PRNewswire-FirstCall LAS VEGAS Oct. 21 :
MGM MIRAGE today reported its third quarter 2003 financial results.
Adjusted earnings from continuing operations per diluted share (“Adjusted
EPS”) was $0.36 in the third quarter of 2003 versus $0.52 in the 2002
quarter. Third quarter results were in line with the Company`s recently
raised guidance for the quarter.
Adjusted EPS (and Adjusted Earnings) excludes discontinued operations,
preopening and start-up expenses, restructuring costs, property
transactions, net and loss on early retirement of debt(1). On a GAAP
(Generally Accepted Accounting Principles) basis, diluted earnings per
share from continuing operations decreased to $0.29 for the third quarter
of 2003 from $0.45 in the 2002 quarter. GAAP diluted EPS, including the
results of discontinued operations, was $0.31 in the 2003 period versus
$0.43 in 2002.
“Our third quarter performance was satisfying on many fronts, including an
increase in demand for resort travel, and increased spending among our
visitors. We also saw solid business levels in the key national high-end
customer segment,” said Terry Lanni, MGM MIRAGE`s Chairman and CEO. “We
expect that the upcoming convention and holiday season will likely provide
further data to support the recent positive trends.”
Third Quarter Company Highlights * Generated net revenues of $990 million,
up 4% from 2002; * Borgata, opened on July 3, 2003 generating net revenues
of $150 million; * Zumanity, the latest production from Cirque du Soleil,
opened at New York-New York; * Fiamma, Stephen Hanson`s award-winning New
York restaurant, opened at MGM Grand Las Vegas; * Completed the rollout of
Players Club, the Company`s exclusive player rewards program, with the
final installation at New York-New York in early October; * Invested $153
million of capital in the Company`s properties, including maintenance and
expansion projects; * Repurchased 4.0 million shares of Company common
stock for $138.5 million in the quarter. * Issued $600 million of 6%
Senior Notes due 2009; * Completed the sale of 315 acres of land in North
Las Vegas, Nevada, near the Company`s Shadow Creek golf course, for $55
million in early October; * Received Board of Directors authorization to
repurchase up to $100 million of the Company`s public debt securities, and
repurchased $25 million in the third quarter.
Except where noted, all references in this release to operating results,
including statistical information, exclude the results of Golden Nugget
Las Vegas, Golden Nugget Laughlin and MGM MIRAGE Online for all periods
presented. The results of these operations are classified as discontinued
Net revenue in the third quarter increased 4% from the 2002 third quarter.
This increase was due to strong volume and pricing for hotel rooms and
increased spending by our customers, particularly on non-gaming amenities.
Casino revenue increased by 1% in the 2003 quarter. Table games volume,
including baccarat, was up 6% from the prior year`s quarter, led by MGM
Grand Las Vegas, up 12% over the 2002 quarter. Table games volumes
benefited from a strong event calendar, including the Oscar De La
Hoya-Shane Mosley fight in September. Table games hold percentages were
within a normal range for both periods, but were significantly lower in
the current year quarter, especially at Bellagio. Company-wide slot
revenue in the quarter was up 6% from 2002. MGM Grand Las Vegas, New
York-New York and The Mirage all posted double-digit percentage increases
in slot revenues.
Non-casino revenue was up 8% in the quarter. Hotel revenue was up 7%, with
higher occupancy of 92% in the third quarter of 2003 versus 89% in 2002,
and a higher average daily room rate (“ADR”) of $116 versus $112 in 2002.
As a result, revenue per available room (“REVPAR”) was $107, compared with
REVPAR of $99 in 2002. Bellagio`s REVPAR was up 10% over 2002, but the
resort had approximately 9% fewer rooms available due to the standard room
remodel project. MGM Grand Las Vegas and New York-New York also posted
double-digit percentage increases in REVPAR, bolstered by recent new
amenities added to these resorts.
Food and beverage, entertainment, retail and other revenues were up 9% in
the 2003 quarter. These increases resulted primarily from the increases in
hotel volumes, as well as the addition of Zumanity and Nine Fine Irishmen
Pub at New York-New York, and continued improvement of amenities at other
resorts, resulting in higher volumes and pricing.
EBITDA was down 5% for the quarter, and operating income was down 11%. The
decrease in EBITDA was primarily the result of the lower hold percentage
discussed earlier. Operating income decreased due to those items and
higher depreciation expense resulting from enhancements to our resorts,
including new slot technology.
Third quarter Adjusted Earnings decreased by 35% compared to 2002 due to
the decrease in operating income and higher net interest expense. Net
interest expense increased due to the Company`s October 2002 decision to
suspend development of its wholly-owned Atlantic City development project,
which resulted in lower capitalized interest, along with the cessation of
interest capitalization on the Company`s investment in Borgata, which
opened on July 3, 2003.
For the third quarter of 2003, Adjusted Earnings excluded a net $17.1
million ($11.2 million, net of tax) of items. These items included:
* Preopening and start-up expenses of $7.3 million ($4.8 million, net of
tax), including $3.5 million related to the Company`s Borgata investment,
$3.0 million at New York-New York, related to Zumanity, Nine Fine Irishmen
Pub and the rollout of Players Club, and $0.7 million related to Fiamma at
MGM Grand Las Vegas; * Net property transactions of $2.6 million ($1.7
million, net of tax), including $1.8 million of demolition costs at
Bellagio, in preparation for the Spa Tower expansion, and MGM Grand Las
Vegas, in preparation for the new Cirque du Soleil show; * Restructuring
costs of $4.0 million ($2.6 million, net of tax), including $3.3 million
for the termination of an operating lease at MGM Grand Las Vegas in order
to facilitate the new monorail entrance, and $0.7 million of severance at
MGM Grand Las Vegas and New York-New York related to a restructuring of
casino staffing. * Loss on early retirement of debt of $3.2 million ($2.1
million, net of tax), classified in “Other, net.”
In the third quarter of 2002, items excluded in the determination of
Adjusted Earnings included $4.0 million ($2.6 million, net of tax) of
preopening and start-up expenses, primarily related to Borgata and Players
Club, and property transactions, net of $12.6 million ($8.2 million, net
of tax) related to the revised Detroit Development Agreement and damage
sustained during Hurricane Isidore at Beau Rivage.
Income (loss) from discontinued operations includes the results of MGM
MIRAGE Online and the Golden Nugget Las Vegas and Golden Nugget Laughlin
resorts. Pretax income from discontinued operations was $5 million,
including the allocation of $2 million of interest expense, in the 2003
third quarter compared to a loss of $4 million, including $2 million of
allocated interest, in the 2002 period.
Third quarter capital investments of $153 million included required
contributions to Borgata of $18 million, $44 million for the Bellagio
expansion and standard room remodel, $33 million for construction of the
two new theatres for Cirque du Soleil at New York-New York and MGM Grand
Las Vegas, $5 million related to continued implementation of new slot
technology, and other routine capital expenditures.
In order to enhance its financial flexibility and to take advantage of
historically low interest rates, the Company issued $600 million of 6%
Senior Notes due 2009 in September 2003. The proceeds were used to reduce
the outstanding balance of the Company`s existing revolving credit
“Our financial position is now optimized to allow us to continue our
investment program in our market leading resorts while positioning
ourselves to grow domestically and internationally,” said MGM MIRAGE
President, CFO and Treasurer Jim Murren. “Much of our recent capital
spending has been focused on enhancing and expanding our Las Vegas
resorts, an approach which continues to be reinforced by recent market
results,” Mr. Murren said.
As of September 30, 2003, the Company had approximately $1.2 billion of
available borrowings under its senior credit facilities, with no public
debt maturities until 2005.
“We are comfortable with the current earnings estimate consensus of 28
cents for the fourth quarter, as reported on First Call on October 20,
2003,” Mr. Murren said. “Of course, as always, a significant factor in our
fourth quarter results will be the holiday period at the end of the
quarter.” The Company`s estimates include the operating impact from the
closure of the Siegfried and Roy show, which is estimated to be roughly
$0.01 per share for the quarter. The Company will also incur a pretax
charge of approximately $4 million as a result of the closure of the show,
which will be excluded from Adjusted EPS. This charge reflects both
restructuring costs, primarily severance for the MGM MIRAGE employees
affected by the show`s closure, and a write-down of certain theatre
assets. Also excluded from Adjusted EPS will be the approximate $37
million pretax gain on the previously announced sale of North Las Vegas