MGM MIRAGE REPORTS THIRD QUARTER RESULTS
Las Vegas, Nevada, October 30, 2001—MGM MIRAGE (NYSE: MGG) today reported earnings before nonrecurring expenses of 19 cents per diluted share for the 2001 third quarter, compared with 45 cents per diluted share in the 2000 quarter. Consolidated net revenue was down 5.3% to $993 million in the 2001 quarter compared with $1.05 billion in the comparable 2000 quarter. For the three months ended September 30, 2001, operating cash flow ("EBITDA") was $236.5 million when compared with $336 million in the prior year's quarter. Net income before nonrecurring expenses during the 2001 quarter was $30.1 million compared with $73.2 million in the prior year's quarter.
These results reflect a substantial decline in business volumes at the Company's hotel and casino resorts immediately after the terrorist attacks of September 11, 2001. The Company's hotels on the Las Vegas Strip averaged an unprecedented low 64% occupancy level from September 11th through September 30th. This reduction in customer traffic also resulted in lower casino, food and beverage and retail revenue. Mid-week occupancy levels have now significantly improved, and weekend occupancy has nearly returned to pre-attack levels, albeit at reduced rates. Accordingly, casino and non-casino revenue continue to rebound.
"Prior to the events of September 11th, our Company was on track to achieve another strong quarterly operating performance. Obviously the result of the terrorist attacks had a profound impact on the hotel and travel industry and our business," said Terry Lanni, Chairman and Chief Executive Officer of MGM MIRAGE. "Our management team undertook a detailed analysis of our current operations in terms of the impact of September 11th. To respond to these historic challenges, we implemented cost containment strategies which included a significant reduction in payroll and a refocusing of several of our marketing programs. The objective of this approach is to rebuild revenue and profitability in order to bring back as many of our displaced employees as possible. Current trends indicate our initiatives are working, as we are once again profitable and we have recalled many of our employees. We expect to be profitable throughout the fourth quarter, the degree of which will depend on business volumes which have continued to improve since late September. Based on early indications, we are optimistic that this recovery will accelerate into 2002."
Layoffs and terminations related to the payroll deductions resulted in an after-tax restructuring charge of $12.9 million (8 cents per share). The Company has achieved reductions in most operating expense categories, including payroll and purchasing, and has restructured several corporate functions. Management also reassessed the carrying value of certain assets and accordingly recognized an after-tax impairment loss of $30.8 million (19 cents per share) for the three months ended September 30, 2001. Including these nonrecurring items, the Company reported a loss of 9 cents per share for the three months ended September 30, 2001 compared with earnings of 42 cents per share during the prior year's quarter.
During the three months ended September 30, 2001, the Company's free cash flow enabled it to reduce debt by $103 million. Since the acquisition of Mirage Resorts on May 31, 2000, the Company has reduced its outstanding debt balance by $947 million.
"Despite the events of September 11th, our Company remains financially strong. We currently have over $730 million of available liquidity with no public debt maturities until 2005. During the quarter we utilized free cash flow to repurchase approximately 2.2 million shares under our 10 million share repurchase program at an average cost of $20.47 per share," said Jim Murren, President and CFO of MGM MIRAGE. "The Company has completed several important cost saving programs and has significant flexibility in its capital requirements over the next few years. Our overall business objectives remain the same. We will continue to grow our business, manage our cost structure and maximize free cash flow for debt reductions, internal growth, acquisitions and share repurchases."
* * *
MGM MIRAGE is an entertainment, hotel and gaming company headquartered in Las Vegas, Nevada, which owns and/or operates through subsidiaries 19 casino properties on three continents. Its U.S. holdings include: Bellagio, the MGM Grand Hotel and Casino—The City of Entertainment, The Mirage, Treasure Island, New York—New York Hotel and Casino, the Boardwalk Hotel and Casino and 50% of Monte Carlo, all located on the Las Vegas Strip; the Golden Nugget in Downtown Las Vegas; Whiskey Pete's, Buffalo Bill's, the Primm Valley Resort and two championship golf courses at the California/Nevada state line; the exclusive Shadow Creek golf course in North Las Vegas; the Golden Nugget in Laughlin, Nevada; the Beau Rivage resort on the Mississippi Gulf Coast; and the MGM Grand Detroit Casino in Detroit, Michigan. The Company is a joint venture partner on Borgata at Renaissance Pointe, a resort under development in Atlantic City, New Jersey and also controls several development sites in the ocean-front resort community. Internationally, MGM MIRAGE owns and operates the MGM Grand Hotel and Casino in Darwin, Australia and manages casinos in Nelspruit, Witbank, Johannesburg and East London, Republic of South Africa.
For more information on MGM MIRAGE and its operating subsidiaries, visit our website at www.mgmmirage.com.
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.
MGM MIRAGE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
| | Three Months Ended | Nine Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | September 30, 2001 | September 30, 2000 | September 30, 2001 | September 30, 2000 | ||||||||||
| Revenues: | ||||||||||||||
| Casino | $ | 551,698 | $ | 571,529 | $ | 1,676,131 | $ | 1,211,839 | ||||||
| Rooms | 196,243 | 210,693 | 662,612 | 398,341 | ||||||||||
| Food and beverage | 174,272 | 182,600 | 556,386 | 332,816 | ||||||||||
| Entertainment, retail and other | 164,310 | 176,233 | 496,959 | 305,882 | ||||||||||
| Income from unconsolidated affiliate | 8,909 | 9,014 | 30,269 | 11,754 | ||||||||||
| 1,095,432 | 1,150,069 | 3,422,357 | 2,260,632 | |||||||||||
| Less: promotional allowances | 102,543 | 101,373 | 309,020 | 185,141 | ||||||||||
| 992,889 | 1,048,696 | 3,113,337 | 2,075,491 | |||||||||||
| Expenses: | ||||||||||||||
| Casino | 288,049 | 268,549 | 859,608 | 566,373 | ||||||||||
| Rooms | 61,237 | 63,783 | 186,348 | 122,202 | ||||||||||
| Food and beverage | 105,742 | 110,376 | 319,939 | 196,370 | ||||||||||
| Entertainment, retail and other | 117,225 | 111,088 | 328,963 | 188,809 | ||||||||||
| Provision for doubtful accounts | 27,008 | 10,666 | 58,745 | 23,907 | ||||||||||
| General and administrative | 157,127 | 148,277 | 454,796 | 298,080 | ||||||||||
| Preopening expenses and other | 1,091 | 1,609 | 3,071 | 3,808 | ||||||||||
| Restructuring costs | 19,896 | — | 19,896 | 23,519 | ||||||||||
| Write-Downs and Impairments | 47,384 | — | 47,384 | 102,225 | ||||||||||
| Depreciation and amortization | 98,697 | 97,576 | 292,034 | 197,096 | ||||||||||
| 923,456 | 811,924 | 2,570,784 | 1,722,389 | |||||||||||
| Operating Profit | 69,433 | 236,772 | 542,553 | 353,102 | ||||||||||
Corporate Expense | 8,408 | 11,949 | 29,607 | 24,635 | ||||||||||
Operating Income | 61,025 | 224,823 | 512,946 | 328,467 | ||||||||||
| Non-Operating Income (Expense): | ||||||||||||||
| Interest income | 1,408 | 2,553 | 5,188 | 10,278 | ||||||||||
| Interest expense, net | (84,185 | ) | (104,876 | ) | (274,197 | ) | (174,336 | ) | ||||||
| Interest expense from unconsolidated affiliate | (482 | ) | (921 | ) | (1,992 | ) | (1,194 | ) | ||||||
| Other, net | (1,440 | ) | (182 | ) | (2,911 | ) | (694 | ) | ||||||
| (84,699 | ) | (103,426 | ) | (273,912 | ) | (165,946 | ) | |||||||
| Income (Loss) Before Income Taxes and Extraordinary Item | (23,674 | ) | 121,397 | 239,034 | 162,521 | |||||||||
| Benefit (Provision) for income taxes | 9,321 | (49,283 | ) | (92,129 | ) | (64,363 | ) | |||||||
| Income (Loss) Before Extraordinary Item | (14,353 | ) | 72,114 | 146,905 | 98,158 | |||||||||
Extraordinary Item: | ||||||||||||||
| Loss on Early Extinguishment of Debt, net | — | (4,683 | ) | (778 | ) | (5,416 | ) | |||||||
| Net Income (Loss) | $ | (14,353 | ) | $ | 67,431 | $ | 146,127 | $ | 92,742 | |||||
| Income Before Preopening and Other, Restructuring, Write-Downs and Impairments and Extraordinary Item | $ | 30,088 | $ | 73,160 | $ | 192,633 | $ | 182,367 | ||||||
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA—PROPERTY OPERATING RESULTS
(in thousands)
| | Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | September 30, 2001 | September 30, 2000 | September 30, 2001 | September 30, 2000 | |||||||||
| NET REVENUES: | |||||||||||||
| Bellagio (1) | $ | 233,390 | $ | 248,007 | $ | 734,096 | $ | 314,626 | |||||
| MGM Grand Las Vegas | 171,334 | 178,997 | 558,314 | 566,059 | |||||||||
| The Mirage (1) | 144,842 | 151,210 | 478,286 | 199,423 | |||||||||
| Treasure Island (1) | 86,274 | 94,194 | 276,940 | 122,752 | |||||||||
| New York-New York | 53,141 | 55,342 | 161,952 | 163,184 | |||||||||
| Primm Properties | 54,702 | 63,084 | 159,756 | 186,539 | |||||||||
| Golden Nugget Las Vegas (1) | 40,081 | 42,412 | 133,209 | 56,006 | |||||||||
| Golden Nugget Laughlin (1) | 11,463 | 10,844 | 35,722 | 14,307 | |||||||||
| MGM Grand Detroit | 87,351 | 103,496 | 264,040 | 302,580 | |||||||||
| Beau Rivage (1) | 83,312 | 80,986 | 227,168 | 106,136 | |||||||||
| Income from Unconsolidated Affiliate (1) | 8,909 | 9,014 | 30,269 | 11,754 | |||||||||
| Boardwalk (1) | 8,356 | — | 26,669 | — | |||||||||
| MGM Grand Australia | 8,635 | 9,830 | 23,428 | 28,077 | |||||||||
| MGM Grand South Africa | 1,099 | 1,280 | 3,488 | 4,048 | |||||||||
| $ | 992,889 | $ | 1,048,696 | $ | 3,113,337 | $ | 2,075,491 | ||||||
| EBITDA: | |||||||||||||
| Bellagio (1) | $ | 62,334 | $ | 86,711 | $ | 232,166 | $ | 103,689 | |||||
| MGM Grand Las Vegas | 30,779 | 50,275 | 138,879 | 167,339 | |||||||||
| The Mirage (1) | 26,855 | 40,429 | 129,068 | 52,678 | |||||||||
| Treasure Island (1) | 18,541 | 27,831 | 77,086 | 35,582 | |||||||||
| New York-New York | 18,000 | 24,543 | 65,276 | 73,774 | |||||||||
| Primm Properties | 11,245 | 19,737 | 34,137 | 60,411 | |||||||||
| Golden Nugget Las Vegas (1) | 3,981 | 7,481 | 25,108 | 9,700 | |||||||||
| Golden Nugget Laughlin (1) | 82 | 908 | 2,909 | 1,267 | |||||||||
| MGM Grand Detroit | 33,201 | 43,147 | 103,928 | 122,574 | |||||||||
| Beau Rivage (1) | 16,866 | 20,277 | 48,561 | 25,685 | |||||||||
| Income from Unconsolidated Affiliate (1) | 8,909 | 9,014 | 30,269 | 11,754 | |||||||||
| Boardwalk (1) | 859 | — | 4,232 | — | |||||||||
| MGM Grand Australia | 3,766 | 4,346 | 9,877 | 11,323 | |||||||||
| MGM Grand South Africa | 1,083 | 1,258 | 3,442 | 3,974 | |||||||||
| $ | 236,501 | $ | 335,957 | $ | 904,938 | $ | 679,750 | ||||||
Note:
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL DATA—PRO FORMA PROPERTY OPERATING RESULTS
(in thousands)
| | Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | September 30, 2001 | September 30, 2000 (1) | September 30, 2001 | September 30, 2000 (1) | |||||||||
| NET REVENUES: | |||||||||||||
| Bellagio | $ | 233,390 | $ | 248,007 | $ | 734,096 | $ | 703,742 | |||||
| MGM Grand Las Vegas | 171,334 | 178,997 | 558,314 | 566,059 | |||||||||
| The Mirage | 144,842 | 151,210 | 478,286 | 468,173 | |||||||||
| Treasure Island | 86,274 | 94,194 | 276,940 | 280,282 | |||||||||
| New York-New York | 53,141 | 55,342 | 161,952 | 163,184 | |||||||||
| Primm Properties | 54,702 | 63,084 | 159,756 | 186,539 | |||||||||
| Golden Nugget Las Vegas | 40,081 | 42,412 | 133,209 | 132,337 | |||||||||
| Golden Nugget Laughlin | 11,463 | 10,844 | 35,722 | 35,032 | |||||||||
| MGM Grand Detroit | 87,351 | 103,496 | 264,040 | 302,580 | |||||||||
| Beau Rivage | 83,312 | 80,986 | 227,168 | 233,959 | |||||||||
| Income from Unconsolidated Affiliate | 8,909 | 9,014 | 30,269 | 28,316 | |||||||||
| Boardwalk | 8,356 | 9,612 | 26,669 | 28,895 | |||||||||
| MGM Grand Australia | 8,635 | 9,830 | 23,428 | 28,077 | |||||||||
| MGM Grand South Africa | 1,099 | 1,280 | 3,488 | 4,048 | |||||||||
| $ | 992,889 | $ | 1,058,308 | $ | 3,113,337 | $ | 3,161,223 | ||||||
| EBITDA: | |||||||||||||
| Bellagio | $ | 62,334 | $ | 86,711 | $ | 232,166 | $ | 206,527 | |||||
| MGM Grand Las Vegas | 30,779 | 50,275 | 138,879 | 167,339 | |||||||||
| The Mirage | 26,855 | 40,429 | 129,068 | 131,862 | |||||||||
| Treasure Island | 18,541 | 27,831 | 77,086 | 83,332 | |||||||||
| New York-New York | 18,000 | 24,543 | 65,276 | 73,774 | |||||||||
| Primm Properties | 11,245 | 19,737 | 34,137 | 60,411 | |||||||||
| Golden Nugget Las Vegas | 3,981 | 7,481 | 25,108 | 27,045 | |||||||||
| Golden Nugget Laughlin | 82 | 908 | 2,909 | 5,146 | |||||||||
| MGM Grand Detroit | 33,201 | 43,147 | 103,928 | 122,574 | |||||||||
| Beau Rivage | 16,866 | 20,277 | 48,561 | 55,679 | |||||||||
| Income from Unconsolidated Affiliate | 8,909 | 9,014 | 30,269 | 28,316 | |||||||||
| Boardwalk | 859 | 1,559 | 4,232 | 5,071 | |||||||||
| MGM Grand Australia | 3,766 | 4,346 | 9,877 | 11,323 | |||||||||
| MGM Grand South Africa | 1,083 | 1,258 | 3,442 | 3,974 | |||||||||
| $ | 236,501 | $ | 337,516 | $ | 904,938 | $ | 982,373 | ||||||
Note:
MGM MIRAGE AND SUBSIDIARIES
SUPPLEMENTAL STATISTICAL INFORMATION
| | Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| | September 30, 2001 | September 30, 2000 | September 30, 2001 | September 30, 2000 | |||||||
| ROOMSTATISTICS: | |||||||||||
| Bellagio (1) (3,005 Rooms) | |||||||||||
| Occupancy % | 90.0 | % | 98.8 | % | 95.0 | % | 98.7 | % | |||
| Average Daily Rate (ADR) | $159 | $157 | $179 | $166 | |||||||
| Revenue per Available Room (REVPAR) | $143 | $155 | $170 | $164 | |||||||
MGM Grand Las Vegas (5,034 Rooms) | |||||||||||
| Occupancy % | 90.0 | % | 99.2 | % | 94.5 | % | 98.5 | % | |||
| Average Daily Rate (ADR) | $105 | $103 | $114 | $108 | |||||||
| Revenue per Available Room (REVPAR) | $94 | $103 | $108 | $106 | |||||||
The Mirage (1) (3,044 Rooms) | |||||||||||
| Occupancy % | 91.7 | % | 98.7 | % | 95.7 | % | 97.8 | % | |||
| Average Daily Rate (ADR) | $109 | $112 | $123 | $117 | |||||||
| Revenue per Available Room (REVPAR) | $100 | $110 | $118 | $114 | |||||||
Treasure Island (1) (2,885 Rooms) | |||||||||||
| Occupancy % | 92.5 | % | 99.3 | % | 95.6 | % | 99.3 | % | |||
| Average Daily Rate (ADR) | $88 | $88 | $99 | $94 | |||||||
| Revenue per Available Room (REVPAR) | $81 | $88 | $95 | $93 | |||||||
New York-New York (2,024 Rooms) | |||||||||||
| Occupancy % | 92.2 | % | 98.6 | % | 96.2 | % | 97.3 | % | |||
| Average Daily Rate (ADR) | $80 | $84 | $87 | $87 | |||||||
| Revenue per Available Room (REVPAR) | $73 | $83 | $84 | $85 | |||||||
Primm Properties (2,642 Rooms) | |||||||||||
| Occupancy % | 62.0 | % | 65.3 | % | 60.2 | % | 66.0 | % | |||
| Average Daily Rate (ADR) | $38 | $39 | $38 | $38 | |||||||
| Revenue per Available Room (REVPAR) | $24 | $26 | $23 | $25 | |||||||
Golden Nugget Las Vegas (1) (1,907 Rooms) | |||||||||||
| Occupancy % | 92.0 | % | 98.2 | % | 96.4 | % | 98.0 | % | |||
| Average Daily Rate (ADR) | $59 | $54 | $62 | $57 | |||||||
| Revenue per Available Room (REVPAR) | $54 | $53 | $60 | $56 | |||||||
Golden Nugget Laughlin (1) (300 Rooms) | |||||||||||
| Occupancy % | 92.3 | % | 91.9 | % | 94.0 | % | 93.9 | % | |||
| Average Daily Rate (ADR) | $34 | $35 | $33 | $36 | |||||||
| Revenue per Available Room (REVPAR) | $32 | $32 | $31 | $33 | |||||||
Beau Rivage (1) (1,780 Rooms) | |||||||||||
| Occupancy % | 95.2 | % | 98.5 | % | 95.5 | % | 97.5 | % | |||
| Average Daily Rate (ADR) | $85 | $89 | $81 | $84 | |||||||
| Revenue per Available Room (REVPAR) | $81 | $88 | $78 | $82 | |||||||
Boardwalk (1) (654 Rooms) | |||||||||||
| Occupancy % | 81.4 | % | 93.3 | % | 87.7 | % | 92.7 | % | |||
| Average Daily Rate (ADR) | $59 | $62 | $65 | $65 | |||||||
| Revenue per Available Room (REVPAR) | $48 | $58 | $57 | $61 | |||||||
MGM Grand Australia (96 Rooms) | |||||||||||
| Occupancy % | 91.0 | % | 92.2 | % | 75.0 | % | 81.6 | % | |||
| Average Daily Rate (ADR) | $62 | $66 | $59 | $64 | |||||||
| Revenue per Available Room (REVPAR) | $56 | $61 | $44 | $52 | |||||||
Note:
MGM MIRAGE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
| | September 30, 2001 | December 31, 2000 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| ASSETS | |||||||||
| CURRENT ASSETS: | |||||||||
| Cash and cash equivalents | $ | 133,440 | $ | 227,968 | |||||
| Accounts receivable, net | 145,103 | 236,650 | |||||||
| Inventories | 87,756 | 86,279 | |||||||
| Income tax receivable | 22,151 | 11,264 | |||||||
| Deferred income taxes | 146,677 | 162,934 | |||||||
| Prepaid expenses | 81,127 | 70,549 | |||||||
| Total current assets | 616,254 | 795,644 | |||||||
| PROPERTY AND EQUIPMENT, NET | 8,892,797 | 9,064,233 | |||||||
OTHER ASSETS: | |||||||||
| Investment in unconsolidated affiliates | 603,927 | 522,422 | |||||||
| Excess of purchase price over fair market value of net assets acquired, net | 102,922 | 54,281 | |||||||
| Deposits and other assets, net | 214,587 | 298,021 | |||||||
| Total other assets | 921,436 | 874,724 | |||||||
| $ | 10,430,487 | $ | 10,734,601 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| CURRENT LIABILITIES: | |||||||||
| Accounts payable | $ | 66,038 | $ | 65,317 | |||||
| Current portion of long-term debt | 142,946 | 521,308 | |||||||
| Accrued interest on long-term debt | 60,685 | 77,738 | |||||||
| Other accrued liabilities | 564,216 | 568,842 | |||||||
| Total current liabilities | 833,885 | 1,233,205 | |||||||
| DEFERRED INCOME TAXES | 1,737,845 | 1,730,158 | |||||||
| LONG-TERM DEBT | 5,331,899 | 5,348,320 | |||||||
| OTHER LONG-TERM OBLIGATIONS | 43,910 | 40,473 | |||||||
| STOCKHOLDERS' EQUITY: | |||||||||
| Common stock ($.01 par value: authorized 300,000,000 shares, issued 163,578,954 and 163,189,205 shares and outstanding 157,289,254 and 159,130,205 shares) | 1,636 | 1,632 | |||||||
| Capital in excess of par value | 2,047,779 | 2,041,820 | |||||||
| Treasury stock, at cost (6,289,700 and 4,059,000 shares) | (129,399 | ) | (83,683 | ) | |||||
| Retained earnings | 574,083 | 427,956 | |||||||
| Other comprehensive loss | (11,151 | ) | (5,280 | ) | |||||
| Total stockholders' equity | 2,482,948 | 2,382,445 | |||||||
| $ | 10,430,487 | $ | 10,734,601 | ||||||
