MGM MIRAGE Reports Record Second Quarter Results

July 24, 2002
PRNewswire-FirstCall
LAS VEGAS

MGM MIRAGE (NYSE: MGG) today reported second quarter diluted earnings per share of 56 cents before preopening expenses, restructuring credits and fees received from the buyout of its South Africa management agreement. These earnings are an all-time record for the Company and an increase of 17% compared with 48 cents earned on a similar basis in the 2001 quarter. Income before preopening expenses, restructuring credits and the South Africa fees was an all-time record high of $90.5 million, compared with $77.3 million in the prior year's quarter. Before adjusting for these items, net income was $101.9 million or 63 cents per diluted share during the 2002 second quarter, compared with net income of $76.6 million or 47 cents per diluted share in the 2001 second quarter.

Excluding $11.4 million received from the South Africa transaction, net revenue was down 2% to $1.03 billion from $1.05 billion in the 2001 quarter. For the three months ended June 30, 2002, earnings before interest, taxes, depreciation and amortization, restructuring, preopening expenses and corporate expense ("EBITDA") were $336.0 million when compared with $324.8 million in the year-ago period. Excluding South Africa's results from both periods, EBITDA was $324.6 million in the 2002 quarter, versus $323.5 million in the prior year's second quarter, and the Company recorded a 31.5% EBITDA margin in the 2002 second quarter, up from 30.8% in the 2001 second quarter.

                    Second Quarter Company Highlights

  -- Net revenue and EBITDA (excluding South Africa) were $1.03 billion and
     $325 million, respectively;
  -- Set all-time record net income and earnings per share;
  -- Reduced debt by $153 million during the quarter, resulting in total
     debt reductions of $304 million this year and $1.25 billion since the
     acquisition of Mirage Resorts, Incorporated in May 2000;
  -- Repurchased one million shares of Company common stock during the
     quarter;
  -- Completed the sale of our South Africa interests and received
     $11.4 million for the early buyout of the Company's management
     agreement;
  -- Successfully launched our Players Club affinity program at The Mirage
     and Treasure Island;
  -- Construction of Borgata, our 50% owned resort, continues on schedule
     and on budget for a summer 2003 opening;
  -- Advanced the design phase for a wholly-owned resort at Renaissance
     Pointe in Atlantic City;
  -- Announced two agreements with Cirque du Soleil for the creation of new
     shows at New York - New York and MGM Grand Las Vegas;

"Our results again exhibited remarkable resiliency against the backdrop of an uncertain economy," said MGM MIRAGE Chairman and CEO Terry Lanni. "The operating performance across our portfolio of properties was strong as we continue to produce industry leading margins. Our properties are in outstanding physical condition and are poised to benefit from strategic entertainment and technology investments, including the continued implementation of Players Club that will drive increased customer traffic," Mr. Lanni said.

The Company's 2002 second quarter results continue to show sequential operating improvement in a trend that began in late 2001. Room revenue continued to strengthen to more normalized levels as a result of improved hotel occupancy. Hotel occupancy of 91.5% in the 2002 second quarter rose when compared with 89.7% and 82.7% in the first quarter 2002 and fourth quarter 2001, respectively, and was down slightly when compared with 93.4% in the 2001 second quarter. For the three months ended June 30, 2002, the average daily room rate ("ADR") was $106, even with the prior year's second quarter, and up $5 and $13 when compared with the first quarter 2002 and fourth quarter 2001, respectively.

As a result, revenue per available room ("REVPAR") improved from the 16% and 10% year-over-year declines in the 2001 fourth quarter and 2002 first quarter, respectively, to a 2% decline in the 2002 second quarter. These improving hotel trends have led to continued improvement in food and beverage, entertainment and retail revenue. Casino revenue declined by 3% in the 2002 second quarter versus the 2001 quarter. A reduction in table game volume was offset in part by an increase in slot volume. Hold percentages were normal in both periods.

"Our company grows stronger every day. Free cash flow from operations allowed us to accelerate the pace of our debt reductions even after the repurchase of one million shares of our common stock during the quarter," said MGM MIRAGE President, CFO and Treasurer Jim Murren. "Our balance sheet has improved dramatically over the past year, a fact recognized by the rating agency Standard & Poor's which rates us investment grade. Our financial objectives continue to be focused on expanding margins, reducing debt, growing revenue profitably and effectively allocating capital," 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 $728.1 million and $233.8 million, respectively, in the 2002 second quarter when compared with net revenue of $759.5 million and EBITDA of $237.1 million in the 2001 quarter. Quarterly EBITDA margin for these resorts was 32.1% for the three months ended June 30, 2002, versus 31.2% in the 2001 second quarter.

The decreases in net revenue and EBITDA at these resorts in the 2002 second quarter were attributable to a 7% and 2% decline in casino and non-casino revenue offset by a 4% reduction in operating expenses. Casino revenue was affected by lower table game volume in the 2002 second quarter as compared with the prior year's quarter while slot volume was slightly higher quarter-over-quarter. The combined hold percentages were normal in both periods. The decrease in non-casino revenue at these resorts was attributable to lower hotel occupancy in the current quarter, while the ADR matched that of the 2001 second quarter.

The Las Vegas Strip Resorts were led by Bellagio, which recorded its second highest quarterly EBITDA of $90.4 million in the 2002 second quarter, up 18% from the $76.3 million achieved in the 2001 second quarter. EBITDA margins at this property were an impressive 36.4% in the 2002 second quarter compared with 31.7% in the prior year's quarter. MGM Grand Las Vegas posted solid results producing EBITDA of $53.4 million in the 2002 quarter albeit lower than the $60.1 million recorded in the 2001 second quarter. In general, hotel trends continued to improve in the quarter led by continued strengthening of the convention business and improved pricing from the free and independent traveler and tour and travel room segments. These Las Vegas Strip Resorts have been able to continue to expand their market share.

Other Nevada Resorts

Primm Valley Resorts reported net revenue of $54.1 million and EBITDA of $10.3 million during the 2002 second quarter, compared with $53.8 million and $11.5 million in the prior year's quarter. The Golden Nugget properties in downtown Las Vegas and in Laughlin generated combined net revenue of $56.5 million in the 2002 quarter, consistent with that reported in the 2001 second quarter, while combined EBITDA was $8.9 million versus $10.6 million in the 2001 period. For the three months ended June 30, 2002, Monte Carlo reported EBITDA of $21.6 million on net revenue of $64.7 million, compared with EBITDA of $24 million on net revenue of $69.0 million. The Company's 50% share of this joint venture contributed $9.1 million to operating results for the 2002 second quarter, versus $9.8 million in the prior year's quarter.

MGM Grand Detroit

Net revenue in the 2002 second quarter at MGM Grand Detroit grew by 12% to $98.9 million from the 2001 quarter, while EBITDA increased 23% to $42.1 million. For the three months ended June 30, 2002, MGM Grand Detroit produced a 43% EBITDA margin versus 39% in the prior year period. These results were aided by a 14% increase in casino revenue largely attributable to increased slot volume.

Beau Rivage

Beau Rivage produced net revenue of $74.9 million and EBITDA $17.3 million for the three months ended June 30, 2002, compared with net revenue and EBITDA of $75.0 million and $17.2 million in the prior year's quarter. EBITDA margins were up slightly to 23.1%. These results were affected by a 6% reduction in casino revenue offset by an 11% increase in non-casino revenue. The lower casino revenue was a result of a lower table game hold percentage offset by higher slot volume.

Other Factors Affecting Second Quarter Results

Net interest expense was $69.1 million for the three months ended June 30, 2002, compared with $92.5 million in the prior year quarter. The decrease in interest expense is due to lower debt levels, a significant reduction in interest rates on the Company's credit facilities and, to a lesser extent, savings associated with interest rate swaps. During the 2002 second quarter, the Company reduced its outstanding indebtedness by $153 million, bringing year-to-date debt reductions to $304 million and total debt reductions to $1.25 billion since the May 2000 acquisition of Mirage Resorts, Incorporated.

The Company repurchased one million shares of its common stock at an average price of $35.66 per share as part of its previously authorized 10 million share repurchase program. Since the inception of the program, the Company has purchased approximately 3.2 million shares at an average price of $25.19 per share.

Second quarter diluted earnings per share as reported of 56 cents was before the following items:

  -- The successful completion of the sale of the Company's interest in
     managing four South African casinos resulted in pretax revenue of
     $11.4 million (or 5 cents per share after tax).
  -- Preopening expenses were $4.4 million (or 2 cents per share after tax)
     as a result of the Company's start-up activities related to its 50%
     interest in Borgata, the introduction of its Players Club affinity
     program, the development of a wholly-owned resort in Atlantic City and
     its online development efforts.
  -- As a result of improving business levels, the Company continues to
     re-hire previously laid-off or terminated employees.  Accordingly, the
     Company reversed approximately $10.4 million (or 4 cents per share
     after tax) of restructuring charges related to previously recorded
     severance accruals.

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 and also controls additional development sites in this resort community. 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 http://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     Six Months Ended
                               June 30,   June 30,    June 30,    June 30,
                                 2002       2001        2002        2001
  Revenues:
    Casino                  $   534,682 $  549,685  $1,102,071  $1,124,433
    Rooms                       224,316    228,915     430,815     461,114
    Food and beverage           194,229    191,024     382,409     383,068
    Entertainment, retail and
     other                      184,095    171,071     341,559     336,950
    Income from
     unconsolidated affiliate     9,148      9,809      18,373      21,360
                              1,146,470  1,150,504   2,275,227   2,326,925
    Less: promotional
     allowances                 105,249     98,828     212,866     206,477
                              1,041,221  1,051,676   2,062,361   2,120,448
  Expenses:
    Casino                      271,588    275,542     553,192     569,869
    Rooms                        58,526     62,625     112,479     121,780
    Food and beverage           106,753    109,917     204,338     213,067
    Entertainment, retail and
     other                      109,361    110,138     213,705     218,553
    Provision for doubtful
     accounts                    11,027     17,088      23,085      31,737
    General and administrative  147,971    151,539     295,454     297,005
    Corporate expense            10,930     10,375      21,565      21,199
    Preopening expenses           4,390      1,105       6,629       1,980
    Restructuring costs
     (credit)                   (10,421)        --     (10,421)         --
    Depreciation and
     amortization                97,565     97,394     200,938     193,337
                                807,690    835,723   1,620,964   1,668,527

  Operating Income              233,531    215,953     441,397     451,921

  Non-Operating Income (Expense):
    Interest income               1,223      1,748       2,463       3,780
    Interest expense, net       (69,117)   (92,476)   (141,714)   (190,012)
    Interest expense from
     unconsolidated affiliate      (311)      (693)       (588)     (1,510)
    Other, net                   (2,911)      (326)     (5,534)     (1,471)
                                (71,116)   (91,747)   (145,373)   (189,213)

  Income Before Income Taxes
   and Extraordinary Item       162,415    124,206     296,024     262,708
   Provision for income taxes   (60,540)   (47,620)   (112,193)   (101,450)

  Income Before Extraordinary
   Item                         101,875     76,586     183,831     161,258

  Extraordinary Item:
    Loss on Early Extinguishment
     of Debt, net                    --         --          --        (778)

  Net Income                 $  101,875 $   76,586  $  183,831  $  160,480

  Per Share Of Common Stock:
     Basic:
     Income Before
      Extraordinary Item     $     0.64 $     0.48  $     1.16  $     1.01
     Extraordinary Item, net         --         --          --          --
     Net Income Per Share    $     0.64 $     0.48  $     1.16  $     1.01

     Weighted Average Shares
      Outstanding (000's)       159,366    159,340     158,692     159,280

     Diluted:
     Income Before
      Extraordinary Item     $     0.63 $     0.47  $     1.14  $     0.99
     Extraordinary Item, net         --         --          --          --
     Net Income Per Share    $     0.63 $     0.47  $     1.14  $     0.99

     Weighted Average Shares
      Outstanding (000's)       161,693    161,653     160,894     161,489


                         MGM MIRAGE AND SUBSIDIARIES
                              SUPPLEMENTAL DATA
                                 (Unaudited)

                                  Three Months Ended     Six Months Ended
                                  June 30,   June 30,   June 30,   June 30,
                                    2002       2001       2002       2001

  Net Income                      $101,875   $ 76,586    $183,831   $160,480
  Preopening expenses, net           2,854        718       4,309      1,287
  Restructuring costs (credit), net (6,774)        --      (6,774)        --
  Management agreement termination
   fee, net                         (7,419)        --      (7,419)        --
  Extraordinary Item, net               --         --          --        778
  Income Before Preopening,
   Restructuring, Management
   Agreement Termination Fee and
   Extraordinary Item             $ 90,536   $ 77,304    $173,947   $162,545


  Per Share Of Common Stock:
     Basic:
     Net Income                   $   0.64   $   0.48   $    1.16   $   1.01
     Preopening expenses, net         0.02       0.01        0.03       0.01
     Restructuring costs (credit),
      net                            (0.04)        --       (0.04)        --
     Management agreement
      termination fee, net           (0.05)        --       (0.05)        --
     Extraordinary Item, net            --         --          --         --
     Income Before Preopening,
      Restructuring, Management
      Agreement Termination Fee
      and Extraordinary Item      $   0.57   $   0.49   $    1.10   $   1.02

     Weighted Average Shares
      Outstanding (000's)          159,366    159,340     158,692    159,280

     Diluted:
     Net Income                   $   0.63   $   0.47   $    1.14   $   0.99
     Preopening expenses, net         0.02       0.01        0.03       0.01
     Restructuring costs (credit),
      net                            (0.04)        --       (0.04)        --
     Management agreement
      termination fee, net           (0.05)        --       (0.05)        --
     Extraordinary Item, net            --         --          --         --
     Income Before Preopening,
      Restructuring, Management
      Agreement Termination Fee and
      Extraordinary Item          $   0.56   $   0.48   $    1.08   $   1.00

     Weighted Average Shares
      Outstanding (000's)          161,693    161,653     160,894    161,489


                         MGM MIRAGE AND SUBSIDIARIES
               SUPPLEMENTAL DATA - PROPERTY OPERATING RESULTS
                               (in thousands)

                                Three Months Ended       Six Months Ended
                               June 30,    June 30,    June 30,    June 30,
                                 2002        2001        2002        2001
  NET REVENUES:
    Bellagio                $  248,437  $  240,466  $  492,885  $  500,706
    MGM Grand Las Vegas        181,556     198,232     366,543     386,980
    The Mirage                 144,543     163,894     289,449     333,444
    Treasure Island             89,907      93,300     176,508     190,666
    New York-New York           55,611      54,393     105,933     108,811
    Primm Valley Resorts        54,076      53,821     105,675     105,054
    Golden Nugget Las Vegas     44,830      44,680      89,849      93,128
    Golden Nugget Laughlin      11,629      11,792      24,010      24,259
    MGM Grand Detroit           98,923      88,044     202,542     176,689
    Beau Rivage                 74,905      75,043     146,807     143,856
    Income from
     Unconsolidated Affiliate    9,148       9,809      18,373      21,360
    Boardwalk                    8,052       9,198      16,165      18,313
    MGM Grand Australia          8,190       7,648      15,530      14,793
    MGM Grand South Africa      11,414       1,356      12,092       2,389
                            $1,041,221  $1,051,676  $2,062,361  $2,120,448

  EBITDA:
    Bellagio                $   90,369  $   76,317  $  177,014  $  169,832
    MGM Grand Las Vegas         53,402      60,104     108,763     108,100
    The Mirage                  37,098      47,655      77,102     102,213
    Treasure Island             27,805      27,540      53,401      58,545
    New York-New York           23,837      23,820      43,456      47,276
    Primm Valley Resorts        10,345      11,497      20,921      22,892
    Golden Nugget Las Vegas      7,652       9,259      16,254      21,127
    Golden Nugget Laughlin       1,281       1,331       3,199       2,827
    MGM Grand Detroit           42,053      34,130      88,179      70,727
    Beau Rivage                 17,305      17,206      32,849      31,695
    Income from
     Unconsolidated Affiliate    9,148       9,809      18,373      21,360
    Boardwalk                    1,239       1,673       2,479       3,373
    MGM Grand Australia          3,049       3,142       6,037       6,111
    MGM Grand South Africa      11,412       1,344      12,081       2,359
                            $  335,995  $  324,827  $  660,108  $  668,437


                         MGM MIRAGE AND SUBSIDIARIES
                     SUPPLEMENTAL STATISTICAL INFORMATION

                                        Three Months Ended Six Months Ended
                                         June 30, June 30, June 30, June 30,
                                           2002     2001     2002     2001
  ROOM STATISTICS:
    Bellagio
      Occupancy %                          96.7%    98.3%    95.9%    97.5%
      Average Daily Rate (ADR)              $186     $183     $181     $189
      Revenue per Available Room (REVPAR)   $179     $180     $174     $184

    MGM Grand Las Vegas
      Occupancy %                          93.8%    98.5%    92.0%    96.7%
      Average Daily Rate (ADR)              $114     $113     $113     $118
      Revenue per Available Room (REVPAR)   $107     $112     $104     $114

    The Mirage
      Occupancy %                          98.4%    98.4%    96.5%    97.8%
      Average Daily Rate (ADR)              $124     $128     $123     $130
      Revenue per Available Room (REVPAR)   $122     $126     $118     $128

    Treasure Island
      Occupancy %                          98.2%    99.1%    96.9%    97.2%
      Average Daily Rate (ADR)              $ 96     $100     $ 94     $104
      Revenue per Available Room (REVPAR)   $ 94     $ 99     $ 91     $101

    New York-New York
      Occupancy %                          96.0%    98.1%    95.5%    98.2%
      Average Daily Rate (ADR)              $ 96     $ 90     $ 93     $ 91
      Revenue per Available Room (REVPAR)   $ 92     $ 88     $ 89     $ 89

    Primm Valley Resorts
      Occupancy %                          63.2%    59.3%    64.4%    59.3%
      Average Daily Rate (ADR)              $ 36     $ 38     $ 36     $ 38
      Revenue per Available Room (REVPAR)   $ 23     $ 23     $ 23     $ 23

    Golden Nugget Las Vegas
      Occupancy %                          97.4%    98.3%    95.9%    98.4%
      Average Daily Rate (ADR)              $ 59     $ 62     $ 60     $ 64
      Revenue per Available Room (REVPAR)   $ 58     $ 61     $ 58     $ 63

    Golden Nugget Laughlin
      Occupancy %                          85.2%    93.7%    88.1%    94.9%
      Average Daily Rate (ADR)              $ 43     $ 36     $ 39     $ 32
      Revenue per Available Room (REVPAR)   $ 37     $ 34     $ 34     $ 31

    Beau Rivage
      Occupancy %                          96.3%    97.2%    94.4%    95.7%
      Average Daily Rate (ADR)              $ 95     $ 87     $ 86     $ 80
      Revenue per Available Room (REVPAR)   $ 92     $ 84     $ 81     $ 76

    Boardwalk
      Occupancy %                          71.7%    92.1%    73.6%    90.9%
      Average Daily Rate (ADR)              $ 62     $ 66     $ 64     $ 68
      Revenue per Available Room (REVPAR)   $ 45     $ 60     $ 47     $ 62

    MGM Grand Australia
      Occupancy %                          72.1%    78.0%    69.2%    66.7%
      Average Daily Rate (ADR)              $ 66     $ 57     $ 63     $ 57
      Revenue per Available Room (REVPAR)   $ 47     $ 45     $ 43     $ 38



                         MGM MIRAGE AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share data)
                                 (Unaudited)

                                    ASSETS
                                                      June 30,  December 31,
                                                        2002         2001
  CURRENT ASSETS:
    Cash and cash equivalents                      $   213,200  $   208,971
    Accounts receivable, net                           130,145      144,374
    Inventories                                         80,630       78,037
    Income tax receivable                                7,142       12,077
    Deferred income taxes                              117,159      148,845
    Prepaid expenses and other                          71,045       69,623
        Total current assets                           619,321      661,927

  PROPERTY AND EQUIPMENT, NET                        8,821,828    8,891,645

  OTHER ASSETS:
    Investment in unconsolidated affiliates            670,269      632,949
    Goodwill, net                                      105,445      103,059
    Deposits and other assets, net                     207,343      207,863
        Total other assets                             983,057      943,871
                                                   $10,424,206  $10,497,443

                    LIABILITIES AND STOCKHOLDERS' EQUITY

  CURRENT LIABILITIES:
    Accounts payable                               $    66,194  $    75,787
    Current portion of long-term debt                    6,980      168,079
    Accrued interest on long-term debt                  81,520       78,938
    Other accrued liabilities                          562,508      565,106
        Total current liabilities                      717,202      887,910

  DEFERRED INCOME TAXES                              1,765,036    1,746,272
  LONG-TERM DEBT                                     5,172,435    5,295,313
  OTHER LONG-TERM OBLIGATIONS                           50,333       57,248
  STOCKHOLDERS' EQUITY:
    Common stock ($.01 par value: authorized
     300,000,000 shares, issued 166,224,859 and
     163,685,876 shares and outstanding
     159,817,159 and 157,396,176 shares)                 1,662        1,637
    Capital in excess of par value                   2,120,845    2,049,841
    Deferred compensation                              (30,407)          --
    Treasury stock, at cost (6,407,700 and
     6,289,700 shares)                                (145,797)    (129,399)
    Retained earnings                                  781,602      597,771
    Other comprehensive loss                            (8,705)      (9,150)
        Total stockholders' equity                   2,719,200    2,510,700
                                                   $10,424,206  $10,497,443

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SOURCE: MGM MIRAGE

CONTACT: investors, 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/

Company News On-Call: http://www.prnewswire.com/comp/000725.html