MGM MIRAGE Reports Record First Quarter Results

May 03, 2007
PRNewswire-FirstCall
LAS VEGAS

MGM MIRAGE (NYSE: MGM) today reported its first quarter 2007 financial results, achieving the Company's highest ever first quarter diluted earnings per share from continuing operations of $0.55, a 15% increase over the $0.48 per share earned in 2006. Net income per share on a diluted basis, including the results of discontinued operations, was $0.57 per share compared to $0.49 per share in 2006. Net revenues for the first quarter increased 9% to $1.9 billion, an all-time record revenue performance for the Company in any quarter. First quarter revenues were positively impacted by strong room pricing at the Company's Las Vegas Strip resorts, the reopening of Beau Rivage in August 2006, and the continued impact of new restaurants, nightclubs and shows at several resorts. Earnings benefited from the strong revenue trends, solid operating margins, and profits from sales of the remaining units of Tower 2 of the Signature at MGM Grand.

  Key results from the quarter include:

  *  Non-gaming revenues increased 12%, 10% excluding Beau Rivage,
     validating the Company's strategic reinvestment in non-gaming
     amenities;
  *  Las Vegas Strip REVPAR(1) increased 9%, which represents the fifteenth
     consecutive quarter of year-over-year REVPAR increases for these
     resorts;
  *  Gaming revenues increased 4% but decreased 6% excluding Beau Rivage.
     Table games volume, including baccarat, decreased 7% excluding Beau
     Rivage;
  *  Record first quarter Property EBITDA(2) of $655 million, a 7% increase
     over the prior year; Property EBITDA margins remained strong at 34% in
     the first quarter;
  *  All-time record Property EBITDA at several Las Vegas Strip resorts,
     including Bellagio, MGM Grand Las Vegas, Mandalay Bay, Treasure Island
     and Monte Carlo;
  *  Beau Rivage, which was closed in the prior year quarter, earned
     Property EBITDA of $28 million, an all-time record for any quarter for
     Beau Rivage(3);
  *  Repurchased 2.5 million shares for $175 million during the quarter.

  Recent significant developments include:

  *  Signed a definitive agreement with Diaoyutai State Guesthouse. The
     joint venture is initially targeting locations for non-gaming luxury
     hotels in the People's Republic of China;
  *  Signed a definitive agreement with Mubadala Development Company, an
     investment and development vehicle established and wholly owned by the
     Government of the Emirate of Abu Dhabi, U.A.E.;
  *  Announced an increase to the CityCenter construction budget to
     $7.4 billion and announced increased expected gross proceeds from sales
     of residential units - $2.7 billion, up from $2.5 billion -- as a
     result of the strong initial public reception of the residential
     offerings.  The current expected net cost of CityCenter is
     $4.7 billion;
  *  Entered into agreements to acquire 34 acres on the Las Vegas Strip
     adjacent to Circus Circus Las Vegas, which together with land already
     owned creates a 78-acre site available for future development;
  *  Completed the sale of the Primm Valley Resorts and expect to close the
     sale of the Laughlin Properties -- Colorado Belle and Edgewater --
     during the second quarter;
  *  Entered into an agreement to invest in The M Resort, an 80-acre
     mixed-use development located about ten miles south of Bellagio on Las
     Vegas Blvd.

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 March 31,                    2007         2006
  ----------------------------                 --------     --------
  Profits from The Signature at MGM Grand      $   0.02     $     --
  Preopening and start-up expenses                (0.03)       (0.02)
  Property transactions, net                      (0.01)       (0.05)



"We remain focused on executing our vision for the Las Vegas Strip and expanding our brands globally as evidenced by our recent Las Vegas Strip land acquisitions and our strategic partnerships with first-class organizations that share our vision," said Terry Lanni, MGM MIRAGE's Chairman and CEO. "As leaders in shaping the future of Las Vegas and expanding markets world-wide, we and our partners are setting the bar for quality, design, and long-term sustainable growth."

Net revenues increased 9%; excluding Beau Rivage, net revenues were up 3%. The Company generated increased revenues from non-gaming operations due to strong room pricing, new and upgraded food and beverage outlets, and exclusive entertainment shows and events. As a part of the Company's efforts to continuously update its entertainment offerings, it will add a new Cirque du Soleil show starring Criss Angel at the Luxor in 2008 and is adding several new and exciting restaurants, nightclubs and other amenities at Luxor, Monte Carlo, Excalibur, New York-New York and Mandalay Bay.

Gaming revenues increased 4%, but decreased 6% excluding Beau Rivage. Table games volumes at the Company's Las Vegas Strip resorts decreased 7% compared to a robust prior year first quarter. Table games hold percentages were near the mid-point of the normal 18-22% range in both periods. Slot revenues at the Company's Las Vegas Strip resorts decreased 3% from the prior year first quarter.

Rooms revenues increased 8%, 5% excluding Beau Rivage despite having 98,000 less available rooms as a result of room remodel projects, primarily at Mandalay Bay and Excalibur. Average rates increased 8% at the Company's Las Vegas Strip resorts. Las Vegas Strip REVPAR increased 9%, led by double-digit percentage increases at Mandalay Bay, The Mirage, and TI. The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

                                              Three Months Ended
                                           ------------------------
                                            March 31,     March 31,
                                              2007         2006
                                           ----------    ----------
  Occupancy %                                  96%          95%
  Average Daily Rate (ADR)                 $   169      $   157
  Revenue per Available Room (REVPAR)      $   162      $   149



The Company's operating income increased 8% to $445 million, which includes $8 million of profit from closings on the final units of Tower 2 of the Signature at MGM Grand and $16 million of operating income from Beau Rivage. Excluding these items, operating income increased 2% from prior year with a margin of 23% in both quarters. EBITDA increased 3% and Property EBITDA increased 2%, also excluding these items, with comparable Property EBITDA margins of 34% in both periods.

Detailed Discussion of Certain Charges

In the first quarter of 2007, the Company incurred $5 million of net property transactions primarily related to the write-off of the net book value of the building assets of Nevada Landing, which closed in March. In the 2006 period, net property transactions of $23 million largely related to the write-off of the tram connecting Bellagio and Monte Carlo and the related tram station assets ($12 million at Bellagio and $10 million at Monte Carlo).

Preopening and start-up expenses of $14 million in 2007 primarily related to CityCenter, the Detroit permanent casino, and MGM Grand Macau. Preopening and start-up expenses of $6 million in the 2006 quarter related primarily to CityCenter, MGM Grand Macau, and The Signature at MGM Grand.

Financial Position

First quarter capital investments totaled $611 million, which included $300 million for CityCenter, $66 million for the permanent MGM Grand Detroit hotel and casino, and $40 million of trailing payments for Beau Rivage rebuilding. Remaining capital expenditures included spending of $65 million on room and suite remodel projects, primarily at Excalibur and Mandalay, expenditures for corporate aircraft of $55 million, and $85 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 $56 million of insurance recoveries related to Hurricane Katrina. These amounts were not recognized as income pending the final settlement of the Company's insurance claim.

During the first quarter of 2007, the Company repurchased 2.5 million shares of its common stock for $175 million, leaving 5.5 million shares available under the Company's current authorization. At March 31, 2007, the Company had $2.3 billion of available borrowings under its senior credit facility.

"We continue to generate significant operating cash flow from our existing resorts and reinvest strategically in those resorts," said Jim Murren, MGM MIRAGE President, CFO and Treasurer. "In addition, we are in the home stretch of construction in Macau and Detroit and look forward to adding significantly to our cash flow base when these resorts open in late 2007. Along with our significant available bank borrowings and ready access to the capital markets, our powerful cash flow generation will allow us to fund a pipeline of development projects for years to come."

MGM MIRAGE will hold a conference call to discuss its first quarter earnings results and outlook for the second quarter at 11:00 a.m. Eastern Daylight Time today. The call can be accessed live at www.companyboardroom.com or www.mgmmirage.com, or by calling 1-800-526-8531 (domestic) or 1-706-634-6528 (international). Until Thursday, May 10, 2007, a complete replay of the conference call can be accessed by dialing 1-706-645-9291, access code 7329695. A complete replay of the call will also be made available at www.mgmmirage.com. Supplemental detailed earnings information will also be available on the Company's website.

  (1)  REVPAR is hotel Revenue per Available Room.

  (2)  "EBITDA" is earnings before interest and other non-operating income
       (expense), taxes, depreciation and amortization.  "Property EBITDA"
       is EBITDA before corporate expense and stock compensation expense.
       EBITDA information is presented solely as a supplemental disclosure
       because management believes that it is 1) a widely used measure of
       operating performance in the gaming industry, and 2) a principal
       basis for valuation of gaming companies.  In addition, capital
       allocation, tax planning, financing and stock compensation awards are
       all managed at the corporate level.  Management uses Property EBITDA
       as the primary measure of the Company's operating resorts'
       performance, including the evaluation of operating personnel.  EBITDA
       should not be construed as an alternative to operating income, as an
       indicator of the Company's operating performance; or as an
       alternative to cash flows from operating activities, as a measure of
       liquidity; or as any other measure determined in accordance with
       generally accepted accounting principles.  The Company has
       significant uses of cash flows, including capital expenditures,
       interest payments, taxes and debt principal repayments, which are not
       reflected in EBITDA.  Also, other gaming companies that report EBITDA
       information may calculate EBITDA in a different manner than the
       Company.  Reconciliations of consolidated EBITDA to net income and of
       operating income to Property EBITDA are included in the financial
       schedules accompanying this release.

  (3)  Beau Rivage earned operating income of $16 million in the first
       quarter of 2007, with depreciation and amortization of $12 million.
       Beau Rivage was closed during the prior year first quarter as a
       result of Hurricane Katrina.

MGM MIRAGE (NYSE: MGM), one of the world's leading and most respected hotel and gaming companies, owns and operates 19 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. The Company has entered into an agreement to sell its Colorado Belle and Edgewater properties located in Laughlin, Nevada. In addition, the Company has major new developments under construction in Nevada, Michigan and Macau S.A.R. CityCenter is a multi-billion dollar mixed-use urban development in the heart of the Las Vegas Strip; a new MGM Grand hotel and casino complex is being built in downtown Detroit; and the Company has a 50% interest in MGM Grand Macau, a hotel-casino resort currently under construction in Macau S.A.R. MGM MIRAGE supports responsible gaming and has implemented the American Gaming Association's Code of Conduct for Responsible Gaming at its properties. MGM MIRAGE also has been the recipient of numerous awards and recognitions for its industry-leading Diversity Initiative and its community philanthropy programs. For more information about MGM MIRAGE, please visit the company's website at http://www.mgmmirage.com/.

Statements in this release which are not historical facts are "forward looking" statements and "safe harbor statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and/or uncertainties, including risks and/or uncertainties as described in the company's public filings with the Securities and Exchange Commission.

                         MGM MIRAGE AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share data)
                                 (Unaudited)

                                                    Three Months Ended
                                             ------------------------------
                                                March 31,         March 31,
                                                  2007              2006
                                             ------------------------------
  Revenues:
     Casino                                  $   811,939       $   780,258
     Rooms                                       549,004           508,398
     Food and beverage                           417,449           369,044
     Entertainment                               134,248            98,980
     Retail                                       68,250            64,486
     Other                                       122,070           105,795
                                             ------------      ------------
                                               2,102,960         1,926,961
     Less: Promotional allowances               (173,525)         (152,593)
                                             ------------      ------------
                                               1,929,435         1,774,368
                                             ------------      ------------
  Expenses:
     Casino                                      418,108           411,032
     Rooms                                       141,774           132,700
     Food and beverage                           244,382           216,371
     Entertainment                                98,145            72,892
     Retail                                       44,391            43,886
     Other                                        72,245            55,022
     General and administrative                  285,105           250,111
     Corporate expense                            33,955            36,652
     Preopening and start-up expenses             14,276             6,181
     Restructuring costs                             -                 804
     Property transactions, net                    5,019            23,485
     Depreciation and amortization               168,277           147,433
                                             ------------      ------------
                                               1,525,677         1,396,569
                                             ------------      ------------

  Income from unconsolidated affiliates           41,375            35,554
                                             ------------      ------------

  Operating income                               445,133           413,353
                                             ------------      ------------

  Non-operating income (expense):
     Interest income                               2,657             2,745
     Interest expense, net                      (184,011)         (192,849)
     Non-operating items from
      unconsolidated affiliates                   (5,106)           (3,595)
     Other, net                                   (2,728)           (3,044)
                                             ------------      ------------
                                                (189,188)         (196,743)
                                             ------------      ------------

  Income from continuing operations
   before income taxes                           255,945           216,610
     Provision for income taxes                  (92,935)          (76,848)
                                             ------------      ------------
  Income from continuing operations              163,010           139,762
                                             ------------      ------------

  Discontinued operations:
     Income from discontinued operations           7,846             6,482
     Provision for income taxes                   (2,683)           (2,207)
                                             ------------      ------------
                                                   5,163             4,275
                                             ------------      ------------
  Net income                                 $   168,173       $   144,037
                                             ============      ============

  Per share of common stock:

     Basic:
     Income from continuing operations       $      0.57       $      0.49
     Discontinued operations                        0.02              0.02
                                             ------------      ------------
     Net income per share                    $      0.59       $      0.51
                                             ============      ============
     Weighted average shares outstanding         284,021           284,200
                                             ============      ============
     Diluted:
     Income from continuing operations       $      0.55       $      0.48
     Discontinued operations                        0.02              0.01
                                             ------------      ------------
     Net income per share                    $      0.57       $      0.49
                                             ============      ============
     Weighted average shares outstanding         295,577           292,783
                                             ============      ============



                       MGM MIRAGE AND SUBSIDIARIES
                     SUPPLEMENTAL DATA - NET REVENUES
                              (In thousands)
                               (Unaudited)

                                                   Three Months Ended
                                           --------------------------------
                                              March 31,          March 31,
                                                2007               2006
                                           --------------    --------------
     Las Vegas Strip                       $   1,626,343     $   1,571,604
     Other Nevada                                 44,432            46,799
     MGM Grand Detroit                           116,134           115,093
     Mississippi                                 142,526            40,872
                                           --------------    --------------
                                           $   1,929,435     $   1,774,368
                                           ==============    ==============


                       MGM MIRAGE AND SUBSIDIARIES
                   SUPPLEMENTAL DATA - PROPERTY EBITDA
                              (In thousands)
                               (Unaudited)

                                                   Three Months Ended
                                           --------------------------------
                                              March 31,          March 31,
                                                2007               2006
                                           --------------    --------------
     Las Vegas Strip                       $     548,842     $     523,381
     Other Nevada                                 (1,996)            5,575
     MGM Grand Detroit                            34,826            37,100
     Mississippi                                  35,403             9,359
     Unconsolidated resorts                       38,142            34,196
                                           --------------    --------------
                                           $     655,217     $     609,611
                                           ==============    ==============



                       MGM MIRAGE AND SUBSIDIARIES
      DETAIL OF CERTAIN CHARGES AFFECTING PROPERTY EBITDA and EBITDA
                              (In thousands)
                               (Unaudited)

                               Three Months Ended March 31, 2007
                               ---------------------------------
                     Preopening                    Property
                    and start-up  Restructuring  transactions,
                     expenses          costs         net           Total
                  -------------   -------------  ------------- -------------
  Las Vegas
   Strip          $      8,472    $         --   $        278  $      8,750
  Other Nevada              --              --          4,630         4,630
  MGM Grand
   Detroit               2,379              --             --         2,379
  Mississippi               --              --             (2)           (2)
  Unconsolidated
   resorts               3,233              --             --         3,233
                  -------------   -------------  ------------- -------------
                        14,084              --          4,906        18,990
  Corporate and
   other                   192              --            113           305
                  -------------   -------------  ------------- -------------
                  $     14,276    $         --   $      5,019  $     19,295
                  =============   =============  ============= =============


                               Three Months Ended March 31, 2006
                               ---------------------------------
                     Preopening                    Property
                    and start-up  Restructuring  transactions,
                     expenses          costs         net           Total
                  -------------   -------------  ------------- -------------

  Las Vegas
   Strip          $      3,208    $        804   $     23,493  $     27,505
  Other Nevada              --              --             (3)           (3)
  MGM Grand
   Detroit                 593              --             (2)          591
  Mississippi               --              --             (3)           (3)
  Unconsolidated
   resorts               2,221              --             --         2,221
                  -------------   -------------  ------------- -------------
                         6,022             804         23,485        30,311
  Corporate and
   other                   159              --             --           159
                  -------------   -------------  ------------- -------------
                  $      6,181    $        804   $     23,485  $     30,470
                  =============   =============  ============= =============



                       MGM MIRAGE AND SUBSIDIARIES
RECONCILIATION OF CONSOLIDATED EBITDA TO INCOME FROM CONTINUING OPERATIONS
                              (In thousands)
                               (Unaudited)

                                                   Three Months Ended
                                            --------------------------------
                                               March 31,         March 31,
                                                 2007              2006
                                            --------------    --------------
  EBITDA                                    $     613,410     $     560,786
    Depreciation and amortization                (168,277)         (147,433)
                                            --------------    --------------
  Operating income                                445,133           413,353
                                            --------------    --------------

  Non-operating income (expense):
    Interest expense, net                        (184,011)         (192,849)
    Other                                          (5,177)           (3,894)
                                            --------------    --------------
                                                 (189,188)         (196,743)
                                            --------------    --------------
  Income from continuing operations
    before income taxes                           255,945           216,610
    Provision for income taxes                    (92,935)          (76,848)
                                            --------------    --------------
  Income from continuing operations         $     163,010     $     139,762
                                            ==============    ==============



                       MGM MIRAGE AND SUBSIDIARIES
          RECONCILIATION OF OPERATING INCOME TO PROPERTY EBITDA
                              (In thousands)
                               (Unaudited)


                    Three Months Ended March 31, 2007
                    ---------------------------------

                                           Depreciation
                             Operating          and
                              income       amortization        EBITDA
                           -------------  ---------------  --------------
  Las Vegas
   Strip                   $    414,945   $      133,897   $     548,842
  Other Nevada                   (3,871)           1,875          (1,996)
  MGM Grand
   Detroit                       28,864            5,962          34,826
  Mississippi                    20,237           15,166          35,403
  Unconsolidated
   resorts                       38,142               --          38,142
                           -------------  ---------------  --------------
                                498,317          156,900         655,217
  Stock compensation                                             (13,580)
  Corporate and
   other                                                         (28,227)
                                                           --------------
                                                           $     613,410
                                                           ==============


                    Three Months Ended March 31, 2006
                    ---------------------------------

                                           Depreciation
                             Operating          and
                              income       amortization        EBITDA
                           -------------  ---------------  --------------
  Las Vegas
   Strip                   $    395,351   $      128,030   $     523,381
  Other Nevada                    3,219            2,356           5,575
  MGM Grand
   Detroit                       34,183            2,917          37,100
  Mississippi                     3,859            5,500           9,359
  Unconsolidated
   resorts                       34,196               --          34,196
                           -------------  ---------------  --------------
                                470,808          138,803         609,611
  Stock compensation                                             (21,096)
  Corporate and
   other                                                         (27,729)
                                                           --------------
                                                           $     560,786
                                                           ==============



                       MGM MIRAGE AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
                    (In thousands, except share data)
                               (Unaudited)

                                                March 31,     December 31,
                                                  2007            2006
                                            --------------   --------------

                                  ASSETS
  Current assets:
      Cash and cash equivalents             $     313,967    $     452,944
      Accounts receivable, net                    373,391          362,921
      Inventories                                 124,500          118,459
      Income tax receivable                            --           18,619
      Deferred income taxes                        70,405           68,046
      Prepaid expenses and other                  133,620          124,414
      Assets held for sale                        418,936          369,348
                                            --------------   --------------
            Total current assets                1,434,819        1,514,751
                                            --------------   --------------

  Real estate under development                   244,520          188,433

  Property and equipment, net                  17,630,756       17,241,860

  Other assets:
      Investments in unconsolidated
       affiliates                               1,086,189        1,092,257
      Goodwill                                  1,269,591        1,300,747
      Other intangible assets, net                364,564          367,200
      Deposits and other assets, net              527,330          440,990
                                            --------------   --------------
            Total other assets                  3,247,674        3,201,194
                                            --------------   --------------
                                            $  22,557,769    $  22,146,238
                                            ==============   ==============


                    LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
      Accounts payable                      $     157,022    $     182,154
      Construction payable                        296,064          234,486
      Income taxes payable                         38,695               --
      Accrued interest on long-term
       debt                                       194,343          232,957
      Other accrued liabilities                   905,503          958,244
      Liabilities related to assets
       held for sale                               43,325           40,259
                                            --------------   --------------
            Total current liabilities           1,634,952        1,648,100
                                            --------------   --------------

  Deferred income taxes                         3,378,256        3,441,157
  Long-term debt                               13,240,315       12,994,869
  Other long-term obligations                     372,648          212,563
  Stockholders' equity:
      Common stock, $.01 par value:
       authorized 600,000,000 shares,
       issued 365,005,233 and
       362,886,027 shares and
       outstanding 283,528,206 and
       283,909,000 shares                          3,650            3,629
      Capital in excess of par value            2,895,060        2,806,636
      Treasury stock, at cost:
       81,477,027 and 78,977,027 shares        (1,771,707)      (1,597,120)
      Retained earnings                         2,804,162        2,635,989
      Accumulated other comprehensive
       income                                         433              415
                                            --------------   --------------
            Total stockholders' equity          3,931,598        3,849,549
                                            --------------   --------------
                                            $  22,557,769    $  22,146,238
                                            ==============   ==============

First Call Analyst:
FCMN Contact: dan_d'arrigo@mgmmirage.com

SOURCE: MGM MIRAGE

CONTACT: Investment Community, James J. Murren, President, Chief
Financial Officer & Treasurer, +1-702-693-8877, or News Media, Alan M.
Feldman, Senior Vice President, Public Affairs, +1-702-891-7147, both of MGM
MIRAGE

Web site: http://www.mgmmirage.com/