MGM Mirage reports record Q3 result

30 Oct 2007

LAS VEGAS, Nevada -- (PRESS RELEASE) -- MGM Mirage (NYSE: MGM) today reported record third quarter 2007 financial results, achieving diluted earnings per share from continuing operations of $0.62, a 17% increase over the $0.53 per share earned in 2006. Earnings benefited from continued year-over-year growth in net revenues and income recognized during the quarter from Hurricane Katrina insurance recoveries.

Net revenues increased 6% to $1.9 billion, a record third quarter for the Company. The Company continues to generate significant increases in revenues from its non-gaming operations as activity at the Company's restaurants, nightclubs, and shows accelerated across the board and room rates remain strong.

Key results from the quarter include:

-- Hotel revenues increased 7% led by a 6% increase in Las Vegas Strip REVPAR(1) -- the 17th consecutive quarter of REVPAR increases at the Company's Las Vegas Strip resorts;

-- Gaming revenues increased 3%, but decreased 3% excluding Beau Rivage; volumes were flat and the table games hold percentage, though near the middle of the Company's normal range, was lower than the prior year;

-- Property EBITDA(2) of $705 million was an all-time record, representing a 13% increase over the prior year; excluding insurance recoveries, other property transactions, preopening expenses and residential sales, Property EBITDA was consistent with the prior-year quarter.

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

    Three months ended September 30,                    2007           2006
    ------------------------------------------------------------------------
    Profits from The Signature at MGM Grand            $ 0.03          $0.06
    Preopening and start-up expenses                    (0.06)         (0.01)
    Hurricane Katrina business interruption income
      (recorded as a reduction of general and
      administrative expenses)                           0.06              -
    Property transactions net:
      Hurricane Katrina property damage income           0.24              -
      Other property transactions                       (0.04)             -
    Tax adjustments                                         -           0.02


    Recent significant developments:
    -- Opened the new MGM Grand Detroit casino and hotel resort complex on
       October 2;
    -- Entered into a 50/50 joint venture agreement on August 21 with a
       subsidiary of Dubai World; the Company will contribute the CityCenter
       project, continue to develop the resort, and upon completion manage
       CityCenter for a fee; Dubai World will contribute cash, most of which
       will be immediately distributed to the Company;
    -- Completed the sale of 14.2 million shares of common stock at $84 per
       share to a subsidiary of Dubai World on October 18, for proceeds of
       approximately $1.2 billion;
    -- Signed a definitive agreement with Kerzner International and a
       subsidiary of Dubai World, forming the joint venture which will develop
       a multi-billion dollar integrated resort property on the Las Vegas
       Strip;
    -- Announced plans for MGM Grand Atlantic City, a $4.5-$5.0 billion
       destination casino resort, which will be located on the Company's
       72-acre site at Renaissance Pointe.

"Our growth initiatives, including strategic relationships with Dubai World and Kerzner International, reflect our ability to leverage our tremendous assets and creative energy to grow the Company," said Terry Lanni, MGM MIRAGE's Chairman and CEO. "Our all-new MGM Grand Detroit is the clear market leader right out of the gate. We are well underway in creating the most important Las Vegas development ever, CityCenter, and we believe our MGM Grand Atlantic City project will have a similarly profound impact on the Atlantic City market."


                   Detailed Discussion of Operating Results
                  -----------------------------------------

Net revenues increased 6% for the quarter; excluding Beau Rivage, net revenues were up 2%. Gaming revenues increased 3%, but decreased 3% excluding Beau Rivage. Several Las Vegas Strip resorts posted solid increases in slot revenues over the prior year, including Bellagio, MGM Grand, and Mirage -- each up 8% -- and Mandalay Bay -- up 9%. Overall, slot revenues at the Company's Las Vegas resorts were up 2%. Slot revenues at MGM Grand Detroit's interim facility fell 8%, partially due to the winding down of operations at the interim facility in preparation for the new resort. Table games revenues decreased 5% excluding Beau Rivage. Table games volume, excluding Beau Rivage, was consistent with the prior year period. The overall table games hold percentage was near the middle of the normal 18-22% range in the 2007 period, though lower than 2006.

Rooms revenues increased 7% despite having 29,000 less available rooms on the Las Vegas Strip due primarily to room and suite remodel activity at Mandalay Bay and Bellagio. Average room rates increased 5% at the Company's Las Vegas Strip resorts and occupancy remained solid. The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

                                                     Three Months Ended
                                                ------------------------------
                                                 September 30,  September 30,
                                                      2007           2006
                                                ------------------------------
    Occupancy %                                        97%            96%
    Average Daily Rate (ADR)                          $147           $140
    Revenue per Available Room (REVPAR)               $143           $135

Food and beverage revenues increased 10% as the Company's restaurants and nightclubs continue to experience increased volumes and the Company continues to invest in new restaurants and nightclubs. For example, on August 31 Luxor opened LAX, the latest addition to the Company's exciting nightlife amenities as part of the repositioning of the resort, which will include additional new entertainment and dining offerings opening in 2007 and 2008. Entertainment revenues increased 13% driven by strong demand across the Company's portfolio of Cirque du Soleil productions.

Beau Rivage was open for a full quarter in 2007 versus 33 days in 2006. Beau Rivage earned operating income of $145 million in the third quarter of 2007 with depreciation and amortization of $12 million for Property EBITDA of $157 million. In the third quarter of 2007, Beau Rivage's operating income and Property EBITDA includes $135 million of insurance recoveries, $107 million of which was recorded as property transactions and $28 million of which was recorded as a reduction in general and administrative expenses. Beau Rivage's third quarter 2007 Property EBITDA before insurance recoveries was $22 million. In the third quarter of 2006, Beau Rivage earned operating income of $10 million with depreciation and amortization of $5 million for Property EBITDA of $15 million.

Corporate expense of $63 million in the third quarter includes $18 million related to severance costs, Atlantic City and Macau development initiatives, and the CityCenter transaction.

The Company's operating income increased 11% to $465 million. Operating income was positively impacted by a full quarter of operations at Beau Rivage, including the insurance recoveries discussed earlier, and negatively impacted by lower profits from condominium sales at the Signature at MGM Grand -- $12 million in the 2007 quarter versus $26 million in 2006. In addition, operating income was negatively impacted by higher write-offs, demolition costs and preopening expense -- $44 million in the current quarter versus $6 million in 2006. Excluding results at Beau Rivage and the other items above, operating income decreased 10%, due in large part to higher corporate expense. Property EBITDA increased 13% to $705 million; excluding the impact of the above items, Property EBITDA and the Property EBITDA margin were consistent with 2006 results.

"Key volume indicators that we have come to rely on to gauge our Las Vegas business remain strong. These metrics suggest continued growth over the upcoming quarters," said Jim Murren, MGM MIRAGE President and Chief Operating Officer. "We have many opportunities to increase our future profits through initiatives deployed throughout the remainder of this year and into 2008. The opening of our Detroit resort has been a tremendous success and we are only a couple of months away from opening in Macau. Both of these resorts will substantially add to our future cash flows and earnings."

                    Detailed Discussion of Certain Charges
                   ---------------------------------------

In addition to the income from Hurricane Katrina insurance recoveries of $107 million included in property transactions, the Company recognized $12 million of write-offs primarily related to discontinued construction projects at its Las Vegas resorts and $5 million in demolition costs related to ongoing capital projects. In the 2006 period, the Company had minimal property transactions.

Preopening and start-up expenses of $26 million in the 2007 quarter included $14 million related to MGM Grand Detroit. Ongoing preopening and start-up expenses were also incurred at CityCenter and MGM Grand Macau.

                              Financial Position
                             -------------------

Third quarter capital investments totaled $767 million, which included $451 million for CityCenter and $140 million for the permanent MGM Grand Detroit resort. Remaining capital expenditures included spending of $61 million on room and suite remodel projects, primarily at Mandalay Bay and Bellagio, expenditures for corporate aircraft of $13 million, and $102 million of other routine capital expenditures on various new and upgraded amenities at the Company's resorts.

During the quarter, the Company received an additional $92 million of insurance recoveries related to Hurricane Katrina, bringing cumulative proceeds through September 30, 2007 to $522 million, of which $53 million was deferred. In October, the Company reached final settlements with its remaining carriers and expects to receive an additional $113 million, bringing final insurance proceeds to $635 million.

The proceeds of $1.2 billion from the sale of common stock in October to a subsidiary of Dubai World were used to reduce outstanding borrowings under the Company's senior credit facility. Following these payments, the Company had

approximately $2.0 billion of available borrowings under its senior credit facility.

"Our recent strategic transactions will have a profound impact on our financial position and allow us to execute our many growth initiatives," said Dan D'Arrigo, MGM MIRAGE Executive Vice President and Chief Financial Officer. "Following the transactions with Dubai World, we will have significant borrowing capacity under our senior credit facility and no significant debt maturities in 2008."


                              Development Update
                             -------------------

As discussed earlier, the permanent MGM Grand Detroit opened on October 2 at estimated final costs consistent with previous estimates. In Macau, the updated total project budget is $1.25 billion, up from the previous estimate of $1.1 billion. At CityCenter, the construction budget has increased from $7.4 billion to $7.8 billion. The current budget for preopening expenses is $200 million, consistent with previous estimates.

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	MGM Mirage reports record Q3 result 30 Oct 2007 LAS VEGAS, Nevada -- (PRESS RELEASE) -- MGM Mirage (NYSE: MGM) today reported record third quarter 2007 financial results, achieving diluted earnings per share from continuing operations of $0.62, a 17% increase over the $0.53 per share earned in 2006. Earnings benefited from continued year-over-year growth in net revenues and income recognized during the quarter from Hurricane Katrina insurance recoveries. Net revenues increased 6% to $1.9 billion, a record third quarter for the Company. The Company continues to generate significant increases in revenues from its non-gaming operations as activity at the Company's restaurants, nightclubs, and shows accelerated across the board and room rates remain strong. Key results from the quarter include: -- Hotel revenues increased 7% led by a 6% increase in Las Vegas Strip REVPAR(1) -- the 17th consecutive quarter of REVPAR increases at the Company's Las Vegas Strip resorts; -- Gaming revenues increased 3%, but decreased 3% excluding Beau Rivage; volumes were flat and the table games hold percentage, though near the middle of the Company's normal range, was lower than the prior year; -- Property EBITDA(2) of $705 million was an all-time record, representing a 13% increase over the prior year; excluding insurance recoveries, other property transactions, preopening expenses and residential sales, Property EBITDA was consistent with the prior-year quarter. The following table lists significant items which affect the comparability of the current year and prior year results (EPS impact shown, net of tax, per diluted share; negative amounts represent charges to income): The following table lists significant items which affect the comparability of the current year and prior year results (EPS impact shown, net of tax, per diluted share; negative amounts represent charges to income): Three months ended September 30, 2007 2006 ------------------------------------------------------------------------ Profits from The Signature at MGM Grand $ 0.03 $0.06 Preopening and start-up expenses (0.06) (0.01) Hurricane Katrina business interruption income (recorded as a reduction of general and administrative expenses) 0.06 - Property transactions net: Hurricane Katrina property damage income 0.24 - Other property transactions (0.04) - Tax adjustments - 0.02 Recent significant developments: -- Opened the new MGM Grand Detroit casino and hotel resort complex on October 2; -- Entered into a 50/50 joint venture agreement on August 21 with a subsidiary of Dubai World; the Company will contribute the CityCenter project, continue to develop the resort, and upon completion manage CityCenter for a fee; Dubai World will contribute cash, most of which will be immediately distributed to the Company; -- Completed the sale of 14.2 million shares of common stock at $84 per share to a subsidiary of Dubai World on October 18, for proceeds of approximately $1.2 billion; -- Signed a definitive agreement with Kerzner International and a subsidiary of Dubai World, forming the joint venture which will develop a multi-billion dollar integrated resort property on the Las Vegas Strip; -- Announced plans for MGM Grand Atlantic City, a $4.5-$5.0 billion destination casino resort, which will be located on the Company's 72-acre site at Renaissance Pointe. "Our growth initiatives, including strategic relationships with Dubai World and Kerzner International, reflect our ability to leverage our tremendous assets and creative energy to grow the Company," said Terry Lanni, MGM MIRAGE's Chairman and CEO. "Our all-new MGM Grand Detroit is the clear market leader right out of the gate. We are well underway in creating the most important Las Vegas development ever, CityCenter, and we believe our MGM Grand Atlantic City project will have a similarly profound impact on the Atlantic City market." Detailed Discussion of Operating Results ----------------------------------------- Net revenues increased 6% for the quarter; excluding Beau Rivage, net revenues were up 2%. Gaming revenues increased 3%, but decreased 3% excluding Beau Rivage. Several Las Vegas Strip resorts posted solid increases in slot revenues over the prior year, including Bellagio, MGM Grand, and Mirage -- each up 8% -- and Mandalay Bay -- up 9%. Overall, slot revenues at the Company's Las Vegas resorts were up 2%. Slot revenues at MGM Grand Detroit's interim facility fell 8%, partially due to the winding down of operations at the interim facility in preparation for the new resort. Table games revenues decreased 5% excluding Beau Rivage. Table games volume, excluding Beau Rivage, was consistent with the prior year period. The overall table games hold percentage was near the middle of the normal 18-22% range in the 2007 period, though lower than 2006. Rooms revenues increased 7% despite having 29,000 less available rooms on the Las Vegas Strip due primarily to room and suite remodel activity at Mandalay Bay and Bellagio. Average room rates increased 5% at the Company's Las Vegas Strip resorts and occupancy remained solid. The following table shows key hotel statistics for the Company's Las Vegas Strip resorts: Three Months Ended ------------------------------ September 30, September 30, 2007 2006 ------------------------------ Occupancy % 97% 96% Average Daily Rate (ADR) $147 $140 Revenue per Available Room (REVPAR) $143 $135 Food and beverage revenues increased 10% as the Company's restaurants and nightclubs continue to experience increased volumes and the Company continues to invest in new restaurants and nightclubs. For example, on August 31 Luxor opened LAX, the latest addition to the Company's exciting nightlife amenities as part of the repositioning of the resort, which will include additional new entertainment and dining offerings opening in 2007 and 2008. Entertainment revenues increased 13% driven by strong demand across the Company's portfolio of Cirque du Soleil productions. Beau Rivage was open for a full quarter in 2007 versus 33 days in 2006. Beau Rivage earned operating income of $145 million in the third quarter of 2007 with depreciation and amortization of $12 million for Property EBITDA of $157 million. In the third quarter of 2007, Beau Rivage's operating income and Property EBITDA includes $135 million of insurance recoveries, $107 million of which was recorded as property transactions and $28 million of which was recorded as a reduction in general and administrative expenses. Beau Rivage's third quarter 2007 Property EBITDA before insurance recoveries was $22 million. In the third quarter of 2006, Beau Rivage earned operating income of $10 million with depreciation and amortization of $5 million for Property EBITDA of $15 million. Corporate expense of $63 million in the third quarter includes $18 million related to severance costs, Atlantic City and Macau development initiatives, and the CityCenter transaction. The Company's operating income increased 11% to $465 million. Operating income was positively impacted by a full quarter of operations at Beau Rivage, including the insurance recoveries discussed earlier, and negatively impacted by lower profits from condominium sales at the Signature at MGM Grand -- $12 million in the 2007 quarter versus $26 million in 2006. In addition, operating income was negatively impacted by higher write-offs, demolition costs and preopening expense -- $44 million in the current quarter versus $6 million in 2006. Excluding results at Beau Rivage and the other items above, operating income decreased 10%, due in large part to higher corporate expense. Property EBITDA increased 13% to $705 million; excluding the impact of the above items, Property EBITDA and the Property EBITDA margin were consistent with 2006 results. "Key volume indicators that we have come to rely on to gauge our Las Vegas business remain strong. These metrics suggest continued growth over the upcoming quarters," said Jim Murren, MGM MIRAGE President and Chief Operating Officer. "We have many opportunities to increase our future profits through initiatives deployed throughout the remainder of this year and into 2008. The opening of our Detroit resort has been a tremendous success and we are only a couple of months away from opening in Macau. Both of these resorts will substantially add to our future cash flows and earnings." Detailed Discussion of Certain Charges --------------------------------------- In addition to the income from Hurricane Katrina insurance recoveries of $107 million included in property transactions, the Company recognized $12 million of write-offs primarily related to discontinued construction projects at its Las Vegas resorts and $5 million in demolition costs related to ongoing capital projects. In the 2006 period, the Company had minimal property transactions. Preopening and start-up expenses of $26 million in the 2007 quarter included $14 million related to MGM Grand Detroit. Ongoing preopening and start-up expenses were also incurred at CityCenter and MGM Grand Macau. Financial Position ------------------- Third quarter capital investments totaled $767 million, which included $451 million for CityCenter and $140 million for the permanent MGM Grand Detroit resort. Remaining capital expenditures included spending of $61 million on room and suite remodel projects, primarily at Mandalay Bay and Bellagio, expenditures for corporate aircraft of $13 million, and $102 million of other routine capital expenditures on various new and upgraded amenities at the Company's resorts. During the quarter, the Company received an additional $92 million of insurance recoveries related to Hurricane Katrina, bringing cumulative proceeds through September 30, 2007 to $522 million, of which $53 million was deferred. In October, the Company reached final settlements with its remaining carriers and expects to receive an additional $113 million, bringing final insurance proceeds to $635 million. The proceeds of $1.2 billion from the sale of common stock in October to a subsidiary of Dubai World were used to reduce outstanding borrowings under the Company's senior credit facility. Following these payments, the Company had approximately $2.0 billion of available borrowings under its senior credit facility. "Our recent strategic transactions will have a profound impact on our financial position and allow us to execute our many growth initiatives," said Dan D'Arrigo, MGM MIRAGE Executive Vice President and Chief Financial Officer. "Following the transactions with Dubai World, we will have significant borrowing capacity under our senior credit facility and no significant debt maturities in 2008." Development Update ------------------- As discussed earlier, the permanent MGM Grand Detroit opened on October 2 at estimated final costs consistent with previous estimates. In Macau, the updated total project budget is $1.25 billion, up from the previous estimate of $1.1 billion. At CityCenter, the construction budget has increased from $7.4 billion to $7.8 billion. The current budget for preopening expenses is $200 million, consistent with previous estimates.