MGM Resorts International Reports Fourth Quarter and Full Year Results
LAS VEGAS, Feb. 14, 2011 - MGM Resorts International (NYSE: MGM) today announced a fourth quarter net loss of $139 million, or $0.29 per share, compared to a net loss of $434 million, or $0.98 per share in the prior year quarter. The current quarter results include a $32 million, or $0.07 per share, reduction in the Company’s income tax benefit as a result of providing reserves for certain state-level deferred tax assets. The prior year results include impairment charges totaling $548 million, or $0.73 per share, related to the Company’s undeveloped land holdings in Atlantic City.
Key results for the fourth quarter 2010 included the following:
— Net revenue was $1.5 billion;
— Adjusted Property EBITDA (1)( )attributable to wholly-owned operations
was $267 million;
— MGM Macau reported a record quarter with operating income of $119
million, including depreciation expense of $23 million;
— CityCenter reported Adjusted Property EBITDA related to its resort
operations of $36 million; and
— The Company received approximately $192 million from MGM Macau, which
represents a full repayment of the Company’s interest and non-interest
bearing notes to the joint venture.
“2010 has been a transformational year for MGM Resorts International from a balance sheet and liquidity perspective. We have built the foundation needed to benefit from an economic recovery and are highly focused on initiatives such as M life, our new customer loyalty program, to improve our business,” said Jim Murren, MGM Resorts International Chairman and CEO. “We are encouraged in early 2011 by the level of business activity we are seeing. Our forward booking pace is currently ahead of last year led by a stronger convention mix which we believe will position our Company to have a better year than last.”
The Company significantly improved its financial position by extending the maturity of its $3.5 billion credit facility to 2014 and raising an additional $3 billion of debt and equity capital during 2010. In addition, MGM Macau, which is 50% owned by the Company, entered into a new $950 million senior secured credit facility in August 2010 and CityCenter Holdings LLC, which is also 50% owned by the Company, recently extended the maturity of $500 million of its credit facility and raised $1.5 billion of senior secured first lien and second lien notes.
“We made significant improvements to our balance sheet during the year, raising capital and extending our debt maturities at MGM Resorts, MGM Macau and CityCenter, providing us with a strong liquidity profile,” said Dan D’Arrigo, MGM Resorts International Executive Vice President and CFO. “We remain focused on continuing to strengthen our balance sheet, growing cash flows and positioning our resort portfolio for future growth.”
Discussion of Fourth Quarter Operating Results
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 share; negative amounts represent charges to income):
Three months ended December 31, 2010 2009
--- ---- ----
Preopening and start-up expenses $- $(0.04)
Atlantic City undeveloped land impairment
charge - (0.73)
Income (loss) from unconsolidated
affiliates:
CityCenter residential inventory impairment
charge (0.02) -
CityCenter forfeited residential deposits
income 0.01 -
Loss on retirement of long-term debt (0.01) -
Tax adjustments (0.07) -
Fourth quarter net revenue for 2010 was $1.5 billion. Excluding reimbursed costs revenue (approximately $87 million in 2010 and $57 million in 2009) mainly related to the Company’s management of CityCenter, net revenue decreased 1% from the fourth quarter of 2009.
Fourth quarter casino revenue decreased 3% compared to the prior year, with slots revenue increasing 2% and table games revenue down 11%. The Company’s table games volume decreased 13%. The overall table games hold percentage was slightly lower in 2010 than the prior year quarter and was near the low end of the Company’s normal range.
Rooms revenue decreased 5% from the prior year, excluding the impact of resort fees. Las Vegas Strip occupancy decreased from 86% to 84%, and ADR was $110, consistent with the prior year quarter; REVPAR (2) decreased 2%. If resort fees were included, rooms revenue and REVPAR would have been up 1% and 2%, respectively.
Operating income for the fourth quarter of 2010 was $107 million compared to a $487 million operating loss in the fourth quarter of 2009. The 2009 quarter included a $548 million impairment charge related to the Company’s Atlantic City land and $25 million related to the Company’s share of CityCenter’s preopening costs. Adjusted Property EBITDA attributable to wholly-owned operations was $267 million in the 2010 quarter, down 5% compared to $281 million in the 2009 quarter.
Income from Unconsolidated Affiliates
The Company had income from unconsolidated affiliates of $27 million in the fourth quarter of 2010 compared to $25 million in the prior year period. The current year includes an increase of $49 million in the Company’s share of operating income from MGM Macau, offset by a $37 million increase in the Company’s share of operating losses from CityCenter. The prior year fourth quarter included $8 million for the Company’s share of operating income from Borgata.
MGM Macau reported operating income of $119 million in the fourth quarter of 2010, which included depreciation expense of $23 million, compared to operating income of $22 million in the 2009 fourth quarter, which included depreciation expense of $24 million.
Results for CityCenter for the fourth quarter of 2010 include the following (see schedules accompanying this release for further detail on CityCenter Holdings, LLC’s fourth quarter and full year 2010 results):
— Net revenue was $257 million, including $26 million related to
residential operations, of which $8 million was related to forfeited
residential deposits;
— Aria’s net revenue was $198 million and Adjusted Property EBITDA was $30
million. Aria’s hold percentage was near the high end of its expected
range;
— Aria’s occupancy percentage was 80% and its average daily rate was $190,
resulting in REVPAR of $152, a 7% improvement compared to the third
quarter;
— Crystals generated $6 million in Adjusted Property EBITDA and was
approximately 80% occupied at December 31, 2010; and
— A $27 million impairment charge was incurred related to Veer residential
inventory.
CityCenter completed the following financing transactions in January 2011:
— Issued $900 million of 7.625% senior secured first lien notes due 2016;
— Issued $600 million of 10.75% senior secured second lien PIK toggle
notes due 2017 which give CityCenter the choice of paying interest in
cash or in additional debt. The interest rate on these notes increases
by 0.75% if CityCenter elects to pay interest in the form of additional
debt;
— Amended and restated CityCenter’s previous credit facility which
extended the maturity of $500 million of the credit facility to January
2015. Amounts in excess of $500 million were repaid using the proceeds
of the first and second lien notes. The remaining $500 million credit
facility is in the form of a term loan and is secured on a pari passu
basis with the first lien notes and by a first priority lien on
substantially all of CityCenter’s assets and those of its subsidiaries;
— Received total equity contributions of $73 million from the members; and
— Established a $159 million interest escrow account for the benefit of
the lenders under the restated credit facility and the holders of the
first lien notes.
Full Year 2010 Results
(Results are presented on a same store basis excluding TI)
Net revenue for 2010 was $6.0 billion. Net revenue excluding reimbursed costs revenue (which was approximately $359 million in 2010 and $99 million in 2009), was $5.7 billion, a decrease of 3% from 2009. Operating loss increased from $1.0 billion in 2009 to $1.2 billion in 2010. Adjusted Property EBITDA from wholly-owned operations was $1.2 billion for 2010 compared to $1..3 billion in 2009.
Loss per share for 2010 was $3.19 compared to a loss of $3.41 per share in 2009. The following table lists significant items that affect the comparability of the current year and prior year annual results (EPS impact shown, net of tax, per share; negative amounts represent charges to income):
Year ended December 31, 2010 2009
-- ---- ----
Monte Carlo business interruption (recorded
as a reduction of
general and administrative expenses) - 0.03
Preopening and start-up expenses (0.01) (0.09)
Property transactions net:
Atlantic City Renaissance Pointe land
holdings impairment (0.85)
Investment in Borgata impairment (0.18) -
Gain on Sale of TI - 0.31
Investment in CityCenter impairment (1.88) (1.63)
Other property transactions (0.01) (0.02)
Income (loss) from unconsolidated
affiliates:
CityCenter joint venture residential
impairment charge (0.24) (0.35)
CityCenter forfeited residential deposits
income 0.08 -
Borgata joint venture insurance proceeds - 0.02
North Las Vegas Strip joint venture
impairment charge - (0.02)
Other, net:
Convertible note impairment charge - (0.30)
Gain (loss) on retirement of long-term
debt 0.19 (0.11)
Tax adjustments (0.07) -
Financial Position
At December 31, 2010, the Company had approximately $12.3 billion of indebtedness (with a carrying value of $12.0 billion), including $2.3 billion of borrowings outstanding under its senior credit facility, with available borrowing capacity under the senior credit facility of approximately $1.2 billion.
During 2010, the Company completed the following capital market transactions:
— In March, issued $845 million of 9% senior secured notes due 2020 for
net proceeds of $826 million;
— In April, issued $1.15 billion of 4.25% convertible senior notes due
2015 for net proceeds of $1.12 billion;
— In October, issued 40.9 million shares of common stock for net proceeds
of approximately $512 million and in November received an additional $77
million of net proceeds from the exercise of the underwriter’s
overallotment option for an additional 6.1 million shares;
— In October, issued $500 million of 10% senior notes due 2016, issued at
a discount to yield 10.25%, for net proceeds of approximately $486
million; and
— The Company used a portion of the net proceeds from the October equity
offering and all of the proceeds of the October debt offering to retire
$1.2 billion in commitments under its senior credit facility that were
scheduled to mature in October 2011 and effect the extension of
approximately $3.5 billion of its senior credit facility to February
2014.
The Company received approximately $192 million from MGM Macau during the fourth quarter of 2010, which represents a full repayment of its interest and non-interest bearing notes to the joint venture.
The Company’s New Jersey trust account received proceeds of approximately $74 million in the fourth quarter, including $71 million related to the sale of long-term land leases and associated real property parcels underlying Borgata. The balance in the trust account was approximately $188 million at December 31, 2010.
Conference Call Details
MGM Resorts International will hold a conference call to discuss its fourth quarter and full year results at 11:00 a.m. Eastern Time today. The call will be accessible via the Internet through http://www.mgmresorts.com under the Investors section or by calling 1-877-274-9221 for Domestic callers and 1-706-634-6528 for International callers. The conference call access code is 38464126. A replay of the call will be available through Sunday, February 20, 2011. The replay may be accessed by dialing 1-800-642-1687 or 1-706-645-9291. The replay access code is 38464126. The call will also be archived at http://www.mgmresorts.com.
(1) “Adjusted EBITDA” is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, and property transactions, net. “Adjusted Property EBITDA” is Adjusted EBITDA before corporate expense and stock compensation expense. Adjusted EBITDA information is presented solely as a supplemental disclosure to reported GAAP measures because management believes these measures are 1) widely used measures of operating performance in the gaming industry, and 2) a principal basis for valuation of gaming companies.
Management believes that while items excluded from Adjusted EBITDA and Adjusted Property EBITDA may be recurring in nature and should not be disregarded in evaluation of the Company’s earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods because these items can vary significantly depending on specific underlying transactions or events that may not be comparable between the periods being presented. Also, management believes excluded items may not relate specifically to current operating trends or be indicative of future results. For example, pre-opening and start-up expenses will be significantly different in periods when the Company is developing and constructing a major expansion project and will depend on where the current period lies within the development cycle, as well as the size and scope of the project(s). Property transactions, net includes normal recurring disposals, gains and losses on sales of assets related to specific assets within the Company’s resorts, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period.
In addition, capital allocation, tax planning, financing and stock compensation awards are all managed at the corporate level. Therefore, management uses Adjusted Property EBITDA as the primary measure of the Company’s operating resorts’ performance.
(2) REVPAR is hotel Revenue per Available Room.
MGM Resorts International (NYSE: MGM) is one of the world’s leading global hospitality companies, operating a peerless portfolio of destination resort brands, including Bellagio, MGM Grand, Mandalay Bay and The Mirage. The Company has significant holdings in gaming, hospitality and entertainment, owns and operates 15 properties located in Nevada, Mississippi and Michigan, and has 50% investments in four other properties in Nevada, Illinois and Macau. One of those investments is CityCenter, an unprecedented urban resort destination on the Las Vegas Strip featuring its centerpiece ARIA Resort & Casino. Leveraging MGM Resorts’ unmatched amenities, the M life loyalty program delivers one-of-a-kind experiences, insider privileges and personalized rewards for guests at the Company’s renowned properties nationwide. Through its hospitality management subsidiary, the Company holds a growing number of development and management agreements for casino and non-casino resort projects around the world. MGM Resorts International supports responsible gaming and has implemented the American Gaming Association’s Code of Conduct for Responsible Gaming at its gaming properties. The Company has been honored with numerous awards and recognitions for its industry-leading Diversity Initiative, its community philanthropy programs and the Company’s commitment to sustainable development and operations. For more information about MGM Resorts International, visit the Company’s Web site at http://www.mgmresorts.com.