MGM Sees Signs of Life in Second Half

LAS VEGAS-MGM Mirage had a positive outlook to report in the company’s first-quarter conference call, saying that it expects improvement in the Las Vegas market for the rest of this year and into next year. Said Jim Murren, MGM Mirage chairman and CEO, "We see signs of improvement in the Las Vegas market and expect those to accelerate in the second half of the year and into 2011. Our forward bookings continue to improve as our convention bookings continue to gain traction."

Murren said that MGM Mirage is well positioned to increase its operating margins and cash flows as the economy recovers. He cited first-quarter results for the company’s new CityCenter project, a $9 billion development that includes the 4,000-room Aria Resort & Casino.

“We expect Las Vegas visitation to be strong for the balance of 2010, and Aria's conference calendar is strengthening,” Murren said. He said that MGM expects Aria's occupancy to improve over the balance of the year and is unveiling a new marketing effort for it in the coming weeks with new TV and direct marketing elements. “Now that CityCenter is complete, we are able to use its architecturally unique and highly visual assets in a coordinated global advertising push," the MGM Mirage chief said.

Aria, the centerpiece casino resort at CityCenter, reported net revenue of $160 million and an operating loss of $66 million, which included depreciation expense of $54 million. Hotel occupancy percentage was 63% with an average daily rate of $194.

CityCenter reported net revenues of $260 million and an operating loss of $255 million for the quarter, which included an approximately $171 million non-cash impairment charge related to its residential inventory, depreciation expense of $69 million, and preopening expenses of $6 million. CityCenter results benefited from revenues of $24 million related to forfeited residential deposits.

Murren said that CityCenter's first quarter results were particularly affected by the weakness in the Las Vegas convention market. The loss at CityCenter was partially offset by the company's share of operating income at the MGM Grand Macau, which earned operating income of $49 million in the first quarter.

Overall, MGM Mirage recorded a first quarter diluted loss per share of $0.22 compared to earnings of $0.38 per share in the previous year first quarter. The current year results include a gain on extinguishment of debt of $142 million, while the previous year’s results included a gain of approximately $190 million (or $0.44 per share, net of tax) related to the sale of Treasure Island hotel and casino.

MGM Mirage owns and operates 15 properties in Nevada, Mississippi and Michigan, and has 50% investments in four other properties in Nevada, Illinois and Macau. Among its major holdings are the Bellagio, MGM Grand, Mandalay Bay, The Mirage, Monte Carlo, New York-New York, Luxor, Excalibur, and Circus Circus.