Filed On 11/13/95 · SEC File 1-06697 · Accession Number 42246-95-16
As Of Filer Filing On/For/As Docs:Pgs
11/13/95 Mirage Resorts Inc 10-Q 9/30/95 9:36
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report 19 92K
2: EX-10.1 Material Contract 3 16K
3: EX-10.2 Material Contract 3 16K
4: EX-10.3 Material Contract 3 17K
5: EX-10.4 Material Contract 2± 8K
6: EX-10.5 Material Contract 3 19K
7: EX-11 Statement re: Computation of Earnings Per Share 1 7K
8: EX-15 Letter re: Unaudited Interim Financial Information 1 6K
9: EX-27 Financial Data Schedule 1 9K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File No. 1-6697
Mirage Resorts, Incorporated
________________________________________________________________
(Exact name of Registrant as specified in its charter)
Nevada 88-0058016
_______________________________ ____________________________
(State or other jurisdiction of (I.R.S. Employer Identifica-
incorporation or organization) tion No.)
3400 Las Vegas Boulevard South, Las Vegas, Nevada 89109
________________________________________________________________
(Address of principal executive offices - Zip Code)
(702) 791-7111
_________________________________________________________________
(Registrant's telephone number, including area code)
_________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
_____ _____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $0.008 par value, 91,443,440 shares outstanding as
of October 31, 1995.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited condensed consolidated financial information as of
September 30, 1995 and for the three-month and nine-month periods
ended September 30, 1995 and 1994 included in this report was
reviewed by Arthur Andersen LLP, independent public accountants,
in accordance with the professional standards and procedures
established for such reviews by the American Institute of
Certified Public Accountants.
REVIEW REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
_______________________________________________
To the Directors and Stockholders
of Mirage Resorts, Incorporated
We have reviewed the accompanying condensed consolidated balance
sheet of Mirage Resorts, Incorporated and subsidiaries (the
"Company") as of September 30, 1995, and the related condensed
consolidated statements of income for the three-month and nine-
month periods ended September 30, 1995 and 1994 and the related
condensed consolidated statements of cash flows for the nine-
month periods ended September 30, 1995 and 1994. These
consolidated financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the financial statements
referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Mirage
Resorts, Incorporated and subsidiaries as of December 31, 1994,
and the related consolidated statements of income, stockholders'
equity and cash flows for the year then ended (not presented
herein), and, in our report dated February 8, 1995 (except for
Note 5, as to which the date is March 13, 1995), we expressed an
unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet of Mirage Resorts,
Incorporated and subsidiaries as of December 31, 1994, is fairly
stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
November 10, 1995
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CONDENSED CONSOLIDATED Mirage Resorts, Incorporated
BALANCE SHEETS
__________________________________________________________________________________________
At September 30, At December 31,
1995 1994
__________________________________________________________________________________________
(In thousands) (UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents $ 34,980 $ 47,142
Receivables, net of allowance for doubtful
accounts of $54,245 and $37,937 71,158 60,192
Inventories 24,865 26,374
Deferred income taxes 40,655 27,906
Prepaid expenses and other 16,500 17,901
__________________________________________________________________________________________
Total current assets 188,158 179,515
Property and equipment, net of accumulated
depreciation of $452,353 and $404,965 1,376,518 1,374,992
Other assets, net 136,511 86,932
__________________________________________________________________________________________
$1,701,187 $1,641,439
==========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 59,994 $ 74,361
Accrued expenses 80,129 73,744
Current maturities of long-term debt 108 3,986
__________________________________________________________________________________________
Total current liabilities 140,231 152,091
Long-term debt, net of current maturities 258,156 359,584
Other liabilities, including deferred income taxes
of $133,843 and $90,400 144,644 98,842
__________________________________________________________________________________________
Total liabilities 543,031 610,517
__________________________________________________________________________________________
Commitments and contingencies
Stockholders' equity
Common stock: 91,385 and 90,996 shares outstanding 940 940
Additional paid-in capital and other 705,488 699,116
Retained earnings 605,696 487,007
Treasury stock, at cost: 26,189 and 26,578 shares (153,968) (156,141)
__________________________________________________________________________________________
Total stockholders' equity 1,158,156 1,030,922
__________________________________________________________________________________________
$1,701,187 $1,641,439
==========================================================================================
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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CONDENSED CONSOLIDATED Mirage Resorts, Incorporated
STATEMENTS OF INCOME (UNAUDITED)
________________________________________________________________________________________________________
Three Months Nine Months
_____________________ _______________________
For the periods ended September 30 1995 1994 1995 1994
________________________________________________________________________________________________________
(In thousands, except per share amounts)
Gross revenues $366,739 $365,769 $1,076,851 $1,030,802
Less-promotional allowances (31,586) (29,424) (89,630) (87,590)
________________________________________________________________________________________________________
335,153 336,345 987,221 943,212
________________________________________________________________________________________________________
Costs and expenses
Casino-hotel operations 193,044 191,080 573,555 557,526
General and administrative 37,348 35,580 112,824 107,701
Depreciation and amortization 22,358 23,590 64,650 70,342
Corporate expense 9,278 11,166 27,193 27,574
________________________________________________________________________________________________________
262,028 261,416 778,222 763,143
________________________________________________________________________________________________________
Operating income 73,125 74,929 208,999 180,069
________________________________________________________________________________________________________
Other income and (expenses)
Interest and other income 1,363 1,001 4,528 4,729
Interest cost (7,720) (12,971) (25,762) (41,011)
Interest capitalized 2,353 1,988 6,830 5,809
Other, net 965 (3,072) 1,205 (3,401)
________________________________________________________________________________________________________
(3,039) (13,054) (13,199) (33,874)
________________________________________________________________________________________________________
Income before income taxes and extra-
ordinary item 70,086 61,875 195,800 146,195
Provision for income taxes (24,891) (22,370) (70,326) (53,180)
________________________________________________________________________________________________________
Income before extraordinary item 45,195 39,505 125,474 93,015
Extraordinary item-loss on early retirements
of debt, net of applicable income tax benefit - (2,773) (6,785) (7,337)
________________________________________________________________________________________________________
Net income $ 45,195 $ 36,732 $ 118,689 $ 85,678
========================================================================================================
Income per share of common stock
Income before extraordinary item $ 0.47 $ 0.42 $ 1.31 $ 0.98
Extraordinary item-loss on early retirements
of debt, net of applicable income tax benefit - (0.03) (0.07) (0.08)
________________________________________________________________________________________________________
Net income per share of common stock $ 0.47 $ 0.39 $ 1.24 $ 0.90
========================================================================================================
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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CONDENSED CONSOLIDATED Mirage Resorts, Incorporated
STATEMENTS OF CASH FLOWS (UNAUDITED)
__________________________________________________________________________________________
Nine months ended September 30 1995 1994
__________________________________________________________________________________________
(In thousands)
Cash flows from operating activities
Net income $ 118,689 $ 85,678
Adjustments to reconcile net income to net cash provided
by operating activities
Provision for losses on receivables 17,300 15,418
Depreciation and amortization of property and equipment,
including amounts reported as corporate expense 67,599 73,061
Amortization of debt discount and issuance costs 9,755 10,196
Other amortization 3,233 3,443
Loss on early retirements of debt 10,439 11,287
Deferred income taxes 30,694 21,452
Changes in assets and liabilities
Net increase in receivables and other current assets (25,356) (15,563)
Net decrease in trade accounts payable and accrued expenses (7,259) (12,730)
Other, net (5,132) (192)
__________________________________________________________________________________________
Net cash provided by operating activities 219,962 192,050
__________________________________________________________________________________________
Cash flows from investing activities
Capital expenditures (95,178) (58,203)
Joint venture and other equity investments (19,884) (22,660)
Proceeds from sales of investments 8,249 17,913
Other, net (9,283) (2,080)
__________________________________________________________________________________________
Net cash used for investing activities (116,096) (65,030)
__________________________________________________________________________________________
Cash flows from financing activities
Borrowings under bank credit facilities 154,000 153,000
Repayments of borrowings under bank credit facilities (119,000) (145,000)
Early retirements of public debt (134,180) (117,314)
Other principal payments on debt (22,279) (30,486)
Other, net 5,431 (2,263)
__________________________________________________________________________________________
Net cash used for financing activities (116,028) (142,063)
__________________________________________________________________________________________
Cash and cash equivalents
Decrease for the period (12,162) (15,043)
Balance, beginning of period 47,142 57,462
__________________________________________________________________________________________
Balance, end of period $ 34,980 $ 42,419
==========================================================================================
Supplemental cash flow disclosures
Cash paid during the period for
Interest, net of amounts capitalized $ 14,708 $ 25,718
Income taxes 29,500 20,500
Noncash investing activities
Contribution of land in exchange for partnership interest 23,170 -
__________________________________________________________________________________________
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
-5-
NOTES TO CONDENSED CONSOLIDATED Mirage Resorts, Incorporated
FINANCIAL STATEMENTS (UNAUDITED)
_________________________________________________________________
Note 1 - Basis of Presentation
Mirage Resorts, Incorporated (the "Company"), through wholly
owned Nevada subsidiaries, owns and operates some of the most
successful casino-based entertainment resorts in the world.
These resorts include The Mirage and Treasure Island on the Las
Vegas Strip, the Golden Nugget in downtown Las Vegas and the
Golden Nugget-Laughlin in Laughlin, Nevada. The Company also
owns 120 acres formerly occupied by the Dunes Hotel, Casino and
Country Club on the Las Vegas Strip on which it recently began
construction of Bellagio, a major new 3,000-guest room luxury
hotel, casino and resort facility. Additionally, the Company is
a 50% partner in a joint venture which is currently constructing
Monte Carlo, a 3,024-guest room, mid-priced resort on 46 acres
adjacent to the Bellagio site.
The condensed consolidated financial statements have been
prepared in accordance with the accounting policies described in
the Company's 1994 Annual Report on Form 10-K and should be read
in conjunction with the Notes to Consolidated Financial
Statements which appear in that report. The Condensed
Consolidated Balance Sheet at December 31, 1994 was derived from
audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation
of the results for the interim periods have been included. The
interim results reflected in the condensed consolidated financial
statements are not necessarily indicative of expected results for
the full year.
Certain amounts in the 1994 condensed consolidated financial
statements have been reclassified to conform with the 1995
presentation. These reclassifications had no effect on the
Company's net income.
Note 2 - Long-Term Debt
EARLY RETIREMENT OF DEBT
On March 13, 1995, the Company called for redemption the
remaining $125,991,000 outstanding principal amount of the 9 7/8%
first mortgage notes collateralized by The Mirage and Treasure
Island. The notes (originally scheduled to mature on October 1,
2000) were redeemed on April 12, 1995 at the initial stated
redemption price of 106.5% of the principal amount. The
redemption premium and the write-off of the unamortized debt
issue costs resulted in an extraordinary loss of $6.8 million,
net of applicable income tax benefits of $3.6 million. The
redemption was funded principally by borrowings under the
Company's bank credit facility discussed below.
-6-
NOTES TO CONDENSED CONSOLIDATED Mirage Resorts, Incorporated
FINANCIAL STATEMENTS (UNAUDITED)
_________________________________________________________________
BANK CREDIT FACILITY AMENDMENT
On April 6, 1995, the Company's $525 million revolving bank
credit facility maturing in May 1999 was amended to increase the
total availability to $1 billion (as so amended, the "Facility").
Borrowings under the Facility bear interest at a specified
premium over, at the Company's option, the prime rate or the
one-, two-, three- or six-month London Interbank Offered Rate
("LIBOR"). The premium is based on the Company's Annualized
Funded Debt Ratio (as defined) and the rating of its zero coupon
first mortgage notes. The premium is currently zero for prime
rate borrowings and 75 basis points for LIBOR borrowings.
Alternatively, the Company may request bids from the
participating banks, which in the past has resulted in borrowings
at less than these premiums. The Company incurs an annual
commitment fee on the unused portion of the Facility, which is
also based on the Company's Annualized Funded Debt Ratio and the
rating of its first mortgage notes. The commitment fee is
currently 0.1625% per annum.
The Company and its significant subsidiaries, excluding the
subsidiary which owns and operates the Golden Nugget-Laughlin and
certain other subsidiaries (the "Excluded Subsidiaries"), are
directly liable for or have guaranteed the repayment of
borrowings under the Facility. Borrowings under the Facility are
currently uncollateralized. If the Company's Leverage Ratio (as
defined) were to exceed 2.75 to 1.0, or if the rating of its
first mortgage notes were to decline to below investment grade,
the banks would be granted a first lien on the Company's Golden
Nugget, Bellagio and Shadow Creek Golf Course properties and
certain other assets, including The Mirage and Treasure Island
properties if the first mortgage notes are then no longer
outstanding. The Company has agreed, with certain limited
exceptions, not to dispose of or further encumber such properties
and assets without the approval of its bank group.
The credit agreement governing the Facility contains covenants
requiring the Company and its subsidiaries (other than the
Excluded Subsidiaries) to maintain a specified tangible net worth
and certain financial ratios. The credit agreement also contains
covenants that limit to various permitted amounts the ability of
the Company and its subsidiaries (other than the Excluded
Subsidiaries) to, among other things, incur additional debt,
commit funds to capital expenditures or new business ventures,
make investments, merge or sell assets or pay dividends on or
repurchase the Company's capital stock.
-7-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR THE THREE-MONTH PERIODS ENDED
SEPTEMBER 30, 1995 AND 1994
RESULTS OF OPERATIONS
FINANCIAL HIGHLIGHTS
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% Increase
Three months ended September 30 1995 1994 (Decrease)
_______________________________________________________________________________________
(Dollars in thousands, except per share amounts)
Gross revenues
The Mirage $200,630 $202,866 (1.1)%
Treasure Island 100,270 94,075 6.6%
Golden Nugget 50,584 53,275 (5.1)%
Golden Nugget-Laughlin 15,255 15,553 (1.9)%
_______________________________________________________________________________________
$366,739 $365,769 0.3%
_______________________________________________________________________________________
Net revenues
The Mirage $183,165 $185,655 (1.3)%
Treasure Island 92,780 88,191 5.2%
Golden Nugget 45,444 48,428 (6.2)%
Golden Nugget-Laughlin 13,764 14,071 (2.2)%
_______________________________________________________________________________________
$335,153 $336,345 (0.4)%
_______________________________________________________________________________________
Operating income
The Mirage $ 52,625 $ 55,016 (4.3)%
Treasure Island 21,051 19,863 6.0%
Golden Nugget 7,523 10,060 (25.2)%
Golden Nugget-Laughlin 1,204 1,156 4.2%
Corporate expense (9,278) (11,166) (16.9)%
_______________________________________________________________________________________
$ 73,125 $ 74,929 (2.4)%
_______________________________________________________________________________________
Operating margin (OPERATING INCOME/NET REVENUES)
The Mirage 28.7% 29.6% (0.9)pts
Treasure Island 22.7% 22.5% 0.2pts
Golden Nugget 16.6% 20.8% (4.2)pts
Golden Nugget-Laughlin 8.7% 8.2% 0.5pts
Company-wide 21.8% 22.3% (0.5)pts
_______________________________________________________________________________________
Income before extraordinary item $ 45,195 $ 39,505 14.4%
Net income $ 45,195 $ 36,732 23.0%
_______________________________________________________________________________________
Income per share before extraordinary item $ 0.47 $ 0.42 11.9%
Net income per share $ 0.47 $ 0.39 20.5%
_______________________________________________________________________________________
Company-wide table games win percentage 20.3% 22.1% (1.8)pts
Company-wide occupancy of standard guest rooms 98.8% 98.9% (0.1)pts
_______________________________________________________________________________________
-8-
Results were good at all four of the Company's properties during
the 1995 third quarter, considering difficult prior-year
comparisons and construction disruptions affecting operations at
both The Mirage and the Golden Nugget-Las Vegas. Contributing to
the difficult comparisons was an above-historical-average
Company-wide table games win percentage of 22.1% during the 1994
period, versus 20.3% during the 1995 third quarter. For the
seven full quarters since Treasure Island opened, the Company-
wide table games win percentage has been 19.4%.
The Company's improved balance sheet contributed significantly to
the increase in earnings. Interest cost, net of amounts
capitalized, declined by $5.6 million, or 51.1%, reflecting
management's continuing efforts to reduce the Company's overall
cost of capital. The Company's total debt at September 30, 1995
was $258.3 million-a reduction of 41.4% from September 30, 1994.
Earnings during the 1995 third quarter also benefited from the
Company's 50% joint venture interest in Casino Iguazu. The
facility, which is located near Iguazu Falls, Argentina, one of
South America's leading tourist attractions, opened on July 6,
1994. The "Other, net" caption includes the Company's
proportionate share of the earnings of Casino Iguazu during the
1995 quarter, versus a $1.6 million charge in the prior-year
period principally representing a proportionate share of the
facility's preopening costs.
The Mirage maintained its record of strong performance in the
recent quarter, despite a decline in its table games win
percentage and the fact that there were 8% fewer available room-
nights in the quarter due to a major guest room enhancement
program. The program involved refurbishing and enhancing all
2,765 of the standard guest rooms and 61 of the 279 suites. The
enhancement program was completed on August 18 and has been very
well received by the public. For the month of September, The
Mirage's average standard room rate rose by 13.2% over September
1994, despite some room reservations honored during the period
that reflected rates charged prior to the enhancement program.
Occupancy of available standard guest rooms during the 1995
quarter was 99.7%, versus 99.6% in the prior-year period.
Despite accommodating fewer hotel guests and the decline in the
table games win percentage, The Mirage's total revenues were down
by only 1.1%. Table games activity at The Mirage was up 9.5%
over the 1994 quarter. The decline in the facility's win
percentage more than offset this improvement, resulting in a $1.7
million reduction in table games revenues. Slot revenues were
$1.9 million lower than the prior-year quarter, which management
attributes principally to the reduction in available room-nights.
The Mirage's gross non-casino revenues increased $1.3 million, or
1.5%, despite the reduction in available room-nights, due
principally to additional performances by Siegfried & Roy.
Treasure Island continued the strong operating results achieved
over the past several quarters. Its gross revenues rose by 6.6%
and its operating income increased by 6.0%. The improvement was
broad-based, with casino and gross non-casino revenues increasing
by $2.0 million and $4.2 million, respectively.
-9-
Total room revenues at Treasure Island grew by $2.4 million, or
11.4%, attributable to an increase in both occupancy and the
average room rate. Treasure Island's standard guest rooms were
99.8% occupied during the 1995 third quarter, versus 99.0% in the
prior-year period. The ongoing success of the popular show
"Mystere" principally accounted for the balance of the
improvement in gross non-casino revenues.
As expected, operating results at the Golden Nugget-Las Vegas
were affected throughout the 1995 third quarter by construction
of the Fremont Street Experience. This exciting new $70 million
attraction is being built by a public/private partnership between
the City of Las Vegas and the major downtown casino owners. It
converts Fremont Street into a pedestrian mall, topped with a
100-foot by 1,500-foot special effects canopy. Within the canopy
are 2.1 million computer-controlled, four-color lights and a
540,000-watt sound system. The system was recently tested
successfully and the project is scheduled to be completed in
December of this year. The decline in the Golden Nugget's
operating income principally represents a $2.6 million, or 23.5%,
reduction in table games revenues reflecting a reduction in both
activity and the win percentage.
Operating results at the Golden Nugget-Laughlin were relatively
flat, notwithstanding the December 1994 opening of 700 additional
hotel rooms by a competitor. Effective cost control measures and
a decline in depreciation and amortization expense resulted in a
4.2% increase in operating income.
OTHER FACTORS AFFECTING EARNINGS
Corporate expense declined by $1.9 million, or 16.9%. This
decline was principally due to the Company's shift in focus to
the design and construction of new projects in existing
jurisdictions rather than efforts to legalize gaming in new
jurisdictions.
During the third quarter of 1994, the Company retired $63.5
million principal amount of the 9 7/8% first mortgage notes
associated with The Mirage and Treasure Island. Although such
early retirement was financially beneficial for the Company, the
repurchase premiums paid and the write-off of the unamortized
debt issuance costs resulted in an extraordinary charge during
the period. There was no similar extraordinary charge during the
1995 third quarter.
-10-
COMPARISON OF OPERATING RESULTS FOR THE NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 1995 AND 1994
RESULTS OF OPERATIONS
FINANCIAL HIGHLIGHTS
· Enlarge/Download Table
% Increase
Nine months ended September 30 1995 1994 (Decrease)
___________________________________________________________________________________________
(Dollars in thousands, except per share amounts)
Gross revenues
The Mirage $ 582,735 $ 556,221 4.8%
Treasure Island 295,195 271,691 8.7%
Golden Nugget 150,697 152,937 (1.5)%
Golden Nugget-Laughlin 48,224 49,953 (3.5)%
___________________________________________________________________________________________
$1,076,851 $1,030,802 4.5%
___________________________________________________________________________________________
Net revenues
The Mirage $ 532,613 $ 505,062 5.5%
Treasure Island 274,201 253,636 8.1%
Golden Nugget 136,752 139,192 (1.8)%
Golden Nugget-Laughlin 43,655 45,322 (3.7)%
___________________________________________________________________________________________
$ 987,221 $ 943,212 4.7%
___________________________________________________________________________________________
Operating income
The Mirage $ 140,619 $ 125,276 12.2%
Treasure Island 65,021 49,210 32.1%
Golden Nugget 24,501 27,273 (10.2)%
Golden Nugget-Laughlin 6,051 5,884 2.8%
Corporate expense (27,193) (27,574) (1.4)%
___________________________________________________________________________________________
$ 208,999 $ 180,069 16.1%
___________________________________________________________________________________________
Operating margin (OPERATING INCOME/NET REVENUES)
The Mirage 26.4% 24.8% 1.6pts
Treasure Island 23.7% 19.4% 4.3pts
Golden Nugget 17.9% 19.6% (1.7)pts
Golden Nugget-Laughlin 13.9% 13.0% 0.9pts
Company-wide 21.2% 19.1% 2.1pts
___________________________________________________________________________________________
Income before extraordinary item $ 125,474 $ 93,015 34.9%
Net income $ 118,689 $ 85,678 38.5%
___________________________________________________________________________________________
Income per share before extraordinary item $ 1.31 $ 0.98 33.7%
Net income per share $ 1.24 $ 0.90 37.8%
___________________________________________________________________________________________
Company-wide table games win percentage 20.2% 19.2% 1.0pts
Company-wide occupancy of standard guest rooms 98.7% 98.7% 0.0pts
___________________________________________________________________________________________
-11-
The Company's earnings per share before extraordinary item of
$1.31 for the 1995 nine-month period nearly equaled the $1.32 per
share earned for the entire year of 1994.
Operating results during the 1995 period benefited from a
somewhat higher than historical average table games win
percentage, 20.2% versus 19.2% in the 1994 nine months. Company-
wide table games activity was also up 4.8% over the prior-year
period, despite having approximately 4% fewer available total
room-nights.
The significant reduction in the Company's debt levels also had a
major impact on the 1995 nine-month period. Interest cost, net
of amounts capitalized, fell 46.2% from the prior-year period.
The Company's long-debt at September 30, 1995 was at its lowest
level since early 1988.
Operating results at The Mirage showed substantial improvement
over the 1994 period, despite the impact of the guest room
enhancement program. This improvement primarily represents a
14.4% increase in table games revenues reflecting an increase
in both activity and the win percentage. Slot revenues were also
up $1.5 million.
The room enhancement program resulted in approximately 11% fewer
available room-nights at The Mirage during the 1995 period.
Nevertheless, The Mirage's total non-casino revenues were down by
only $1.2 million, or less than 1% from the 1994 nine-month
period. The impact of the reduction in room inventory was
significantly offset by a $4.1 million, or 12.4%, increase in
gross entertainment revenues. This improvement principally
reflects additional performances by Siegfried & Roy, as well as
an increase in the show's average ticket price.
Treasure Island surpassed its quarterly operating results for
1994 (its first full year of operation) in all three quarters of
1995. As a result, its gross revenues and operating income grew
by $23.5 million (8.7%) and $15.8 million (32.1%), respectively,
over the 1994 nine-month period.
The improvement in Treasure Island's revenues represents
increases of $7.9 million, or 7.0%, in casino revenues and
$15.6 million, or 9.9%, in gross non-casino revenues. The
growth in Treasure Island's gross non-casino revenues is
primarily attributable to higher room and entertainment revenues.
Room revenues grew by 13.3%, principally reflecting an increase
in the average room rate. Entertainment revenues showed a 31.8%
improvement over the 1994 period, representing an increase in
both occupancy and the average ticket price for Mystere as
well as additional performances of the show during the 1995
period.
-12-
The factors discussed previously with respect to the three-month
periods had a similar effect on operations at the Company's two
Golden Nugget properties when comparing the nine-month periods.
At the Golden Nugget-Las Vegas, a $1.0 million improvement in
total non-casino revenues partially compensated for a $3.2
million decline in casino revenues. The increase in non-casino
revenues is principally due to an entire nine months of
performances of the country/western show "Country Fever," which
opened in mid-June 1994. Slot revenues were up $3.6 million, or
6.2%, over the prior-year period. However, this improvement was
more than offset by a $6.2 million decline in table games
revenues caused by a reduction in both activity and the win
percentage.
The decline in revenues at the Golden Nugget-Laughlin primarily
represents a $1.4 million, or 4.4%, decrease in slot revenues. A
reduction in promotional, payroll, advertising, depreciation and
amortization and various other costs and expenses resulted in an
improvement in the operating margin and a slight increase in
operating income.
OTHER FACTORS AFFECTING EARNINGS
The factors discussed earlier in comparing the three-month
periods had a similar effect on the amounts shown in the "Other,
net" caption when comparing the nine-month periods.
As discussed in Note 2 of Notes to Condensed Consolidated
Financial Statements, the $6.8 million extraordinary loss
incurred during the 1995 nine-month period relates to the April
12 redemption of the remaining $126.0 million principal amount of
the 9 7/8% first mortgage notes collateralized by The Mirage and
Treasure Island.
During the 1994 nine-month period, the Company repurchased $118.7
million principal amount of the 9 7/8% notes. In connection
with these retirements and the write-off of the unamortized
financing costs associated with a previous bank credit facility,
the Company recorded an extraordinary charge of $7.3 million.
CAPITAL RESOURCES AND LIQUIDITY
FUNDS FROM OPERATIONS
Principally reflecting the substantial improvement in the
Company's net income, net cash provided by operating activities
(as shown in the Condensed Consolidated Statements of Cash Flows)
was $220.0 million during the 1995 nine-month period. This
represents a $27.9 million, or 14.5%, increase over the
corresponding 1994 period.
CAPITAL SPENDING
Capital expenditures during the 1995 nine-month period totaled
$95.2 million. Approximately $48 million of this amount relates
to the recently completed $52 million room enhancement program at
The Mirage. Expenditures associated with the design and
development of Bellagio and maintenance capital spending
accounted for most of the remaining balance.
-13-
The Company recently began construction of Bellagio, a major new
3,000-room luxury casino-based entertainment resort. The new
facility is being constructed on the northern portion of the
Dunes property at the corner of Flamingo Road and the Strip. The
resort is currently expected to cost approximately $1.1 billion
(excluding the cost of the land and capitalized interest) and is
scheduled to open in early 1998.
Capital expenditures of $58.2 million during the 1994 period
primarily reflect the completion of certain projects at Treasure
Island and amounts expended to upgrade the Company's slot
machines. The balance principally consists of maintenance
capital spending as well as amounts associated with the Dunes
site. Management believes in maintaining the Company's
facilities in first-class condition. Maintenance capital
spending for its four operating properties is anticipated to
approximate $30 million per year.
In April 1995, a joint venture in which the Company is a 50%
partner began construction of Monte Carlo, a new value-oriented
hotel-casino resort on approximately 46 acres on the portion of
the Dunes property near Tropicana Avenue. The French Victorian-
themed facility will offer 3,024 guest rooms and a 90,000-square
foot casino. The Company's partner in the venture, a subsidiary
of Circus Circus Enterprises, Inc., is supervising the
construction and will manage the resort without fee. Monte Carlo
is currently scheduled to open in the summer of 1996.
Based on the current budget, the total cost of Monte Carlo is
anticipated to be approximately $300 million. This amount
excludes the estimated value of the 44 acres of land which the
Company contributed as equity to the venture.
The joint venture has obtained a $200 million reducing revolving
credit facility from a group of commercial banks to fund a
substantial portion of the construction costs. The credit
facility is collateralized by a first mortgage on all existing
and future assets of the venture and is non-recourse to the
Company. Under the joint venture agreement, the joint venture's
debt is limited to the lesser of $210 million or 70% of the
project cost, inclusive of land. The balance of the construction
costs is being provided by equity contributions from the
Company's partner and by equity contributions from the Company of
up to $20 million in cash, $5 million of which the Company has
already contributed.
On September 6, 1995, the Company was selected by the City of
Atlantic City, New Jersey as the preferred developer of a 178-
acre site owned by the City in the Marina district. The Company
is currently planning to construct a luxury hotel-casino resort
on the site at a total cost of between $500 million and $750
million.
The Company is working with the City on a memorandum of
understanding, which is expected to be followed within 12 months
by a development agreement and commencement of construction. It
is anticipated that the project will require 24 to 30 months to
construct.
-14-
On July 24, 1995, the Company entered into an agreement with a
wholly owned subsidiary of Capital Gaming International, Inc. to
purchase the stock of the subsidiary which owns a riverboat
casino and related gaming license in New Orleans, Louisiana.
Under the terms of the agreement, the total purchase price is $55
million plus the assumption of equipment financing of up to $6.5
million. The casino has ceased operating and, on July 28, 1995,
the subsidiary became the debtor-in-possession in a Chapter 11
bankruptcy proceeding.
Closing of the purchase is subject to numerous contingencies,
including the receipt of requisite licenses and other state and
local approvals, approval of creditors and the bankruptcy court
and the acquisition of a site suitable to the Company at which to
operate the riverboat. Accordingly, there is no assurance that
the purchase will be consummated. The Capital Gaming subsidiary
has filed a plan of reorganization with the bankruptcy court
which incorporates consummation of its purchase agreement with
the Company.
The Company has also filed an application with the State of
Louisiana for the sole unassigned riverboat casino license. The
Company is negotiating agreements to acquire sites in Calcasieu
Parish (Lake Charles) and Bossier City, Louisiana where, if
successful in obtaining the necessary casino licenses and other
required consents and approvals, it may develop regional vacation
destination resorts.
FINANCING AND LIQUIDITY
During the 1995 nine-month period, the Company used existing cash
balances and operating cash flow to further reduce its
outstanding indebtedness. This reduction principally consists of
the redemption of the remaining $126.0 million principal amount
of 9 7/8% first mortgage notes and the repayment of the
remaining $22.1 million principal amount of its floating rate
aircraft loan, offset in part by net borrowings of $35.0 million
under its bank credit facility.
During the 1994 period, the Company expended $147.8 million on
the repayment of debt. These repayments primarily reflect the
retirement of $118.7 million of the 9 7/8% notes ($7.3 million of
which was funded in early October) and the March 15 maturity of
the remaining $27.0 million of floating rate first mortgage notes
also associated with The Mirage and Treasure Island.
At September 30, 1995, cash and cash equivalents totaled $35.0
million and other current assets exceeded current liabilities,
providing a total of $47.9 million in working capital. Amounts
available under the Company's bank credit facility were $945
million. Maturities of the Company's debt are relatively minor
through 1997. Management believes that the Company's existing
cash balances, anticipated operating cash flow and amounts
available under its bank credit facility will be sufficient to
meet its future debt obligations and fund construction of
Bellagio. Depending on specifically which projects become
feasible and are undertaken by the Company as well as the
ultimate size of such projects, construction of envisioned
facilities in Louisiana, New Jersey or other jurisdictions may
require additional financing.
-15-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 23, 1995, an amended complaint in a purported
class action lawsuit was filed in the United States
District Court for the District of New Jersey, Camden
Division, against 80 defendants, including the Registrant
and other hotel-casino operators. The complaint, filed
on behalf of Thomas Hyland and other persons similarly
situated, alleges that the defendants have engaged in a
course of conduct involving conspiracy among casinos in
the United States to refuse to deal to skilled blackjack
players who are capable of winning money at the casinos'
blackjack tables in violation of various statutory
provisions, including the Sherman Act, the Fair Credit
Reporting Act and state antitrust and consumer fraud
laws. The complaint also asserts pendant causes of
action under the tort and contract laws of states where
it is alleged that refusal to deal to skilled players is
illegal. The complaint seeks unspecified compensatory
damages as well as punitive damages, including treble
damages for alleged violations of the Sherman Act.
Management believes that the claims against the
Registrant are without merit and intends to defend the
case vigorously.
On September 26, 1995, a complaint in a purported class
action lawsuit was filed in the United States District
Court for the District of Nevada against 45
manufacturers, distributors and casino operators of video
poker and electronic slot machines, including the
Registrant. The complaint, filed on behalf of Larry
Schreier and other persons similarly situated, alleges
that the defendants have engaged in a course of
fraudulent and misleading conduct intended to induce
persons to play video poker and electronic slot machines
by collectively misrepresenting how the gaming machines
operate, as well as the extent to which there is an
opportunity to win. The complaint alleges violations of
the Racketeer Influenced and Corrupt Organizations Act,
as well as claims of common law fraud, unjust enrichment
and negligent misrepresentation, and seeks unspecified
compensatory and punitive damages. The claims alleged in
the complaint are substantially identical to those
alleged in the purported class action lawsuit described
in Item 3 of Part I of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994.
Management believes that the claims against the
Registrant are without merit and intends to defend the
case vigorously.
-16-
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
10.1 Amendment No. 2 to Reducing Revolving Loan Agreement (the
"MRI Loan Agreement"), dated as of August 30, 1995, among
the Registrant, THE MIRAGE CASINO-HOTEL, Treasure Island
Corp., Bellagio, MH, INC., GNLV, CORP., each bank party
thereto, Bank of America National Trust and Savings
Association, Bankers Trust Company, The Long-Term Credit
Bank of Japan, Ltd., Los Angeles Agency, Societe
Generale, Credit Lyonnais Los Angeles Branch and Credit
Lyonnais Cayman Island Branch, as Co-Agents, and Bank of
America National Trust and Savings Association, as
Administrative Co-Agent (without Exhibits).
10.2 Amendment No. 3 to the MRI Loan Agreement, dated as of
August 30, 1995 (without Exhibits).
10.3 Amendment No. 4 to the MRI Loan Agreement, dated as of
September 5, 1995 (without Exhibits).
10.4 Amendment No. 2 to Joint Venture Agreement of Victoria
Partners, dated as of September 25, 1995, between MRGS
Corp. and Gold Strike L.V.
10.5 Employment Agreement, dated as of August 16, 1995,
between the Registrant and James E. Pettis.
11 Mirage Resorts, Incorporated - Computation of Net Income
Per Share of Common Stock for the three-month and nine-
month periods ended September 30, 1995 and 1994.
15 Letter from independent public accountants acknowledging
awareness of the use of their report dated November 10,
1995 in the Registrant's registration statements.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the three-month
period ended September 30, 1995.
-17-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Mirage Resorts, Incorporated
November 10, 1995 by: DANIEL R. LEE
_________________ _______________________________
Date Daniel R. Lee
Senior Vice President - Finance
and Development, Chief Financial
Officer and Treasurer (Principal
Financial Officer)
-18-
Dates Referenced Herein and Documents Incorporated By Reference
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