MGM MIRAGE (NYSE: MGG) today reported its first quarter 2003 financial results. Adjusted earnings per diluted share ("Adjusted EPS") was $0.40 in the first quarter of 2003, versus $0.52 in the 2002 quarter. First quarter Adjusted EPS was in line with the Company's previously announced guidance of $0.35 to $0.40.
Adjusted EPS (and Adjusted Earnings) excludes preopening and start-up expenses, restructuring costs, and property transactions, net(1). Diluted EPS computed in accordance with generally accepted accounting principles ("GAAP EPS") decreased to $0.33 for the first quarter of 2003 from $0.51 in the 2002 quarter.
"We performed largely as we expected in the first quarter, which is particularly noteworthy given current economic and world events. Our resorts posted solid results due to strong business volumes," said Terry Lanni, MGM MIRAGE's Chairman and CEO. "We are cognizant of near-term challenges, but continue to focus on maximizing the power of our brands, superior resorts, and world-class employees to generate market-leading results."
First Quarter 2003 Company Highlights
* Earned revenues of $1.02 billion, up 1% from 2002;
* Amended the 364-Day Revolving Credit Facility, extending the maturity
to April 2, 2004 and securing total available borrowings of
$525 million.
* Used $101 million of cash to repay debt and repurchase common stock;
* Invested $88 million of capital in the Company's properties, including
maintenance and expansion projects;
* Opened Tabu, the Ultra-Lounge, at MGM Grand Las Vegas, and Caramel and
Mist, new lounges at Bellagio and Treasure Island, respectively.
* Announced a new Irish Pub at New York-New York, complementing the
resort's improved entertainment amenities, including the new Cirque du
Soleil show, Zumanity, slated to open this summer.
Detailed Financial Results
The following table shows key financial results on a Company-wide basis for the first quarter.
Three months ended
March 31,
2003 2002
(In millions)
Casino revenue, net $ 545.3 $ 567.4
Non-casino revenue, net 476.6 440.0
Net revenue 1,021.9 1,007.4
Property-level EBITDA(2) 301.8 324.1
EBITDA (after corporate expense)(2) 288.0 313.5
Operating income 167.6 207.9
Net income 51.0 82.0
Adjusted Earnings 60.9 83.4
Net revenue in the first quarter grew 1% from the 2002 first quarter, benefiting from strong hotel and other non-gaming results throughout much of the quarter, offset by lower gaming revenues. Casino revenue decreased by 4% in the 2003 quarter. Table games volume, including baccarat, was down 1% from the 2002 quarter. Table games hold percentages were within a normal range for both periods, but the hold percentage was higher in last year's quarter. Slot revenue in the quarter was up 4% from 2002. Bellagio had another strong quarter in slots, with revenue up 10% in the quarter. This was Bellagio's fourth straight quarter of double-digit year-over-year slot revenue growth. New York-New York also posted a strong 19% increase in slot revenues over last year. MGM Grand Detroit slot revenues were down 3% compared to last year.
Non-casino revenue was up 8% in this year's quarter, as a result of continued year-over-year improvement in visitation trends and room rates. Hotel occupancy was 90% in the first quarter of 2003, up slightly over 89% in 2002, while the average daily room rate ("ADR") was $120, up 8% over 2002. As a result, revenue per available room ("REVPAR") increased 8% to $108 in the 2003 first quarter when compared with 2002.
Food and beverage, entertainment, retail and other revenues showed solid gains in the first quarter. These revenues increased 16% at MGM Grand Las Vegas, even after the impact of closing the EFX! show in January 2003. This resort's mix of dining and entertainment has improved significantly since last year, as management's transformation of the resort continues to benefit financial results. Bellagio and The Mirage also showed strong growth in food and beverage revenues, up 7% and 8%, respectively.
For the quarter, EBITDA was down 8% from the year-ago period, and operating income was down 19%. The decrease in EBITDA was primarily the result of increased labor costs in the quarter, along with increased property taxes and insurance costs. Operating income decreased due to those items and higher preopening expenses and net property transactions.
Adjusted Earnings and net income decreased by 27% and 38%, respectively, in the first quarter due to the decrease in operating income and higher net interest expense. Net interest expense was higher due to the Company's decision to suspend development of its wholly-owned Atlantic City development project, resulting in lower capitalized interest, and the prior year savings from interest rate swaps.
Net income for the first quarter of 2003 included a net $14.8 million ($9.9 million, net of tax) of items excluded from Adjusted Earnings. These items included:
* Preopening and start-up expenses of $7.4 million, including
$4.2 million related to the Company's Borgata investment and
$1.7 million related to Players Club;
* Net property transactions of $6.8 million, resulting primarily from
asset impairments and demolition costs associated with the closure of
the EFX! show ($4.7 million), and other asset impairments at MGM Grand
Las Vegas ($1.4 million);
* Restructuring costs of $0.6 million.
In the first quarter of 2002, similar items totaled $2.2 million ($1.5 million, net of tax), and consisted of preopening expenses related primarily to MGM MIRAGE Online and Borgata.
Financial Position
* Repaid $34 million of debt;
* Repurchased the remaining 1.4 million shares of Company common stock
available under the 2001 authorization at a total cost of $36 million;
* Announced Board of Director approval for a new 10 million share
repurchase program, and repurchased 1.2 million shares under the new
authorization at a total cost of $31 million.
First quarter capital expenditures of $88 million included costs related to continued implementation of new slot technology, the Bellagio expansion, construction of the two new theatres for Cirque du Soleil at New York-New York and MGM Grand Las Vegas, and other maintenance expenditures.
After giving effect to the extension of the 364-day credit facility, the Company has approximately $654 million of available borrowings under its senior credit facilities, with no public debt maturities until 2005.
"We are pleased to have secured continuing available credit at terms consistent with our past borrowings. Our extended facility also gives us the flexibility needed to pursue development opportunities," said MGM MIRAGE President, CFO and Treasurer Jim Murren. "We are analyzing a variety of growth opportunities, and while we explore them we are actively returning value to shareholders through targeted investments in our existing resorts, debt reductions, and prudent stock repurchases consistent with the strength of our balance sheet," Mr. Murren said.
Operational Highlights
* Successfully launched Players Club at Beau Rivage, the sixth resort
linked to the program;
* Continued installation of IGT's EZ-Pay™ cashless gaming system at
the Company's resorts, with over 10,000 machines converted to cashless
technology by quarter-end;
* Further enhanced our resorts with world-class lounge and entertainment
offerings, including Tabu, the Ultra Lounge, at MGM Grand Las Vegas,
Caramel bar and lounge at Bellagio, and Mist bar and lounge at
Treasure Island.
Outlook
* Anticipate the opening of Borgata this summer, with our final capital
contributions of up to $40 million to be made in the second and third
quarters;
* Forecast capital expenditures (excluding required contributions to
Borgata) of $100 million in the second quarter of 2003, including
continued development expenditures related to the Bellagio expansion
and theatres for the two new Cirque du Soleil shows.
"Global events and the current state of the economy create a difficult environment in which to forecast performance," said Mr. Lanni. "Incoming call volumes are slightly lower than last year's pace while we continue to operate with shortened booking windows. While these conditions may put pressure on near-term performance, we are confident that the Las Vegas market will once again prove its durability, and that an improving economy and resolution to global uncertainties will spur increased spending by our customers."
MGM MIRAGE will hold a conference call to discuss its earnings results and outlook for the second quarter at 11:00 a.m. Eastern Daylight Time today. The call can be accessed live at www.companyboardroom.com or www.mgmmirage.com, or by calling 1-800-299-7635 (domestic) or 1-617-786-2901 (international) with the access code "MGM MIRAGE". A complete replay of the conference call will be made available at www.mgmmirage.com .
(1) Adjusted Earnings (and Adjusted EPS) is presented solely as a supplemental disclosure because management believes that it is 1) a widely used measure of performance, and 2) a principal basis for valuation of gaming companies, as this measure is considered by many to be a better measure on which to base expectations of future results than GAAP net income. A reconciliation of Adjusted Earnings and EPS to GAAP net income and EPS is included in the financial schedules accompanying this release.
(2) EBITDA is earnings before interest, taxes, depreciation and amortization, restructuring, preopening and start-up expenses, and property transactions, net. EBITDA is presented solely as a supplemental disclosure because management believes that it is 1) a widely used measure of operating performance in the gaming industry, and 2) a principal basis for valuation of gaming companies. Management uses property-level EBITDA (EBITDA before corporate expense) as the primary measure of the Company's operating resorts' performance, including the evaluation of operating personnel. EBITDA should not be construed as an alternative to operating income, as an indicator of the Company's operating performance, or as an alternative to cash flows from operating activities, as a measure of liquidity, or as any other measure determined in accordance with generally accepted accounting principles. The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in EBITDA. Also, other gaming companies that report EBITDA information may calculate EBITDA in a different manner than the Company. A reconciliation of EBITDA to operating income is included in the financial schedules accompanying this release.
MGM MIRAGE (NYSE: MGG), one of the world's leading and most respected hotel and gaming companies, owns and operates 14 casino resorts located in Nevada, Mississippi, Michigan and Australia, and has investments in two other casino resorts in Nevada and New Jersey. The company is headquartered in Las Vegas, Nevada, and offers an unmatched collection of casino resorts with a limitless range of choices for guests. Guest satisfaction is paramount, and the company has approximately 43,000 employees committed to that result. Its portfolio of brands include AAA Five Diamond award-winner Bellagio, MGM Grand Las Vegas - The City of Entertainment, The Mirage, Treasure Island, New York - New York, Boardwalk Hotel and Casino and 50 percent of Monte Carlo, all located on the Las Vegas Strip; Golden Nugget in downtown Las Vegas; Whiskey Pete's, Buffalo Bill's, Primm Valley Resort and two championship golf courses at the California/Nevada state line; the exclusive Shadow Creek golf course in North Las Vegas; Golden Nugget in Laughlin, Nevada; Beau Rivage on the Mississippi Gulf Coast; and MGM Grand Detroit Casino in Detroit, Michigan. The Company is also a 50-percent owner of Borgata, a destination casino resort under development on Renaissance Pointe in Atlantic City, New Jersey. Borgata is scheduled to open this summer. Internationally, MGM MIRAGE owns and operates MGM Grand Australia in Darwin, Australia. For more information about MGM MIRAGE, please visit the company's 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002
Revenues:
Casino $545,343 $567,389
Rooms 225,539 206,499
Food and beverage 201,937 188,180
Entertainment, retail and other 162,049 152,955
1,134,868 1,115,023
Less: Promotional allowances 112,938 107,617
1,021,930 1,007,406
Expenses:
Casino 287,405 281,604
Rooms 63,137 53,953
Food and beverage 113,946 97,585
Entertainment, retail and other 108,259 99,835
Provision for doubtful accounts 7,966 12,058
General and administrative 150,256 147,483
Corporate expense 13,746 10,635
Preopening and start-up expenses 7,431 2,239
Restructuring costs 605 --
Property transactions, net 6,784 --
Depreciation and amortization 105,613 103,373
865,148 808,765
Income from unconsolidated affiliate 10,789 9,225
Operating income 167,571 207,866
Non-operating income (expense):
Interest income 1,777 1,240
Interest expense, net (85,988) (72,597)
Interest expense from unconsolidated affiliate -- (277)
Other, net 389 (2,623)
(83,822) (74,257)
Income before income taxes 83,749 133,609
Provision for income taxes (32,746) (51,653)
Net income $51,003 $81,956
Per share of common stock:
Basic:
Net income per share $0.34 $0.52
Weighted average shares outstanding 152,110 158,011
Diluted:
Net income per share $0.33 $0.51
Weighted average shares outstanding 153,549 160,152
MGM MIRAGE AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME AND EPS TO ADJUSTED EARNINGS AND EPS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002
Net income $51,003 $81,956
Preopening and start-up expenses, net 5,088 1,455
Restructuring costs, net 393 --
Property transactions, net 4,410 --
Adjusted earnings $60,894 $83,411
Per diluted share of common stock:
Net income $0.33 $0.51
Preopening and start-up expenses, net 0.04 0.01
Restructuring costs, net -- --
Property transactions, net 0.03 --
Adjusted EPS $0.40 $0.52
Weighted average diluted shares outstanding 153,549 160,152
MGM MIRAGE AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME TO EBITDA
(In thousands)
(Unaudited)
Three Months Ended March 31, 2003
Depreci- Preopening Property
ation and and Restruc- trans-
Operating amorti- start-up turing actions,
income zation expenses costs net EBITDA
Bellagio $40,281 $27,872 $-- $-- $10 $68,163
MGM Grand
Las Vegas 26,879 20,188 591 25 6,331 54,014
The Mirage 29,694 12,435 -- 300 (69) 42,360
Treasure Island 18,081 8,219 -- -- (77) 26,223
New York-New York 19,471 5,950 52 -- 42 25,515
MGM Grand Detroit 28,197 8,581 -- -- 156 36,934
Beau Rivage 10,002 4,641 -- -- 206 14,849
Other operations 12,336 9,715 884 -- (32) 22,903
Unconsolidated
affiliate 10,789 -- -- -- -- 10,789
195,730 97,601 1,527 325 6,567 301,750
Corporate
and other (28,159) 8,012 5,904 280 217 (13,746)
$167,571 $105,613 $7,431 $605 $6,784 $288,004
Three Months Ended March 31, 2002
Depreci- Preopening Property
ation and and Restruc- trans-
Operating amorti- start-up turing actions,
income zation expenses costs net EBITDA
Bellagio $63,346 $23,299 $-- $-- $-- $86,645
MGM Grand
Las Vegas 33,093 22,268 -- -- -- 55,361
The Mirage 27,353 12,651 -- -- -- 40,004
Treasure Island 17,216 8,380 -- -- -- 25,596
New York-New York 8,421 11,198 -- -- -- 19,619
MGM Grand Detroit 40,335 5,791 -- -- -- 46,126
Beau Rivage 9,362 6,182 -- -- -- 15,544
Other operations 15,332 9,563 1,098 -- -- 25,993
Unconsolidated
affiliate 9,225 -- -- -- -- 9,225
223,683 99,332 1,098 -- -- 324,113
Corporate
and other (15,817) 4,041 1,141 -- -- (10,635)
$207,866 $103,373 $2,239 $-- $-- $313,478
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA - NET REVENUES BY RESORT
(In thousands)
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002
Bellagio $ 240,364 $ 244,448
MGM Grand Las Vegas 184,143 184,987
The Mirage 150,107 140,397
Treasure Island 89,942 86,601
New York-New York 61,911 50,322
MGM Grand Detroit 94,769 103,619
Beau Rivage 70,411 71,902
Other operations 130,283 125,130
$1,021,930 $1,007,406
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA - HOTEL STATISTICS
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002
Bellagio
Occupancy % 91.7% 92.8%
Average daily rate (ADR) $238 $217
Revenue per available room (REVPAR) $219 $202
MGM Grand Las Vegas
Occupancy % 92.7% 90.2%
Average daily rate (ADR) $119 $113
Revenue per available room (REVPAR) $111 $101
The Mirage
Occupancy % 92.2% 93.0%
Average daily rate (ADR) $149 $139
Revenue per available room (REVPAR) $137 $130
Treasure Island
Occupancy % 94.9% 95.2%
Average daily rate (ADR) $110 $99
Revenue per available room (REVPAR) $104 $94
New York-New York
Occupancy % 99.0% 95.0%
Average daily rate (ADR) $101 $90
Revenue per available room (REVPAR) $100 $85
Beau Rivage
Occupancy % 91.0% 91.6%
Average daily rate (ADR) $87 $81
Revenue per available room (REVPAR) $79 $74
Other operations
Occupancy % 78.4% 77.8%
Average daily rate (ADR) $53 $52
Revenue per available room (REVPAR) $42 $41
MGM MIRAGE AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
ASSETS
March 31, December 31,
2003 2002
Current assets:
Cash and cash equivalents $ 172,134 $ 211,234
Accounts receivable, net 134,586 139,935
Inventories 68,066 83,582
Deferred income taxes 65,604 84,348
Prepaid expenses and other 87,572 86,311
Total current assets 527,962 605,410
Property and equipment, net 8,739,506 8,762,445
Other assets:
Investment in unconsolidated affiliates 713,682 710,802
Goodwill and other intangible assets, net 257,351 256,108
Deposits and other assets, net 192,835 170,220
Total other assets 1,163,868 1,137,130
$10,431,336 $10,504,985
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 75,168 $ 69,959
Income taxes payable 13,445 637
Current portion of long-term debt 7,356 6,956
Accrued interest on long-term debt 56,267 80,310
Other accrued liabilities 567,665 592,206
Total current liabilities 719,901 750,068
Deferred income taxes 1,761,541 1,769,431
Long-term debt 5,184,236 5,213,778
Other long-term obligations 112,594 107,564
Stockholders' equity:
Common stock ($.01 par value:
authorized 300,000,000 shares,
issued 166,399,089 and
166,393,025 shares and outstanding
152,021,689 and 154,574,225 shares) 1,664 1,664
Capital in excess of par value 2,125,999 2,125,626
Deferred compensation (25,195) (27,034)
Treasury stock, at cost (14,377,400 and
11,818,800 shares) (384,172) (317,432)
Retained earnings 941,209 890,206
Other comprehensive loss (6,441) (8,886)
Total stockholders' equity 2,653,064 2,664,144
$10,431,336 $10,504,985
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