Company Press Release: Sun International Hotels Limited
January 20, 2000
PARADISE ISLAND, The Bahamas -- Sun International Hotels Limited (NYSE: SIH) reported income for the fourth quarter
of $11.3 million, compared to $12.9 million for the same period last year, before pre-opening expenses. Fully diluted
earnings per share for the quarter were $0.34 compared to $0.38 for the same period last year, before pre-opening
expenses. For the year ended December 31, 1999, the Company achieved income before pre-opening expenses of $75.2
million versus $83.7 million in the previous year. Fully diluted earnings per share for 1999, before pre-opening
expenses, were $2.21 compared to $2.46 for last year.
Paradise Island
The Company's flagship Paradise Island operations generated earnings before interest, taxes, depreciation, amortization
and pre-opening expenses (``EBITDA'') of $28.9 million in the quarter, including a business interruption insurance
recovery of $12.0 million related to Hurricane Floyd. In the same period last year, the Paradise Island operations
generated EBITDA of $11.9 million.
The business interruption insurance recovery has been agreed with the loss adjusters appointed by the Company's
insurers. No further business interruption recoveries are anticipated with respect to Hurricane Floyd. The rectification
of hurricane property damage, at both Atlantis and the Ocean Club, is now effectively complete.
Despite the effects of Hurricane Floyd, Atlantis achieved an average occupancy of 74% for the quarter and recorded
an average room rate of $204, an increase of 8% over the same period last year.
The Paradise Island operations achieved EBITDA for the year of $133.2 million, compared to $58.1 million in 1998.
This increase of 129% reflected the substantial contribution from Atlantis' new 1,201-room Royal Towers complex,
new casino and associated recreational and entertainment facilities, which opened in late 1998. For the year, Atlantis
achieved an average occupancy of 81% at an average room rate of $211, an increase of 13% above the average room
rate achieved in 1998.
The Ocean Club, the Company's 59-room boutique hotel on Paradise Island, which had been closed due to Hurricane
Floyd, re-opened as anticipated on December 22, 1999. During the quarter, construction commenced on a 50-room expansion,
which is expected to be completed in the second quarter of 2000.
Atlantic City
Resorts Casino Hotel generated EBITDA of $0.9 million for the quarter, compared to $4.2 million for the same period
last year. Gaming revenues for the quarter were comparable to the prior year but marketing expenditures at the
property were increased to drive gaming revenues. During the quarter, the Atlantic City gaming market grew by 3%
over the previous year. Resorts Casino Hotel, reported EBITDA of $16.3 million for the year, compared to $34.2
million in 1998. The property did not recover business levels it had lost while under reconstruction in the first
half of 1999.
Connecticut
The Mohegan Sun Casino generated earnings before interest, taxes, management fees, depreciation and bingo (``Adjusted
EBITDA'') of $52.6 million, a 2% increase over the same period last year. The overall Connecticut gaming market
continued to demonstrate good growth in the quarter, with slot revenues increasing by 10% over the same period
last year.
Through December 31, 1999, the Mohegan Sun Casino was managed by Trading Cove Associates, a partnership in which
the Company has a 50% interest. The Company's share of management fees was $8.9 million and $33.2 million for the
quarter and the year to date, respectively. In exchange for relinquishing its rights under its existing agreements,
effective January 1, 2000, Trading Cove Associates will receive annual payments of 5% of gross revenues of the
Mohegan Sun Resorts Complex.
Other Matters
The Company has applied for the necessary gaming licenses in Nevada in order to complete the previously announced
acquisition of the Desert Inn in Las Vegas. This process is not expected to be complete until the second half of
2000.
The Company has furnished its quarterly results to the Securities and Exchange Commission.
Inquiries should be directed to John Allison, Executive Vice President - Chief Financial Officer, of Sun International
Hotels Limited at (954) 713- 2500.
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
that could cause actual results to differ materially from the forward-looking statements.
(Condensed Consolidated Statements of Operations and Summary Segment Data follow)
Sun International Hotels Limited
Summary Segment Data
(In Millions)
(Unaudited)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
1999 1998 1999 1998
Paradise Island Operations
Gross revenues 104.8 62.6 440.9 243.7
Casino 28.7 23.4 130.5 84.6
Hotel (1) 64.1 39.2 296.1 159.1
Insurance Recovery 12 14.2
EBITDA 28.9 11.9 133.2 58.1
Atlantis
Occupancy rate 74% 78% 81% 87%
Average room rate $204 0 $189 $ 211 $ 187
Mohegan Sun Casino (2)
Gross revenues 199.5 181 771.6 674.5
Casino 165.4 0 152.7 653.8 576.7
Other 34.1 0 28.3 117.8 97.8
Adjusted EBITDA (3) 52.6 51.7 239.5 216.7
Resorts Casino Hotel
Gross revenues 64 65 269.8 289
Casino 52.4 0 52.4 221.1 234.7
Hotel 11.6 0 12.6 48.7 54.3
EBITDA (4) 0.9 4.2 16.3 34.2
(1) Excludes results of the Company's wholly owned tour operator.
(2) Managed by a partnership in which the Company holds a 50% interest.
(3) Earnings before interest, taxes, depreciation, management fees and bingo.
(4) Excludes pre-opening expenses in 1999 of $0 and $5.4 million for the 3 month and 12 month periods, respectively.
SOURCE: Sun International Hotels Limited
Condensed Consolidated Statements of Operations
(In Thousands of Dollars Except Per Share Data)
(Unaudited)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
1999 1998 1999 1998
Revenues:
Casino and resort revenues $157,006 $127,660 $696,517 $532,736
Less: promotional allowances (12,263) (9,545) (50,240) (40,792)
144,743 118,115 646,277 491,944
Tour operations 7,130 4,467 28,714 14,757
Management and other fees 13,118 10,575 46,898 40,645
Insurance recovery 12,009 --- 14,209 ---
Real estate related --- --- --- 754
Other 728 706 2,869 2,778
177,728 133,863 738,967 550,878
Expenses:
Casino and resort expenses 102,513 85,446 423,869 337,142
Tour operations 6,375 4,631 27,816 14,653
Selling, general and
administrative 27,619 18,143 93,962 70,024
Corporate expenses 3,606 4,417 16,260 18,811
Depreciation and amortization 14,297 8,941 57,230 32,081
Pre-opening expenses --- 25,961 5,398 25,961
154,410 147,539 624,535 498,672
Operating income 23,318 (13,676) 114,432 52,206
Other income and expenses:
Interest income 3,231 3,280 12,725 15,651
Interest expense, net
of capitalization (13,513) (2,066) (50,699) (4,516)
Equity in earnings of
associated company 928 1,689 2,628 2,730
Other, net (805) (316) 60 (316)
Income before income taxes 13,159 (11,089) 79,146 65,755
Provision for income taxes (1,847) (2,013) (9,324) (8,009)
Net income $11,312 $(13,102) $69,822 $57,746
Diluted earnings per share $0.34 $(0.39) $2.05 $1.70
Weighted average number
of shares outstanding (1) 33,170 33,500 34,005 34,034
(1)Includes the effect of outstanding stock options.
SOURCE: Sun International Hotels Limited