MGM Mirage reports results

5 Aug 2008

LAS VEGAS, Nevada --(PRESS RELEASE) -- MGM Mirage (NYSE: MGM) today reported its second quarter 2008 financial results. The Company achieved 97% occupancy at its Las Vegas Strip resorts, while company-wide net revenue declined 2%. The Company earned $0.40 per diluted share from continuing operations in the 2008 second quarter, compared to $0.62 in the prior year second quarter. The 2007 quarter included $63 million, or $0.14 per diluted share net of tax, of residential sales at The Signature at MGM Grand. The 2008 quarter includes $19 million, or $0.04 per diluted share net of tax, of insurance recovery income related to the Monte Carlo fire.

Overall trends were similar to those experienced in the first quarter of 2008 -- guests continued to visit the Company's resorts in high numbers, but at lower room rates, and current economic conditions led to lower visitor spending. Gaming revenues were impacted slightly more than non-gaming revenues, with the Company experiencing a 4% decline in gaming revenues on a quarter-over-quarter basis. Net non-gaming revenues were flat as relative strength in food and beverage and entertainment revenue offset lower revenue in rooms and retail. The Company also notes that results at its regional properties in Mississippi and Michigan improved compared to first quarter performance and exceeded 2007 results.

Key results for the quarter include:

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

-- Las Vegas Strip REVPAR(1) decreased 5%; occupancy was 97% at the Company's Las Vegas Strip resorts versus 98% a year ago;

-- Casino revenue decreased 4%, mainly as result of lower table games volume at the Company's Las Vegas Strip resorts and a 10% decline in Las Vegas Strip slots revenue, offset by increased slots revenue at the larger MGM Grand Detroit and increases at Beau Rivage and Gold Strike Tunica;

-- Property EBITDA(2) decreased 12% on a comparable basis, after removing the impact of the prior year residential profits and current year insurance recoveries. On an absolute basis, Property EBITDA was $564 million in the 2008 quarter, an 18% decrease from the prior year;

-- Bellagio and Mandalay Bay reported increases in Property EBITDA, with Bellagio reporting its highest ever quarterly hotel revenue and leading the Las Vegas market in Property EBITDA; Mandalay Bay produced a record for second quarter EBITDA.

"Our resorts were near capacity and we believe our market share increased, as discriminating customers seek the best resort and entertainment experiences," said Terry Lanni, Chairman and CEO of MGM MIRAGE. "Our track record of successfully navigating through changing economic conditions is solid and is reinforced by our results this quarter."

Detailed Discussion of Second Quarter Operating Results

Casino revenue decreased 4%, mainly due to a decrease in table games volume of 7%. The table games hold percentage was at the mid-point of the normal 18% to 22% range in the current quarter and slightly higher than in the 2007 quarter. Slots revenue decreased 2% in the quarter, with the Company's Las Vegas Strip resorts posting a 10% decrease. However, slots revenue increased in the high single digits at Beau Rivage and Gold Strike Tunica and 18% at MGM Grand Detroit. MGM Grand Detroit continues to gain market share as a result of its upgraded amenities.

Rooms revenue decreased 6%, with a 5% decline in Las Vegas Strip REVPAR. Average room rates were down 5% at the Company's Las Vegas Strip resorts. Las Vegas Strip occupancy decreased slightly, and the Company had approximately 32,000 less rooms available at its Las Vegas Strip resorts, mainly due to the lower room count at Monte Carlo. These trends are largely in line with the Company's experience in the first quarter, when Las Vegas Strip REVPAR decreased 4%. In the second quarter, the Company strategically managed its room rates to ensure that occupancy was maximized in line with historical levels.

Food and beverage revenue increased 2% and entertainment revenues also performed well, only down 4% despite a difficult comparison as the second quarter of 2007 featured the Oscar de la Hoya-Floyd Mayweather fight. The Company's Cirque du Soleil production shows generated a combined 3% increase in revenue. The Company believes its restaurants, nightclubs and shows continue to attract guests seeking the highest quality experience, and the Company has continued to introduce new venues such as the recently opened Brand Steakhouse at Monte Carlo, Tender Steakhouse at Luxor, BLT Burger at The Mirage, and Yellowtail sushi restaurant at Bellagio; and the soon-to-open RokVegas nightclub at New York-New York. In addition, the new production show from Cirque du Soleil and Criss Angel, Believe, will open in the fall.

The Company recorded $19 million of insurance recovery income in the quarter related to the January 2008 Monte Carlo fire -- $9 million related to business interruption recorded as a reduction of general and administrative expenses, and $10 million related to property damage recorded as property transactions. Through June 30, 2008, the Company had received $50 million from its insurers. Excluding the insurance recovery income, Monte Carlo earned Property EBITDA of $17 million in the 2008 second quarter compared to $32 million reported in the 2007 second quarter; the property is still without nearly 200 rooms, mostly suites, as a result of the fire.

Corporate expense decreased from $44 million in the 2007 quarter to $27 million in 2008, due to the impact of cost reduction measures implemented during the quarter and lower accruals for profit-based bonuses.

MGM Grand Macau, of which the Company owns 50%, recorded Property EBITDA of $23 million and an operating loss of $5 million. The Company recognized its share of MGM Grand Macau's results as follows: $4 million of loss in the "Income from unconsolidated affiliates" line and $3 million of expense in "Non-operating items from unconsolidated affiliates."

"As these results represent only our second full quarter of operations at MGM Grand Macau, we believe we are still in the early stages of realizing the potential of this resort," said Mr. Lanni. "We have taken several steps to improve our operating performance over the past several months and based on our results in June and July, we believe these measures are having the desired impact as evidenced by our increased market share."

Operating income decreased 29% for the quarter to $334 million, a larger percentage decrease than the 18% drop in Property EBITDA as a result of higher depreciation expense, including the larger MGM Grand Detroit. Year-over-year comparisons for both Property EBITDA and operating income were impacted by the prior year Signature profits of $63 million and the other items described earlier in the release. On a comparable basis excluding these items in both quarterly periods, Property EBITDA decreased 12% with a margin of 30% in 2008 versus 33% in 2007; and operating income decreased 21% with a margin of 17% versus 22%.

Net income, including discontinued operations, decreased to $113 million, or $0.40 per diluted share, from $360 million, or $1.22 per diluted share. In addition to the factors described above, the decrease resulted from the $264 million of pre-tax gains recorded in the prior year quarter from the sale of discontinued operations (the Primm Valley Resorts and Laughlin Properties).

"Our resorts are clearly positioned to be the standard of quality in our industry, and our results reflect that competitive position," said Jim Murren, President and Chief Operating Officer of MGM MIRAGE. "While we had mixed results, some of our properties generated increases in cash flow in this challenging environment, and our cost reduction efforts continue to gain traction without impacting guest service; we expect these initiatives will benefit us well into the future. We believe in the durability of the Las Vegas market and that over time it will continue to grow in line with historical trends. Our own forward booking trends show improvement in the fourth quarter of 2008 and into 2009."

Financial Position

Second quarter capital investments totaled $221 million which included $73 million on room and suite remodel projects, primarily at The Mirage and TI; $7 million for the theatre at Luxor; expenditures of $9 million for remediation efforts at Monte Carlo; and $23 million for the people mover joining CityCenter, Monte Carlo and Bellagio, and Monte Carlo's share of a parking garage being constructed for both Monte Carlo and CityCenter. The remaining $109 million was for other capital expenditures, including various new and upgraded amenities at the Company's resorts.

The Company repurchased 2.6 million shares of its common stock in the open market for $134 million during the second quarter, completing the Company's December 2007 share repurchase authorization. In May 2008, the Company's Board of Directors approved a new 20 million share repurchase program; however, the Company has not repurchased any shares under this authorization. Available borrowing capacity under the Company's senior credit facility was $1.7 billion as of June 30, 2008; after giving effect to the repayment of $196 million of senior notes in August 2008, such availability is $1.5 billion.

During the quarter, the Company and Dubai World each funded $300 million of construction costs for CityCenter. The Company and Dubai World are currently working with several relationship lenders regarding a $3 billion financing package for the joint venture. To date, CityCenter has received commitments totaling $1.65 billion from the lead banks -- Bank of America, Royal Bank of Scotland, UBS, BNP Paribas, and Sumitomo Mitsui. In addition, CityCenter has received commitments from Deutsche Bank, Morgan Stanley, and the Bank of Nova Scotia.

"In an unprecedented credit market, CityCenter has received to date well over half of the financing committed from these institutions and anticipates finalizing its bank financing this quarter," said Executive Vice President and Chief Financial Officer of MGM MIRAGE, Dan D'Arrigo. Related to MGM MIRAGE capital spending, Mr. D'Arrigo noted, "Over the past several years, we have invested significant capital in our resorts in the form of new restaurants, entertainment venues and upgraded rooms, and we maintain them at the highest level. As a result, our required capital spending for the remainder of this year and into 2009 will be lower than in the recent past, enhancing our available free cash flow."

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 results 5 Aug 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 second quarter 2008 financial results. The Company achieved 97% occupancy at its Las Vegas Strip resorts, while company-wide net revenue declined 2%. The Company earned $0.40 per diluted share from continuing operations in the 2008 second quarter, compared to $0.62 in the prior year second quarter. The 2007 quarter included $63 million, or $0.14 per diluted share net of tax, of residential sales at The Signature at MGM Grand. The 2008 quarter includes $19 million, or $0.04 per diluted share net of tax, of insurance recovery income related to the Monte Carlo fire. Overall trends were similar to those experienced in the first quarter of 2008 -- guests continued to visit the Company's resorts in high numbers, but at lower room rates, and current economic conditions led to lower visitor spending. Gaming revenues were impacted slightly more than non-gaming revenues, with the Company experiencing a 4% decline in gaming revenues on a quarter-over-quarter basis. Net non-gaming revenues were flat as relative strength in food and beverage and entertainment revenue offset lower revenue in rooms and retail. The Company also notes that results at its regional properties in Mississippi and Michigan improved compared to first quarter performance and exceeded 2007 results. Key results for the quarter include: -- Net revenue decreased 2% to $1.9 billion; -- Las Vegas Strip REVPAR(1) decreased 5%; occupancy was 97% at the Company's Las Vegas Strip resorts versus 98% a year ago; -- Casino revenue decreased 4%, mainly as result of lower table games volume at the Company's Las Vegas Strip resorts and a 10% decline in Las Vegas Strip slots revenue, offset by increased slots revenue at the larger MGM Grand Detroit and increases at Beau Rivage and Gold Strike Tunica; -- Property EBITDA(2) decreased 12% on a comparable basis, after removing the impact of the prior year residential profits and current year insurance recoveries. On an absolute basis, Property EBITDA was $564 million in the 2008 quarter, an 18% decrease from the prior year; -- Bellagio and Mandalay Bay reported increases in Property EBITDA, with Bellagio reporting its highest ever quarterly hotel revenue and leading the Las Vegas market in Property EBITDA; Mandalay Bay produced a record for second quarter EBITDA. "Our resorts were near capacity and we believe our market share increased, as discriminating customers seek the best resort and entertainment experiences," said Terry Lanni, Chairman and CEO of MGM MIRAGE. "Our track record of successfully navigating through changing economic conditions is solid and is reinforced by our results this quarter." Detailed Discussion of Second Quarter Operating Results Casino revenue decreased 4%, mainly due to a decrease in table games volume of 7%. The table games hold percentage was at the mid-point of the normal 18% to 22% range in the current quarter and slightly higher than in the 2007 quarter. Slots revenue decreased 2% in the quarter, with the Company's Las Vegas Strip resorts posting a 10% decrease. However, slots revenue increased in the high single digits at Beau Rivage and Gold Strike Tunica and 18% at MGM Grand Detroit. MGM Grand Detroit continues to gain market share as a result of its upgraded amenities. Rooms revenue decreased 6%, with a 5% decline in Las Vegas Strip REVPAR. Average room rates were down 5% at the Company's Las Vegas Strip resorts. Las Vegas Strip occupancy decreased slightly, and the Company had approximately 32,000 less rooms available at its Las Vegas Strip resorts, mainly due to the lower room count at Monte Carlo. These trends are largely in line with the Company's experience in the first quarter, when Las Vegas Strip REVPAR decreased 4%. In the second quarter, the Company strategically managed its room rates to ensure that occupancy was maximized in line with historical levels. Food and beverage revenue increased 2% and entertainment revenues also performed well, only down 4% despite a difficult comparison as the second quarter of 2007 featured the Oscar de la Hoya-Floyd Mayweather fight. The Company's Cirque du Soleil production shows generated a combined 3% increase in revenue. The Company believes its restaurants, nightclubs and shows continue to attract guests seeking the highest quality experience, and the Company has continued to introduce new venues such as the recently opened Brand Steakhouse at Monte Carlo, Tender Steakhouse at Luxor, BLT Burger at The Mirage, and Yellowtail sushi restaurant at Bellagio; and the soon-to-open RokVegas nightclub at New York-New York. In addition, the new production show from Cirque du Soleil and Criss Angel, Believe, will open in the fall. The Company recorded $19 million of insurance recovery income in the quarter related to the January 2008 Monte Carlo fire -- $9 million related to business interruption recorded as a reduction of general and administrative expenses, and $10 million related to property damage recorded as property transactions. Through June 30, 2008, the Company had received $50 million from its insurers. Excluding the insurance recovery income, Monte Carlo earned Property EBITDA of $17 million in the 2008 second quarter compared to $32 million reported in the 2007 second quarter; the property is still without nearly 200 rooms, mostly suites, as a result of the fire. Corporate expense decreased from $44 million in the 2007 quarter to $27 million in 2008, due to the impact of cost reduction measures implemented during the quarter and lower accruals for profit-based bonuses. MGM Grand Macau, of which the Company owns 50%, recorded Property EBITDA of $23 million and an operating loss of $5 million. The Company recognized its share of MGM Grand Macau's results as follows: $4 million of loss in the "Income from unconsolidated affiliates" line and $3 million of expense in "Non-operating items from unconsolidated affiliates." "As these results represent only our second full quarter of operations at MGM Grand Macau, we believe we are still in the early stages of realizing the potential of this resort," said Mr. Lanni. "We have taken several steps to improve our operating performance over the past several months and based on our results in June and July, we believe these measures are having the desired impact as evidenced by our increased market share." Operating income decreased 29% for the quarter to $334 million, a larger percentage decrease than the 18% drop in Property EBITDA as a result of higher depreciation expense, including the larger MGM Grand Detroit. Year-over-year comparisons for both Property EBITDA and operating income were impacted by the prior year Signature profits of $63 million and the other items described earlier in the release. On a comparable basis excluding these items in both quarterly periods, Property EBITDA decreased 12% with a margin of 30% in 2008 versus 33% in 2007; and operating income decreased 21% with a margin of 17% versus 22%. Net income, including discontinued operations, decreased to $113 million, or $0.40 per diluted share, from $360 million, or $1.22 per diluted share. In addition to the factors described above, the decrease resulted from the $264 million of pre-tax gains recorded in the prior year quarter from the sale of discontinued operations (the Primm Valley Resorts and Laughlin Properties). "Our resorts are clearly positioned to be the standard of quality in our industry, and our results reflect that competitive position," said Jim Murren, President and Chief Operating Officer of MGM MIRAGE. "While we had mixed results, some of our properties generated increases in cash flow in this challenging environment, and our cost reduction efforts continue to gain traction without impacting guest service; we expect these initiatives will benefit us well into the future. We believe in the durability of the Las Vegas market and that over time it will continue to grow in line with historical trends. Our own forward booking trends show improvement in the fourth quarter of 2008 and into 2009." Financial Position Second quarter capital investments totaled $221 million which included $73 million on room and suite remodel projects, primarily at The Mirage and TI; $7 million for the theatre at Luxor; expenditures of $9 million for remediation efforts at Monte Carlo; and $23 million for the people mover joining CityCenter, Monte Carlo and Bellagio, and Monte Carlo's share of a parking garage being constructed for both Monte Carlo and CityCenter. The remaining $109 million was for other capital expenditures, including various new and upgraded amenities at the Company's resorts. The Company repurchased 2.6 million shares of its common stock in the open market for $134 million during the second quarter, completing the Company's December 2007 share repurchase authorization. In May 2008, the Company's Board of Directors approved a new 20 million share repurchase program; however, the Company has not repurchased any shares under this authorization. Available borrowing capacity under the Company's senior credit facility was $1.7 billion as of June 30, 2008; after giving effect to the repayment of $196 million of senior notes in August 2008, such availability is $1.5 billion. During the quarter, the Company and Dubai World each funded $300 million of construction costs for CityCenter. The Company and Dubai World are currently working with several relationship lenders regarding a $3 billion financing package for the joint venture. To date, CityCenter has received commitments totaling $1.65 billion from the lead banks -- Bank of America, Royal Bank of Scotland, UBS, BNP Paribas, and Sumitomo Mitsui. In addition, CityCenter has received commitments from Deutsche Bank, Morgan Stanley, and the Bank of Nova Scotia. "In an unprecedented credit market, CityCenter has received to date well over half of the financing committed from these institutions and anticipates finalizing its bank financing this quarter," said Executive Vice President and Chief Financial Officer of MGM MIRAGE, Dan D'Arrigo. Related to MGM MIRAGE capital spending, Mr. D'Arrigo noted, "Over the past several years, we have invested significant capital in our resorts in the form of new restaurants, entertainment venues and upgraded rooms, and we maintain them at the highest level. As a result, our required capital spending for the remainder of this year and into 2009 will be lower than in the recent past, enhancing our available free cash flow."