2004 Most Profitable Year Ever, Driven by Record
Operating Performances at Bellagio, MGM Grand
Las Vegas and Beau Rivage
|LAS VEGAS, Feb. 1, 2005 - MGM MIRAGE (NYSE: MGG) today reported record
fourth quarter and full year financial results for 2004. Adjusted
earnings per diluted share ("Adjusted EPS") rose 42% to $0.51 in the fourth
quarter of 2004 from $0.36 in the 2003 quarter, representing the Company's
best fourth quarter performance in its history. For the full year,
the Company earned $2.52 in Adjusted EPS compared to $1.52 in 2003, with
record operating performance for the year at several resorts, including
Bellagio, MGM Grand Las Vegas and Beau Rivage.
Fourth quarter business trends were consistent with those experienced throughout 2004, with strong customer spending and significant increases in room rates. The Company has been adding upscale amenities across its resort portfolio, attracting more guests and capturing increased share of customer spending. Casino revenue increased 10%, with continued strength in slot revenues, up 9%, and extremely strong table games revenues, up 12%. REVPAR (revenue per available room) increased 13% at the Company's Las Vegas resorts in the 2004 fourth quarter, on top of a 5% year-over-year increase in the 2003 fourth quarter.
Adjusted EPS (and Adjusted Earnings) excludes discontinued operations, preopening and start-up expenses, restructuring costs, net property transactions, tax adjustments 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 $0.47 for the fourth quarter of 2004 from $0.58 in the 2003 quarter, due to one-time items in the prior year including the gain on sale of land in North Las Vegas ($0.16 per share) and the reversal of tax reserves ($0.09 per share). GAAP diluted EPS, including the results of discontinued operations, was $0.47 in the 2004 quarter versus $0.62 in 2003. Full year GAAP diluted EPS in 2004 was $2.37 from continuing operations versus $1.52 in 2003 and $2.80 on a net basis (including discontinued operations), versus $1.61 in 2003.
"The fourth quarter of 2004 provides an exclamation point on a tremendous year for all of us at MGM MIRAGE," said Terry Lanni, MGM MIRAGE's Chairman and CEO. "We have again proven our ability to operate the world's best resorts, and have demonstrated vision to look to the future. In 2005, we will successfully integrate Mandalay Resort Group's properties and employees, and begin executing on the vision of Project CityCenter."
Fourth Quarter Company Highlights
Full Year Company Highlights
Detailed Financial Results
The following table shows key financial results on a Company-wide basis
for the fourth quarter and the full year.
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, MGM Grand Australia and MGM MIRAGE Online for all periods presented. The results of these operations are classified as discontinued operations.
The 11% increase in net revenue in the fourth quarter was representative of revenue gains in all of the Company's operations with strong casino and hotel volumes driven by ongoing investments in new amenities, continued increases in room rates and higher spending by customers throughout the Company's resorts. Casino revenue increased 10% in the 2004 quarter. Table games volume increased a significant 14%, with particular strength in baccarat volume, up 40%. The Company's table games hold percentage was near the mid-point of the Company's normal range in both the current and prior year quarters. Company-wide slot revenue in the quarter was up 9% from 2003. Several resorts experienced double-digit increases in slot revenues, including Bellagio, New York-New York, The Mirage, TI and Beau Rivage.
Non-casino revenue was up 11% in the quarter. Hotel revenue was up 10%, with a higher occupancy rate of 90% in the fourth quarter of 2004 versus 88% in 2003, and a higher average daily room rate ("ADR") of $134 versus $122 in 2003. As a result, REVPAR was $120, an increase of 12% over 2003. REVPAR at the Company's Las Vegas resorts was up 13% over the prior year to $141.
Food and beverage, entertainment, retail and other revenues were up 11% in the 2004 quarter. KA opened in late November, generating a portion of the increase in non-gaming revenues. Additionally, the Company has opened several new restaurant and entertainment venues in the past year.
Consolidated EBITDA increased 18% for the quarter, reflecting the strong revenue results and operating leverage inherent with strong customer volumes and higher hotel room rates. The property-level EBITDA margin was 33% in the 2004 quarter, up from 31% in the prior year's quarter and the Company's highest fourth quarter margin since the 2000 merger of MGM Grand, Inc. and Mirage Resorts. Additionally, the Company benefited from the increased contribution of Borgata. Operating income only increased 1% due to the prior year gain on sale of land of $37 million; excluding that gain, operating income was up 23%.
Fourth quarter Adjusted Earnings increased 40% compared to 2003 due to the strong operating results described above. Net interest expense increased due to slightly higher variable market interest rates and the issuance of fixed rate debt in the third quarter of 2004.
For the fourth quarter of 2004, Adjusted Earnings excluded a net $9.7
million ($6.3 million, net of tax) of items. These items included:
In the fourth quarter of 2003, items excluded in the determination of Adjusted Earnings totaled a net benefit of $43.0 million ($32.6 million, net of tax) and included preopening and start-up expenses of $0.5 million ($0.3 million, net of tax); restructuring costs of $1.4 million ($0.9 million, net of tax), primarily related to the closure of the Siegfried and Roy show; net gain on property transactions of $31.5 million ($20.5 million, net of tax), including the $36.7 million gain on sale of land in North Las Vegas; and reversal of tax reserves of $13.4 million.
The Company's effective income tax rate was 38.5% in the fourth quarter versus 24.7% in the 2003 quarter. The increase was due to non-deductible costs related to a Michigan ballot initiative, overseas development costs for which no tax benefit was provided, and the reversal of tax reserves in the prior year.
Fourth quarter capital investments of $168 million included $57 million for the Bellagio expansion and $33 million related to the renovation of the Emerald Tower and the SKYLOFTS at MGM Grand Las Vegas. Other expenditures related primarily to continued enhancements to the Company's existing resorts, including work on new dining and entertainment venues.
The Company did not repurchase any shares of common stock in the fourth quarter, and repaid $111 million of net debt. As of December 31, 2004, the Company had approximately $2.4 billion of available borrowings under its existing senior credit facility.
"We generated significant operating cash flow in 2004, and will continue to do so to provide support for our growth initiatives," said MGM MIRAGE President, CFO and Treasurer, Jim Murren. "We look forward to enhancing our already strong portfolio of resorts with the coming Mandalay merger. This transaction will allow us to further invest in strategic developments with outstanding returns and to rapidly de-leverage," Mr. Murren said.
The Company expects REVPAR growth to be in the 10% range in the first quarter of 2005, driven by an exceptional convention and events calendar, on top of a 9% year-over-year increase in the 2004 first quarter. Property-level EBITDA is expected to increase over the prior year due to the expected continued strength in hotel results and solid gaming volumes. The Bellagio expansion will also contribute to the positive comparison. Other factors affecting Adjusted EPS compared to the first quarter of 2004 include higher levels of fixed rate borrowings related to the pending Mandalay merger and higher depreciation expense resulting from recent capital additions.
"We believe the current earnings consensus for the first quarter of
$0.74 as reported on First Call on January 31, 2005 is reasonable.
We are mindful that two important first quarter events, Super Sunday and
Chinese New Year, have not yet occurred, and our guidance excludes any
impact from the expected closing of the Mandalay merger," said Mr. Murren.
The Company earned $0.70 in the prior year first quarter on an Adjusted
EPS basis, which was an all-time record for the Company.
(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 income from continuing operations computed in accordance with
generally accepted accounting principles ("GAAP"). Reconciliations
of GAAP income from continuing operations and EPS to Adjusted Earnings
and EPS are included in the financial schedules accompanying this release.
MGM MIRAGE (NYSE: MGG), headquartered in Las Vegas, Nevada, is one of the world's leading and most respected hotel and gaming companies. The Company owns and operates 11 casino resorts located in Nevada, Mississippi and Michigan, and has investments in three other casino resorts in Nevada, New Jersey and the United Kingdom.
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.
Web Site: http://www.mgmmirage.com
|Also See:||MGM Mirage Third-Quarter Profit Nearly Triples, $126.9 million Compared to Last Year $47.2 million; Planned Acquisition of Mandalay Resort Group On Track to Close in the 1st Qtr of 2005 / Hotel Statistics / October 2004|
|MGM MIRAGE Almost Doubles 2nd Qtr Profit, $104.7 million compared with $53.8 million Previous Year / Hotel Statistics / July 2004|
|MGM MIRAGE Reports 1st Qtr 2004 Net Profit of $105.8 million Double from 2003; Most Profitable Quarter Ever / April 2004|