MGM Mirage reports Q1 results

6 May 2008

LAS VEGAS, Nevada -- (PRESS RELEASE) -- MGM Mirage (NYSE: MGM) today reported its first quarter 2008 financial results. The Company earned $0.40 per diluted share from continuing operations in the first quarter, compared to $0.55 in the prior year. The Company experienced low-single digit percentage decreases in both gaming and non-gaming revenues on a quarter-over-quarter basis, while earnings were also negatively impacted by the temporary closure of Monte Carlo and ramp-up costs related to the recent opening of two major resorts.

Key results for the quarter:

-- Net revenue decreased 2% to $1.9 billion;

-- Las Vegas Strip REVPAR(1) decreased 4%;

-- Casino revenue decreased 3%, mainly as result of lower table games volume at the Company's Las Vegas Strip resorts;

-- Property EBITDA(2) was $575 million, a 12% decrease from the 2007 quarter;

-- Monte Carlo earned Property EBITDA of $14 million compared to $34 million in prior year quarter; the resort was closed from January 25, 2008 through February 14, 2008 due to a rooftop fire, and approximately 20% of its rooms and suites remained out of service at quarter-end;

-- Completed a joint tender offer with Dubai World for the purchase of 15 million shares of common stock, of which the Company purchased 8.5 million shares at a total cost of $680 million;

-- Repurchased an additional 7 million shares of common stock in the open market for $427 million.

The following table lists certain items which affect the comparability of the current year and prior year quarterly results (earnings per share impact shown, net of tax, per diluted share; negative amounts represent charges to income):

Three months ended March 31, 2008 2007 Profits from The Signature at MGM Grand........ $- $0.02 Preopening and start-up expenses............... (0.01) (0.03)

"Our business should be evaluated in the context of the state of the economy," said Terry Lanni, MGM MIRAGE's Chairman and CEO. "The gaming industry and our company have seen considerable growth within the last several years, and even with near-term weaker economic conditions our resorts are still attracting premium customers and generating tremendous cash flow. We are focused on our fundamental strategies which have consistently produced positive results."

Detailed Discussion of First Quarter Operating Results

Casino revenue decreased 3%, mainly due to a decrease in table games volume of 4%. The overall table games hold percentage was near the high-end of the normal 18% to 22% range in the current quarter and slightly higher than in the 2007 quarter. Slots revenue decreased 1% compared to the prior year. Several of the Company's Las Vegas Strip resorts reported increases in slots revenue including Bellagio, The Mirage, and Mandalay Bay, which all reported mid-single digit percentage increases. Excluding Monte Carlo, Las Vegas Strip slots revenue was consistent with the prior year. Additionally, slots revenue at MGM Grand Detroit increased 9% as a result of increased capacity in the permanent casino.

Rooms revenue decreased 6%, with a 4% decrease in Las Vegas Strip REVPAR. Average room rates were down 2% at the Company's Las Vegas Strip resorts. Las Vegas Strip occupancy also decreased, and the Company had approximately 60,000 less rooms available, mainly due to the Monte Carlo fire. The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

    Three months ended March 31,                 2008           2007
    Occupancy %.............................      93%            96%
    Average Daily Rate (ADR)................     $165           $169
    Revenue per Available Room (REVPAR).....     $155           $162

Food and beverage revenue decreased 4% as the Company's restaurants and nightclubs were also impacted by the decrease in occupancy and the slowdown in consumer spending. Entertainment revenues held steady, despite fewer concerts and sporting events, led by strength in the Company's Cirque du Soleil production shows.

The Monte Carlo was closed from January 25, 2008 through February 14, 2008 due to a rooftop fire and a significant portion of its rooms and suites remained out of service through the end of the quarter. The Company maintains substantial property and business interruption insurance and to date has received a total of $50 million of insurance recoveries, including $22 million received as of the end of the first quarter. The Company recorded recoveries of costs incurred during the period, but will not record recoveries for lost profits until all contingencies with the insurance claim have been resolved. Monte Carlo earned Property EBITDA of $14 million compared to $34 million in the prior year quarter.

MGM Grand Macau, of which the Company owns 50%, was open for its first full quarter of operations and produced Property EBITDA of $43 million and operating income of $23 million. The Company recognized its share of MGM Grand Macau's results as follows: $10 million of income in the "Income from unconsolidated affiliates" line, and $5 million of expense in the "Non-operating items from unconsolidated affiliates" line for the Company's share of MGM Grand Macau's interest expense and other non-operating expenses.

Operating income decreased 23% for the quarter to $341 million as a result of the decrease in revenue described above, and the increased costs of operating the larger MGM Grand Detroit. The Company's operating margin was 18% and Property EBITDA margin was 31% in the quarter versus 23% and 34%, respectively, in the 2007 quarter. Preopening and start-up expenses were lower during the current quarter and mainly related to the Company's share of preopening expenses at CityCenter. Additionally, the prior year quarter included $8 million of profit from closings on units of The Signature at MGM Grand Las Vegas.

"We must continue to concentrate on our customers and the celebrated experiences we provide at our resorts," said Jim Murren, MGM MIRAGE President and Chief Operating Officer. "Additionally, we have always been committed to operating our resorts at maximum efficiency. Over the past several months we have been implementing various new revenue enhancement and cost savings initiatives. We will continue to make substantial long-term investments in our people and resorts."

Financial Position

First quarter capital investments totaled $236 million which included $61 million on room and suite remodel projects, primarily at The Mirage, TI, and Excalibur; expenditures of $10 million for remediation efforts at Monte Carlo; $19 million of trailing payments for MGM Grand Detroit; and $28 million for corporate aircraft. The remaining $118 million was for other routine capital expenditures and various new and upgraded amenities at the Company's resorts.

During the quarter, the Company repaid $180 million of its senior notes at maturity, and the Company and Dubai World each funded $200 million of construction costs for CityCenter. The Company and Dubai World are currently in discussions with several financial institutions with regard to bank financing for the project.

The Company purchased 8.5 million shares upon completion of its joint tender offer with Dubai World for a total cost of $680 million. Additionally, the Company repurchased 7 million shares in the open market for $427 million during the first quarter, leaving 2.6 million shares available under the Company's share repurchase authorization. Available borrowing capacity under the Company's senior credit facility was $1.9 billion as of March 31, 2008.

"Our company continues to generate strong cash flow and has significant debt capacity under our credit facilities," said Dan D'Arrigo, MGM MIRAGE Executive Vice President and Chief Financial Officer. "This combination provides ample capital flexibility to meet all of our strategic growth initiatives and maintain our strategic focus during a difficult time in the credit markets."

Language: English Location: Currency: > edit my preferences Home Online Slots Live Dealer Games Online Casinos Online Poker Online Bingo Games Lotteries Sports & Racebooks Fantasy Sports Forex Betting Exchanges Spread Betting Binary Options Exclusive Bonuses Weekly Newsletter Online Gaming News Payment Methods Gaming Software Gaming Site Owners Gaming Jurisdictions		Bonuses! New games! Gossip! And all the player news you can handle. Sign up NOW! View the current issue
	MGM Mirage reports Q1 results 6 May 2008 <a href='https://ad.casinocity.com/adclick.php?n=a21efcd1'><img src='https://ad.casinocity.com/adview.php?what=-site:vendors/width:250/RON&n=a21efcd1' border='0' alt='' /></a> LAS VEGAS, Nevada -- (PRESS RELEASE) -- MGM Mirage (NYSE: MGM) today reported its first quarter 2008 financial results. The Company earned $0.40 per diluted share from continuing operations in the first quarter, compared to $0.55 in the prior year. The Company experienced low-single digit percentage decreases in both gaming and non-gaming revenues on a quarter-over-quarter basis, while earnings were also negatively impacted by the temporary closure of Monte Carlo and ramp-up costs related to the recent opening of two major resorts. Key results for the quarter: -- Net revenue decreased 2% to $1.9 billion; -- Las Vegas Strip REVPAR(1) decreased 4%; -- Casino revenue decreased 3%, mainly as result of lower table games volume at the Company's Las Vegas Strip resorts; -- Property EBITDA(2) was $575 million, a 12% decrease from the 2007 quarter; -- Monte Carlo earned Property EBITDA of $14 million compared to $34 million in prior year quarter; the resort was closed from January 25, 2008 through February 14, 2008 due to a rooftop fire, and approximately 20% of its rooms and suites remained out of service at quarter-end; -- Completed a joint tender offer with Dubai World for the purchase of 15 million shares of common stock, of which the Company purchased 8.5 million shares at a total cost of $680 million; -- Repurchased an additional 7 million shares of common stock in the open market for $427 million. The following table lists certain items which affect the comparability of the current year and prior year quarterly results (earnings per share impact shown, net of tax, per diluted share; negative amounts represent charges to income): Three months ended March 31, 2008 2007 Profits from The Signature at MGM Grand........ $- $0.02 Preopening and start-up expenses............... (0.01) (0.03) "Our business should be evaluated in the context of the state of the economy," said Terry Lanni, MGM MIRAGE's Chairman and CEO. "The gaming industry and our company have seen considerable growth within the last several years, and even with near-term weaker economic conditions our resorts are still attracting premium customers and generating tremendous cash flow. We are focused on our fundamental strategies which have consistently produced positive results." Detailed Discussion of First Quarter Operating Results Casino revenue decreased 3%, mainly due to a decrease in table games volume of 4%. The overall table games hold percentage was near the high-end of the normal 18% to 22% range in the current quarter and slightly higher than in the 2007 quarter. Slots revenue decreased 1% compared to the prior year. Several of the Company's Las Vegas Strip resorts reported increases in slots revenue including Bellagio, The Mirage, and Mandalay Bay, which all reported mid-single digit percentage increases. Excluding Monte Carlo, Las Vegas Strip slots revenue was consistent with the prior year. Additionally, slots revenue at MGM Grand Detroit increased 9% as a result of increased capacity in the permanent casino. Rooms revenue decreased 6%, with a 4% decrease in Las Vegas Strip REVPAR. Average room rates were down 2% at the Company's Las Vegas Strip resorts. Las Vegas Strip occupancy also decreased, and the Company had approximately 60,000 less rooms available, mainly due to the Monte Carlo fire. The following table shows key hotel statistics for the Company's Las Vegas Strip resorts: Three months ended March 31, 2008 2007 Occupancy %............................. 93% 96% Average Daily Rate (ADR)................ $165 $169 Revenue per Available Room (REVPAR)..... $155 $162 Food and beverage revenue decreased 4% as the Company's restaurants and nightclubs were also impacted by the decrease in occupancy and the slowdown in consumer spending. Entertainment revenues held steady, despite fewer concerts and sporting events, led by strength in the Company's Cirque du Soleil production shows. The Monte Carlo was closed from January 25, 2008 through February 14, 2008 due to a rooftop fire and a significant portion of its rooms and suites remained out of service through the end of the quarter. The Company maintains substantial property and business interruption insurance and to date has received a total of $50 million of insurance recoveries, including $22 million received as of the end of the first quarter. The Company recorded recoveries of costs incurred during the period, but will not record recoveries for lost profits until all contingencies with the insurance claim have been resolved. Monte Carlo earned Property EBITDA of $14 million compared to $34 million in the prior year quarter. MGM Grand Macau, of which the Company owns 50%, was open for its first full quarter of operations and produced Property EBITDA of $43 million and operating income of $23 million. The Company recognized its share of MGM Grand Macau's results as follows: $10 million of income in the "Income from unconsolidated affiliates" line, and $5 million of expense in the "Non-operating items from unconsolidated affiliates" line for the Company's share of MGM Grand Macau's interest expense and other non-operating expenses. Operating income decreased 23% for the quarter to $341 million as a result of the decrease in revenue described above, and the increased costs of operating the larger MGM Grand Detroit. The Company's operating margin was 18% and Property EBITDA margin was 31% in the quarter versus 23% and 34%, respectively, in the 2007 quarter. Preopening and start-up expenses were lower during the current quarter and mainly related to the Company's share of preopening expenses at CityCenter. Additionally, the prior year quarter included $8 million of profit from closings on units of The Signature at MGM Grand Las Vegas. "We must continue to concentrate on our customers and the celebrated experiences we provide at our resorts," said Jim Murren, MGM MIRAGE President and Chief Operating Officer. "Additionally, we have always been committed to operating our resorts at maximum efficiency. Over the past several months we have been implementing various new revenue enhancement and cost savings initiatives. We will continue to make substantial long-term investments in our people and resorts." Financial Position First quarter capital investments totaled $236 million which included $61 million on room and suite remodel projects, primarily at The Mirage, TI, and Excalibur; expenditures of $10 million for remediation efforts at Monte Carlo; $19 million of trailing payments for MGM Grand Detroit; and $28 million for corporate aircraft. The remaining $118 million was for other routine capital expenditures and various new and upgraded amenities at the Company's resorts. During the quarter, the Company repaid $180 million of its senior notes at maturity, and the Company and Dubai World each funded $200 million of construction costs for CityCenter. The Company and Dubai World are currently in discussions with several financial institutions with regard to bank financing for the project. The Company purchased 8.5 million shares upon completion of its joint tender offer with Dubai World for a total cost of $680 million. Additionally, the Company repurchased 7 million shares in the open market for $427 million during the first quarter, leaving 2.6 million shares available under the Company's share repurchase authorization. Available borrowing capacity under the Company's senior credit facility was $1.9 billion as of March 31, 2008. "Our company continues to generate strong cash flow and has significant debt capacity under our credit facilities," said Dan D'Arrigo, MGM MIRAGE Executive Vice President and Chief Financial Officer. "This combination provides ample capital flexibility to meet all of our strategic growth initiatives and maintain our strategic focus during a difficult time in the credit markets."