Press Release: Sun International Hotels Limited
February 7, 2001
PARADISE ISLAND, Bahamas -- Sun International Hotels Limited (NYSE: SIH) reported net income for the fourth quarter
of $3.8 million, excluding the effects of the $229.2 million write down of the investment in Resorts Atlantic City
to its realizable value, pre-opening costs and sales of real estate at its Paradise Island operations. Earnings
in the quarter compared to $11.3 million in the same period last year. The pre-opening costs related to the expansion
of the Company's deluxe Ocean Club hotel on Paradise Island and the new Ocean Club Golf Course. Earnings per share
for the period, excluding these non-recurring items, were $0.14 compared to $0.34 for the same period last year.
Including the non-recurring items referred to above, the Company generated a net loss for the fourth quarter of
$229.3 million, compared to net income of $11.3 million for the same period last year.
The reduction in operating earnings for the quarter was due mainly to a lower contribution from Atlantis (which
had benefited from a $12.0 million insurance recovery in the fourth quarter of 1999) and a lower contribution from
the Mohegan Sun Casino, partially offset by an improved performance from Resorts Atlantic City. Interest income
also declined during the quarter, due to the repayment in December 1999 by the Mohegan Tribe of $94.1 million of
Subordinated Notes held by the Company.
Paradise Island
The Company's flagship Paradise Island operations generated EBITDA of $20.7 million, compared to $28.9 million
during the same period last year that had included a $12.0 million insurance recovery. Atlantis achieved an average
occupancy of 73% for the quarter and recorded an average room rate of $227, an increase in average rate of 11%
over the same period last year. During the quarter, Atlantis' 423-room Beach Tower was fully refurbished and reopened
prior to the Christmas holiday season.
The Ocean Club, the Company's high-end boutique hotel on Paradise Island, achieved an average occupancy of 61%
for the quarter at an average rate of $479. The expansion of the hotel included the addition of 50 luxurious rooms
including 10 deluxe suites, as well as a new beachfront restaurant, Dune, operated by well-known restaurateur Jean-Georges
and opened on schedule early in October 2000.
The new Ocean Club Golf Course, by Tom Weiskopf, hosted the PGA ``Father and Son'' golf tournament in December
2000 and the Michael Jordan Celebrity Classic in January 2001. Extensive publicity for the Company's Paradise Island
facilities was achieved by the televising of both events in the United States by the NBC network.
Atlantic City
Resorts Atlantic City generated EBITDA of $3.1 million for the quarter, compared to $0.9 million for the same period
last year. Gaming revenues for the quarter of $53.2 million were approximately 2% ahead of the same quarter of
last year, despite a severe winter storm that hurt all Atlantic City casinos over the last two days of the quarter.
The improvement in gaming revenues year-on-year was achieved despite a decline of 1% in Atlantic City's aggregate
gaming revenues.
Slots revenues continued to show improvement compared to the same period last year, with growth of approximately
7% compared to an industry growth of 1%. Table revenues declined by 10%, primarily due to a reduction in the average
hold percentage to 14.2% from 15.3% in last year's fourth quarter. During December 2000, a new bus customer center
was opened, with improved facilities for this important customer segment.
Connecticut
The Mohegan Sun Casino generated gross operating revenues of $202.3 million, a 6% increase over the same period
last year. The Company's share of Mohegan Sun income was $4.7 million for the quarter compared to $8.9 million
in the prior year.
Through December 31, 1999, the Mohegan Sun Casino was managed by Trading Cove Associates. In exchange for relinquishing
its rights under its then existing agreements, effective January 1, 2000, Trading Cove Associates began to receive
payments of 5% of gross revenues of the Mohegan Sun. These relinquishment payments are currently contributing less
income than was previously earned under the prior management contracts. However, the relinquishment payments continue
for a period of 15 years, whereas the management contract was to expire in 2003.
The property is currently on track with its budgeted $960 million expansion, which will include 115,000 additional
square feet of gaming space, a 1,200-room luxury hotel, a 100,000-square foot convention center, a 10,000-seat
events center and additional retail and restaurant facilities. It is anticipated that the new casino will open
in the fall of 2001 with the hotel opening in the spring of 2002. The relinquishment payments will be based on
gross revenues of the expanded Mohegan Sun complex.
Other Matters
During the third quarter of 2000, the Company entered into a definitive agreement to sell its Resorts Casino Hotel
to an affiliate of Colony Capital LLC for a purchase price of $140 million, such purchase price to accrue interest
at an annual rate of 6% until closing. In addition, Colony has a two-year option to acquire the undeveloped real
estate adjacent to the Resorts Casino Hotel for a purchase price of $40 million, which option can be extended for
an additional two years under certain circumstances. The sale is subject to certain customary conditions, including
approval by the New Jersey Casino Control Commission, and is also subject to Colony receiving certain financing
in order to consummate the transaction. The parties still expect to close the transaction during the first quarter
of 2001. As a result of entering into the agreement to sell Resorts Atlantic City, the company has written down
its investment and taken a loss of $229.2 million for the quarter.
Inquiries should be directed to John Allison, Executive Vice President - Chief Financial Officer of Sun International
Hotels Limited at 1.242.363.6016.
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.
Sun International Hotels Limited
Condensed Consolidated Statements of Operations
(In Thousands of Dollars Except Per Share Data)
For the Three For the Twelve
Months Ended Months Ended
December 31, December 31,
(Unaudited)
2000 1999 2000 1999
Revenues:
Casino and resort revenues $169,867 $157,006 $755,866 $696,517
Less: promotional allowances (11,313) (12,263) (51,779) (50,240)
158,554 144,743 704,087 646,277
Tour operations 9,208 7,130 33,192 28,714
Management and other fees 11,062 13,118 35,763 46,898
Real estate related 3,146 -- 108,650 --
Insurance recovery -- 12,009 -- 14,209
Other 772 728 3,003 2,869
182,742 177,728 884,695 738,967
Expenses:
Casino and resort expenses 110,578 102,513 453,573 423,869
Tour operations 8,182 6,375 29,626 27,816
Selling, general and
administrative 25,406 26,171 103,465 89,593
Real estate related 1,533 -- 32,272 --
Corporate expenses 6,704 5,054 25,340 20,629
Depreciation and amortization 15,889 14,297 60,223 57,230
Write-off of Desert Inn costs -- -- 11,202 --
Transactions costs -- -- 7,014 --
Pre-opening expenses 5,529 -- 7,616 5,398
Write Down of Assets to be
Sold 229,208 -- 229,208 --
403,029 154,410 959,539 624,535
Operating income (loss) (220,287) 23,318 (74,844) 114,432
Other income and expenses:
Interest income 1,396 3,231 4,194 12,725
Interest expense, net of
capitalization (11,997) (13,513) (45,678) (50,699)
Equity in earnings of
associated companies 2,458 928 4,225 2,628
Other, net 19 (805) (688) 60
Income (loss) before income
taxes (228,411) 13,159 (112,791) 79,146
Provision for income taxes (877) (1,847) (6,313) (9,324)
Net income (loss) $(229,288) $11,312 $(119,104) $69,822
Diluted earnings (loss) per
share $(8.30) $0.34 $(3.86) $2.05
Weighted average number of
shares outstanding (1) 27,638 33,170 30,850 34,005
(1) Includes the effect of outstanding stock options.
Sun International Hotels Limited
Summary Segment Data
(In Millions)
(Unaudited)
For the Three For the Twelve
Months Ended Months Ended
December 31, December 31,
2000 1999 2000 1999
Paradise Island Operations
Gross revenues (1) $105.7 $104.8 $472.6 $440.9
Casino 30.7 28.7 132.1 130.5
Hotel (2) 75.0 64.1 340.5 296.2
Insurance recovery -- 12.0 -- 14.2
EBITDA (3) $20.7 $28.9 $128.1 $133.2
Atlantis
Occupancy rate 73% 74% 83% 81%
Average room rate $227 $204 $242 $211
Resorts Atlantic City
Gross revenues $64.1 $64.0 $283.2 $269.8
Casino 53.2 52.4 235.8 221.1
Hotel 10.9 11.6 47.4 48.7
EBITDA (4) $3.1 $0.9 $23.8 $16.3
(1) The three month and twelve month periods of 2000 exclude revenues of
$3.1 million and $108.7 million, respectively, from Ocean Club
Estates lot sales.
(2) Excludes results of the Company's wholly owned tour operator.
(3) The three month and twelve month periods of 2000 exclude a gain of
$1.6 million and $76.4 million, respectively, from Ocean Club Estates
lot sales; and exclude pre-opening expense of $5.5 million and
$7.6 million, respectively.
(4) The twelve month period of 1999 excludes pre-opening expense of
$5.4 million.
SOURCE: Sun International Hotels Limited