MGM Capricorn Metals Ltd

Significant Capital Raise Improves Financial Position; Operating Trends Stabilize in Second Quarter LAS VEGAS, Aug. 3 /PRNewswire-FirstCall/ -- MGM MIRAGE (NYSE:MGM) today announced its financial results for the second quarter of 2009. The Company reported a second quarter diluted loss per share of $0.60 compared to income per share of $0.40 in the prior year second quarter. The current year result was impacted by non-cash impairment charges of $188 million, or $0.34 per diluted share net of tax, primarily related to the Company's investment in a convertible note. The Company also recorded losses on the retirement of long-term debt of $58 million primarily related to the redemption of senior debentures required to permit the Company's recent secured note issuances - an impact of $0.11 per diluted share net of tax. The following key results for the quarter are presented on a "same store" basis excluding the results of TI in the prior year as the Company completed the sale of TI in March 2009: -- Net revenue decreased 17% to $1.5 billion; -- Las Vegas Strip REVPAR(1) decreased 31%; -- Casino revenue decreased 12%, mainly as a result of lower table games volume at the Company's Las Vegas Strip resorts; -- Property EBITDA(2) was $357 million, a 34% decrease from the 2008 second quarter; excluding impairment charges, property transactions, and preopening expenses, Property EBITDA was $379 million, or down 29% on a comparable basis. 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 June 30, 2009 2008 ----------------------------------------------------------------------- Preopening and start-up expenses $ (0.02) $ (0.02) Monte Carlo fire business interruption income (recorded as a reduction of general and administrative expenses) -- 0.02 Property transactions net: Monte Carlo fire property damage income -- 0.02 Other property transactions, net (0.01) (0.02) North Las Vegas Strip joint venture impairment charge (0.02) -- Convertible note impairment charge (0.32) -- Loss on early retirement of long-term debt (0.11) -- As previously disclosed, during the second quarter the Company secured funding for the completion of CityCenter, issued $1.15 billion of equity through an offering of common stock, issued $1.5 billion of senior secured notes, and secured key amendments to its senior credit facility. "This has been a monumental quarter for us, as the significant capital market transactions and other corporate finance activities meaningfully improved our financial position," said Jim Murren, MGM MIRAGE Chairman and Chief Executive Officer. "Perhaps as important, we saw a more stabilized - though still difficult - operating environment in the second quarter. Our operating teams are focused on continuing to sequentially increase cash flow and our CityCenter team is driving towards completion and opening of CityCenter. We believe CityCenter will invigorate the Las Vegas market and be a key component of the future growth of MGM MIRAGE." Detailed Discussion of Second Quarter Operating Results (Results are presented on a same store basis excluding TI) Total casino revenue declined 12%, with slots revenue down 11% for the quarter. The Company's table games volume, excluding baccarat, was down 15% in the quarter, while baccarat volume increased 17% in the 2009 quarter. The overall table games hold percentage was slightly higher in 2009 than the prior year quarter and near the mid-point of the Company's normal 18% to 22% range in both periods. Rooms revenue decreased 29%. Las Vegas Strip REVPAR decreased 31% with average room rates down 29%. Occupancy and room rates continued to be negatively impacted by weakness in convention bookings and business travel, which put downward pressure on rates throughout the Company's customer segments. The following table shows key hotel statistics for the Company's Las Vegas Strip resorts: Three months ended June 30, 2009 2008 ---------------------------------------------------------------- Occupancy % 94% 97% Average Daily Rate (ADR) $ 111 $ 156 Revenue per Available Room (REVPAR) $ 104 $ 151 "While we expect the business and convention market to remain challenging in the near term, we are seeing signs of improvement in future bookings and believe we are increasing our market share by offering a superior product and proven best-in-class customer service," said Mr. Murren. Food and beverage revenue decreased 13%. The Company's catering, restaurants and nightclubs continued to be impacted by the reduction in convention business and decreased occupancy. Entertainment revenues were flat at the Company's Las Vegas Strip resorts driven by a strong event calendar. Corporate expense increased to $43 million compared to $27 million in the 2008 second quarter. Approximately $13 million of this increase was due to legal and advisory costs related to the Company's activities to improve its financial position. Income from unconsolidated affiliates decreased to $4 million for the quarter compared to income of $17 million in the 2008 second quarter. The current year results included a $12 million impairment charge, or $0.02 per diluted share net of tax, related to the write-off of development costs related to the Company's postponed joint venture project on the North Las Vegas Strip. Property EBITDA was down 29% on a comparable basis to the prior year quarter with a margin of 25% compared to a 30% margin in the second quarter of 2008. The following table lists the items that impacted comparability of Property EBITDA (expense/(income)): Three months ended June 30, 2009 2008 ----------------------------------------------------------------------- (In thousands) Joint venture impairment charge $12,314 $ -- Preopening and start-up expenses 9,410 6,910 Monte Carlo fire business interruption (recorded as a reduction of general and administrative expenses) -- (9,146) Property transactions net: Monte Carlo fire property damage income -- (9,639) Other property transactions 320 6,780 Operating income for the second quarter decreased 59% to $131 million and was also impacted by the items above. Excluding these items along with corporate property transactions, operating income decreased 50% compared to the 2008 second quarter with a margin of 10% compared to a 17% margin in the prior year. "Our second quarter results showed improvement over the first quarter of 2009 in several areas, with Property EBITDA on a comparable basis increasing from $347 million to $379 million with a higher margin - 25% versus 24%," said Dan D'Arrigo, MGM MIRAGE Executive Vice President and Chief Financial Officer. "Results at our Las Vegas Strip resorts have increased sequentially and we expect even greater improvement as room rates rebound." Non-operating expense increased due to higher net interest expense resulting from increased interest rates on the Company's senior credit facility and recent senior notes issuances, partially offset by higher capitalized interest related to CityCenter. In addition, other non-operating expense includes the convertible note impairment charge of $176 million and losses on the retirement of long-term debt of $58 million in the 2009 second quarter. Financial Position The $2.65 billion of debt and equity issuances, completed in the second quarter, significantly improved the Company's financial position. Also, in conjunction with these transactions the Company secured a long-term amendment to its senior credit facility. The amendment to the senior credit facility permanently waived prior non-compliance with financial covenants and amended the financial covenants to provide for minimum EBITDA and maximum annual capital expenditure tests, replacing the previous leverage and interest coverage tests. A portion of the net proceeds from the issuance of the senior secured notes and common stock were used to permanently repay approximately $826 million under the senior credit facility. The Company also redeemed all of its 7.25% senior debentures due 2017 for $127 million, and repurchased $885 million of its senior notes due 2009 through a public tender offer. At June 30, 2009, the Company had approximately $4.1 billion of borrowings outstanding under its senior credit facility with available borrowings of $1.5 billion; total long-term debt was $12.3 billion, down $1.1 billion from December 31, 2008. The Company's cash balance was $411 million at June 30, 2009. During the second quarter of 2009 the Company made capital investments of approximately $33 million. In addition, the Company funded $294 million for its portion of the remaining equity contributions to CityCenter which included $224 million in the form of an irrevocable letter of credit, of which $88 million remained to be drawn as of June 30, 2009. "Our ability to access the capital markets in the second quarter is a testament to our operating strength as well as the incredible demonstration of support our stakeholders have in our Company, our properties and our employees," said Mr. D'Arrigo. "We will continue to evaluate additional strategies to further enhance our financial position." MGM MIRAGE will hold a conference call to discuss its second quarter results 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 1-706-758-3659 (international). Until August 10, 2009, a complete replay of the conference call can be accessed by dialing 1-706-645-9291, access code 18140021. 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 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 throughout the world. 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 Web site 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 Six Months Ended --------------------- ---------------------- June 30, June 30, June 30, June 30, 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Revenues: Casino $ 625,570 $ 742,183 $1,290,297 $1,532,647 Rooms 350,295 523,530 705,339 1,042,271 Food and beverage 357,859 431,563 696,256 833,955 Entertainment 123,373 138,030 241,430 272,868 Retail 54,311 68,818 102,260 132,855 Other 143,802 155,984 281,175 303,957 ---------- ---------- ---------- ---------- 1,655,210 2,060,108 3,316,757 4,118,553 Less: Promotional allowances (161,055) (164,389) (323,807) (339,201) ---------- ---------- ---------- ---------- 1,494,155 1,895,719 2,992,950 3,779,352 ---------- ---------- ---------- ---------- Expenses: Casino 349,831 400,979 725,348 817,542 Rooms 106,147 139,736 216,974 276,533 Food and beverage 199,032 246,799 393,359 483,071 Entertainment 88,622 98,286 176,364 193,950 Retail 34,455 42,495 66,076 85,659 Other 85,495 96,196 169,301 188,760 General and administrative 273,567 323,811 534,364 644,185 Corporate expense 43,006 26,621 67,367 59,071 Preopening and start-up expenses 9,410 6,957 17,481 12,121 Restructuring costs 50 - 493 329 Property transactions, net 3,248 (118) (191,877) 2,658 Depreciation and amortization 174,368 197,218 351,226 391,557 ---------- ---------- ---------- ---------- 1,367,231 1,578,980 2,526,476 3,155,436 ---------- ---------- ---------- ---------- Income from unconsolidated affiliates 4,175 17,045 19,724 51,156 ---------- ---------- ---------- ---------- Operating income 131,099 333,784 486,198 675,072 ---------- ---------- ---------- ---------- Non-operating income (expense): Interest income 6,296 3,680 10,678 7,146 Interest expense, net (201,287) (145,304) (372,923) (295,093) Non-operating items from unconsolidated affiliates (12,314) (7,288) (23,445) (17,179) Other, net (234,181) (1,564) (235,519) (1,334) ---------- ---------- ---------- ---------- (441,486) (150,476) (621,209) (306,460) ---------- ---------- ---------- ---------- Income (loss) before income taxes (310,387) 183,308 (135,011) 368,612 Benefit (provision) for income taxes 97,812 (70,207) 27,635 (137,165) ---------- ---------- ---------- ---------- Net income (loss) $ (212,575)$ 113,101 $ (107,376) $ 231,447 ========== ========== ========== ========== Per share of common stock: Basic: Net income (loss) per share $ (0.60)$ 0.41 $ (0.34) $ 0.82 ========== ========== ========== ========== Weighted average shares outstanding 352,457 277,468 314,718 283,205 ========== ========== ========== ========== Diluted: Net income (loss) per share $ (0.60)$ 0.40 $ (0.34) $ 0.79 ========== ========== ========== ========== Weighted average shares outstanding 352,457 284,615 314,718 291,508 ========== ========== ========== ========== MGM MIRAGE AND SUBSIDIARIES SUPPLEMENTAL DATA - NET REVENUES (In thousands) (Unaudited) Three Months Ended Six Months Ended ------------------------ ------------------------- June 30, June 30, June 30, June 30, 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Las Vegas Strip $1,190,542 $1,551,148 $2,378,536 $3,099,205 Other Nevada 33,238 38,821 61,775 75,671 MGM Grand Detroit 128,097 145,428 264,612 290,208 Mississippi 120,359 139,401 244,204 273,623 Other 21,919 20,921 43,823 40,645 ---------- ---------- ---------- ---------- $1,494,155 $1,895,719 $2,992,950 $3,779,352 ========== ========== ========== ========== MGM MIRAGE AND SUBSIDIARIES SUPPLEMENTAL DATA - PROPERTY EBITDA (In thousands) (Unaudited) Three Months Ended Six Months Ended ------------------------ ------------------------- June 30, June 30, June 30, June 30, 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Las Vegas Strip $ 291,958 $ 482,744 $ 580,674 $ 962,240 Other Nevada 3,219 (735) 1,702 (1,420) MGM Grand Detroit 33,617 38,524 74,169 72,936 Mississippi 28,719 28,616 60,133 55,986 Other 4,047 4,170 8,911 8,749 Unconsolidated resorts (4,442) 10,634 3,395 40,001 ---------- ---------- ---------- ---------- $ 357,118 $ 563,953 $ 728,984 $1,138,492 ========== ========== ========== ========== MGM MIRAGE AND SUBSIDIARIES DETAIL OF CERTAIN CHARGES AFFECTING PROPERTY EBITDA and EBITDA (In thousands) (Unaudited) Three Months Ended June 30, 2009 -------------------------------- Preopening Property and start-up Restructuring transactions, expenses costs net Total ------------ ------------ ------------ ------------ Las Vegas Strip $ 562 $ 50 $ 157 $ 769 Other Nevada - - 6 6 MGM Grand Detroit - - - - Mississippi - - 157 157 Unconsolidated resorts 8,848 - - 8,848 ------------ ------------ ------------ ------------ 9,410 50 320 9,780 Corporate and other - - 2,928 2,928 ------------ ------------ ------------ ------------ $ 9,410 $ 50 $ 3,248 $ 12,708 ============ ============ ============ ============ Three Months Ended June 30, 2008 -------------------------------- Preopening Property and start-up Restructuring transactions, expenses costs net Total ------------ ------------ ------------ ------------ Las Vegas Strip $ 394 $ - $ (3,628) $ (3,234) Other Nevada - - 2,187 2,187 MGM Grand Detroit (59) - - (59) Mississippi - - (3) (3) Unconsolidated resorts 6,575 - - 6,575 ------------ ------------ ------------ ------------ 6,910 - (1,444) 5,466 Corporate and other 47 - 1,326 1,373 ------------ ------------ ------------ ------------ $ 6,957 $ - $ (118) $ 6,839 ============ ============ ============ ============ MGM MIRAGE AND SUBSIDIARIES DETAIL OF CERTAIN CHARGES AFFECTING PROPERTY EBITDA and EBITDA (continued) (In thousands) (Unaudited) Six Months Ended June 30, 2009 ------------------------------ Preopening Property and start-up Restructuring transactions, expenses costs net Total ------------ ------------ ------------ ------------ Las Vegas Strip $ 752 $ 493 $ (5,270) $ (4,025) Other Nevada - - 6 6 MGM Grand Detroit - - - - Mississippi - - 157 157 Unconsolidated resorts 16,729 - - 16,729 ------------ ------------ ------------ ------------ 17,481 493 (5,107) 12,867 Corporate and other - - (186,770) (186,770) ------------ ------------ ------------ ------------ $ 17,481 $ 493 $ (191,877)$ (173,903) ============ ============ ============ ============ Six Months Ended June 30, 2008 ------------------------------ Preopening Property and start-up Restructuring transactions, expenses costs net Total ------------ ------------ ------------ ------------ Las Vegas Strip $ 620 $ 329 $ (839) $ 110 Other Nevada - - 2,187 2,187 MGM Grand Detroit 135 - 8 143 Mississippi - - 2 2 Unconsolidated resorts 11,319 - - 11,319 ------------ ------------ ------------ ------------ 12,074 329 1,358 13,761 Corporate and other 47 - 1,300 1,347 ------------ ------------ ------------ ------------ $ 12,121 $ 329 $ 2,658 $ 15,108 ============ ============ ============ ============ MGM MIRAGE AND SUBSIDIARIES RECONCILIATION OF CONSOLIDATED EBITDA TO NET INCOME (LOSS) (In thousands) (Unaudited) Three Months Ended Six Months Ended ----------------------- ----------------------- June 30, June 30, June 30, June 30, 2009 2008 2009 2008 ---------- ---------- ---------- ---------- EBITDA $ 305,467 $ 531,002 $ 837,424 $1,066,629 Depreciation and amortization (174,368) (197,218) (351,226) (391,557) ---------- ---------- ---------- ---------- Operating income 131,099 333,784 486,198 675,072 ---------- ---------- ---------- ---------- Non-operating income (expense): Interest expense, net (201,287) (145,304) (372,923) (295,093) Other (240,199) (5,172) (248,286) (11,367) ---------- ---------- ---------- ---------- (441,486) (150,476) (621,209) (306,460) ---------- ---------- ---------- ---------- Income (loss) before income taxes (310,387) 183,308 (135,011) 368,612 Benefit (provision) for income taxes 97,812 (70,207) 27,635 (137,165) ---------- ---------- ---------- ---------- Net income (loss) $ (212,575) $ 113,101 $ (107,376) $ 231,447 ========== ========== ========== ========== MGM MIRAGE AND SUBSIDIARIES RECONCILIATION OF OPERATING INCOME TO PROPERTY EBITDA (In thousands) (Unaudited) Three Months Ended June 30, 2009 -------------------------------- Depreciation Operating and income (loss) amortization EBITDA ------------- ------------- ------------- Las Vegas Strip $ 163,858 $ 128,100 $ 291,958 Other Nevada 1,696 1,523 3,219 MGM Grand Detroit 22,928 10,689 33,617 Mississippi 12,556 16,163 28,719 Other 1,581 2,466 4,047 Unconsolidated resorts (4,442) - (4,442) ------------- ------------- ------------- 198,177 158,941 357,118 Stock compensation (9,023) Corporate and other (42,628) ------------- $ 305,467 ============= Three Months Ended June 30, 2008 -------------------------------- Depreciation Operating and income (loss) amortization EBITDA ------------- ------------- ------------- Las Vegas Strip $ 334,457 $ 148,287 $ 482,744 Other Nevada (2,220) 1,485 (735) MGM Grand Detroit 24,227 14,297 38,524 Mississippi 13,148 15,468 28,616 Other 2,091 2,079 4,170 Unconsolidated resorts 10,634 - 10,634 ------------- ------------- ------------- 382,337 181,616 563,953 Stock compensation (9,592) Corporate and other (23,359) ------------- $ 531,002 ============= Six Months Ended June 30, 2009 ------------------------------ Depreciation Operating and income (loss) amortization EBITDA ------------- ------------- ------------- Las Vegas Strip $ 323,841 $ 256,833 $ 580,674 Other Nevada (1,369) 3,071 1,702 MGM Grand Detroit 52,769 21,400 74,169 Mississippi 27,182 32,951 60,133 Other 3,852 5,059 8,911 Unconsolidated resorts 3,395 - 3,395 ------------- ------------- ------------- 409,670 319,314 728,984 Stock compensation (17,757) Corporate and other 126,197 ------------- $ 837,424 ============= Six Months Ended June 30, 2008 ------------------------------ Depreciation Operating and income (loss) amortization EBITDA ------------- ------------- ------------- Las Vegas Strip $ 667,754 $ 294,486 $ 962,240 Other Nevada (4,406) 2,986 (1,420) MGM Grand Detroit 44,288 28,648 72,936 Mississippi 24,961 31,025 55,986 Other 4,672 4,077 8,749 Unconsolidated resorts 40,001 - 40,001 ------------- ------------- ------------- 777,270 361,222 1,138,492 Stock compensation (20,795) Corporate and other (51,068) ------------- $ 1,066,629 ============= MGM MIRAGE AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) June 30, December 31, 2009 2008 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 411,356 $ 295,644 Accounts receivable, net 287,862 303,416 Inventories 100,401 111,505 Income tax receivable 134,367 64,685 Deferred income taxes 58,476 63,153 Prepaid expenses and other 82,858 155,652 Assets held for sale - 538,975 ----------- ----------- Total current assets 1,075,320 1,533,030 ----------- ----------- Property and equipment, net 15,924,679 16,289,154 Other assets: Investments in and advances to unconsolidated affiliates 4,600,375 4,642,865 Goodwill 86,353 86,353 Other intangible assets, net 345,699 347,209 Deposits and other assets, net 377,499 376,105 ----------- ----------- Total other assets 5,409,926 5,452,532 ----------- ----------- $22,409,925 $23,274,716 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 117,254 $ 142,693 Construction payable 22,096 45,103 Current portion of long-term debt - 1,047,614 Accrued interest on long-term debt 193,230 187,597 Other accrued liabilities 899,381 1,549,296 Liabilities related to assets held for sale - 30,273 ----------- ----------- Total current liabilities 1,231,961 3,002,576 ----------- ----------- Deferred income taxes 3,581,454 3,441,198 Long-term debt 12,364,839 12,416,552 Other long-term obligations 186,741 440,029 Stockholders' equity: Common stock, $.01 par value: authorized 600,000,000 shares, issued 441,007,329 and 369,283,995 shares and outstanding 441,007,329 and 276,506,968 shares 4,410 3,693 Capital in excess of par value 3,487,329 4,018,410 Treasury stock, at cost: 0 and 92,777,027 shares - (3,355,963) Retained earnings 1,554,838 3,365,122 Accumulated other comprehensive loss (1,647) (56,901) ----------- ----------- Total stockholders' equity 5,044,930 3,974,361 ----------- ----------- $22,409,925 $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 Web Site: http://www.mgmmirage.com/

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