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Hotel Online Special Report
Bellagio Has a Strong Start; 
Mirage Resorts Reports Third Quarter Earnings 
Drop to $0.16 per share, versus $0.28 per share
LAS VEGAS, Nov. 9, 1998 -  Numerous investors have inquired about the early results of Bellagio, which opened to the public at approximately 11:30 p.m. on October 15. The public reception has been exceptional and Bellagio is expected to be a financial success as it has already proven to be an aesthetic success. 

Bellagio is intended to have a life of 100 years or more, similar to other hospitality icons such as The Ritz hotel in Paris or The Plaza hotel in New York. Hence, the first 20 days are not particularly meaningful. Furthermore, the financial results of the first few weeks of any new major resort contain numerous distortions. In the case of Bellagio, large numbers of sightseers distort certain revenue categories, while expenses are also high, with significant overtime and similar expenses being incurred to allow the new staff to provide a positive guest experience. 

The best indication of Bellagio's progress is the overwhelming positive response of its guests. Management estimates that nearly one million people have visited the facility since its opening and customer comments have been extremely complimentary. 

Prior to Bellagio, the most successful resort in Nevada history by many measures was the Company's Mirage hotel-casino, which opened on November 22, 1989. In its first 20 days of operation, the table games play of $125 million at Bellagio was 40% above what was achieved in the first 20 days of operation at The Mirage. Likewise, room, food and beverage revenues have been more than double the comparable initial results at The Mirage. 

The retail sales of the Company - owned and leased shops at Bellagio after only 20 days are nearly $9 million -- a remarkable result of over $5 per square foot per day. Slot revenues of over $12.7 million exceeded in only 20 days the best month that The Mirage has ever had, even as The Mirage itself had an $11.2 million slot win in October -- a 4% increase over the prior-year period. Like The Mirage, Bellagio has been profitable from its first day of operation. Recognize, however, that these numbers reflect a very short period of time and business activity levels at Bellagio are expected to normalize at lower, but still high, levels over the next few months. 

Room rates at Bellagio vary widely, from several thousand dollars per night for certain suites during holiday periods to only $99 per night for some standard guestrooms during certain mid-week periods. Prices vary according to availability and the number of guests in the room and are often higher when large conventions or holidays boost guestroom demand. The average rate for rooms and suites occupied at Bellagio during its first 20 days has been $188 per night. 

Finally, the word-of-mouth regarding this spectacular new resort has resulted in unprecedented requests for reservations since opening day. The Bellagio reservation center received 140,000 calls in the resort's first 20 days and confirmed approximately 28,000 new reservations. The average anticipated stay of such reservations is approximately three nights. Management expects well over half of Bellagio's available guestrooms to be occupied by conventions, tour groups and casino customers -- customer groups that do not book through the reservation center. While Bellagio still has room availability during many periods, the pace of reservation requests is testament to the high level of customer satisfaction with the product and to the likely long-term success of this new resort. 

Third Quarter Earnings 

Mirage Resorts (NYSE: MIR) reported third quarter earnings of $0.16 per share, versus $0.28 per share in the prior-year period.  The difference was attributable to a decline in baccarat activity (affecting earnings by approximately $0.03 per share), a normal  table games win percentage versus an exceptional win percentage ($0.06 per share) and higher than normal corporate expenses. 

The prior-year period benefited from high levels of baccarat play and the highest Company-wide table games win percentage in any quarter since The Mirage opened in 1989. The level of baccarat play in the recent quarter was consistent with the levels of the first and second quarters of 1998, reflecting the shift in economic conditions in certain Asian economies that occurred primarily in the second half of 1997 and began affecting that component of the Company's revenues in the first quarter of 1998. 

Apart from the swing in baccarat activity, the Company's level of business remained excellent. The Company-wide table games drop excluding baccarat increased 4% over the prior-year period, while the Company-wide slot win increased by 5%. Non-casino revenues, at $178 million, were approximately equal with the prior-year period and represented 49% of total revenues. The operating expenses of the Company's hotel-casinos were likewise approximately equal to the prior-year period, despite additional staffing that was necessary to prepare for the October opening of Bellagio. 

Corporate expense rose significantly over the prior-year period, reflecting certain political contributions and legal expenses, the growth in the size of the Company and expanded activities in pursuit of entertainment attractions for the Company's resorts. Political contributions are not deductible for tax purposes, resulting in a higher than normal tax rate in the quarter. 

Interest cost rose significantly in the quarter, but most of such cost was capitalized as the increased debt levels related to projects under construction during the quarter. As noted, Bellagio opened on October 15. Construction is continuing apace on the Company's Beau Rivage resort in Biloxi, Mississippi, which is expected to open in March 1999. 


                                     Three Months             Nine Months 
    For the periods ended 
     September 30,                 1998       1997         1998        1997 
    (In thousands, except 
     per share data) 

    Gross revenues            $372,174   $400,631   $1,104,263   $1,168,787 
    Less - promotional 
     allowances                (34,031)   (31,478)    (100,581)     (93,234) 
                               338,143    369,153    1,003,682    1,075,553 
    Casino-hotel operating 
     costs and expenses        273,200    272,658      802,175      796,169 
    Operating profit before 
     corporate expense          64,943     96,495      201,507      279,384 
    Corporate expense           16,718      9,042       34,810       24,357 
    Operating income            48,225     87,453      166,697      255,027 
    Other income (expense) 
      Interest cost            (34,376)   (18,709)     (92,619)     (45,912) 
      Interest capitalized      32,340     15,114       81,968       36,613 
      Other, including 
       interest income           2,677      1,215       11,237        2,723 
                                   641     (2,380)         586       (6,576) 

    Income before income 
     taxes and extraordinary 
     item                       48,866     85,073      167,283      248,451 
    Provision for income 
     taxes                      18,762     30,174       61,960       87,962 
    Income before 
     extraordinary item         30,104     54,899      105,323      160,489 
    Extraordinary item - 
     loss on early retirement 
     of debt, net of 
     applicable income 
     tax benefit                   --         --        (3,521)      (2,225) 
    Net income                 $30,104    $54,899     $101,802    $ 158,264 

    Income per share before 
     extraordinary item 
       Basic                     $0.17      $0.31        $0.59       $ 0.90 
       Diluted                    0.16       0.28         0.55         0.83 
    Net income per share 
       Basic                     $0.17      $0.31        $0.57       $ 0.89 
       Diluted                    0.16       0.28         0.53         0.82 

    Weighted-average common 
     shares outstanding 
    (used in the computation 
     of basic earnings per 
     share)                    179,720    178,842      179,568      178,655 
    Effect of common stock 
     options under the 
     treasury stock 
     method                     10,828     14,556       12,187       13,726 
    Weighted-average common 
     and common equivalent 
     shares (used in the 
     computation of diluted 
     earnings per share)       190,548    193,398      191,755      192,381 

Interpretive Data 

                                  Three Months               Nine Months 
    For the periods ended 
     September 30,              1998        1997         1998        1997 
    (Dollars in thousands, 
     except room rate amounts) 

    Gross revenues 
      The Mirage              $201,808   $230,444     $586,430     $649,605 
      Treasure Island          100,819     99,475      301,991      298,679 
      Golden Nugget             50,478     50,176      152,194      152,754 
      Golden Nugget-Laughlin    13,520     13,904       43,313       44,957 
      Equity in earnings 
       of Monte Carlo            5,549      6,632       20,335       22,792 
                               372,174    400,631    1,104,263    1,168,787 
    Less - promotional 
     allowances                (34,031)   (31,478)    (100,581)     (93,234) 
    Net revenues              $338,143   $369,153  $ 1,003,682   $1,075,553 
    Operating cash flow 
      The Mirage               $49,635    $74,879     $140,490    $ 200,125 
      Treasure Island           22,813     26,493       73,762       83,397 
      Golden Nugget              7,332      9,286       27,983       31,387 
      Golden Nugget-Laughlin     1,264      1,421        5,643        7,273 
                               $81,044   $112,079     $247,878    $ 322,182 

    Operating income 
      The Mirage               $40,336    $64,802     $110,620    $ 171,054 
      Treasure Island           14,934     18,947       50,430       61,146 
      Golden Nugget              3,819      5,828       17,450       20,642 
      Golden Nugget-Laughlin       305        286        2,672        3,750 
                                59,394     89,863      181,172      256,592 
    Equity in earnings 
      of Monte Carlo             5,549      6,632       20,335       22,792 
    Corporate expense          (16,718)    (9,042)     (34,810)     (24,357) 
                               $48,225    $87,453     $166,697    $ 255,027 

    Monte Carlo operating 
     information (100%) 
      Gross revenues           $66,219    $64,233     $201,204    $ 197,494 
      Operating cash 
       flow (EBDIT)(a)         $18,458    $21,395      $62,153      $69,399 
      Operating income         $12,917    $15,754      $45,598      $53,548 

    Other information 
     (excluding Monte Carlo) 
      Company-wide table games 
       win percentage            20.8%       25.5%        19.2%        21.8% 
      Company-wide occupancy of 
       standard guest rooms      98.8%       98.7%        98.7%        99.0% 
      Average standard guest 
       room rate(b)               $ 83       $ 86         $ 88         $ 91 

    (a) Earnings before depreciation, interest and taxes. 

    (b) Cash rate (i.e., excluding complimentary accommodations) at the 
    Company's Las Vegas hotels. 

Forward-Looking Statements 

This press release contains forward-looking statements which are subject  to change.  Actual results may differ materially from those described in any forward-looking statement.  Additional information concerning potential factors that could affect the Company's future financial results is included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997.

Alan Feldman of Mirage Resorts, Incorporated, 
Also See:
Bellagio Bookings Substantially Ahead of Expectations / Mirage Resorts Reports Second Quarter Earnings / Aug 1998 
Bellagio's Opening Marks New Direction for Las Vegas / Bear Stearns Cites Concerns on Room Supply, Asia and Cannibalization / Oct 1998