| LAS VEGAS, April 21, 2004 - MGM MIRAGE (NYSE:
MGG) today reported its first quarter 2004 financial results. Adjusted
earnings from continuing operations per diluted share ("Adjusted EPS")
increased to an all-time record $0.70 in the first quarter of 2004 from
$0.38 in the 2003 quarter. The increase resulted from strong visitor
levels and customer spending in all areas, highlighted by a significant
11% increase in REVPAR (revenue per available room) at the Company's Las
Vegas Strip resorts.
Adjusted EPS (and Adjusted Earnings) excludes discontinued operations,
preopening and start-up expenses, restructuring costs, 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 more than doubled to $0.66 for the first quarter of 2004 from
$0.32 in the 2003 quarter. GAAP diluted EPS, including the results
of discontinued operations, was $0.72 in the 2004 period versus $0.33 in
2003.
"Our first quarter was satisfying in many regards and we achieved several
milestones, including record EPS and EBITDA. This was our most profitable
quarter ever, with the highest EBITDA margin since the formation of MGM
MIRAGE four years ago," said Terry Lanni, MGM MIRAGE's Chairman and CEO.
"These results further validate our strategy of operating the premier resorts
on the Las Vegas Strip. Bellagio and MGM Grand, for example, each
had their most profitable quarter ever. We expect to build momentum
throughout 2004 as we continue to roll out new and exciting guest amenities
at several of our resorts."
First Quarter 2004 Company Highlights
-
Generated net revenues of $1.07 billion, up 12% from 2003;
-
Produced property-level EBITDA(2) of $370.5 million, up 29% over prior
year and an all-time Company record for any quarter, and operating income
of $255 million, up 60% over 2003;
-
Invested $174 million of capital in the Company's resorts, including the
Bellagio room remodel and expansion project, and the new theatre for a
Cirque du Soleil show scheduled to open at MGM Grand Las Vegas in 2004;
-
Reduced debt by $139 million in the quarter, including the repurchase of
$49 million of the Company's publicly-traded debt securities;
-
Repurchased 2.9 million shares of Company common stock for $121 million.
The Company is authorized to repurchase 5.1 million shares as of March
31, 2004;
-
Issued $525 million of 5.875% Senior Notes due 2014;
-
Closed the sale of the Golden Nugget resorts in Las Vegas and Laughlin
for $215 million;
-
Announced the proposed sale of MGM Grand Australia to SKYCITY Entertainment
Group Limited for A$195 million (approximately $143 million), expected
to close by the third quarter.
Detailed Financial Results
The following table shows key financial results on a Company-wide basis
for the first quarter:
Three months ended
March 31,
2004
2003
(In millions)
Casino revenue
$ 558.7 $ 496.2
Non-casino revenue, net
507.7 455.7
Net revenue
1,066.4 951.9
Operating income
254.7 159.5
Income from continuing operations
97.1
48.8
Discontinued operations, net
8.7
2.2
Net income
105.8
51.0
Property-level EBITDA(2)
$ 370.5 $ 287.7
EBITDA (after corporate expense)(2)
354.8 274.0
Adjusted Earnings
102.4
57.9
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.
Net revenue in the first quarter increased 12% from the 2003 first quarter.
Results were strong in all operating departments. A solid convention
calendar and increased visitation to Las Vegas yielded significant gains
in room rates and considerable increases in gaming volumes.
Casino revenue increased by 13% in the 2004 quarter. Table games
volume, including baccarat, was up 12% from the prior year's quarter, with
a 15% increase at the Company's Las Vegas Strip resorts, resulting from
strong Chinese New Year and Super Bowl events and continued improvement
in the United States economy. Table games hold percentages were within
a normal range for both periods. The Company had previously announced
that table games hold percentages were below normal through Chinese New
Year, but results for the remainder of the quarter, subsequent to Chinese
New Year, were more favorable. Company-wide slot revenue in the quarter
was up 10% from 2003, led by double-digit increases at MGM Grand Las Vegas,
New York-New York, The Mirage and MGM Grand Detroit.
Non-casino revenue was up 11% in the quarter. Hotel revenue was
up 10%, with occupancy of 90% in the first quarter of 2004, consistent
with 2003, and a higher average daily room rate ("ADR") of $138 versus
$127 in 2003. This is the highest quarterly ADR in the Company's
history. As a result, REVPAR was $124, up 9% over REVPAR of $114
in 2003. REVPAR at the Company's Las Vegas Strip resorts increased
11%, impacted positively by strong conference and group business and higher
rates across all segments.
Food and beverage revenue increased 16%, as new restaurants such as
the Nine Fine Irishmen Pub at New York-New York, and Fiamma Trattoria and
SeaBlue at MGM Grand Las Vegas have allowed guests to spend a greater share
of their dining budget at the Company's resorts. Entertainment revenues
were up slightly in the 2004 quarter despite the closure of the Siegfried
& Roy show in October 2003 and fewer performances by Danny Gans at
The Mirage. Zumanity, which debuted in August 2003, continues to
perform exceptionally well at New York-New York. Retail revenues
were up 10%, driven by new retail outlets and increased spending by guests.
EBITDA was up 29% for the quarter, reflecting the operating trends described
above and the benefit of the results from Borgata. The percentage
increase in EBITDA was higher than the percentage increase in net revenue
due to the enhanced pricing power in non-gaming amenities, which largely
flows through to profit. The Company's property-level EBITDA margin
was 35% in 2004 versus 30% in the 2003 quarter. Operating income
increased 60% over the 2003 quarter, and the Company's operating margin
improved to 24% from 17% in 2003. The higher percentage increase
in operating income than EBITDA was due to lower preopening and start-up
expenses and lower property transactions in 2004.
First quarter Adjusted Earnings increased by 77% compared to 2003 due
to the higher operating income. Net interest expense increased over
the 2003 quarter due to higher average borrowings and the cessation of
interest capitalization on the Company's investment in Borgata, which opened
on July 3, 2003. For the first quarter of 2004, Adjusted Earnings
excluded $8.0 million ($5.2 million, net of tax) of items as follows:
-
Net property transactions of $1.7 million ($1.1 million, net of tax), including
$0.9 million of demolition costs, primarily at Bellagio in connection with
the room remodel and expansion projects, and other net losses on disposal
of assets;
-
Restructuring costs of $0.4 million ($0.3 million, net of tax);
-
Preopening and start-up expenses of $0.4 million ($0.2 million, net of
tax);
-
Loss on early retirement of debt of $5.5 million ($3.6 million, net of
tax) related to the repurchase and retirement of the Company's publicly-traded
debt securities, classified within "Other, net".
In the first quarter of 2003, items excluded in the determination of Adjusted
Earnings included $6.5 million ($4.3 million, net of tax) of preopening
and start-up expenses, primarily related to Borgata and Players Club; restructuring
costs of $0.6 million ($0.4 million, net of tax); and property transactions
of $6.8 million ($4.4 million, net of tax) related to assets abandoned
or replaced in connection with construction projects and demolition costs
at MGM Grand Las Vegas.
Income from discontinued operations includes the results of Golden Nugget
Las Vegas, Golden Nugget Laughlin, MGM Grand Australia, and MGM MIRAGE
Online. Pretax income from discontinued operations was $14 million
in the 2004 quarter compared to $5 million in the 2003 quarter. The
current year quarter includes the $8 million gain on the sale of the Golden
Nugget resorts. The prior year quarter included significant expenses
related to MGM MIRAGE Online's start-up efforts. Interest allocated
to discontinued operations was $1 million for the first quarter of 2004
and $3 million for the 2003 period.
Financial Position
The Company generated significant operating cash flow in the first quarter
as a result of its positive operating results. The Company utilized
available cash flow, including the $215 million received from the sale
of the Golden Nugget resorts and $71 million of proceeds upon exercise
of employee stock options, to repay $139 million of net debt, invest $174
million in capital projects, repurchase $49 million of the Company's publicly-traded
debt securities, and repurchase $121 million of the Company's common stock.
First quarter capital investments of $174 million included $58 million
for the Bellagio expansion, $43 million for construction of the new theatre
for Cirque du Soleil at MGM Grand Las Vegas, costs related to the Bellagio
and New York-New York room remodel projects and other routine capital expenditures.
In order to take advantage of historically low interest rates and ensure
maximum flexibility for future growth prospects, the Company issued $525
million of 5.875% Senior Notes due 2014, the proceeds from which were used
to repay amounts outstanding under the Company's senior credit facility.
As of March 31, 2004, the Company had $1.5 billion available under its
senior credit facility.
In November 2003, the Company's Board of Directors approved a 10 million
share repurchase program. During the first quarter of 2004, the Company
repurchased 2.9 million shares of common stock for $121 million under this
authorization, leaving 5.1 million shares available for future purchase
as of March 31, 2004.
"Our strong operating results and financing transactions in the first
quarter have further strengthened our balance sheet and enhanced our ability
to profitably grow our company," said Jim Murren, MGM MIRAGE President
and CFO. "We are pleased with the operating performance of our existing
resorts and are excited about the prospects of globally expanding our portfolio."
Outlook
"Our extraordinary first quarter demonstrates the tremendous operating
leverage inherent in our market-leading resorts. If current trends
continue, we expect to produce year-over-year gains in earnings throughout
2004. At this early stage, we believe the current earnings estimate
consensus of $0.51 per share for the second quarter of 2004, as reported
on First Call on April 20, 2004, is reasonable," Mr. Murren said.
"Our current forecast indicates that company-wide REVPAR for the second
quarter will be up approximately 7% over last year, with REVPAR at our
Las Vegas Strip resorts up a vibrant 9%." The Company's guidance
includes the impact of business interruption of approximately $0.01 per
share, net of our preliminary estimates of insurance recoveries, resulting
from the recent power outage at Bellagio.
MGM MIRAGE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31, March 31,
2004 2003
Revenues:
Casino
$ 558,723 $ 496,221
Rooms
234,961 213,298
Food and beverage
217,764 188,077
Entertainment
67,242 65,143
Retail
45,098 41,090
Other
51,086 52,349
1,174,874 1,056,178
Less: Promotional allowances
108,438 104,304
1,066,436 951,874
Expenses:
Casino
277,603 262,016
Rooms
61,832 57,906
Food and beverage
119,549 105,252
Entertainment
46,579 46,733
Retail
28,512 26,586
Other
32,884 30,485
Provision for doubtful
accounts
6,877 7,636
General and administrative
146,281 138,300
Corporate expense
15,738 13,746
Preopening and start-up
expenses
381 6,547
Restructuring costs
414 605
Property transactions,
net
1,739 6,816
Depreciation and amortization
97,553 100,550
835,942 803,178
Income from unconsolidated affiliates
24,172 10,789
Operating income
254,666 159,485
Non-operating income (expense):
Interest income
903 1,708
Interest expense, net
(89,810) (82,798)
Non-operating items from
unconsolidated affiliates
(6,205) (151)
Other, net
(7,154) 768
(102,266) (80,473)
Income from continuing operations
before income taxes
152,400 79,012
Provision for income taxes
(55,260) (30,236)
Income from continuing operations
97,140 48,776
Discontinued operations
Income from discontinued
operations,
including gain on
disposal of $8,186
(three months 2004)
13,869 4,732
Provision for income taxes
(5,161) (2,505)
8,708 2,227
Net income
$ 105,848 $ 51,003
Per share of common stock:
Basic:
Income from continuing
operations
$ 0.68 $
0.32
Discontinued operations
0.06 0.02
Net income per share
$ 0.74 $
0.34
Weighted average shares
outstanding
142,115 152,110
Diluted:
Income from continuing
operations
$ 0.66 $
0.32
Discontinued operations
0.06 0.01
Net income per share
$ 0.72 $
0.33
Weighted average shares
outstanding
146,847 153,549
MGM MIRAGE AND SUBSIDIARIES
RECONCILIATION OF GAAP INCOME FROM CONTINUING OPERATIONS
AND EPS TO ADJUSTED EARNINGS AND EPS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31, March 31,
2004 2003
Income from continuing operations
$ 97,140 $ 48,776
Preopening and start-up expenses,
net
248 4,256
Restructuring costs, net
269 393
Property transactions, net
1,130 4,430
Loss on debt retirements, net
3,593
--
Adjusted earnings
$ 102,380 $ 57,855
Per diluted share of common stock:
Income from continuing
operations
$ 0.66 $
0.32
Preopening and start-up
expenses, net
-- 0.03
Restructuring costs, net
--
--
Property transactions,
net
0.01 0.03
Loss on debt retirements,
net
0.03
--
Adjusted EPS
$ 0.70 $
0.38
Weighted average diluted
shares outstanding 146,847
153,549
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA - NET REVENUES BY RESORT
(In thousands)
(Unaudited)
Three Months Ended
March 31, March 31,
2004 2003
Bellagio
$ 278,634 $ 240,364
MGM Grand Las Vegas
223,020 184,143
The Mirage
139,054 150,107
Treasure Island
99,796 89,942
New York-New York
82,793 61,911
MGM Grand Detroit
103,917 94,769
Beau Rivage
72,986 70,411
Other operations
66,236 60,227
$1,066,436 $ 951,874
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA - EBITDA BY RESORT
(In thousands)
(Unaudited)
Three Months Ended
March 31, March 31,
2004 2003
Bellagio
$ 99,019 $ 68,163
MGM Grand Las Vegas
75,829 54,014
The Mirage
40,128 42,360
Treasure Island
31,303 26,223
New York-New York
32,124 25,515
MGM Grand Detroit
38,562 36,934
Beau Rivage
16,789 14,849
Other operations
12,565 8,902
Income from unconsolidated
affiliates
24,172 10,789
$ 370,491 $ 287,749
MGM MIRAGE AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME TO EBITDA
(In thousands)
(Unaudited)
Three Months Ended March 31, 2004
Depreci- Pre-
ation opening
Property
and and Restruc-
trans-
Operating amorti- start-up turing
actions,
income zation expenses
costs net EBITDA
Bellagio
$ 77,091 $20,352 $ --
$ -- $1,576 $ 99,019
MGM Grand
Las Vegas
51,977 23,518 338
-- (4) 75,829
The Mirage
27,411 12,657
-- --
60 40,128
Treasure
Island
22,651 8,660
-- --
(8) 31,303
New York-
New York
24,757 7,453
(86) --
-- 32,124
MGM Grand
Detroit
30,699 7,474
-- --
389 38,562
Beau Rivage
11,674 5,304
-- --
(189) 16,789
Other
operations
8,265 4,385
-- --
(85) 12,565
Unconsolidated
affiliates
24,172 --
-- --
-- 24,172
278,697 89,803 252
-- 1,739 370,491
Corporate
and other
(24,031) 7,750 129
414 -- (15,738)
$254,666 $97,553 $ 381
$ 414 $1,739 $354,753
Three Months Ended March 31, 2003
Depreci- Pre-
ation opening
Property
and and Restruc-
trans-
Operating amorti- start-up turing
actions,
income zation expenses
costs net EBITDA
Bellagio
$ 40,281 $ 27,872 $ --
$ -- $ 10 $ 68,163
MGM Grand
Las Vegas
26,879 20,188 591
25 6,331 54,014
The Mirage
29,694 12,435
-- 300
(69) 42,360
Treasure
Island
18,081 8,219
-- --
(77) 26,223
New York-
New York
19,471 5,950
52 --
42 25,515
MGM Grand
Detroit
28,197 8,581
-- --
156 36,934
Beau Rivage
10,002 4,641
-- --
206 14,849
Other
operations
3,905 4,997
-- --
-- 8,902
Unconsolidated
affiliates
6,716 --
4,073 --
-- 10,789
183,226 92,883 4,716
325 6,599 287,749
Corporate
and other
(23,741) 7,667 1,831
280 217 (13,746)
$159,485 $100,550 $ 6,547 $ 605
$6,816 $274,003
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA - HOTEL STATISTICS
(Unaudited)
Three Months Ended
March 31, March 31,
2004 2003
Bellagio
Occupancy %
95.4% 92.7%
Average daily rate (ADR)
$255 $238
Revenue per available
room (REVPAR)
$243 $221
MGM Grand Las Vegas
Occupancy %
92.2% 92.7%
Average daily rate (ADR)
$139 $119
Revenue per available
room (REVPAR)
$128 $110
The Mirage
Occupancy %
94.2% 92.5%
Average daily rate (ADR)
$156 $148
Revenue per available
room (REVPAR)
$147 $137
Treasure Island
Occupancy %
96.5% 96.0%
Average daily rate (ADR)
$123 $110
Revenue per available
room (REVPAR)
$118 $106
New York-New York
Occupancy %
97.5% 98.4%
Average daily rate (ADR)
$119 $102
Revenue per available
room (REVPAR)
$116 $100
Beau Rivage
Occupancy %
86.1% 91.0%
Average daily rate (ADR)
$ 91 $ 87
Revenue per available
room (REVPAR)
$ 78 $ 79
Other operations
Occupancy %
69.2% 68.9%
Average daily rate (ADR)
$ 43 $ 44
Revenue per available
room (REVPAR)
$ 30 $ 30
MGM MIRAGE AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
(Unaudited)
March 31, December 31,
2004 2003
ASSETS Current assets:
Cash and cash equivalents
$ 196,413 $ 178,047
Accounts receivable, net
161,883 139,475
Inventories
63,230 65,189
Income tax receivable
-- 9,901
Deferred income taxes
48,498 49,286
Prepaid expenses and other
88,516 89,641
Assets held for sale
86,516 226,082
Total current assets
645,056 757,621
Property and equipment, net
8,718,333 8,681,339
Other assets:
Investments in unconsolidated
affiliates 772,976
756,012
Goodwill and other intangible
assets, net 232,671
267,668
Deposits and other assets,
net
277,383 247,070
Total other assets
1,283,030 1,270,750
$10,646,419 $10,709,710
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 95,229 $ 85,439
Income taxes payable
58,605
--
Current portion of long-term
debt
9,687 9,008
Accrued interest on long-term
debt
76,808 87,711
Other accrued liabilities
525,122 559,445
Liabilities related to
assets held
for sale
7,235 23,456
Total current liabilities
772,686 765,059
Deferred income taxes
1,732,256 1,765,426
Long-term debt
5,394,989 5,521,890
Other long-term obligations
135,544 123,547
Stockholders' equity:
Common stock ($.01 par
value: authorized
300,000,000 shares,
issued
171,194,901 and
168,268,213 shares
and outstanding
143,143,001 and
143,096,213 shares)
1,712 1,683
Capital in excess of par
value
2,261,525 2,171,625
Deferred compensation
(16,795) (19,174)
Treasury stock, at cost
(28,051,900 and
25,172,000 shares) (882,378)
(760,594)
Retained earnings
1,239,751 1,133,903
Accumulated other comprehensive
income 7,129
6,345
Total stockholders' equity
2,610,944 2,533,788
$10,646,419 $10,709,710 |
(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.
(2) EBITDA is earnings
before interest and other non-operating income (expense), taxes, depreciation
and amortization, restructuring, preopening and start-up expenses, and
property transactions, net. EBITDA is presented solely as a supplemental
disclosure because management believes that it is 1) a widely used measure
of operating performance in the gaming industry, and 2) a principal basis
for valuation of gaming companies. Management uses property-level
EBITDA (EBITDA before corporate expense) as the primary measure of the
Company's operating resorts' performance, including the evaluation of operating
personnel. EBITDA should not be construed as an alternative to operating
income, as an indicator of the Company's operating performance; or as an
alternative to cash flows from operating activities, as a measure of liquidity;
or as any other measure determined in accordance with generally accepted
accounting principles. The Company has significant uses of cash flows,
including capital expenditures, interest payments, taxes and debt principal
repayments, which are not reflected in EBITDA. Also, other gaming
companies that report EBITDA information may calculate EBITDA in a different
manner than the Company. Reconciliations of operating income to EBITDA
are included in the financial schedules accompanying this release.
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.
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