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MGM reports $883 million net loss

3 August 2010

LAS VEGAS, Nevada -- CityCenter continued to be a drain on MGM Resorts International.

The Las Vegas-based casino giant said this morning its second quarter net loss was $883 million, or $2 a share, compared to a loss of $212 million, or 60 cents, in the same three-month period a year ago. Wall Street analysts expected a loss of 24 cents a share according to those polled by FactSet Research.

MGM Resorts blamed much of the loss for the quarter, which ended June 30, on a pre-tax, non-cash impairment charge of approximately $1.12 billion related to the investment in CityCenter, the $8.5 billion Strip development that opened in December.

There was a separate $29 million non-cash charge due to an impairment of CityCenter's 2,400-unit residential inventory.

MGM Resorts owns CityCenter in a 50-50 joint venture with Dubai World, the investment arm of the Persian Gulf emirate.

Despite the results, MGM Resorts Chairman and Chief Executive Officer Jim Murren said CityCenter is seeing improved business activity. Aria, the development's centerpiece 4,004-room hotel casino, saw occupancy increase in the quarter and grew non-casino revenues.

"The Las Vegas operating environment remains difficult, but as we expected, we are seeing a gradual recovery," Murren said. "Our adjusted (cash flows) improved compared to the first quarter, despite low hold percentages."

Company wide net revenue grew in the quarter to $1.54 billion, compared with $1.46 billion in the first quarter of 2010.

CityCenter reported net revenues of $401 million in the second quarter, which included $218 million related to sales of condominium units at Vdara, Mandarin Oriental and Veer Towers. Part of the residential revenues included $56 million in forfeited residential deposits.

CityCenter had a total operating loss of $128 million.

Aria reported net revenue of $157 million and an adjusted cash flow loss of $17 million. Aria's results were hurt by a low table games hold percentage. Aria had a room occupancy percentage of 80 percent in the quarter and average daily room rates of $178.

The figures resulted in a "significant" improvement from the first quarter in revenue per available room, a non-traditional measurement Wall Street uses to gage profitability.

At MGM Resorts' 10 Strip hotel-casinos including Aria, occupancy was 93 percent during the quarter, down 1 percentage point from a year ago.

"We maintained strong occupancy and improved our convention mix over the prior year second quarter, leading to sequential improvement in Las Vegas Strip (revenue per available room)," Murren said. "We expect continued progress in our business trends driven by strong forward convention bookings."

One sign of improvement was the results from the MGM Grand Macau, the company's 50-percent resort in China. MGM Grand Macau earned operating income of $40 million in the quarter, including depreciation expense of $21 million. A year ago, the resort reported an operating loss of $8 million, which included depreciation expense of $22 million.
MGM reports $883 million net loss is republished from