PARADISE ISLAND, The Bahamas, May 5, 1998 - Sun International Hotels Limited (NYSE: SIH) reported first quarter earnings per share of $0.87, a 30% increase over the same period last year. The Company generated net income of $29.9 million compared to net income before extraordinary items of $22.6 million for the same period last year.
The Paradise Island operations achieved good results for the quarter, generating earnings before interest, taxes and depreciation (EBITDA) of $24.3 million, an 8% increase over the same period last year. The 1,147-room Atlantis Resort achieved an occupancy of 92% for the quarter at an average room rate of $223, a 12% increase over the average room rate in the first quarter of last year.
Gross revenues from the Paradise Island operations declined over the same period last year due to the closure of the Company's 560-room Pirate's Cove Hotel during September 1997. The Pirate's Cove Hotel was closed to the public in order to utilize the facility to house construction workers for the Phase II expansion to Atlantis. During the first quarter of 1997, the Pirate's Cove Hotel contributed $5.3 million of revenues and $1.8 million of EBITDA.
The Company will continue to operate the Pirate's Cove Hotel for construction workers until October of this year, at which time it shall be demolished to begin to make way for the development of future phases to Atlantis. The Company's estimated $450 million expansion to Atlantis is proceeding well. The new development, which will be connected to the existing Atlantis complex by a new casino straddling a seven-acre lagoon, includes a deluxe 1,208-room hotel and convention facilities, as well as a dramatic expansion to the ocean-themed adventure environment and thrill rides of Atlantis. Construction of the expansion is proceeding well and is anticipated to open on schedule for Christmas of 1998.
Resorts Casino Hotel in Atlantic City, which was acquired by the Company in December 1996, generated EBITDA of $6.7 million for the quarter compared to $6.2 million for the same period last year. Despite the addition of new rooms at several competing casinos and the opening of Bally's Wild Wild West, Resorts achieved a satisfactory 2% growth in revenues over the same period last year. Slot revenues, which increased in the quarter by 7% compared to the same period last year, were largely offset by a decrease in table revenues resulting from the Company's decision to discontinue pursuing certain less profitable segments of the market.
The Company further announced that it has revised its previously announced $150 million redevelopment plan of the existing Resorts Casino Hotel as the Beach Club. The Company has determined to limit the project to the renovation of the existing 500-room hotel tower incorporating the elements of the Beach Club theme as well as completing modest enhancements to the public areas. The scope of the renovation of the existing facility will be materially smaller than the previously announced $150 million program and will result in less disruption to the facilities during construction. Mr. Kerzner stated that "after detailed planning, we determined that achieving the desired objective of completely retheming the existing public spaces and improving their operating efficiency would be difficult to complete within the budget of $150 million. We will continue with our plans to renovate the guest rooms which will significantly enhance the experience of the hotel customer. This renovation should be complete by the beginning of the summer of 1999."
Mr. Kerzner further announced that "having operated in Atlantic City for over a year, we are confident in the prospects for the future development of the Resorts Casino Hotel. In addition to renovating the existing hotel rooms, we are seriously evaluating the possibility of developing a larger project on our undeveloped real estate through which we could more fully realize the enormous potential of the concept of the Beach Club. We plan on moving forward immediately with our renovation plan while considering various expansion alternatives. We remain committed to our goal of establishing one of the new generation mega-resorts in Atlantic City." The Company noted that the planning of any future expansion is still in the preliminary stages and the scope and timing of such development is uncertain.
The Mohegan Sun Casino, which is managed by a partnership in which the Company has a 50% interest, performed very well for the quarter, generating earnings before interest, taxes, management fees, depreciation and bingo ("Adjusted EBITDA") of $48.5 million, a 49% increase over the same period last year. The property achieved an Adjusted EBITDA margin of 35% for the quarter.
Slot revenues for the quarter increased by 29% over the same period last year with a slot win per unit per day of $359 compared to $312 last year. The overall Connecticut gaming market continued to demonstrate strong growth in the quarter, with slot revenues increasing by 23% over the same period last year. The Company's share of management fees was $8.0 million for the quarter.
The Company has furnished its quarterly results to the Securities and Exchange Commission. Inquiries should be directed to Drew Goldman, Vice President of Investor Relations and Strategic Planning, of Sun International Hotels Limited at 242-363-6021.
This press release contains forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.