April
16, 2003 - MGM MIRAGE today reported its first quarter 2003 financial results.
Adjusted earnings per diluted share ("Adjusted EPS") was $0.40 in the first
quarter of 2003, versus $0.52 in the 2002 quarter. First quarter Adjusted
EPS was in line with the Company's previously announced guidance of $0.35
to $0.40.
Adjusted
EPS (and Adjusted Earnings) excludes preopening and start-up expenses,
restructuring costs, and property transactions, net(1). Diluted EPS computed
in accordance with generally accepted accounting principles ("GAAP EPS")
decreased to $0.33 for the first quarter of 2003 from $0.51 in the 2002
quarter.
"We
performed largely as we expected in the first quarter, which is particularly
noteworthy given current economic and world events. Our resorts posted
solid results due to strong business volumes," said Terry Lanni, MGM MIRAGE's
Chairman and CEO. "We are cognizant of near-term challenges, but continue
to focus on maximizing the power of our brands, superior resorts, and world-class
employees to generate market-leading results."
First
Quarter 2003 Company
-
Earned
revenues of $1.02 billion, up 1% from 2002;
-
Amended
the 364-Day Revolving Credit Facility, extending the maturity to April
2, 2004 and securing total available borrowings of $525 million.
-
Used $101
million of cash to repay debt and repurchase common stock;
-
Invested
$88 million of capital in the Company's properties, including maintenance
and expansion projects;
-
Opened
Tabu, the Ultra-Lounge, at MGM Grand Las Vegas, and Caramel and Mist, new
lounges at Bellagio and Treasure Island, respectively.
-
Announced
a new Irish Pub at New York-New York, complementing the resort's improved
entertainment amenities, including the new Cirque du Soleil show, Zumanity,
slated to open this summer.
Detailed
Financial Results
The
following table shows key financial results on a Company-wide basis for
the first quarter.
Three months ended
March 31,
2003 2002
(In millions)
Casino revenue, net
$ 545.3 $ 567.4
Non-casino revenue, net
476.6 440.0
Net revenue
1,021.9 1,007.4
Property-level EBITDA(2)
301.8 324.1
EBITDA (after corporate expense)(2) 288.0
313.5
Operating income
167.6 207.9
Net income
51.0
82.0
Adjusted Earnings
60.9
83.4
Net
revenue in the first quarter grew 1% from the 2002 first quarter, benefiting
from strong hotel and other non-gaming results throughout much of the quarter,
offset by lower gaming revenues. Casino revenue decreased by 4% in the
2003 quarter. Table games volume, including baccarat, was down 1% from
the 2002 quarter. Table games hold percentages were within a normal range
for both periods, but the hold percentage was higher in last year's quarter.
Slot revenue in the quarter was up 4% from 2002. Bellagio had another strong
quarter in slots, with revenue up 10% in the quarter. This was Bellagio's
fourth straight quarter of double-digit year-over-year slot revenue growth.
New York-New York also posted a strong 19% increase in slot revenues over
last year. MGM Grand Detroit slot revenues were down 3% compared to last
year.
Non-casino
revenue was up 8% in this year's quarter, as a result of continued year-over-year
improvement in visitation trends and room rates. Hotel occupancy was 90%
in the first quarter of 2003, up slightly over 89% in 2002, while the average
daily room rate ("ADR") was $120, up 8% over 2002. As a result, revenue
per available room ("REVPAR") increased 8% to $108 in the 2003 first quarter
when compared with 2002.
Food
and beverage, entertainment, retail and other revenues showed solid gains
in the first quarter. These revenues increased 16% at MGM Grand Las Vegas,
even after the impact of closing the EFX! show in January 2003. This resort's
mix of dining and entertainment has improved significantly since last year,
as management's transformation of the resort continues to benefit financial
results. Bellagio and The Mirage also showed strong growth in food and
beverage revenues, up 7% and 8%, respectively.
For
the quarter, EBITDA was down 8% from the year-ago period, and operating
income was down 19%. The decrease in EBITDA was primarily the result of
increased labor costs in the quarter, along with increased property taxes
and insurance costs. Operating income decreased due to those items and
higher preopening expenses and net property transactions.
Adjusted
Earnings and net income decreased by 27% and 38%, respectively, in the
first quarter due to the decrease in operating income and higher net interest
expense. Net interest expense was higher due to the Company's decision
to suspend development of its wholly-owned Atlantic City development project,
resulting in lower capitalized interest, and the prior year savings from
interest rate swaps.
Net
income for the first quarter of 2003 included a net $14.8 million ($9.9
million, net of tax) of items excluded from Adjusted Earnings. These items
included:
-
Preopening
and start-up expenses of $7.4 million, including $4.2 million related to
the Company's Borgata investment and $1.7 million related to Players Club;
-
Net property
transactions of $6.8 million, resulting primarily from asset impairments
and demolition costs associated with the closure of the EFX! show
($4.7 million), and other asset impairments at MGM Grand Las Vegas ($1.4
million);
-
Restructuring
costs of $0.6 million.
In
the first quarter of 2002, similar items totaled $2.2 million ($1.5 million,
net of tax), and consisted of preopening expenses related primarily to
MGM MIRAGE Online and Borgata.
Financial
Position
-
Repaid
$34 million of debt;
-
Repurchased
the remaining 1.4 million shares of Company common stock available under
the 2001 authorization at a total cost of $36 million;
-
Announced
Board of Director approval for a new 10 million share repurchase program,
and repurchased 1.2 million shares under the new authorization at a total
cost of $31 million.
First quarter
capital expenditures of $88 million included costs related to continued
implementation of new slot technology, the Bellagio expansion, construction
of the two new theatres for Cirque du Soleil at New York-New York and MGM
Grand Las Vegas, and other maintenance expenditures.
After
giving effect to the extension of the 364-day credit facility, the Company
has approximately $654 million of available borrowings under its senior
credit facilities, with no public debt maturities until 2005.
"We
are pleased to have secured continuing available credit at terms consistent
with our past borrowings. Our extended facility also gives us the flexibility
needed to pursue development opportunities," said MGM MIRAGE President,
CFO and Treasurer Jim Murren. "We are analyzing a variety of growth opportunities,
and while we explore them we are actively returning value to shareholders
through targeted investments in our existing resorts, debt reductions,
and prudent stock repurchases consistent with the strength of our balance
sheet," Mr. Murren said.
Operational
Highlights
-
Successfully
launched Players Club at Beau Rivage, the sixth resort linked to the program;
-
Continued
installation of IGT's EZ-Pay(TM) cashless gaming system at the Company's
resorts, with over 10,000 machines converted to cashless technology by
quarter-end;
-
Further
enhanced our resorts with world-class lounge and entertainment offerings,
including Tabu, the Ultra Lounge, at MGM Grand Las Vegas, Caramel bar and
lounge at Bellagio, and Mist bar and lounge at Treasure Island. Outlook
-
Anticipate
the opening of Borgata this summer, with our final capital contributions
of up to $40 million to be made in the second and third quarters;
-
Forecast
capital expenditures (excluding required contributions to Borgata) of $100
million in the second quarter of 2003, including continued development
expenditures related to the Bellagio expansion and theatres for the two
new Cirque du Soleil shows.
"Global
events and the current state of the economy create a difficult environment
in which to forecast performance," said Mr. Lanni. "Incoming call volumes
are slightly lower than last year's pace while we continue to operate with
shortened booking windows. While these conditions may put pressure on near-term
performance, we are confident that the Las Vegas market will once again
prove its durability, and that an improving economy and resolution to global
uncertainties will spur increased spending by our customers."
MGM MIRAGE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002
Revenues:
Casino
$545,343 $567,389
Rooms
225,539 206,499
Food and beverage
201,937 188,180
Entertainment, retail and other
162,049 152,955
1,134,868 1,115,023
Less: Promotional allowances
112,938 107,617
1,021,930 1,007,406
Expenses:
Casino
287,405 281,604
Rooms
63,137 53,953
Food and beverage
113,946 97,585
Entertainment, retail and other
108,259 99,835
Provision for doubtful accounts
7,966 12,058
General and administrative
150,256 147,483
Corporate expense
13,746 10,635
Preopening and start-up expenses
7,431 2,239
Restructuring costs
605
--
Property transactions, net
6,784
--
Depreciation and amortization
105,613 103,373
865,148 808,765
Income from unconsolidated affiliate
10,789 9,225
Operating income
167,571 207,866
Non-operating income (expense):
Interest income
1,777 1,240
Interest expense, net
(85,988) (72,597)
Interest expense from unconsolidated affiliate
-- (277)
Other, net
389 (2,623)
(83,822) (74,257)
Income before income taxes
83,749 133,609
Provision for income taxes
(32,746) (51,653)
Net income
$51,003 $81,956
Per share of common stock:
Basic:
Net income per share
$0.34 $0.52
Weighted average shares outstanding
152,110 158,011
Diluted:
Net income per share
$0.33 $0.51
Weighted average shares outstanding
153,549 160,152
MGM MIRAGE AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME AND EPS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002
Net income
$51,003 $81,956
Preopening and start-up expenses, net
5,088 1,455
Restructuring costs, net
393
--
Property transactions, net
4,410
--
Adjusted earnings
$60,894 $83,411
Per diluted share of common stock:
Net income
$0.33 $0.51
Preopening and start-up expenses, net
0.04 0.01
Restructuring costs, net
--
--
Property transactions, net
0.03
--
Adjusted EPS
$0.40 $0.52
Weighted average diluted shares outstanding 153,549
160,152
MGM MIRAGE AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME
(In thousands)
(Unaudited)
Three Months Ended March 31, 2003
Depreci- Preopening
Property
ation 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 12,336 9,715
884 --
(32) 22,903
Unconsolidated
affiliate 10,789
-- --
-- -- 10,789
195,730 97,601 1,527
325 6,567 301,750
Corporate
and other (28,159)
8,012 5,904 280
217 (13,746)
$167,571 $105,613 $7,431
$605 $6,784 $288,004
Three Months Ended March 31, 2002
Depreci- Preopening
Property
ation and and Restruc-
trans-
Operating amorti- start-up turing
actions,
income zation expenses
costs net EBITDA
Bellagio $63,346
$23,299 $--
$-- $-- $86,645
MGM Grand
Las Vegas 33,093
22,268 --
-- -- 55,361
The Mirage 27,353
12,651 --
-- -- 40,004
Treasure Island 17,216 8,380
-- --
-- 25,596
New York-New York 8,421 11,198
-- --
-- 19,619
MGM Grand Detroit 40,335 5,791
-- --
-- 46,126
Beau Rivage 9,362
6,182 --
-- -- 15,544
Other operations 15,332 9,563
1,098 --
-- 25,993
Unconsolidated
affiliate 9,225
-- --
-- -- 9,225
223,683 99,332 1,098
-- -- 324,113
Corporate
and other (15,817)
4,041 1,141
-- -- (10,635)
$207,866 $103,373 $2,239
$-- $-- $313,478
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA - NET REVENUES BY RESORT
(In thousands)
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002
Bellagio
$ 240,364 $ 244,448
MGM Grand Las Vegas
184,143 184,987
The Mirage
150,107 140,397
Treasure Island
89,942 86,601
New York-New York
61,911 50,322
MGM Grand Detroit
94,769 103,619
Beau Rivage
70,411 71,902
Other operations
130,283 125,130
$1,021,930 $1,007,406
MGM
MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA - HOTEL STATISTICS
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002
Bellagio
Occupancy %
91.7% 92.8%
Average daily rate (ADR)
$238 $217
Revenue per available room (REVPAR)
$219 $202
MGM Grand Las Vegas
Occupancy %
92.7% 90.2%
Average daily rate (ADR)
$119 $113
Revenue per available room (REVPAR)
$111 $101
The Mirage
Occupancy %
92.2% 93.0%
Average daily rate (ADR)
$149 $139
Revenue per available room (REVPAR)
$137 $130
Treasure Island
Occupancy %
94.9% 95.2%
Average daily rate (ADR)
$110
$99
Revenue per available room (REVPAR)
$104
$94
New York-New York
Occupancy %
99.0% 95.0%
Average daily rate (ADR)
$101
$90
Revenue per available room (REVPAR)
$100
$85
Beau Rivage
Occupancy %
91.0% 91.6%
Average daily rate (ADR)
$87 $81
Revenue per available room (REVPAR)
$79 $74
Other operations
Occupancy %
78.4% 77.8%
Average daily rate (ADR)
$53 $52
Revenue per available room (REVPAR)
$42 $41
MGM MIRAGE AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
(Unaudited)
ASSETS
March 31, December 31,
2003 2002 Current
assets:
Cash and cash equivalents
$ 172,134 $ 211,234
Accounts receivable, net
134,586 139,935
Inventories
68,066 83,582
Deferred income taxes
65,604 84,348
Prepaid expenses and other
87,572 86,311
Total current assets
527,962 605,410
Property and equipment, net
8,739,506 8,762,445
Other assets:
Investment in unconsolidated affiliates
713,682 710,802
Goodwill and other intangible assets, net
257,351 256,108
Deposits and other assets, net
192,835 170,220
Total other assets
1,163,868 1,137,130
$10,431,336 $10,504,985
LIABILITIES AND S Current liabilities:
Accounts payable
$ 75,168 $ 69,959
Income taxes payable
13,445
637
Current portion of long-term debt
7,356 6,956
Accrued interest on long-term debt
56,267 80,310
Other accrued liabilities
567,665 592,206
Total current liabilities
719,901 750,068
Deferred income taxes
1,761,541 1,769,431
Long-term debt
5,184,236 5,213,778
Other long-term obligations
112,594 107,564
Stockholders' equity:
Common stock ($.01 par value:
authorized 300,000,000 shares,
issued 166,399,089 and
166,393,025 shares and outstanding
152,021,689 and 154,574,225 shares)
1,664 1,664
Capital in excess of par value
2,125,999 2,125,626
Deferred compensation
(25,195) (27,034)
Treasury stock, at cost (14,377,400 and
11,818,800 shares)
(384,172) (317,432)
Retained earnings
941,209 890,206
Other comprehensive loss
(6,441) (8,886)
Total stockholders' equity
2,653,064 2,664,144
$10,431,336 $10,504,985 |
(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 GAAP net income. A reconciliation
of Adjusted Earnings and EPS to GAAP net income and EPS is included in
the financial schedules accompanying this release.
(2)
EBITDA is earnings before interest, 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. A reconciliation
of EBITDA to operating income is included in the financial schedules accompanying
this release.
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. |