MGM MIRAGE Reports First Quarter Financial Results
LAS VEGAS, May 4 /PRNewswire-FirstCall/ -- MGM MIRAGE (NYSE:MGM) today announced its financial results for the first quarter of 2009. The Company reported first quarter diluted earnings per share (EPS) of $0.38 compared to $0.40 per share in the prior year first quarter. The current year results include a gain of $0.44, net of tax, related to the sale of the Treasure Island hotel and casino.
Operating Results and Outlook
Net revenue decreased 20% to $1.5 billion in the first quarter of 2009. Revenues were negatively impacted by increased convention cancellations - particularly in January and February and at the Company's Las Vegas Strip resorts - and a continued decline in discretionary spending due to the weakened economy. Occupancy at the Company's Las Vegas Strip resorts was unusually low in January, improved in February, and returned to a normalized level of approximately 95% in March. The convention cancellations forced the Company to shift hotel business to the leisure segment at lower room rates. As a result of these factors, Las Vegas Strip REVPAR(1) decreased by 34%, to $102 for the first quarter of 2009 compared to $154 in the first quarter of 2008.
Total casino revenue declined 16%, with slots revenue down 12% for the quarter. The Company's table games volume, excluding baccarat, was down 20% in the quarter, but the high-end of the gaming segment was more resilient, with baccarat volume only down 1% in the 2009 quarter. The overall table games hold percentage was slightly lower in 2009 than the prior year quarter and near the top end of the Company's normal 18% to 22% range in both periods.
Operating income for the first quarter of 2009 was $355 million compared to $341 million in the first quarter of 2008. The current year results include the pre-tax gain on the TI sale - $190 million - as well as $15 million of Monte Carlo business interruption insurance recovery income (recorded as a reduction to SG&A expense) and $7 million of Monte Carlo property damage insurance recovery income (recorded as property transactions, net). Property EBITDA(2), which does not include the TI gain, was approximately $372 million in the 2009 quarter, down 35% from $575 million. Property EBITDA, excluding the Monte Carlo insurance recovery income and other items affecting comparability (preopening expenses and other property transactions, net), declined 38% on a comparable basis with a margin of 24% versus 31% in the prior year quarter. Consolidated EBITDA was $532 million in the 2009 quarter, which includes the $190 million pre-tax gain on the TI sale, compared to $536 million in the prior year period.
The Company's regional properties reported strong results with MGM Grand Detroit's EBITDA up 18% to $41 million in the 2009 quarter, and the combined EBITDA of Beau Rivage and Gold Strike Tunica up 15% to $31 million. Corporate expense declined 25% to $24 million, despite increased costs for legal and other corporate finance costs. The Company has continued to implement cost savings initiatives on a company-wide basis, which positively impacted results in the quarter.
The following table lists items which affect the comparability of the current and prior year quarterly results (approximate EPS impact shown, net of tax, per diluted share; negative amounts represent charges to income):
Three months ended March 31, 2009 2008 Preopening and start-up expenses $ (0.02) $ (0.01) Monte Carlo fire business interruption income (recorded as a reduction of general and administrative expenses) 0.04 - Property transactions net: Gain on the sale of TI 0.44 - Monte Carlo fire property damage income 0.02 - Other property transactions, net - (0.01)
"While we experienced significant group cancellations early in the quarter and experienced a continuation of negative consumer spending trends from the fourth quarter, cancellations have tapered off and we see signs that business levels seem to be stabilizing," said Jim Murren, MGM MIRAGE Chairman and Chief Executive Officer. "Our resorts have seen sequential increases in occupancy levels through the first quarter and into April, and our forward booking pace is improving. This is allowing us the opportunity to better yield our room pricing. Additionally, world-class events at our resorts continue to drive revenue and we have an exceptionally strong event calendar in the second and third quarters, with recent events such as the Pacquiao vs. Hatton fight; and numerous other premier concerts and events in the summer months."
Financial Position
At March 31, 2009, the Company had approximately $14.4 billion of borrowings outstanding and its cash balance was approximately $1.4 billion. These balances included the results of the following transactions:
-- In March 2009, the Company closed on the TI sale. The Company received cash of $600 million and a note receivable of $175 million at closing from the purchaser, Ruffin Acquisition, LLC.
-- During the quarter, the Company drew down the remainder of unused borrowing capacity available under its $7.0 billion senior credit facility.
-- During the quarter, capital expenditures were $56 million.
-- On March 16, 2009, the Company obtained a waiver through May 15, 2009 of the requirement that the Company comply with the financial covenants in its senior credit facility as of March 31, 2009. As part of the amendment, the Company repaid $300 million of the outstanding borrowings under the facility.
-- During the first quarter, the Company funded $437 million of equity contributions to CityCenter, which included $100 million that should have been funded by Dubai World.
On April 17, 2009, the Company made an additional investment of $70 million in CityCenter, which included $35 million that should have been funded by Dubai World. As announced separately on April 29, 2009, the Company, Dubai World and the CityCenter lenders entered into a series of agreements, including an amendment to the CityCenter joint venture agreement and the CityCenter senior secured credit facility, resulting in a comprehensive plan to fully fund the completion of CityCenter for its scheduled opening later this year.
On April 29, 2009, the Company received $155 million, plus accrued interest, from Ruffin Acquisition, LLC in full payment of the note receivable referred to above, with a $20 million discount for early payment.
Also as separately announced, the Company reached an agreement with its senior lenders for a further waiver of noncompliance (as of March 31, 2009) with financial covenants under its senior credit facility through June 30, 2009. As part of these agreements and amendments, the Company funded the remaining $224 million of its required equity contributions for CityCenter through the issuance of a letter of credit.
"We continue to work constructively with our advisors and senior lenders to find a comprehensive long-term solution to improve our financial position," said Dan D'Arrigo, MGM MIRAGE Executive Vice President and Chief Financial Officer. "We are evaluating a variety of options - which may include asset sales, new capital, and modifying or extending our existing debt - to address our liquidity needs and strengthen our balance sheet."
The Company intends to further formulate its plans to address near-term liquidity issues and its overall levels of outstanding borrowings and leverage, and to work with its lenders to approve and implement such solutions and to obtain additional waivers or amendments prior to June 30, 2009 to address future noncompliance with the senior credit facility; however, the Company can provide no assurance that it will be able to secure such waivers or amendments. Following expiration of the waiver referred to above on June 30, 2009, the Company will be subject to an event of default related to noncompliance with financial covenants under the senior credit facility at March 31, 2009. Under the terms of the senior credit facility, noncompliance with financial covenants is an event of default, under which the lenders (with a vote of more than 50% of the lenders) may exercise any or all of their remedies, including demanding immediate repayment of all outstanding borrowings under the senior credit facility.
In addition, there are provisions in the indentures governing the Company's senior and senior subordinated notes under which a) the event of default under the senior credit facility, or b) the remedies under an event of default under the senior credit facility, would cause an event of default under the relevant senior and senior subordinated notes, which would also allow holders of the senior and senior subordinated notes to demand immediate repayment and decline to release subsidiary guarantees. If the lenders exercise any or all such rights, the Company may determine to seek relief through a filing under the U.S. Bankruptcy Code.
As a result of the short-term nature of the waiver under the senior credit facility and potential cross-defaults under the indentures, the Company has classified all of its outstanding borrowings as current liabilities as of March 31, 2009 in the accompanying consolidated balance sheet.
MGM MIRAGE will hold a conference call to discuss its first quarter earnings results at 5:00 p.m. Eastern Daylight Savings 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 1-706-758-3659 (international). Until May 11, 2009, a complete replay of the conference call can be accessed by dialing 1-706-645-9291, access code 98130554. 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.
MGM MIRAGE (NYSE:MGM), one of the world's leading and most respected companies with significant holdings in gaming, hospitality and entertainment, owns and operates 16 properties located in Nevada, Mississippi and Michigan, and has 50% investments in four other properties in Nevada, New Jersey, Illinois and Macau. CityCenter, an unprecedented urban metropolis on the Las Vegas Strip scheduled to open in late 2009, is a joint venture between MGM MIRAGE and Infinity World Development Corp., a subsidiary of Dubai World. MGM MIRAGE Hospitality has entered into management agreements for future casino and non-casino resorts in the People's Republic of China, Abu Dhabi, U.A.E. and Vietnam. 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 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, 2009 2008 --------- --------- Revenues: Casino $ 664,727 $ 790,464 Rooms 355,044 518,741 Food and beverage 338,397 402,392 Entertainment 118,057 134,838 Retail 47,949 64,037 Other 137,373 147,973 --------- --------- 1,661,547 2,058,445 Less: Promotional allowances (162,752) (174,812) --------- --------- 1,498,795 1,883,633 --------- --------- Expenses: Casino 375,517 416,563 Rooms 110,827 136,797 Food and beverage 194,327 236,272 Entertainment 87,742 95,664 Retail 31,621 43,164 Other 83,806 92,564 General and administrative 260,797 320,374 Corporate expense 24,361 32,450 Preopening and start-up expenses 8,071 5,164 Restructuring costs 443 329 Property transactions, net (195,125) 2,776 Depreciation and amortization 176,858 194,339 --------- --------- 1,159,245 1,576,456 --------- ---------
Income from unconsolidated affiliates 15,549 34,111 --------- ---------
Operating income 355,099 341,288 --------- ---------
Non-operating income (expense): Interest income 4,382 3,466 Interest expense, net (171,636) (149,789) Non-operating items from unconsolidated affiliates (11,131) (9,891) Other, net (1,338) 230 --------- --------- (179,723) (155,984) --------- ---------
Income before income taxes 175,376 185,304 Provision for income taxes (70,177) (66,958) --------- ---------
Net income $ 105,199 $ 118,346 ========= =========
Per share of common stock: Basic: Net income per share $ 0.38 $ 0.41 ========= =========
Weighted average shares outstanding 276,556 288,943 ========= =========
Diluted: Net income per share $ 0.38 $ 0.40 ========= =========
Weighted average shares outstanding 276,770 298,400 ========= =========
MGM MIRAGE AND SUBSIDIARIES SUPPLEMENTAL DATA - NET REVENUES (In thousands) (Unaudited)
Three Months Ended ---------------------------- March 31, March 31, 2009 2008 ---------- ---------- Las Vegas Strip $1,187,994 $1,548,057 Other Nevada 28,537 36,850 MGM Grand Detroit 136,515 144,780 Mississippi 123,845 134,222 Other 21,904 19,724 ---------- ---------- $1,498,795 $1,883,633 ========== ==========
MGM MIRAGE AND SUBSIDIARIES SUPPLEMENTAL DATA - PROPERTY EBITDA (In thousands) (Unaudited)
Three Months Ended ---------------------------- March 31, March 31, 2009 2008 ---------- ---------- Las Vegas Strip $ 288,716 $ 479,496 Other Nevada (1,517) (685) MGM Grand Detroit 40,552 34,412 Mississippi 31,414 27,370 Other 4,864 4,579 Unconsolidated resorts 7,837 29,367 ---------- ---------- $ 371,866 $ 574,539 ========== ==========
MGM MIRAGE AND SUBSIDIARIES DETAIL OF CERTAIN CHARGES AFFECTING PROPERTY EBITDA and EBITDA (In thousands) (Unaudited)
Three Months Ended March 31, 2009 ---------------------------------
Preopening Property and start-up Restructuring transactions, expenses costs net Total ------------ ------------- ------------ --------- Las Vegas Strip $ 190 $ 443 $ (5,427) $ (4,794) Other Nevada - - - - MGM Grand Detroit - - - - Mississippi - - - - Unconsolidated resorts 7,881 - - 7,881 ------------ ------------- ---------- --------- 8,071 443 (5,427) 3,087 Corporate and other - - (189,698) (189,698) ------------ ------------- ---------- --------- $ 8,071 $ 443 $ (195,125) $(186,611) ============ ============= ========== =========
Three Months Ended March 31, 2008 --------------------------------- Preopening Property and 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 ============ ============= ============ =========
MGM MIRAGE AND SUBSIDIARIES RECONCILIATION OF CONSOLIDATED EBITDA TO NET INCOME (In thousands) (Unaudited)
Three Months Ended -------------------------- March 31, March 31, 2009 2008 --------- ---------
EBITDA $ 531,957 $ 535,627 Depreciation and amortization (176,858) (194,339) --------- --------- Operating income 355,099 341,288 --------- ---------
Non-operating income (expense): Interest expense, net (171,636) (149,789) Other (8,087) (6,195) --------- --------- (179,723) (155,984) --------- ---------
Income before income taxes 175,376 185,304 Provision for income taxes (70,177) (66,958) --------- --------- Net income $ 105,199 $ 118,346 ========= =========
MGM MIRAGE AND SUBSIDIARIES RECONCILIATION OF OPERATING INCOME TO PROPERTY EBITDA (In thousands) (Unaudited)
Three Months Ended March 31, 2009 ---------------------------------
Depreciation Operating and income (loss) amortization EBITDA ---------------- ---------------- -------- Las Vegas Strip $ 159,983 $ 128,733 $288,716 Other Nevada (3,065) 1,548 (1,517) MGM Grand Detroit 29,841 10,711 40,552 Mississippi 14,626 16,788 31,414 Other 2,271 2,593 4,864 Unconsolidated resorts 7,837 - 7,837 ---------------- ---------------- -------- 211,493 160,373 371,866 Stock compensation (8,734) Corporate and other 168,825 -------- $531,957 ========
Three Months Ended March 31, 2008 ---------------------------------
Depreciation Operating and income (loss) 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 ========
MGM MIRAGE AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)
March 31, December 31, 2009 2008 ----------- -----------
ASSETS Current assets: Cash and cash equivalents $ 1,365,581 $ 295,644 Accounts receivable, net 449,468 303,416 Inventories 102,828 111,505 Income tax receivable - 64,685 Deferred income taxes 53,424 63,153 Prepaid expenses and other 119,563 155,652 Assets held for sale - 538,975 ----------- ----------- Total current assets 2,090,864 1,533,030 ----------- -----------
Property and equipment, net 16,067,874 16,289,154
Other assets: Investments in and advances to unconsolidated affiliates 4,689,120 4,642,865 Goodwill 86,353 86,353 Other intangible assets, net 346,441 347,209 Deposits and other assets, net 560,997 376,105 ----------- ----------- Total other assets 5,682,911 5,452,532 ----------- ----------- $23,841,649 $23,274,716 =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 113,237 $ 142,693 Construction payable 26,880 45,103 Income taxes payable 177,400 - Current portion of long-term debt 14,356,492 1,047,614 Accrued interest on long-term debt 176,049 187,597 Other accrued liabilities 1,165,070 1,549,296 Liabilities related to assets held for sale - 30,273 ----------- ----------- Total current liabilities 16,015,128 3,002,576 ----------- -----------
Deferred income taxes 3,340,759 3,441,198 Long-term debt 3,990 12,416,552 Other long-term obligations 391,606 440,029 Stockholders' equity: Common stock, $.01 par value: authorized 600,000,000 shares, issued 369,334,372 and 369,283,995 shares and outstanding 276,557,345 and 276,506,968 shares 3,693 3,693 Capital in excess of par value 4,027,260 4,018,410 Treasury stock, at cost: 92,777,027 shares (3,355,963) (3,355,963) Retained earnings 3,470,321 3,365,122 Accumulated other comprehensive income (loss) (55,145) (56,901) ----------- ----------- Total stockholders' equity 4,090,166 3,974,361 ----------- ----------- $23,841,649 $23,274,716 =========== ===========
DATASOURCE: 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: www.mgmmirage.com/
