FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 or 15d-16 under
the securities exchange act of 1934
For the month of August 2000
SUN INTERNATIONAL HOTELS LIMITED
(Translation of registrant's name into English)
Coral Towers, Paradise Island, The Bahamas
(address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If "yes" is marked, indicate below this file number assigned to the registrant
in connection with Rule 12g-3-2(b): N/A
Page 1 of 8
Exhibit Index is on Page 3
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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.
Date: August 29, 2000
SUN INTERNATIONAL HOTELS LIMITED
By: /s/Charles D. Adamo
Name: Charles D. Adamo
Title: Executive Vice President
Corporate Development & General Counsel
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EXHIBIT LIST
Exhibit Description Sequential Page No.
1. Shareholder Mailing dated August 25, 2000 4
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SUN INTERNATIONAL
To Our Shareholders:
The Company reported net income for the second quarter, excluding the effects of
non-recurring items and sales of real-estate at its Paradise Island operations,
of $19.2 million, compared to $23.3 million for the same period last year.
Earnings per share for the period, excluding non-recurring items and real estate
sales, were $0.58 compared to $0.68 for the same period last year. Including
non-recurring items and real estate sales, the Company generated net income, for
the second quarter of $70.5 million, compared to $22.2 million for the same
period last year. Earnings per share for the quarter were $2.14 compared to
$0.65, for the same period last year. Non-recurring items included the write-off
of costs relating to the cancelled Desert Inn acquisition and transaction costs
relating to the self-tender offer and to the termination of the proposal by Sun
International Investments Limited to acquire, in a merger transaction, all
Ordinary Shares in the Company that it did not already own.
Operating earnings for the quarter declined over the same period last year
primarily due to the termination of the management agreement between the Mohegan
Sun and Trading Cove Associates, a partnership in which the Company holds a 50%
interest. Interest income declined during the quarter due to the repayment by
the Mohegan Tribe of $94.1 million of Subordinated Notes held by the Company.
Further, the Paradise Island operations reported slightly lower operating
profits compared to the same period last year due to a poor hold percentage in
the Atlantis casino. Corporate costs also included approximately $350,000 of
costs related to various opportunities that the Company has evaluated but
concluded that it will not pursue.
The Company's flagship Paradise Island operations generated EBITDA of $36.4
million compared to $38.1 million in the same period last year. Atlantis
achieved an average occupancy of 92% for the quarter, and recorded an average
room rate of $241, an increase of 16% over the same period last year. The
resort's casino recorded an unusually low average hold percentage of 12.4% on
table games in the quarter, which effectively reduced EBITDA by approximately $5
million.
The Ocean Club, the Company's 59-room boutique hotel on Paradise Island,
achieved an average occupancy of 79% for the quarter at an average rate of $506,
a 4% increase over the same period in the prior year. This was achieved despite
the adverse effects of construction of additional rooms and suites at the
property, which should be complete around the end of this year's third quarter.
The redevelopment of the Paradise Island Golf Club is proceeding well and is
expected to be completed during this year's fourth quarter. The sale of luxury
homesites around the golf course was very strong in the quarter and 91 sales
were closed out by the quarter end, generating net cash proceeds of $ 87.6
million.
Resorts Atlantic City generated EBITDA of $7.9 million for the quarter, compared
to $4.9 million for the same period last year and $9.6 million for the same
period in 1998. The results for the quarter ended June 30, 2000, are being
compared to June 30, 1998, as that period did not have construction disruption
which did impact the 1999 results. Gaming revenues for the quarter of $62.0
million were approximately 5% ahead of both last year and 1998's results. The
property has not fully recovered the business levels it lost while under
reconstruction last year, although some progress was achieved during the
quarter. Table games performed very well during the quarter with table drop
increasing by 12.1% and 18.0% over 1998 and 1999 respectively. Slot revenues
have begun to show a modest positive trend, decreasing by 5.0% over 1998 levels
compared to the first quarter which demonstrated a 17.8% decrease from 1998
levels. During the quarter, the Atlantic City gaming market showed growth in
total gaming revenues of 4% over the previous year. Slot win for the quarter
increased by 3% over the same period last year.
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The Mohegan Sun Casino generated gross operating revenues of $202.8 million, a
10% increase over the same period last year. The Company's share of Mohegan Sun
income was $5.5 million for the quarter compared to $9.5 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 undergoing a
significant expansion which will include 115,000 additional square feet of
gaming space, a 1,200-room luxury hotel, a convention center, a 10,000-seat
events center and additional retail and restaurant facilities. This expansion is
proceeding well. 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.
On December 30, 1999 the Mohegan Tribe repaid $94.1 million of outstanding
Subordinated Notes held by the Company. These notes had been funded at the time
of the construction of the facility and were repaid in connection with the
termination of the management contracts. During the second quarter of 1999, the
Company had earned interest income of $2.4 million on such notes.
Sol Kerzner
Chairman of the Board & Chief Executive Officer
August 14, 2000
Paradise Island, The Bahamas
Forward-Looking Statements This document 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.
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Sun International Hotels Limited
Consolidated Balance Sheets
(Dollars in thousands)
June 30, December 31,
2000 1999
------------- -------------
(Unaudited)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 55,678 $ 39,229
Restricted cash 5,501 981
Trade receivables, net 54,845 44,425
Due from affiliates 20,969 14,212
Inventories 12,423 13,742
Prepaid expenses 12,142 8,412
------------- -------------
Total current assets 161,558 121,001
Property and equipment, net 1,387,188 1,378,138
Deferred charges and other assets 33,981 49,884
Investment in associated companies
& joint venture 27,924 28,593
Goodwill 92,534 93,855
------------- -------------
Total assets $ 1,703,185 $ 1,671,471
============== =============
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt $ 1,544 $ 1,100
Accounts payable and accrued liabilities 142,318 133,334
Capital creditors 10,518 16,950
------------- -------------
Total current liabilities 154,380 151,384
Long-term debt, net of current maturities 508,874 578,033
Deferred tax liability 42,253 42,223
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Total liabilities 705,507 771,640
------------- -------------
Shareholders' equity 997,678 899,831
------------- -------------
Total liabilities and shareholders' equity $ 1,703,185 $ 1,671,471
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Sun International Hotels Limited
Consolidated Statements of Operations
(Dollars in thousands,
except per share data)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
(Unaudited) Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Casino and resort revenues $ 198,391 $ 184,296 $ 399,263 $ 369,996
Less: promotional allowances (13,667) (11,843) (28,745) (25,215)
----------- ----------- ----------- -----------
184,724 172,453 370,518 344,781
Tour operations 7,305 7,074 15,926 13,973
Management and other fees 8,921 12,259 16,670 23,366
Real estate related 96,091 - 96,091 -
Other 729 706 1,458 1,412
----------- ----------- ----------- -----------
297,770 192,492 500,663 383,532
----------- ----------- ----------- -----------
Expenses:
Casino and resort expenses 116,256 109,214 228,414 213,662
Tour operations 6,478 7,028 14,447 14,057
Selling, general and administrative 24,918 20,457 50,035 40,562
Real estate related 26,626 312 26,914 520
Corporate expenses 6,398 5,384 12,192 10,761
Depreciation and amortization 14,923 14,245 29,278 27,927
Write-off of Desert Inn costs 11,202 - 11,202 -
Transactions costs 7,014 - 7,014 -
Pre-opening expenses 659 1,063 690 1,063
----------- ----------- ----------- -----------
214,474 157,703 380,186 308,552
----------- ----------- ----------- -----------
Operating income 83,296 34,789 120,477 74,980
Other income and expenses:
Interest income 1,131 3,012 1,972 6,426
Interest expense, net of
capitalization (11,844) (12,939) (23,320) (24,861)
Equity in earnings (loss) of
associated companies (131) 144 1,014 1,335
Other, net - 34 - 706
----------- ----------- ----------- -----------
Income before income taxes 72,452 25,040 100,143 58,586
Provision for income taxes (1,979) (2,791) (2,333) (4,949)
----------- ----------- ----------- -----------
Net income $ 70,473 $ 22,249 $ 97,810 $ 53,637
============ =========== =========== ===========
Diluted earnings per share $ 2.14 $ 0.65 $ 2.96 $ 1.56
Weighted average number of shares
outstanding 32,978 34,473 33,010 34,327
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Sun International Hotels Limited
Consolidated Statements of Cash Flows
(Dollars in thousands)
For the Six Months Ended
June 30,
2000 1999
--------- ---------
(Unaudited)
<S> <C> <C>
Cashflows from operating activities:
Reconciliation of net income to net cash provided by operating activities:
Net income $ 97,810 $ 53,637
Depreciation and amortization 31,858 29,275
Provision for doubtful receivables 3,192 1,414
Provision for discount on CRDA obligations, net 461 255
Gain on Ocean Club Estates land sales (70,197) -
Gain on disposal of fixed assets - (706)
Net change in working capital accounts (8,723) (26,373)
Net change in deferred charges 9,801 3,024
Equity earnings (loss) from affiliates, net 672 160
--------- ---------
Net cash provided by operating activities 64,874 60,686
--------- ---------
Cashflows from investing activities:
Payments for major capital projects, including
hurricane repair expenditures (88,979) (107,257)
Other operating capital expenditures (8,750) (11,889)
Acquisition of other fixed assets - (19,422)
Proceeds received from insurance company 31,520 -
Proceeds received from sale of land, including
deposits received for future land sales 94,597 -
Proceeds received from sale of other assets 161 32
Deposit on proposed acquisition of Desert Inn - (15,272)
Payments for investment in joint venture (3) (580)
CRDA deposits and other (1,385) (1,263)
--------- ---------
Net cash provided by (used in) investing
activities 27,161 (155,651)
--------- ---------
Cashflows from financing activities:
Proceeds from issuance of debt 24,000 81,500
Repayment of debt (94,168) (16,859)
Payments to amend borrowing facility (919) -
Proceeds from exercise of stock options 21 2,392
--------- ---------
Net cash provided by (used in) financing
activities (71,066) 67,033
--------- ---------
Net increase (decrease) in cash and cash equivalents 20,969 (27,932)
Cash and cash equivalents at beginning of period 40,210 63,123
--------- ---------
Cash and cash equivalents at end of period $ 61,179 $ 35,191
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