703 171,334 543,246 558,314
The Mirage 144,107 144,842 433,556 478,286
Treasure Island 86,159 86,274 262,667 276,940
New York-New York 55,901 53,141 161,834 161,952
Primm Valley
Resorts 55,533 54,702 161,208 159,756
Golden Nugget
Las Vegas 40,728 40,081 130,577 133,209
Golden Nugget
Laughlin 10,821 11,463 34,831 35,722
MGM Grand Detroit 93,392 87,351 295,934 264,040
Beau Rivage 77,028 83,312 223,835 227,168
Income from
Unconsolidated
Affiliate 6,720 8,909 25,093 30,269
Boardwalk 8,203 8,356 24,368 26,669
MGM Grand
Australia 10,194 8,635 25,724 23,428
MGM Grand South
Africa -- 1,099 12,092 3,488
$ 1,011,308 $ 992,889 $ 3,073,669 $ 3,113,337
EBITDA:
Bellagio $ 91,305 $ 62,334 $ 268,319 $ 232,166
MGM Grand
Las Vegas 53,470 30,779 162,233 138,879
The Mirage 43,083 26,855 120,185 129,068
Treasure Island 21,617 18,541 75,018 77,086
New York-New York 21,679 18,000 65,135 65,276
Primm Valley
Resorts 8,331 11,245 29,252 34,137
Golden Nugget Las
Vegas 2,337 3,981 18,591 25,108
Golden Nugget
Laughlin 905 82 4,104 2,909
MGM Grand Detroit 35,132 33,201 123,311 103,928
Beau Rivage 16,445 16,866 49,294 48,561
Income from
Unconsolidated
Affiliate 6,720 8,909 25,093 30,269
Boardwalk 1,009 859 3,488 4,232
MGM Grand
Australia 4,262 3,766 10,299 9,877
MGM Grand South
Africa -- 1,083 12,081 3,442
$ 306,295 $ 236,501 $ 966,403 $ 904,938
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL STATISTICAL INFORMATION
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
ROOM STATISTICS:
Bellagio
Occupancy % 93.8% 90.0% 95.2% 95.0%
Average Daily Rate
(ADR) $169 $159 $177 $179
Revenue per
Available Room
(REVPAR) $159 $143 $169 $170
MGM Grand Las Vegas
Occupancy % 92.8% 90.0% 92.3% 94.5%
Average Daily Rate
(ADR) $104 $105 $110 $114
Revenue per
Available Room
(REVPAR) $96 $94 $102 $108
The Mirage
Occupancy % 95.2% 91.7% 96.0% 95.7%
Average Daily Rate
(ADR) $110 $109 $118 $123
Revenue per
Available Room
(REVPAR) $104 $100 $114 $118
Treasure Island
Occupancy % 93.3% 92.5% 95.7% 95.6%
Average Daily Rate
(ADR) $90 $88 $93 $99
Revenue per
Available Room
(REVPAR) $84 $81 $89 $95
New York-New York
Occupancy % 97.0% 92.2% 96.0% 96.2%
Average Daily Rate
(ADR) $87 $80 $91 $87
Revenue per
Available Room
(REVPAR) $84 $73 $87 $84
Primm Valley Resorts
Occupancy % 61.7% 62.0% 63.4% 60.2%
Average Daily Rate
(ADR) $38 $38 $37 $38
Revenue per
Available Room
(REVPAR) $23 $24 $23 $23
Golden Nugget
Las Vegas
Occupancy % 94.5% 92.0% 95.5% 96.4%
Average Daily Rate
(ADR) $56 $59 $59 $62
Revenue per
Available Room
(REVPAR) $53 $54 $56 $60
Golden Nugget
Laughlin
Occupancy % 84.9% 92.3% 87.1% 94.0%
Average Daily
Rate (ADR) $38 $34 $39 $33
Revenue per
Available Room
(REVPAR) $32 $32 $34 $31
Beau Rivage
Occupancy % 90.6% 95.2% 93.1% 95.5%
Average Daily Rate
(ADR) $95 $85 $89 $81
Revenue per
Available Room
(REVPAR) $86 $81 $83 $78
Boardwalk
Occupancy % 73.2% 81.4% 73.5% 87.7%
Average Daily Rate
(ADR) $57 $59 $62 $65
Revenue per
Available Room
(REVPAR) $42 $48 $46 $57
MGM Grand Australia
Occupancy % 88.3% 91.0% 76.5% 75.0%
Average Daily Rate
(ADR) $75 $62 $68 $59
Revenue per
Available Room
(REVPAR) $67 $56 $52 $44
MGM MIRAGE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
ASSETS
September 30, December 31,
2002 2001
CURRENT ASSETS:
Cash and cash equivalents $ 139,199 $ 208,971
Accounts receivable, net 114,767 144,374
Inventories 84,183 78,037
Income tax receivable 5,556 12,077
Deferred income taxes 92,489 148,845
Prepaid expenses and other 84,467 69,623
Total current assets 520,661 661,927
PROPERTY AND EQUIPMENT, NET 8,786,931 8,891,645
OTHER ASSETS:
Investment in unconsolidated affiliates 709,206 632,949
Goodwill, net 104,522 103,059
Deposits and other assets, net 313,317 207,863
Total other assets 1,127,045 943,871
$ 10,434,637 $ 10,497,443
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 62,915 $ 75,787
Current portion of long-term debt 6,734 168,079
Accrued interest on long-term debt 56,375 78,938
Other accrued liabilities 611,749 565,106
Total current liabilities 737,773 887,910
DEFERRED INCOME TAXES 1,761,915 1,746,272
LONG-TERM DEBT 5,069,243 5,295,313
OTHER LONG-TERM OBLIGATIONS 107,493 57,248
STOCKHOLDERS' EQUITY:
Common stock ($.01 par value: authorized
300,000,000 shares, issued 166,364,271
and 163,685,876 shares and outstanding
158,938,971 and 157,396,176 shares) 1,664 1,637
Capital in excess of par value 2,124,763 2,049,841
Deferred compensation (28,370) --
Treasury stock, at cost (7,425,300 and
6,289,700 shares) (180,055) (129,399)
Retained earnings 851,162 597,771
Other comprehensive loss (10,951) (9,150)
Total stockholders' equity 2,758,213 2,510,700
$ 10,434,637 $ 10,497,443
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SOURCE: MGM MIRAGE
CONTACT: Investment Community, James J. Murren, President, Chief
Financial Officer and Treasurer, +1-702-693-8877, or Media, Alan Feldman,
Senior Vice President, Public Affairs, +1-702-891-7147, both of MGM MIRAGE
Web site: http://www.mgmmirage.com/