MGM Resorts International Reports Fourth Quarter And Full Year Results

LAS VEGAS, Feb. 20, 2013 /PRNewswire/ -- MGM Resorts International (NYSE: MGM) today reported financial results for the fourth quarter and full year ended December 31, 2012.  Loss per share for the fourth quarter of 2012 was $2.50 compared to a loss per share of $0.23 in the prior year fourth quarter.  Comparability of the current and prior year consolidated results was affected by certain items discussed further below.

"2012 was a transformational year for MGM Resorts International highlighted by major improvements in our financial position, significant progress on future growth opportunities and strengthening of our company culture.  We closed the year with strong fourth quarter results driven by a 5% increase in wholly owned domestic resorts EBITDA," said Jim Murren, MGM Resorts International Chairman and CEO.  "We are off to a great start in 2013, with our Cotai land recently gazetted, a $500 million special dividend announced by MGM China, and solid events thus far in Las Vegas including Super Bowl and Chinese New Year."

Key results for the fourth quarter of 2012 include the following:

• Consolidated net revenue was $2.3 billion in both the current and prior year quarter;
• Consolidated casino revenue increased 1% compared to the prior year quarter;
• Rooms revenue at wholly owned domestic resorts increased 2% with a 1% increase in REVPAR⁽¹⁾ at the Company's Las Vegas Strip resorts;
• Adjusted Property EBITDA⁽²⁾ was $505 million compared to $482 million in the prior year quarter;
• The Company's wholly owned domestic resorts earned Adjusted Property EBITDA of $334 million, a 5% increase compared to the prior year quarter;
• MGM China's Adjusted EBITDA was $176 million, a 1% increase compared to the prior year quarter;
• CityCenter's Adjusted EBITDA related to resort operations was $68 million, a 17% increase compared to the prior year quarter; and
• Consolidated operating loss was $425 million compared to operating income of $91 million in the fourth quarter of 2011, impacted by significant impairment charges in each period.

Certain Items Affecting Fourth Quarter Results

The following table lists items that 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):

Items in the above table for the fourth quarter of 2012 include:

• An impairment charge of $65 million related to the Company's investment in Borgata;
• A $366 million impairment charge related to certain of the Company's land holdings on the north end of the Las Vegas Strip and a $167 million impairment charge related to the Company's land holdings in Atlantic City;
• A $47 million write-off related to the Company's holding of South Jersey Transportation Authority ("SJTA") road development special revenue bonds;
• A loss of $505 million related to the Company's December refinancing transactions; and
• $372 million related to the change in valuation allowance for U.S. deferred tax assets.

Items in the above table for the fourth quarter of 2011 include:

• An impairment charge of $62 million related to the Company's investment in Borgata;
• An impairment charge of $23 million related to the Company's investment in Silver Legacy; and
• A net $44 million increase in income tax benefit resulting from a decrease in net deferred tax liability related to Macau, partially offset by an increase in the Michigan net deferred tax liability.

In addition to these items, corporate expense increased to $87 million during the current year quarter, primarily as a result of approximately $34 million of costs associated with the Company's development efforts in Maryland and Massachusetts.

Wholly Owned Domestic Resorts

Casino revenue related to wholly owned domestic resorts was up 1% compared to the prior year quarter. The overall table games hold percentage in the fourth quarter of 2012 was 21.9% compared to 22.8% for the prior year quarter. Slots revenue increased 2% compared to the prior year quarter.

Rooms revenue increased 2% with Las Vegas Strip REVPAR up 1%.  The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

Operating income for the Company's wholly owned domestic resorts for the fourth quarter of 2012 was $202 million, an increase of 8% compared to the prior year quarter.

MGM China

On February 20, 2013, MGM China's Board of Directors announced a special dividend of $500 million, which will be paid to shareholders of record as of March 11, 2013 and distributed on or about March 18, 2013.  MGM Resorts International will receive $255 million, representing its 51% share of the dividend.

Key fourth quarter results for MGM China include the following:

• MGM China earned net revenue of $731 million, a 2% increase over the prior year quarter driven by increases in volume for main floor table games and slots of 13% and 37%, respectively. VIP table games turnover increased 6% from the prior year quarter, while hold percentage was 2.9% in the current year quarter compared to 3.2% in the prior year quarter; and
• MGM China's operating income was $83 million, an 8% increase over the prior year quarter and Adjusted EBITDA was $176 million compared to $174 million in the prior year quarter.

As previously announced, MGM China, through its wholly owned subsidiary MGM Grand Paradise S.A. ("MGM Grand Paradise"), formally accepted a land concession contract with the Macau government in October 2012 and received approval to develop a five-star luxury resort and casino in Cotai, Macau.  The contract became effective on January 9, 2013 when the Macau government published it in the Official Gazette of Macau.

In October 2012, MGM China and MGM Grand Paradise, as co-borrowers, entered into an amended and restated credit facility agreement which consists of $550 million of term loans and a $1.45 billion revolving credit facility due October 2017.  The interest rate fluctuates based on HIBOR plus a margin, set at 2.5% for the first six months of the agreement and ranging between 1.75% and 2.5% thereafter based on MGM China's leverage ratio. The credit facility is being used for general corporate purposes and for the development of the Cotai project.

"We have made significant progress in the design and development of our Cotai resort and casino.  With the recent approval of our general building plan, we look forward to our groundbreaking ceremony next week. We remain on track for an early to mid 2016 opening of what will be our most stunning resort and casino yet," said Jim Murren, MGM Resorts International Chairman and CEO.

Income (Loss) from Unconsolidated Affiliates

The following table summarizes information related to the Company's share of income (loss) from unconsolidated affiliates:

Results for CityCenter Holdings, LLC for the fourth quarter of 2012 include the following (see schedules accompanying this release for further detail on CityCenter's fourth quarter results):

• Net revenue from resort operations increased to $272 million compared to $265 million in the prior year quarter;
• Adjusted EBITDA from resort operations was $68 million, an increase of 17% compared to the prior year quarter;
• Aria's table games hold percentage was 23.9% in the current year quarter compared to 27.2% in the prior year quarter;
• Aria's occupancy percentage was 86% and its ADR was $202, resulting in REVPAR of $173, a 2% increase compared to the prior year quarter; and
• In December 2012, CityCenter closed on a sale of 427 of the remaining 438 units at Veer for $119 million in proceeds.

Full Year 2012 Results

Net revenue for 2012 was $9.2 billion, which included a full year of results from MGM China. Net revenue from wholly owned domestic resorts was $5.9 billion, a 1% increase compared to 2011.  Adjusted Property EBITDA from wholly owned domestic resorts increased 2% to $1.3 billion for 2012.

MGM China reported record results for 2012 with net revenues of $2.8 billion and Adjusted EBITDA of $679 million.  Excluding branding fees of $30 million in 2012 and $15 million in 2011, Adjusted EBITDA increased by 10% year over year.  CityCenter reported net revenue from resort operations of $1.1 billion, a 1% decrease compared to the prior year, and Adjusted EBITDA related to resort operations of $230 million, a 3% decrease.

Loss per share attributable to MGM Resorts International for 2012 was $3.62 compared to diluted income per share of $5.62 in 2011. The following table lists items that affect the comparability of the current year and prior year annual results in addition to the consolidation of MGM China (approximate EPS impact shown, net of tax, per share; negative amounts represent charges to income):

Financial Position

"We achieved several financial milestones in 2012, culminating with the refinancing transactions in December which allowed us to lower interest expense by over $200 million annually," said Dan D'Arrigo, MGM Resorts International Executive Vice President, CFO and Treasurer.  "We remain focused on reducing debt while continuing to maximize our free cash flow and have set a foundation for the execution of growth and development initiatives at our existing resorts and in new markets."

In December 2012, the Company amended and restated its senior credit facility which increased its total capacity to $4.0 billion, issued $1.25 billion of 6.625% senior notes due 2021, and used the proceeds from these transactions, together with cash on hand, to repurchase and fund the satisfaction and discharge of all of its outstanding senior secured notes.

The Company's cash balance at December 31, 2012 was $1.5 billion, which included approximately $952 million of cash and cash equivalents related to MGM China.  At December 31, 2012, the Company had approximately $13.6 billion of indebtedness, including $2.8 billion of borrowings outstanding under its senior credit facility and $554 million outstanding under the MGM China credit facility.

At December 31, 2012, the Company's senior credit facility consisted of approximately $1.05 billion in term A loans, $1.75 billion in term B loans, and $1.2 billion of revolving loan commitments.  At December 31, 2012 the Company had approximately $1.2 billion of available borrowing capacity under its revolving facility. At December 31, 2012, the interest rate on the term A loans was 3.3% and the interest rate on the term B loans was 4.25%.

Conference Call Details

MGM Resorts International will host a conference call at 11:00 a.m. Eastern Time today which will include a brief discussion of these results followed by a question and answer period. The call will be accessible via the Internet through www.mgmresorts.com under the Investors section or by calling 1-877-355-2280 for domestic callers and 1-706-634-6528 for international callers.  The conference call access code is 92557344. A replay of the call will be available through Wednesday, February 27, 2013.  The replay may be accessed by dialing 1-855-859-2056 or 1-404-537-3406.  The replay access code is 92557344.  The call will also be archived at www.mgmresorts.com.

1              REVPAR is hotel revenue per available room.

2              "Adjusted EBITDA" is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, property transactions, net and the gain on the MGM China transaction.  "Adjusted Property EBITDA" is Adjusted EBITDA before corporate expense and stock compensation expense related to the MGM Resorts stock option plan, which is not allocated to each property. MGM China recognizes stock compensation expense related to its stock compensation plan which is included in the calculation of Adjusted EBITDA for MGM China.  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, preopening 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.

Reconciliations of GAAP net income (loss) to Adjusted EBITDA and GAAP operating income (loss) to Adjusted Property EBITDA are included in the financial schedules in this release.

About MGM Resorts International

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.  In addition to its 51% interest in MGM China Holdings, Limited, which owns the MGM Macau resort and casino and is in the process of developing a gaming resort in Cotai, 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 three other properties in Nevada and Illinois. 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 website at www.mgmresorts.com.

Statements in this release that are not historical facts are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and/or uncertainties, including those described in the company's public filings with the Securities and Exchange Commission.  We have based forward-looking statements on management's current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, statements regarding future operating results, the amount we will receive as a result of the MGM China special dividend and our ability to execute growth and development activities. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include effects of economic conditions and market conditions in the markets in which we operate and competition with other destination travel locations throughout the United States and the world, the design, timing and costs of expansion projects, risks relating to international operations, permits, licenses, financings, approvals and other contingencies in connection with growth in new or existing jurisdictions and additional risks and uncertainties described in our Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports).  In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those other forward-looking statements.