Press Release: Sun International Hotels Limited
February 6, 2002
PARADISE ISLAND, The Bahamas -- Sun International Hotels Limited (NYSE: SIH) reported a net loss for the quarter
of $9.2 million, before pre-opening expenses, restructuring costs and the effect of tax benefits from net loss
carry forwards (``NOLs''), compared to recurring earnings of $3.8 million in the same period last year. The loss
per share for the period, excluding the above items, was $0.34, compared to recurring earnings per share (pro-forma
for the sale of Resorts Atlantic City) of $0.26 for the same period last year.
Including non-recurring items and usage of NOLs, the Company recorded a net loss in the quarter of $11.6 million,
compared to a net loss of $229.3 million for the same period last year when the Company wrote down its former investment
in Resorts Atlantic City. On this basis, the loss per share for the quarter was $0.43 compared to $8.30 for the
same period last year.
The reduction in recurring net income was primarily due to the severe slowdown in air travel in the aftermath of
the events of September 11 and the weak US economy, which negatively impacted occupancies at Atlantis, Paradise
Island.
Paradise Island
The Company's Paradise Island operations generated EBITDA of $10.4 million, a 50% decline compared to $20.7 million
achieved during the same period last year. Although occupancies at Atlantis, which totaled 55% for the quarter,
remained well below those of the fourth quarter in the previous year, the initial booking trends in September and
October of 2001, which indicated the gradual recovery of business levels, have further improved.
To a much lesser extent, the island was affected by Hurricane Michelle, which passed directly over Paradise Island
on November 5, 2001. Atlantis remained open throughout the storm and business interruption was limited. The Ocean
Club and golf course were closed for ten days. The golf course recovered quickly and hosted the PGA-sanctioned
Office Depot Father and Son tournament in November, which was broadcast on NBC on both Saturday and Sunday of the
tournament. The Company has recognized business interruption insurance income of $2 million in the quarter.
During the quarter, the refurbishments of rooms at Atlantis' Coral Towers and rooms at the Ocean Club were completed
as planned, at an aggregate cost of $21 million and reopened prior to the New Year peak holiday, when the properties
were sold out.
Connecticut
The Mohegan Sun Casino recorded growth of 28% in gross operating revenues, which reached $258.6 million in the
quarter. During the quarter, the Mohegan Sun operated over 6,200 slot machines, which was over 3,150 more than
in the same period last year and achieved gross win per slot machine per day for the quarter of $300, versus $473
for the same period last year.
Trading Cove Associates, an entity 50%-owned by the Company, receives payments of 5% of gross revenues of the expanded
Mohegan Sun operation. The Company's share of Trading Cove Associate's net income from Mohegan Sun was $7.1 million
for the quarter compared to $4.7 million in the prior year.
Other Resort Operations
The Company manages seven luxury resort hotels in the Indian Ocean and Dubai. During the quarter, these properties
continued to be impacted by economic weakness in their European source markets and by the September 11 events.
The Company earned management fees of $2.7 million from these other resort operations in the quarter, compared
to $3.1 million in the comparable quarter last year.
Taxation
The Company recorded a consolidated net income tax benefit for the quarter of $3.5 million, which included a credit
of $3.9 million in recognition of anticipated benefits in 2002 from the use of NOLs. Generally Accepted Accounting
Principles required that the Company reassess the valuation of its deferred tax asset. During the quarter, the
Company used available NOLs to offset its US source income and it is anticipated that this will continue in 2002.
Internet Gaming
The Company's internet gaming subsidiary was successful in obtaining one of three licenses awarded by the Government
of the Isle of Man, and went live with its site www.CasinoAtlantis.com at the end of the quarter. US persons are
prohibited from utilizing the Company's internet gaming site for the purpose of making wagers.
Sun International Hotels Limited is a leading developer and operator of premier casinos, resorts and luxury hotels.
Our flagship destination is Atlantis, a 2,317-room, ocean-themed resort located on Paradise Island, The Bahamas.
Atlantis is a unique destination casino resort featuring three interconnected hotel towers built around a 7-acre
lagoon and a 34-acre marine environment that includes the world's largest open-air marine habitat. We also developed
and receive certain revenue from the Mohegan Sun casino in Uncasville, Connecticut. The Native American-themed
Mohegan Sun is one of the premier casino gaming properties in the Northeast. In our luxury resort hotel business,
we operate eight beach resorts in Mauritius, Dubai, the Maldives and The Bahamas. For more information concerning
Sun International Hotels Limited and its operating subsidiaries, visit our website at www.sunint.com.
This press release contains forward-looking statements, which are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties,
which are described in the Company's public filings with the Securities Exchange Commission.
Inquiries should be directed to John Allison, Executive Vice President - Chief Financial Officer of Sun International
Hotels Limited at +1.242.363.6016.
(Consolidated Statements of Operations and Summary Segment Data follow.)
Sun International Hotels Limited
Consolidated Statements of Operations
(In Thousands of Dollars Except Per Share Data)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2001 2000 2001 2000
(unaudited)
Revenues:
Casino and resort revenues $79,541 $169,867 $466,940 $755,866
Less: promotional allowances (4,168) (11,313) (22,778) (51,779)
75,373 158,554 444,162 704,087
Tour operations 7,902 9,208 36,348 33,192
Management and other fees 10,023 11,062 36,806 35,763
Real estate related -- 3,146 9,771 108,650
Insurance recovery 2,000 -- 2,000 --
Other 1,094 772 3,954 3,003
96,392 182,742 533,041 884,695
Expenses:
Casino and resort expenses 50,554 110,578 253,019 453,573
Tour operations 6,981 8,182 32,041 29,626
Selling, general and
administrative 17,412 25,406 80,206 103,465
Real estate related -- 1,533 2,865 32,272
Corporate expenses 7,395 6,704 25,106 25,340
Depreciation and
amortization 13,437 15,889 51,490 60,223
Write-off of Desert Inn
costs -- -- -- 11,202
Transactions costs -- -- -- 7,014
Restructuring costs 4,532 -- 5,732 --
Pre-opening expenses 1,768 5,529 6,904 7,616
Write down of assets to be
sold -- 229,208 -- 229,208
102,079 403,029 457,363 959,539
Operating income (loss) (5,687) (220,287) 75,678 (74,844)
Other income and expenses:
Interest income 1,326 1,396 7,471 4,194
Interest expense, net of
capitalization (11,316) (11,997) (49,347) (45,678)
Non-recurring interest
expense -- -- (3,355) --
Equity in earnings of
associated companies, net 893 2,458 3,059 4,225
Other, net (310) 19 (760) (688)
Income (loss) before income
taxes (15,094) (228,411) 32,746 (112,791)
Income tax benefit (provision) 3,476 (877) (1,090) (6,313)
Net income (loss) $(11,618) $(229,288) $31,656 $(119,104)
Basic earnings (loss) per share $(0.43) $(8.30) $1.18 $(3.86)
Diluted earnings (loss) per
share $(0.43) $(8.30) $1.14 $(3.86)
Weighted average number of
shares outstanding - basic 26,925 27,638 26,885 30,850
Weighted average number of
shares outstanding - diluted 26,925 27,638 27,826 30,850
Sun International Hotels Limited
Summary Segment Data
(In Millions)
(Unaudited)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2001 2000 2001 2000
Paradise Island Operations
Gross revenues (1) $79.6 $105.7 $467.0 $472.6
Casino 19.7 30.7 116.5 132.1
Hotel (2) 59.9 75.0 350.5 340.5
EBITDA (3) $10.4 $20.7 $118.0 $128.1
Atlantis
Occupancy rate 56% 73% 77% 83%
Average room rate $211 $227 $252 $242
Resorts Casino Hotel
Gross revenues $-- $64.1 $-- $283.2
Casino -- 53.2 -- 235.8
Hotel -- 10.9 -- 47.4
EBITDA $-- $3.1 $-- $23.8
(1) The three month period presented for 2001 and 2000 excludes Ocean Club
Estates lot sales of $-0- and $3.1 million, respectively. The twelve
month period presented for 2001 and 2000 excludes Ocean Club Estates
lot sales of $9.8 million and $108.7 million, respectively.
(2) Excludes results of the Company's wholly owned tour operator.
(3) The three month period presented for 2001 and 2000 excludes income
from Ocean Club Estates lot sales of $-0- and $1.6 million,
respectively, pre-opening expenses of $0.7 million and $5.5 million,
respectively, and restructuring costs of $4.5 million and $-0-,
respectively. The twelve month period presented for 2001 and 2000
excludes income from Ocean Club Estates lot sales of $6.7 million and
$76.4 million, respectively, pre-opening expenses of $2.3 million and
$7.6 million, respectively, and restructuring costs of $5.7 million
and $-0-, respectively.
SOURCE: Sun International Hotels Limited