|LAS VEGAS, Feb. 22, 1999 - Despite being open for
only 77 days in the fourth quarter, Bellagio achieved what is believed
to be the highest quarterly revenues of any resort in Nevada history. Its
gross revenues of $244 million equated to over $3 million per day.
Bellagio was also very profitable during its opening period, despite high staffing levels and other inefficiencies historically associated with the opening periods of new facilities. The resort produced cash flow before preopening costs and debt service (i.e., EBDIT) of $53 million during the abbreviated quarter.
The Company expensed Bellagio's preopening costs during the fourth quarter. Such costs, aggregating $88 million, include the costs of hiring and training employees, operating the reservation office and marketing departments and various other costs incurred prior to opening this $1.6 billion facility. These costs resulted in a fourth quarter net loss of $0.11 per share. Excluding the charge for preopening costs, Mirage Resorts earned $0.20 per share in the 1998 fourth quarter, versus $0.26 in the prior-year quarter.
"This was a complicated quarter, with the opening of Bellagio being overlayed on a series of non-recurring items," noted Stephen A. Wynn, Chairman of Mirage Resorts. "Yet, it was also a quarter of tremendous achievement."
"We had a very smooth and exciting opening of Bellagio -- perhaps the greatest operating challenge in the history of the lodging industry. The entire 3,005-guestroom resort opened at once, including the intricate "O" theatrical production, all 16 restaurants, 21 retail shops and the specialized attractions, such as its signature fountains and the botanical conservatory. We estimate that Bellagio entertained over two million people in the quarter and did so smoothly and profitably. This is a testament to the planning of its President Robert Baldwin and the efforts of all 9,300 of its employees."
"Meanwhile, our other properties have reacted well to the new high-end competition, introducing new marketing programs and carefully controlling expenses. While there has been some dilution of table games revenues, slot revenues and hotel occupancies have remained strong. We entered 1999 with both our people and our properties prepared to lead Las Vegas into a new chapter as the world's most exciting and diverse tourism destination."
"At the same time, we are putting the final touches on Beau Rivage -- our $680 million resort opening on March 15 in Biloxi, Mississippi. Beau Rivage incorporates everything we have learned about building exciting destination resorts, including many details found before only at Bellagio. It is particularly exciting to build such a resort in a beachside setting and to draw upon the natural warmth and hospitality of the people of the South. We expect that our recent agreement with AirTran Airways will provide the Gulf Coast with excellent air service at reasonable prices. In short, we look forward to another exciting opening in the first quarter and many years of success thereafter."
As noted, there were several non-recurring items in both fourth-quarter periods in addition to the charge for preopening costs. The recent quarter included abandonment charges of $2.1 million ($0.01 per share after tax) related to the refurbishment of Treasure Island's guestrooms now underway and $2.6 million ($0.01 per share after tax) related to a monorail that was planned to connect Bellagio and The Mirage. The Company hopes to construct the monorail eventually, but to date it has been unable to reach agreements with the county and a neighboring property that would enable its construction.
The prior-year quarter benefited from exceptionally strong baccarat business at The Mirage, a $3.5 million ($0.01 per share after tax) gain on the sale of an aircraft and a $5.3 million ($0.02 per share after tax) cumulative adjustment to capitalized interest to properly reflect the Company's investment-to-date in its new projects. Furthermore, during 1997 and the first nine months of 1998, the Company's construction in progress nearly equaled its overall debt levels, resulting in capitalization of most of the Company's interest cost. With Bellagio open, a much smaller portion of the Company's interest cost is now being capitalized.
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 results is included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
This statement is provided as permitted by the Private Securities Litigation
Reform Act of 1995.
|Also See:||Mirage Resorts Reports Record 1997 Earnings / Feb 1998|