MGM MIRAGE (NYSE: MGG) today reported its fourth quarter and year-end financial results. Adjusted earnings per diluted share ("Adjusted EPS") was $0.28 in the fourth quarter of 2002, versus $0.18 in the 2001 quarter.
Adjusted EPS (and Adjusted Earnings) excludes preopening and start-up expenses, restructuring costs, write-downs and impairments and extraordinary items. The Company previously announced that it expected fourth quarter earnings per share of $0.24 to $0.27 on a comparable basis.
Diluted EPS computed in accordance with generally accepted accounting principles ("GAAP EPS") increased to $0.25 for the fourth quarter of 2002 from $0.15 in the 2001 quarter.
2002 Company Highlights
* Net revenue of over $4.0 billion for the year, up 1% from 2001;
* EBITDA(1) increased 8% to $1.2 billion;
* Adjusted EPS grew to $1.87, up 36% from 2001;
* Reduced debt by $314 million, including the Company's $44 million
share of debt repaid by Monte Carlo;
* Repurchased 6.4 million shares of Company common stock for
$208 million;
* Invested $295 million of capital in the Company's properties and for
development and expansion projects.
* Entered into a Revised Development Agreement with the City of Detroit
for development of a permanent casino complex;
* Completed the sale of the Company's South Africa interests;
* Implemented several technological initiatives designed to enhance both
revenues and the Company's industry-leading cost structure, including
Players Club and IGT's EZ-Pay™;
* Announced two agreements with Cirque du Soleil for new shows at
New York-New York and MGM Grand Las Vegas;
* Announced a $375 million expansion program at Bellagio, including a
925-room Spa Tower and enhanced and expanded spa, retail, restaurant
and conference offerings.
Overall Financial Results
Adjusted EPS of $0.28 for the fourth quarter was significantly above the prior year, but was below expectations due to lower-than-expected casino volume in December, primarily from weakness in the national high-end business. Hotel and other operating results were generally above 2001's fourth quarter results.
"The fourth quarter proved that we are still in a challenging environment and that the economic recovery in the United States is still a work in progress," said Terry Lanni, MGM MIRAGE's Chairman and CEO. "We continue to refine the manner in which we market to our national customers, as we remain alert to global and national conditions which could have a short-term impact on leisure travel," Mr. Lanni said.
Full-year Adjusted EPS was $1.87, compared with $1.37 for the year ended December 31, 2001. Full-year GAAP EPS was $1.83, an increase of 73% over the $1.06 reported in 2001 and an all-time record for the Company. For the full year results, Adjusted EPS excludes the $11.4 million ($0.05 per share, net of tax) received from the early buyout of the Company's management agreements in South Africa.
"We are proud of our 2002 results, which produced record earnings for our company in spite of a difficult environment. This was clearly due to the tireless efforts of our 43,000 employees and their focus on our customers and cost efficiencies," Mr. Lanni said.
Detailed Financial Results
The following table shows key financial results on a Company-wide basis for the fourth quarter and for the full year.
Three months ended Year ended
December 31, December 31,
2002 2001 2002 2001
(In millions)
Casino revenue, net $533.6 $487.7 $2,189.7 $2,163.8
Non-casino
revenue, net 449.1 402.0 1,841.6 1,809.0
Net revenue 982.7 889.7 4,031.3 3,972.8
EBITDA 262.0 228.2 1,228.4 1,133.1
Net income 39.0 23.7 292.4 169.8
Adjusted Earnings 43.4 27.9 299.1 220.5
Net revenue in the fourth quarter grew 10% from the 2001 fourth quarter, benefiting from the relatively easy comparisons after the events of September 11, 2001. Compared with the 2000 fourth quarter, net revenue was down 4%. Casino revenue increased by 9% in the 2002 quarter, but decreased 7% from the fourth quarter of 2000. Table games volume was up 7% over the 2001 quarter, due mostly to increased baccarat play, but was down 13% compared with the 2000 quarter. Table games volume was negatively impacted by weakness in the national high-end business. Table games hold percentages were within a normal range for all three periods. Slot revenue in the quarter was up 6% over 2001, led by strong performances at Bellagio and The Mirage.
Non-casino revenue was up 12% in this year's quarter, as a result of continued year-over-year improvement in visitation trends. Hotel occupancy was 84.6% in the fourth quarter of 2002, up from 82.7% in 2001, but still lower than occupancy of 88.6% in the 2000 quarter. For the fourth quarter of 2002, the average daily room rate ("ADR") was $104, up 12% when compared with the fourth quarter of 2001 and back to even with rates earned in the 2000 period. As a result, revenue per available room ("REVPAR") increased 14% to $88 in the 2002 fourth quarter when compared with 2001 and was slightly below 2000. These improving hotel trends continue to have a positive impact on food and beverage, entertainment and retail revenue.
For the quarter, EBITDA was up 15% over the year-ago period. The Company achieved a 26.7% EBITDA margin in the 2002 fourth quarter, up from 25.6% in 2001. The increase was primarily the result of increased revenues in the quarter. Operating expenses were 9% higher in the 2002 quarter than in 2001, primarily the result of increased payroll and insurance costs.
Adjusted Earnings increased by 56% in the fourth quarter due to the increase in EBITDA, offset by higher net interest expense. Net interest expense was higher due mostly to the Company's decision to suspend development of its wholly-owned Atlantic City development project, resulting in lower capitalized interest.
Net income for the fourth quarter of 2002 included a net $4.6 million of items excluded from Adjusted Earnings. These items included preopening and start-up expenses of $9.1 million related to the Company's Borgata investment, Players Club implementation and online activities; a restructuring credit of $6.6 million, which included $9.9 million reversal of lease buyout accruals no longer considered probable of payment, offset by $3.3 million of early contract termination costs at MGM Grand Las Vegas for the EFX show and a restaurant lease; and write-downs and impairments of $2.1 million related to assets abandoned or replaced with new construction. In the fourth quarter of 2001, similar items totaled $6.4 million.
For the full year, net revenues were slightly higher than in 2001 as business levels continued to improve throughout the year, while EBITDA increased by 8%, largely as a result of a lower cost structure implemented in late 2001. The Company's EBITDA margin in 2002 was an impressive 30.5%. Net income increased by 72% as a result of improved EBITDA and lower net interest expense, restructuring charges, and write-downs and impairments.
Financial Position
* Repaid $314 million of debt in 2002, including the Company's
$44 million share of debt repaid by Monte Carlo;
* Repurchased 4.4 million shares of Company common stock in the quarter
at a total cost of $138 million. For the year, the Company
repurchased 6.4 million shares of Company common stock at a total cost
of $208 million. Including shares purchased so far in the first
quarter of 2003, the Company has now completed its previously
authorized 10 million share repurchase program initiated in
September 2001.
* Invested $37 million of additional capital contributions in Borgata in
2002, along with expenditures for common areas of the Renaissance
Pointe site.
The Company invested $93 million of capital during the quarter on maintenance and growth initiatives, bringing the total for 2002 to $295 million. At December 31, 2002, the Company had $685 million of available borrowings under its senior credit facilities.
"We are well positioned financially as we move into 2003," said MGM MIRAGE President, CFO and Treasurer Jim Murren. "We have a strong balance sheet and will continue to repay debt and invest in our premier properties. We also believe the projects we've decided to invest in -- the Bellagio expansion, Detroit, Borgata, the Cirque du Soleil shows, resort upgrades and improvements in slot technology -- will enhance our portfolio and generate excellent returns on investment," Mr. Murren said.
Operational Highlights
* Entered into an agreement with Turnberry Associates to jointly develop
a luxury condominium-hotel complex at MGM Grand Las Vegas.
* Successfully launched Players Club at The Mirage, Treasure Island, MGM
Grand Detroit, MGM Grand Las Vegas and Bellagio, with final roll-outs
expected at Beau Rivage, New York-New York and Golden Nugget Las Vegas
in 2003.
* Began installation of IGT's EZ-Pay™ cashless gaming system at the
Company's resorts, with conversion of almost all of the Company's slot
machines expected by mid-2003.
* Earned second straight AAA Five-Diamond Award at Bellagio, the largest
resort to ever earn the award, and restaurants Picasso at Bellagio and
Renoir at The Mirage.
* Further enhanced our resorts with world-class restaurants and
entertainment offerings, including Craftsteak by James Beard
Award-winning Chef Tom Colicchio and Zuri, an upscale lounge at MGM
Grand Las Vegas, and Zax, an exciting restaurant and late night
entertainment venue at Golden Nugget Las Vegas.
"We're constantly looking for new ways to improve our customers' experiences, which we believe is the key driver of our long-term success," Mr. Murren said. "Our technological, entertainment and expansion initiatives will generate returns in 2003, and will help us maintain our position as the premier gaming company."
Outlook
* Anticipate the opening of Borgata in the summer of 2003.
* Expect the new Cirque du Soleil show at New York-New York to open in
summer of 2003.
* Forecast capital expenditures of $375 to $425 million in 2003,
including development expenditures related to the Bellagio expansion,
EZ Pay™ system, and theatres for the two new Cirque du Soleil
shows.
"Our objective is to continue to maximize free cash flow and, in turn, enhance shareholder value. Excess cash will largely be utilized to reduce debt," Mr. Lanni said. "We also continue to assess development opportunities and intend to maintain financial flexibility to capitalize on opportunities as they arise."
(1) EBITDA is earnings before interest, taxes, depreciation and amortization, restructuring, preopening and start-up expenses, write-downs and impairments and corporate expense. EBITDA information is presented solely as a supplemental disclosure because management believes that it is a widely used measure of operating performance in the gaming industry. 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 of performance 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. It should also be noted that other gaming companies that report EBITDA information may calculate EBITDA in a different manner than the Company.
MGM MIRAGE is one of the world's leading and most respected entertainment, hotel and gaming companies that owns and operates 15 casino properties located in Nevada, Mississippi and Michigan. The company is headquartered in Las Vegas, Nev. and offers an unmatched collection of resort-casinos 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 two-time AAA Five Diamond award-winner 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 percent 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 also a joint venture partner in Borgata at Renaissance Pointe, a $1 billion destination resort-casino under development in Atlantic City, New Jersey. Borgata is scheduled to open summer 2003. Internationally, MGM MIRAGE owns and operates the MGM Grand Hotel and Casino 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)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
Revenues:
Casino $533,583 $487,677 $2,189,720 $2,163,808
Rooms 207,034 181,683 841,481 837,288
Food and beverage 190,224 167,708 757,602 725,335
Entertainment,
retail
and other 160,521 150,717 670,810 653,442
1,091,362 987,785 4,459,613 4,379,873
Less:
promotional
allowances 108,643 98,051 428,318 407,071
982,719 889,734 4,031,295 3,972,802
Expenses:
Casino 277,234 266,375 1,104,124 1,123,583
Rooms 60,092 51,927 229,568 233,434
Food and beverage 115,752 94,596 427,763 412,684
Entertainment,
retail
and other 108,734 100,114 433,585 439,205
Provision for
doubtful
accounts 7,616 12,499 28,352 71,244
General and
administrative 158,564 142,574 611,866 596,334
Corporate expense 11,671 8,117 43,856 37,724
Preopening and
start-up
expenses 9,115 2,035 21,467 5,106
Restructuring
costs (credit) (6,600) 3,825 (17,021) 23,721
Write-downs and
impairments 2,134 571 14,712 47,955
Depreciation and
amortization 101,656 98,692 398,623 390,726
845,968 781,325 3,296,895 3,381,716
Income from
unconsolidated
affiliate 7,268 6,547 32,361 36,816
Operating Income 144,019 114,956 766,761 627,902
Non-Operating Income
(Expense):
Interest income 931 918 4,515 6,106
Interest
expense, net (82,414) (75,281) (295,626) (349,478)
Interest
expense from
unconsolidated
affiliate -- (378) (596) (2,370)
Other, net (457) (1,660) (8,740) (4,571)
(81,940) (76,401) (300,447) (350,313)
Income Before
Income Taxes and
Extraordinary Item 62,079 38,555 466,314 277,589
Provision for
income taxes (23,035) (14,867) (173,551) (106,996)
Income Before
Extraordinary Item 39,044 23,688 292,763 170,593
Extraordinary Item:
Loss on Early
Extinguishment
of Debt, net -- -- (328) (778)
Net Income $39,044 $23,688 $292,435 $169,815
Per Share Of
Common Stock:
Basic:
Income Before
Extraordinary
Item $0.25 $0.15 $1.85 $1.07
Extraordinary
Item, net -- -- -- --
Net Income
Per Share $0.25 $0.15 $1.85 $1.07
Weighted
Average Shares
Outstanding
(000's) 155,387 157,336 157,809 158,771
Diluted:
Income Before
Extraordinary
Item $0.25 $0.15 $1.83 $1.06
Extraordinary
Item, net -- -- -- --
Net Income
Per Share $0.25 $0.15 $1.83 $1.06
Weighted
Average Shares
Outstanding
(000's) 157,229 158,994 159,940 160,822
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
Net Income $39,044 $23,688 $292,435 $169,815
Preopening
and start-up
expenses, net 7,220 1,323 15,249 3,319
Restructuring
costs
(credit), net (4,290) 2,486 (11,064) 15,418
Write-downs and
impairments, net 1,387 371 9,563 31,171
Management
agreement
termination
fee, net -- -- (7,419) --
Extraordinary
item, net -- -- 328 778
Adjusted Earnings $43,361 $27,868 $299,092 $220,501
Per Share Of Common Stock:
Basic:
Net Income $0.25 $0.15 $1.85 $1.07
Preopening
and start-up
expenses, net 0.05 0.01 0.10 0.02
Restructuring
costs
(credit), net (0.03) 0.02 (0.07) 0.10
Write-downs and
impairments, net 0.01 -- 0.06 0.20
Management
agreement
termination
fee, net -- -- (0.04) --
Extraordinary
item, net -- -- -- --
Adjusted Earnings $0.28 $0.18 $1.90 $1.39
Weighted
Average Shares
Outstanding
(000's) 155,387 157,336 157,809 158,771
Diluted:
Net Income $0.25 $0.15 $1.83 $1.06
Preopening
and start-up
expenses, net 0.05 0.01 0.10 0.02
Restructuring
costs
(credit), net (0.03) 0.02 (0.07) 0.10
Write-downs and
impairments, net 0.01 -- 0.06 0.19
Management
agreement
termination
fee, net -- -- (0.05) --
Extraordinary
item, net -- -- -- --
Adjusted Earnings $0.28 $0.18 $1.87 $1.37
Weighted
Average Shares
Outstanding
(000's) 157,229 158,994 159,940 160,822
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA - PROPERTY OPERATING RESULTS
(in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
NET REVENUES:
Bellagio $232,163 $202,183 $970,867 $936,279
MGM Grand
Las Vegas 190,840 156,545 734,086 714,859
The Mirage 137,749 124,280 571,305 602,566
Treasure Island 81,006 78,012 343,673 354,952
New York-New York 56,464 47,360 218,298 209,312
Primm Valley
Resorts 48,330 46,920 209,538 206,676
Golden Nugget
Las Vegas 46,152 43,033 176,729 176,242
Golden Nugget
Laughlin 10,242 11,018 45,073 46,740
MGM Grand Detroit 95,130 96,294 391,064 360,334
Beau Rivage 66,750 67,375 290,585 294,543
Boardwalk 8,297 7,577 32,665 34,246
MGM Grand Australia 9,596 8,356 35,320 31,784
MGM Grand
South Africa -- 781 12,092 4,269
$982,719 $889,734 $4,031,295 $3,972,802
EBITDA:
Bellagio $67,985 $56,186 $336,304 $288,352
MGM Grand
Las Vegas 50,644 35,387 212,877 174,266
The Mirage 31,966 26,175 152,151 155,243
Treasure Island 19,986 17,074 95,004 94,160
New York-New York 21,010 17,251 86,145 82,527
Primm Valley
Resorts 5,760 8,172 35,012 42,309
Golden Nugget
Las Vegas 6,824 7,563 25,415 32,671
Golden Nugget
Laughlin 554 704 4,658 3,613
MGM Grand Detroit 34,229 40,418 157,540 144,346
Beau Rivage 10,792 7,811 60,086 56,372
Income from
Unconsolidated
Affiliate 7,268 6,547 32,361 36,816
Boardwalk 962 307 4,450 4,539
MGM Grand Australia 4,015 3,838 14,314 13,715
MGM Grand
South Africa -- 763 12,081 4,205
$261,995 $228,196 $1,228,398 $1,133,134
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL STATISTICAL INFORMATION
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
ROOM STATISTICS:
Bellagio
Occupancy % 90.2% 91.3% 93.9% 94.1%
Average Daily
Rate (ADR) $188 $156 $180 $174
Revenue per
Available Room
(REVPAR) $170 $143 $169 $163
MGM Grand Las Vegas
Occupancy % 85.6% 81.7% 90.6% 91.2%
Average Daily
Rate (ADR) $114 $107 $111 $112
Revenue per
Available Room
(REVPAR) $98 $87 $101 $103
The Mirage
Occupancy % 88.5% 89.7% 94.1% 94.3%
Average Daily
Rate (ADR) $118 $105 $118 $119
Revenue per
Available Room
(REVPAR) $104 $94 $111 $112
Treasure Island
Occupancy % 92.6% 90.5% 94.9% 94.3%
Average Daily
Rate (ADR) $94 $84 $93 $95
Revenue per
Available Room
(REVPAR) $87 $76 $88 $90
New York-New York
Occupancy % 92.8% 89.8% 95.2% 94.6%
Average Daily
Rate (ADR) $96 $81 $92 $86
Revenue per
Available Room
(REVPAR) $89 $72 $88 $81
Primm Valley Resorts
Occupancy % 56.5% 51.2% 61.7% 57.9%
Average Daily
Rate (ADR) $38 $38 $37 $38
Revenue per
Available Room
(REVPAR) $21 $19 $23 $22
Golden Nugget
Las Vegas
Occupancy % 89.3% 88.4% 94.3% 94.2%
Average Daily
Rate (ADR) $62 $61 $60 $62
Revenue per
Available Room
(REVPAR) $56 $53 $56 $58
Golden Nugget
Laughlin
Occupancy % 74.1% 81.4% 83.8% 90.8%
Average Daily
Rate (ADR) $35 $34 $38 $33
Revenue per
Available Room
(REVPAR) $26 $28 $32 $30
Beau Rivage
Occupancy % 88.8% 89.2% 92.1% 93.9%
Average Daily
Rate (ADR) $75 $73 $86 $79
Revenue per
Available Room
(REVPAR) $66 $65 $79 $75
Boardwalk
Occupancy % 75.0% 73.4% 73.8% 84.1%
Average Daily
Rate (ADR) $62 $58 $62 $64
Revenue per
Available Room
(REVPAR) $47 $43 $46 $53
MGM Grand Australia
Occupancy % 59.7% 70.7% 71.8% 74.1%
Average Daily
Rate (ADR) $65 $55 $68 $58
Revenue per
Available Room
(REVPAR) $39 $39 $49 $43
MGM MIRAGE AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
ASSETS
December 31, December 31,
2002 2001
CURRENT ASSETS:
Cash and cash equivalents $211,234 $208,971
Accounts receivable, net 139,935 144,374
Inventories 83,582 78,037
Income tax receivable -- 12,077
Deferred income taxes 84,348 148,845
Prepaid expenses and other 86,311 69,623
Total current assets 605,410 661,927
PROPERTY AND EQUIPMENT, NET 8,762,445 8,891,645
OTHER ASSETS:
Investment in unconsolidated
affiliates 710,802 632,949
Goodwill and other intangible
assets, net 256,108 139,178
Deposits and other assets, net 170,220 171,744
Total other assets 1,137,130 943,871
$10,504,985 $10,497,443
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $69,959 $75,787
Income taxes payable 637 --
Current portion of long-term debt 6,956 168,079
Accrued interest on long-term debt 80,310 78,938
Other accrued liabilities 596,523 565,106
Total current liabilities 754,385 887,910
DEFERRED INCOME TAXES 1,765,114 1,746,272
LONG-TERM DEBT 5,213,778 5,295,313
OTHER LONG-TERM OBLIGATIONS 107,564 57,248
STOCKHOLDERS' EQUITY:
Common stock ($.01 par value:
authorized 300,000,000 shares,
issued 166,393,025 and 163,685,876
shares and outstanding
154,574,225 and 157,396,176
shares) 1,664 1,637
Capital in excess of par value 2,125,626 2,049,841
Deferred compensation (27,034) --
Treasury stock, at cost
(11,818,800 and 6,289,700 shares) (317,432) (129,399)
Retained earnings 890,206 597,771
Other comprehensive loss (8,886) (9,150)
Total stockholders' equity 2,664,144 2,510,700
$10,504,985 $10,497,443
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/