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For the fourth quarter of 2008, net revenue was US$253.5 million, up from US$179.7 million for the comparable period ending December 31, 2007. The revenue increase was primarily driven by substantially improved operating performance at Crown Macau.
Adjusted EBITDA(1) was US$22.4 million for the fourth quarter of 2008, up from a loss of US$1.6 million in the fourth quarter of 2007.
The Company recorded a net loss for the fourth quarter of 2008 of US$18.9 million, or US$0.04 per ADS, compared to a net loss of US$36.5 million, or US$0.09 per ADS, in the fourth quarter of 2007.
Lawrence Ho, Co-Chairman and Chief Executive Officer of MPEL, commented, "We are entering the homestretch in the development of City of Dreams, our flagship property in Macau. The opening of City of Dreams will solidify our portfolio approach to development and changes the complexion of our company in almost every measurable way, from the market segments we address to our overall market share. MPEL is about to emerge as a full blown operating entity from a company that has to date been largely focused on property development."
Mr. Ho continued, "City of Dreams remains on time and on budget with an expected opening date in early June of this year. Our conservative approach to managing our balance sheet continues to pay off. City of Dreams remains fully funded and our development pipeline is intact.
"We held approximately US$825 million of cash excluding cage cash on our balance sheet at the end of the fourth quarter and had undrawn credit facilities available of an additional US$320 million. We expect to spend approximately US$620 million on construction activities and pre-opening preparations at City of Dreams from the start of the current quarter through the opening of the property in early June.
"Subsequent to the end of the fourth quarter of 2008, we successfully drew down a further US$270 million on our bank facilities. At this time, our US$1.5 billion term loan is fully drawn and only US$50 million of our US$250 million revolver remains undrawn. Given the current uncertain state of global lending markets, we are determined to accelerate our drawdown schedule and this process is now considered to be completed.
"We have no debt maturities until 2012, when a maximum of US$250 million could come due on our revolving credit facility. Our term loan fully matures in 2014.
"Last month, we named DFS the official operator of the 85,000 square feet of first phase upscale retail space at City of Dreams. The retail offering at City of Dreams is integrated into The Boulevard, a "lifestyle precinct" running throughout the property and directly linking the hotels and casino areas within City of Dreams. In addition to providing a unique shopping environment, The Boulevard will feature iconic, "must see" entertainment and a number of regional and international dining outlets. DFS is a proven and highly respected luxury retail operator in the region and around the world, and we are pleased to be working with them to bring an exciting retail element to the overall guest experience at City of Dreams.
"As some of our competitors have suspended the development of their integrated resort projects in Cotai, the supply growth outlook in Macau has shifted in our favour. We expect City of Dreams to be the only new property to open in Cotai in 2009. We believe that high-quality new supply drives incremental visitation demand, and we are fortunate to be the sole beneficiary of this phenomenon for the foreseeable future. Additionally, more staggered supply growth will give Macau's expanding transportation infrastructure time to catch up with the expected future increases in visitation.
"In these challenging economic times, we are proud to have managed our company in a prudent manner that allows us to protect the jobs and benefits of our existing team members and to create thousands of new job opportunities and careers for the people of Macau. We are in the process of hiring approximately 7,000 team members at City of Dreams, and we have received applications from roughly 24,000 candidates. We are on track to be fully staffed according to plan and have benefited from an increasingly selective hiring market.
"The rolling chip market in Macau continues to be both challenging and dynamic, primarily due to the headwinds created by the soft global economy. However, we are pleased to have stabilized our rolling chip market share at Crown Macau through the fourth quarter of 2008, the promotional environment remains stable and we are cautiously optimistic that various regulatory measures, including a cap on junket commissions and relaxation of visa restrictions, could improve market conditions over the course of this year.
"Our rebranding efforts at Crown Macau are well underway, and we expect to launch our new proprietary brand for that property in the Spring of this year, well ahead of the opening of City of Dreams."
Crown Macau 4Q Results
For the quarter ending December 31, 2008, net revenue at Crown Macau was US$225.8 million versus US$158.0 million in the quarter ending December 31, 2007. Crown Macau generated adjusted EBITDA of US$25.7 million in the fourth quarter of 2008 compared with US$4.2 million in the fourth quarter of 2007.
Rolling chip volume totaled US$10.28 billion for the fourth quarter of 2008, up from US$8.53 billion in the fourth quarter of 2007. The rolling chip table games hold percentage in the fourth quarter of 2008 (calculated before discounts and commissions) was 2.89% versus 2.4% recorded in the fourth quarter of 2007. Our target rolling chip hold percentage is 2.85%.
In the mass market table games segment, drop (non rolling chip) totaled US$73.0 million in the fourth quarter of 2008, down from US$87.3 million generated in the fourth quarter of 2007. The average number of mass market tables in service in the fourth quarter of 2008 was 34, as compared to 69 in the fourth quarter of 2007. The mass market table games hold percentage was approximately 15.5% in the fourth quarter of 2008, below our expected range for mass market table games hold percentage of 16%-18%. The mass market table games hold percentage for the fourth quarter of 2007 was 17.5%.
Total non-gaming revenue at Crown Macau in the fourth quarter of 2008 was US$9.0 million, up from US$7.6 million in the fourth quarter of 2007. Occupancy per available room in the fourth quarter of 2008 was 92% and the average daily rate (ADR) was US$238 per occupied room. This compares with occupancy and ADR of 78% and US$221, respectively, in the fourth quarter of 2007.
Mocha Clubs 4Q Results
Net operating revenue from Mocha Clubs totaled US$22.4 million in the fourth quarter of 2008, up from US$21.7 million in the fourth quarter of 2007.
Mocha Clubs generated US$6.7 million of adjusted EBITDA in the fourth quarter of 2008, which compares with US$4.8 million in the fourth quarter of 2007.
The number of gaming machines in operation at the Mocha Clubs averaged approximately 1,091 in the fourth quarter of 2008. Average net win per gaming machine per day increased to US$223 in this period, as compared with US$215 in the same period in 2007.
As of December 1, 2008, Mocha Clubs assumed management of 95 gaming machines in operation at Crown Macau, and the financial contribution from these gaming machines is included in Mocha Clubs results from that date and going forward. As a result, Mocha Clubs had seven venues in operation as of the end of the fourth quarter of 2008.
On February 20, 2009, Mocha Clubs' Mocha Square venue reopened, which added 75 gaming machines to its market-wide installed base at eight locations throughout Macau.
Other Factors Affecting Earnings
Total non-operating expenses for the fourth quarter of 2008 were US$2.5 million, which included US$1.9 million in interest income and US$0.9 million in net foreign exchange gains, less other non-recurring finance costs of US$5.4 million. Capitalized interest during the fourth quarter of 2008 totaled US$20.8 million. Pre-opening expenses, related entirely to the development of City of Dreams, were US$9.4 million for the fourth quarter of 2008. Corporate expenses and other costs totaled US$10.0 million in the fourth quarter of 2008, of which US$2.5 million is related to non-recurring compensation-related expenses. Total stock based compensation costs for MPEL were US$1.9 million in the quarter ending December 31, 2008.
Depreciation and amortization costs of US$28.0 million were booked in the fourth quarter of 2008, of which US$14.3 million was related to the amortization of our gaming sub-concession and US$4.5 million was related to the amortization of land use rights.
Financial Position and Capital Expenditure
Cash and cash equivalents as of December 31, 2008, including restricted cash, totaled US$883.1 million. Total outstanding debts at the end of the fourth quarter of 2008 were US$1.53 billion, of which US$115.6 million represented loans from MPEL's two major shareholders. Total debt to shareholders' equity as of December 31, 2008 was 63%.
Capital expenditures for the fourth quarter of 2008 were US$327 million, essentially all of which were attributable to the development of City of Dreams.
Full Year 2008 Results
For the full year ending December 31, 2008, the Company reported revenue of US$1.41 billion versus US$358.5 million in the full year ending December 31, 2007. The year over year revenue increase was driven by improved operating performance and a full year of operations at Crown Macau, which opened in May 2007.
The Company reported net loss of US$2.5 million for the twelve months of 2008, compared to a net loss of US$178.2 million for the twelve months of 2007. 2008 net loss per ADS was US$0.01 compared to a net loss per ADS of US$0.44 in 2007.
Conference Call Information
MPEL will hold a conference call to discuss its fourth quarter 2008 financial results on Tuesday, February 24, 2009, at 8:30 a.m. Eastern Standard Time (or 9:30 p.m. Hong Kong Time). To join the conference call, please use the dial-in details below:
US Toll Free Number: 1.866.510.0705 US Toll Number (for international callers): 1.617.597.5363 Hong Kong Toll Number: 852.3002.1672 Hong Kong Toll Free Number: 800.96.3844 UK Toll Free Number: 00.800.280.02002 Australia Toll Free Number: 1.800.002.971 Passcode: MPEL
An audio webcast will also be available at http://www.melco-crown.com.
A replay of the call will be available on the same day at 10:30 a.m. Eastern Standard Time (or 11:30 p.m. Hong Kong Time) until March 3, 2009. To listen to the replay, please use the dial-in details below:
US Toll Free Number: 1.888.286.8010 US Toll Number (for international callers): 1.617.801.6888 Passcode: 21719684
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. MPEL may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about MPEL's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: growth of the gaming market and visitation in Macau; finalization of credit facilities to finance construction of projects; the completion of the construction of our hotel casino resort projects; our acquisition and development of the Macau Peninsula site; increased competition and other planned casino hotel and resort projects in Macau and elsewhere in Asia; the completion of infrastructure projects in Macau; government regulation of the casino industry; our ability to raise additional financing; obtaining approval from the Macau government for an increase in the developable gross floor area of the City of Dreams site; the formal grant of an occupancy permit for City of Dreams; our anticipated growth strategies; and our future business development, results of operations and financial condition. Further information regarding these and other risks is included in our Annual Report on Form 20-F filed on April 9, 2008 and other documents filed with the Securities and Exchange Commission. MPEL does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release is as of the date of this release, and MPEL undertakes no duty to update such information, except as required under applicable law.
Non-GAAP Financial Measure
(1) "Adjusted EBITDA" is earnings before interest, taxes, depreciation, amortization, pre-opening costs, stock-based compensation costs, and other non-operating income and expenses. Adjusted EBITDA is presented exclusively as a supplemental disclosure because management believes that it is widely used to measure the performance, and as a basis for valuation, of gaming companies. Management uses adjusted EBITDA as a measure of the operating performance of its segments and to compare the operating performance of its properties with those of its competitors. MPEL also presents adjusted EBITDA because it is used by some investors as a way to measure a company's ability to incur and service debt, make capital expenditures, and meet working capital requirements. Gaming companies have historically reported adjusted EBITDA as a supplement to financial measures in accordance with U.S. generally accepted accounting principles ("GAAP"). However, adjusted EBITDA should not be considered as an alternative to operating income as an indicator of MPEL's performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure determined in accordance with GAAP. Unlike net income, adjusted EBITDA does not include depreciation and amortization or interest expense and therefore does not reflect current or future capital expenditure or the cost of capital. MPEL compensates for these limitations by using adjusted EBITDA as only one of several comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance. Such GAAP measurements include operating income (loss), net income (loss), cash flows from operations and cash flow data. MPEL has significant uses of cash flows, including capital expenditures, interest payments, debt principal repayments, taxes and other non-recurring charges, which are not reflected in adjusted EBITDA. Also, MPEL's calculation of adjusted EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited.
About Melco Crown Entertainment Limited
MPEL is a developer, owner and, through its sub-concession holding company, an operator of casino gaming and entertainment casino resort facilities in Macau. Its first property, Crown Macau (www.crown-macau.com), opened in 2007. Other development projects include City of Dreams, an integrated urban casino resort located in Cotai, Macau. MPEL's business also includes the Mocha Clubs (www.mochaclubs.com), which feature a total of approximately 1,300 gaming machines in eight locations and comprise the largest non-casino based operations of electronic gaming machines in Macau. MPEL has entered into an agreement, subject to certain conditions, to acquire a third development site on the Macau Peninsula. For more information about MPEL, please visit www.melco-crown.com.
MPEL has strong support from both of its major shareholders, Melco International Development Limited ("Melco") and Crown Limited ("Crown"). Melco is a listed company on the Hong Kong Stock Exchange and is substantially owned and led by Mr. Lawrence Ho, who is Co-Chairman and the CEO of MPEL. Crown is a top-100 company listed on the Australian Stock Exchange and led by Executive Chairman James Packer, who is also Co-Chairman and a Director of MPEL.
Melco Crown Entertainment Limited
Condensed Consolidated Statements of Operations
(In Thousands of U.S. dollars, except share and per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(2) (2)
OPERATING
REVENUES
Casino 251,408 175,172 1,405,932 348,725
Rooms 4,343 3,076 17,084 5,670
Food and
beverage 3,320 4,007 16,107 11,121
Entertainment,
retail and
others 1,309 874 5,396 1,964
----------- ----------- ----------- -----------
Gross revenues 260,380 183,129 1,444,519 367,480
Less:
promotional
allowances (6,885) (3,394) (28,385) (8,984)
----------- ----------- ----------- -----------
Net revenues 253,495 179,735 1,416,134 358,496
----------- ----------- ----------- -----------
OPERATING COSTS
AND EXPENSES
Casino (200,451) (146,468) (1,146,893) (291,045)
Rooms (354) (1,104) (1,342) (2,222)
Food and
beverage (3,085) (3,504) (12,745) (10,541)
Entertainment,
retail and
others (334) (246) (1,240) (504)
General and
administrative (28,697) (31,083) (104,034) (96,037)
Pre-opening
costs (9,391) (1,453) (21,821) (40,032)
Amortization
of gaming
sub-concession (14,309) (14,322) (57,237) (57,190)
Amortization
of land use
rights (4,502) (4,528) (18,269) (17,276)
Depreciation
and
amortization (9,171) (14,119) (51,379) (39,466)
----------- ----------- ----------- -----------
Total operating
costs and
expenses (270,294) (216,827) (1,414,960) (554,313)
----------- ----------- ----------- -----------
OPERATING
(LOSS) INCOME (16,799) (37,092) 1,174 (195,817)
----------- ----------- ----------- -----------
NON-OPERATING
(EXPENSES)
INCOME
Interest
income, net 1,947 4,332 8,215 17,870
Other finance
costs (5,445) (5,635) (15,730) (5,765)
Foreign
exchange gain,
net 934 2,355 1,436 3,832
Other, net 24 128 972 275
----------- ----------- ----------- -----------
Total non-
operating
(expenses)
income (2,540) 1,180 (5,107) 16,212
----------- ----------- ----------- -----------
LOSS BEFORE
INCOME TAX (19,339) (35,912) (3,933) (179,605)
INCOME TAX
CREDIT
(EXPENSE) 454 (627) 1,470 1,454
----------- ----------- ----------- -----------
NET LOSS $ (18,885) $ (36,539) $ (2,463) $ (178,151)
=========== =========== =========== ===========
LOSS PER SHARE:
Basic and
diluted $ (0.014) $ (0.029) $ (0.002) $ (0.145)
=========== =========== =========== ===========
LOSS PER ADS:
Basic and
diluted $ (0.043) $ (0.086) $ (0.006) $ (0.436)
=========== =========== =========== ===========
WEIGHTED
AVERAGE SHARES
USED IN LOSS
PER SHARE
CALCULATION:
Basic and
diluted 1,320,970,883 1,276,718,198 1,320,946,942 1,224,880,031
============= ============= ============= =============
(2) The unaudited condensed consolidated financial statements for
2007 reflect certain reclassifications, which have no effect on
previously reported net loss, to conform to current period
presentation.
Melco Crown Entertainment Limited
Condensed Consolidated Balance Sheets
(In Thousands of U.S. dollars)
December 31, December 31,
2008 2007
------------ ------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 815,144 $ 835,419
Restricted cash 67,977 298,983
Accounts receivable, net 72,755 49,390
Amounts due from affiliated companies 650 --
Inventories 2,170 1,484
Prepaid expenses and other
current assets 17,556 15,715
----------- -----------
Total current assets 976,252 1,200,991
----------- -----------
PROPERTY AND EQUIPMENT, NET 2,107,722 980,241
GAMING SUB-CONCESSION 771,216 828,453
INTANGIBLE ASSETS, NET 4,220 4,220
GOODWILL 81,915 81,915
LONG-TERM PREPAYMENT, DEPOSITS AND
OTHER ASSETS 60,894 15,832
DEFERRED FINANCING COST 49,336 48,295
DEFERRED TAX ASSET 28 --
DEPOSIT FOR ACQUISITION OF
LAND INTEREST 12,853 12,853
LAND USE RIGHTS, NET 433,853 447,468
----------- -----------
TOTAL $ 4,498,289 $ 3,620,268
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,494 $ 5,736
Accrued expenses and other current
liabilities 442,671 468,236
Income tax payable 1,954 1,560
Amounts due to affiliated companies 1,985 6,602
Amounts due to shareholders 1,032 1,551
----------- -----------
Total current liabilities 450,136 483,685
----------- -----------
LONG-TERM DEBT 1,412,516 500,209
OTHER LONG-TERM LIABILITIES 38,304 11,074
DEFERRED TAX LIABILITIES 19,191 21,286
LOANS FROM SHAREHOLDERS 115,647 114,616
LAND USE RIGHTS PAYABLE 53,891 60,857
SHAREHOLDERS' EQUITY
Ordinary shares 13,212 13,209
Additional paid-in capital 2,689,257 2,682,125
Accumulated other comprehensive losses (35,685) (11,076)
Accumulated losses (258,180) (255,717)
----------- -----------
Total shareholders' equity 2,408,604 2,428,541
----------- -----------
TOTAL $ 4,498,289 $ 3,620,268
=========== ===========
Melco Crown Entertainment Limited
Reconciliation of Operating Income (Loss) to Adjusted EBITDA
(In Thousands of U.S. dollars)
Three Months Ended December 31, 2008
Corporate
and
Crown Mocha Other Total
-------- -------- -------- --------
(Unaudited) (Unaudited)
Operating Income (Loss) $ 14,708 $ 4,456 $(35,963) $(16,799)
Pre-opening Costs -- -- 9,391 9,391
Depreciation and
Amortization 10,998 2,245 14,739 27,982
Stock-based
Compensation (7) 17 1,858 1,868
-------- -------- -------- --------
Adjusted EBITDA $ 25,699 $ 6,718 $ (9,975) $ 22,442
======== ======== ======== ========
Three Months Ended December 31, 2007
Corporate
and
Crown Mocha Other Total
-------- -------- -------- --------
(Unaudited) (Unaudited)
Operating (Loss) Income $ (7,581) $ 1,550 $(31,061) $(37,092)
Pre-opening Costs -- -- 1,453 1,453
Depreciation and
Amortization 11,376 3,128 18,465 32,969
Stock-based
Compensation 360 95 646 1,101
-------- -------- -------- --------
Adjusted EBITDA $ 4,155 $ 4,773 $(10,497) $ (1,569)
======== ======== ======== ========
Melco Crown Entertainment Limited
Reconciliation of Adjusted EBITDA to Net Loss
(In Thousands of U.S. dollars)
Three Months Ended
December 31,
2008 2007
--------- ---------
(Unaudited)
Adjusted EBITDA $ 22,442 $ (1,569)
Pre-opening Costs (9,391) (1,453)
Depreciation and Amortization (27,982) (32,969)
Stock-based Compensation (1,868) (1,101)
Interest and Other Non-Operating
(Expense) Income, Net (2,540) 1,180
Income Tax Credit (Expense) 454 (627)
-------- --------
Net Loss $(18,885) $(36,539)
======== ========
Melco Crown Entertainment Limited
Reconciliation of Operating Income (Loss) to Adjusted EBITDA
(In Thousands of U.S. dollars)
For the Year Ended December 31, 2008
Corporate
and
Crown Mocha Other Total
-------- -------- -------- --------
(Unaudited) (Unaudited)
Operating Income (Loss) $ 118,367 $ 12,981 $(130,174) $ 1,174
Pre-opening Costs -- -- 21,821 21,821
Depreciation and
Amortization 44,304 12,698 69,883 126,885
Stock-based
Compensation 298 126 6,431 6,855
Marketing Expense
Relating to Crown
Macau Opening -- -- -- --
--------- --------- --------- ---------
Adjusted EBITDA $ 162,969 $ 25,805 $ (32,039) $ 156,735
========= ========= ========= =========
For the Year Ended December 31, 2007
Corporate
and
Crown Mocha Other Total
-------- -------- -------- --------
(Unaudited) (Unaudited)
Operating (Loss) Income $ (92,606) $ 10,562 $(113,773) $(195,817)
Pre-opening Costs 36,985 -- 3,047 40,032
Depreciation and
Amortization 30,317 11,399 72,216 113,932
Stock-based
Compensation 360 95 4,801 5,256
Marketing Expense
Relating to Crown
Macau Opening 2,500 (3) -- 9,459 11,959
--------- --------- --------- ---------
Adjusted EBITDA $ (22,444) $ 22,056 $ (24,250) $ (24,638)
========= ========= ========= =========
(3) Marketing expenses related to the Crown Macau opening are
allocated to Crown Macau in accordance with the property budget
as set at the end of 2006
Melco Crown Entertainment Limited
Reconciliation of Adjusted EBITDA to Net Loss
(In Thousands of U.S. dollars)
For The Year Ended
December 31,
2008 2007
--------- ---------
(Unaudited)
Adjusted EBITDA $ 156,735 $ (24,638)
Pre-opening Costs (21,821) (40,032)
Depreciation and Amortization (126,885) (113,932)
Stock-based Compensation (6,855) (5,256)
Marketing Expense Relating to Crown
Macau Opening -- (11,959)
Interest and Other Non-Operating (Expense)
Income, Net (5,107) 16,212
Income Tax Credit 1,470 1,454
--------- ---------
Net Loss $ (2,463) $(178,151)
========= =========
Melco Crown Entertainment Limited
Supplemental Data Schedule
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
------- ------- ------- -------
Crown Macau
Average number of table games 250 167 250 190
Average number of gaming
machines 112 282 178 431
Period end number of table
games 253 244 253 244
Period end number of gaming
machines -- 242 -- 242
Table games win per unit per
day (4) $13,412 $14,344 $20,009 $ 8,561
Gaming machines win per unit
per day (5) $ 173 $ 145 $ 205 $ 97
Average daily rate (6) $ 238 $ 221 $ 236 $ 226
Occupancy per available room 92% 78% 94% 66%
Revenue per available room (7) $ 218 $ 172 $ 222 $ 149
(4) table games win per unit per day is shown before discounts and
commissions
(5) gaming machines win per unit per day is shown before deducting
cost for slot points
(6) Average daily rate is calculated by dividing total room revenue
by total occupied rooms
(7) Revenue per available room is calculated by dividing total room
revenue by total rooms available
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Melco Crown Entertainment Limited
Melco Crown Entertainment Limited
Investor Inquiries:
Geoffrey Davis, CFA, Senior Vice President, Corporate Finance
+1 212 671 1936
geoffreydavis@melco-crown.com