MGM MIRAGE Reports First Quarter Results

May 06, 2008
PRNewswire-FirstCall
LAS VEGAS

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."

MGM MIRAGE will hold a conference call to discuss its first quarter earnings results and outlook for the second quarter of 2008 at 11:00 a.m. Eastern Daylight Time today. The call can be accessed live at http://www.companyboardroom.com/ or http://www.mgmmirage.com/, or by calling 1-800-526-8531 (domestic) or 1-706-634-6528 (international). Until Tuesday, May 13, 2008, a complete replay of the conference call can be accessed by dialing 1-706-645-9291, access code 42415451. A complete replay of the call will also be made available at http://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.

                              *     *      *

MGM MIRAGE (NYSE: MGM), one of the world's leading and most respected development companies with significant holdings in gaming, hospitality and entertainment, owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has 50% investments in four other properties in Nevada, New Jersey, Illinois and Macau. MGM MIRAGE is developing major casino and non-casino resorts, separately and with partners in Las Vegas, Atlantic City, the People's Republic of China and Abu Dhabi, U.A.E. MGM MIRAGE supports responsible gaming and has implemented the American Gaming Association's Code of Conduct for Responsible Gaming at its properties. MGM MIRAGE has received 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,
                                                  2008               2007
                                              ------------------------------
  Revenues:
     Casino                                   $  790,464         $  811,939
     Rooms                                       518,741            549,004
     Food and beverage                           402,392            417,449
     Entertainment                               134,838            134,248
     Retail                                       64,037             68,250
     Other                                       147,973            122,070
                                              -----------        -----------
                                               2,058,445          2,102,960
     Less: Promotional allowances               (174,812)          (173,525)
                                              -----------        -----------
                                               1,883,633          1,929,435
                                              -----------        -----------
  Expenses:
     Casino                                      416,563            411,792
     Rooms                                       136,797            135,185
     Food and beverage                           236,272            235,704
     Entertainment                                95,664             97,243
     Retail                                       43,164             43,744
     Other                                        92,564             68,808
     General and administrative                  320,374            311,674
     Corporate expense                            32,450             33,955
     Preopening and start-up expenses              5,164             14,276
     Restructuring costs                             329               -
     Property transactions, net                    2,776              5,019
     Depreciation and amortization               194,339            168,277
                                              -----------        -----------
                                               1,576,456          1,525,677
                                              -----------        -----------

  Income from unconsolidated affiliates           34,111             41,375
                                              -----------        -----------

  Operating income                               341,288            445,133
                                              -----------        -----------

  Non-operating income (expense):
     Interest income                               3,466              2,657
     Interest expense, net                      (149,789)          (184,011)
     Non-operating items from
      unconsolidated affiliates                   (9,891)            (5,106)
     Other, net                                      230             (2,728)
                                              -----------        -----------
                                                (155,984)          (189,188)
                                              -----------        -----------

  Income from continuing operations
   before income taxes                           185,304            255,945
     Provision for income taxes                  (66,958)           (92,935)
                                              -----------        -----------
  Income from continuing operations              118,346            163,010
                                              -----------        -----------

  Discontinued operations:
     Income from discontinued operations             -                7,846
     Provision for income taxes                      -               (2,683)
                                              -----------        -----------
                                                     -                5,163
                                              -----------        -----------

  Net income                                  $  118,346         $  168,173
                                              ===========        ===========

  Per share of common stock:
     Basic:
     Income from continuing operations        $     0.41         $     0.57
     Discontinued operations                         -                 0.02
                                              -----------        -----------
     Net income per share                     $     0.41         $     0.59
                                              ===========        ===========

     Weighted average shares outstanding         288,943            284,021
                                              ===========        ===========

     Diluted:
     Income from continuing operations        $     0.40         $     0.55
     Discontinued operations                         -                 0.02
                                              -----------        -----------
     Net income per share                     $     0.40         $     0.57
                                              ===========        ===========
     Weighted average shares outstanding         298,400            295,577
                                              ===========        ===========



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

                             Three Months Ended
                          ------------------------
                           March 31,     March 31,
                             2008          2007
                          -----------  -----------
    Las Vegas Strip       $1,548,057   $1,626,343
    Other Nevada              36,850       44,432
    MGM Grand Detroit        144,780      116,134
    Mississippi              134,222      142,526
    Other                     19,724          -
                          -----------  -----------
                          $1,883,633   $1,929,435
                          ===========  ===========



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

                             Three Months Ended
                          ------------------------
                           March 31,     March 31,
                             2008          2007
                          -----------  -----------
    Las Vegas Strip       $  479,496   $  548,842
    Other Nevada                (685)      (1,996)
    MGM Grand Detroit         34,412       34,826
    Mississippi               27,370       35,403
    Other                      4,579          -
    Unconsolidated resorts    29,367       38,142
                          -----------  -----------
                          $  574,539   $  655,217
                          ===========  ===========



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

                    Three Months Ended March 31, 2008
                    ---------------------------------


                           Preopening
                              and                      Property
                            start-up   Restructuring transactions,
                            expenses       costs          net        Total
                           ----------- ------------- ------------- ---------
    Las Vegas Strip        $     226   $      329    $    2,789    $  3,344
    Other Nevada                 -            -             -           -
    MGM Grand Detroit            194          -               8         202
    Mississippi                  -            -               5           5
    Unconsolidated resorts     4,744          -             -         4,744
                           ----------- ------------- ------------- ---------
                               5,164          329         2,802       8,295
    Corporate and other          -            -             (26)        (26)
                           ----------- ------------- ------------- ---------
                           $   5,164   $      329    $    2,776    $  8,269
                           =========== ============= ============= =========


                    Three Months Ended March 31, 2007
                    ----------------------------------
                           Preopening
                              and                      Property
                            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
                           =========== ============= ============= =========



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

                                           Three Months Ended
                                       -------------------------
                                        March 31,     March 31,
                                          2008          2007
                                       -----------  ------------
  EBITDA                               $  535,627   $  613,410
    Depreciation and amortization        (194,339)    (168,277)
                                       -----------  ------------
  Operating income                        341,288      445,133
                                       -----------  ------------

  Non-operating income (expense):
    Interest expense, net                (149,789)    (184,011)
    Other                                  (6,195)      (5,177)
                                       -----------  ------------
                                         (155,984)    (189,188)
                                       -----------  ------------
  Income from continuing operations
    before income taxes                   185,304      255,945
    Provision for income taxes            (66,958)     (92,935)
                                       -----------  ------------
  Income from continuing operations    $  118,346   $  163,010
                                       ===========  ============



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

                    Three Months Ended March 31, 2008
                    ---------------------------------

                                                    Depreciation
                                        Operating       and
                                         income     amortization    EBITDA
                                       -----------  ------------  ----------
     Las Vegas Strip                   $  333,297   $  146,199    $ 479,496
     Other Nevada                          (2,186)       1,501         (685)
     MGM Grand Detroit                     20,061       14,351       34,412
     Mississippi                           11,813       15,557       27,370
     Other                                  2,581        1,998        4,579
     Unconsolidated resorts                29,367          -         29,367
                                       -----------  ------------  ----------
                                          394,933      179,606      574,539
     Stock compensation                                             (11,203)
     Corporate and other                                            (27,709)
                                                                  ----------
                                                                  $ 535,627
                                                                  ==========

                    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
                                                                  ==========



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

                                               March 31,       December 31,
                                                 2008              2007
                                            --------------   ---------------
                                  ASSETS
  Current assets:
      Cash and cash equivalents             $    327,745     $      412,390
      Accounts receivable, net                   390,452            412,345
      Inventories                                124,190            126,116
      Deferred income taxes                       56,464             63,453
      Prepaid expenses and other                 135,269            105,412
      Assets held for sale                        54,435             55,670
                                            --------------   ---------------
            Total current assets               1,088,555          1,175,386
                                            --------------   ---------------

  Property and equipment, net                 16,845,320         16,823,704

  Other assets:
      Investments in unconsolidated
       affiliates                              2,487,363          2,482,727
      Goodwill                                 1,262,922          1,262,922
      Other intangible assets, net               358,987            359,770
      Deposits and other assets, net             852,732            623,177
                                            --------------   ---------------
            Total other assets                 4,962,004          4,728,596
                                            --------------   ---------------
                                            $ 22,895,879     $   22,727,686
                                            ==============   ===============


                   LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
      Accounts payable                      $    169,419     $      219,556
      Construction payable                        67,546             76,524
      Income taxes payable                        20,034            284,075
      Accrued interest on long-term debt         152,096            211,228
      Other accrued liabilities                  855,067            929,424
      Liabilities related to assets
       held for sale                               3,761              3,880
                                            --------------   ---------------
            Total current liabilities          1,267,923          1,724,687
                                            --------------   ---------------

  Deferred income taxes                        3,406,120          3,416,660
  Long-term debt                              12,777,215         11,175,229
  Other long-term obligations                    348,903            350,407
  Stockholders' equity:
      Common stock, $.01 par value:
       authorized 600,000,000 shares, issued
       368,865,942 and 368,395,926 shares and
       outstanding 278,721,429 and 293,768,899
       shares                                      3,689              3,684
      Capital in excess of par value           3,978,213          3,951,162
      Treasury stock, at cost:
       90,144,513 and 74,627,027 shares       (3,222,272)        (2,115,107)
      Retained earnings                        4,338,754          4,220,408
      Accumulated other comprehensive
       income (loss)                              (2,666)               556
                                            --------------   ---------------
            Total stockholders' equity         5,095,718          6,060,703
                                            --------------   ---------------
                                            $ 22,895,879     $   22,727,686
                                            ==============   ===============

First Call Analyst:
FCMN Contact: mrenelle@mgmmirage.com

SOURCE: MGM MIRAGE

CONTACT: Investment Community, DANIEL J. D'ARRIGO, Executive Vice
President, Chief Financial Officer, +1-702-693-8895, or News Media, ALAN M.
FELDMAN, Senior Vice President, Public Affairs, +1-702-650-6947, both of MGM
MIRAGE

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