$104.7 million compared with $53.8 million Previous Year
|LAS VEGAS, July 21, 2004 - MGM MIRAGE (NYSE: MGG) today reported its
second quarter 2004 financial results. Adjusted earnings from continuing
operations per diluted share ("Adjusted EPS") rose 72% to $0.74 in the
second quarter of 2004 from $0.43 in the 2003 quarter. These results
represent an all-time record for Adjusted EPS in the Company's history,
exceeding the previous record of $0.70 set in the first quarter of this
year. Current quarter results benefited from the Company's capital
investment and marketing programs which are driving increased visitation
and customer spending company-wide. Casino revenues grew an impressive
8% in the quarter, while hotel revenues also posted a stellar 9% increase.
REVPAR (revenue per available room) increased 12% at the Company's Las
Vegas Strip resorts in the quarter. Current quarter results also
benefited from strong collections of casino receivables resulting in a
lower bad debt provision compared to prior year, which equates to a benefit
of approximately $0.04 per diluted share in the current quarter.
Adjusted EPS (and Adjusted Earnings) excludes discontinued operations, preopening and start-up expenses, restructuring costs, net property transactions and loss on early retirement of debt(1). On a GAAP (Generally Accepted Accounting Principles) basis, diluted earnings per share from continuing operations increased to $0.70 for the second quarter of 2004 from $0.36 in the 2003 quarter. GAAP diluted EPS, including the results of discontinued operations, was $0.72 in the 2004 period versus $0.35 in 2003.
"We continue to reap the rewards of our steady and targeted investments in our capital assets and enhanced marketing and technology programs for our guests," said Terry Lanni, MGM MIRAGE's Chairman and CEO. "The announced acquisition of Mandalay Resort Group accelerates our growth initiatives and will add to the ranks of our management and employee talent, enhance our portfolio of resorts, and provide additional amenities to our customers. Las Vegas is becoming one of the world's leading business and leisure travel destinations, and we believe MGM MIRAGE is uniquely positioned to benefit from that success."
Second Quarter Company Highlights
The following table shows key financial results on a Company-wide basis
for the second quarter and year to date.
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 Grand Australia and MGM MIRAGE Online for all periods presented. The results of these operations are classified as discontinued operations.
Net revenue in the second quarter increased 10% from the 2003 second quarter. This increase was due to strong casino and hotel volumes, increased room pricing and increased spending by our customers in all areas of our resorts.
Casino revenue increased by 8% in the 2004 quarter. Table games volume, including baccarat, was up 8% from the prior year's quarter, with strength in both national and international play, primarily at MGM Grand Las Vegas, where the Company held a baccarat tournament in April for its premium customers. Table games hold percentages were within a normal range for both periods and the hold percentage in 2004 was in line with the hold percentage in 2003. Company-wide slot revenue in the quarter was up 10% from 2003. Several resorts experienced double-digit increases in slot revenues, including New York-New York, The Mirage and MGM Grand Detroit.
Non-casino revenue was up 12% in the quarter. Hotel revenue was up 9%, with higher occupancy of 94% in the second quarter of 2004 versus 92% in 2003, and a higher average daily room rate ("ADR") of $131 versus $121 in 2003. As a result, revenue per available room ("REVPAR") was $123, an increase of 11% over 2003. REVPAR at the Company's Las Vegas Strip resorts was up 12% over prior year.
Food and beverage, entertainment, retail and other revenues were up 12% in the 2004 quarter. These increases resulted primarily from the increases in hotel volumes, as well as the addition of Zumanity at New York-New York and other new restaurant and entertainment amenities at our resorts.
Other revenue includes business interruption proceeds of $6 million for the Bellagio power outage. Based on information from the Company's insurance provider, this amount is a reasonable estimate of the minimum amount the Company should receive upon final settlement of the claim. Therefore, the Company expects that further recoveries may be recorded in future periods.
Consolidated EBITDA increased 26% for the quarter, reflecting the strong revenue results and operating leverage inherent with higher hotel room rates, which largely flow through to operating profit, as evidenced by an increase in EBITDA margins. The property-level EBITDA margin was 36% in 2004, up from 31% in the prior year quarter and the highest quarterly margin since the Mirage Resorts acquisition. Additionally, the Company benefited from the contribution of Borgata, which was not open in the prior-year quarter, resulting in higher income from unconsolidated affiliates. Operating income increased 52% due to the increased property-level EBITDA and lower preopening expenses in the current year.
Second quarter Adjusted Earnings increased by 60% compared to 2003 due to the increase in operating income described above. Net interest expense increased due to higher average borrowings and the cessation of interest capitalization on the Company's investment in Borgata.
For the second quarter of 2004, Adjusted Earnings excluded a net $7.5 million ($4.8 million, net of tax) of items. These items included:
Income (loss) from discontinued operations includes the results of the Golden Nugget Las Vegas and Golden Nugget Laughlin resorts, MGM MIRAGE Online and MGM Grand Australia. Pretax income from discontinued operations was $5 million, including the allocation of $1 million of interest expense, in the 2004 second quarter compared to a loss of $6 million, including $3 million of allocated interest and a loss on disposal of $7 million related to MGM MIRAGE Online, in the 2003 period.
The Company generated significant operating cash flow in the second quarter. This cash flow was partially re-invested in the Company's resorts. Second quarter capital investments of $165 million included $73 million for the Bellagio expansion, $10 million for construction of the new theatre for Cirque du Soleil at MGM Grand Las Vegas, and other routine capital expenditures, including new restaurants at The Mirage and MGM Grand Las Vegas, and continued work on the standard room remodel project at New York-New York.
The Company also repurchased 5 million shares of its common stock for a total cost of $223 million in the second quarter, bringing year-to-date repurchases to 7.9 million shares at a total cost of $344 million, and effectively completing the Company's existing authorization. In July 2004, the Company's Board of Directors approved a new 10 million share repurchase program.
As of June 30, 2004, the Company had approximately $1.4 billion of available borrowings under its senior credit facilities.
"Our exceptional 2004 operating results have allowed us to continue to invest in our world-class resorts -- these investments are already generating strong returns and will further enhance the appeal of our resorts," said MGM MIRAGE President, CFO and Treasurer Jim Murren. "In addition, we have strengthened our balance sheet to a point where we have the lowest leverage ratio at any time since the Mirage Resorts acquisition. This strength allows us access to sufficient sources of capital to finance our announced acquisition of Mandalay while providing the financial strength to execute our long-term growth strategy," Mr. Murren said.
"We believe the current earnings estimate consensus of 53 cents for
the third quarter, as reported on First Call on July 20, 2004, is reasonable,"
Mr. Murren said. "This represents a 56% increase over the prior-year
quarter, and takes into account our expectation for percentage REVPAR growth
over prior year in the 6-8% range."
MGM MIRAGE (NYSE: MGG), one of the world's leading and most respected hotel and gaming companies, owns and operates 12 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 40,000 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 ("TI"), New York - New York, Boardwalk Hotel and Casino and 50 percent of Monte Carlo, all located on the Las Vegas Strip; 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; Beau Rivage on the Mississippi Gulf Coast; and MGM Grand Detroit Casino in Detroit, Michigan. The Company is a 50-percent owner of Borgata, a destination casino resort at Renaissance Pointe in Atlantic City, New Jersey. Internationally, MGM MIRAGE also owns a 25 percent interest in Triangle Casino, a local casino in Bristol, United Kingdom. The Company has entered an agreement to sell MGM Grand Australia in Darwin, Australia, pending finalization.
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.
|Also See:||MGM MIRAGE Reports 1st Qtr 2004 Net Profit of $105.8 million Double from 2003; Most Profitable Quarter Ever / April 2004|
|MGM Mirage Offers to Buy Mandalay Resort Group for $7.65 billion / June 2004|