e10vq
UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2010
OR
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 001-10362
MGM Resorts International
(Exact name of registrant as specified in its charter)
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Delaware
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88-0215232 |
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.) |
3600 Las Vegas Boulevard South, Las Vegas, Nevada 89109
(Address of principal executive offices Zip Code)
(702) 693-7120
(Registrants telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days: Yes þ No o
Indicate by check mark whether the Registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act (Check one):
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
(Do not check if smaller reporting company)
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Smaller reporting company o |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act):
Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date:
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Class
Common Stock, $.01 par value
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Outstanding at November 1, 2010
482,369,501 shares |
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
FORM 10-Q
I N D E X
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
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September 30, |
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December 31, |
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2010 |
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2009 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
552,757 |
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$ |
2,056,207 |
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Accounts receivable, net |
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324,206 |
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368,474 |
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Inventories |
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93,479 |
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101,809 |
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Income tax receivable |
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180,181 |
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384,555 |
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Deferred income taxes |
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22,681 |
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38,487 |
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Prepaid expenses and other |
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115,497 |
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103,969 |
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Total current assets |
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1,288,801 |
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3,053,501 |
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Property and equipment, net |
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14,697,192 |
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15,069,952 |
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Other assets |
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Investments in and advances to unconsolidated affiliates |
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2,115,760 |
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3,611,799 |
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Goodwill |
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86,353 |
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86,353 |
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Other intangible assets, net |
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342,995 |
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344,253 |
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Other long-term assets, net |
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605,271 |
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352,352 |
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Total other assets |
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3,150,379 |
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4,394,757 |
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$ |
19,136,372 |
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$ |
22,518,210 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities |
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Accounts payable |
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$ |
153,049 |
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$ |
173,719 |
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Current portion of long-term debt |
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1,079,824 |
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Accrued interest on long-term debt |
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223,106 |
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206,357 |
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Other accrued liabilities |
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942,802 |
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923,701 |
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Total current liabilities |
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1,318,957 |
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2,383,601 |
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Deferred income taxes |
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2,400,984 |
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3,031,303 |
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Long-term debt |
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12,623,851 |
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12,976,037 |
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Other long-term obligations |
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252,209 |
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256,837 |
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Commitments and contingencies (Note 4) |
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Stockholders equity |
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Common stock, $.01 par value: authorized 600,000,000 shares;
Issued and outstanding 441,339,770 and 441,222,251 shares |
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4,413 |
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4,412 |
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Capital in excess of par value |
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3,465,253 |
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3,497,425 |
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Retained earnings (accumulated deficit) |
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(927,676 |
) |
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370,532 |
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Accumulated other comprehensive loss |
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(1,619 |
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(1,937 |
) |
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Total stockholders equity |
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2,540,371 |
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3,870,432 |
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$ |
19,136,372 |
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$ |
22,518,210 |
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The accompanying notes are an integral part of these consolidated financial statements.
1
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2010 |
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2009 |
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2010 |
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2009 |
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Revenues |
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Casino |
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$ |
633,983 |
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$ |
699,806 |
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$ |
1,834,132 |
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$ |
1,990,103 |
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Rooms |
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331,424 |
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340,165 |
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990,546 |
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1,045,504 |
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Food and beverage |
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343,180 |
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344,284 |
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1,019,553 |
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1,040,540 |
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Entertainment |
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123,907 |
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128,568 |
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364,524 |
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369,998 |
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Retail |
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52,618 |
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54,525 |
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147,569 |
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156,785 |
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Other |
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145,375 |
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122,549 |
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403,214 |
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376,768 |
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Reimbursed costs |
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88,551 |
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15,524 |
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272,235 |
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42,480 |
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1,719,038 |
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1,705,421 |
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5,031,773 |
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5,022,178 |
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Less: Promotional allowances |
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(161,333 |
) |
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(172,198 |
) |
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(478,981 |
) |
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(496,005 |
) |
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1,557,705 |
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1,533,223 |
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4,552,792 |
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4,526,173 |
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Expenses |
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Casino |
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346,806 |
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367,720 |
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1,039,118 |
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1,093,068 |
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Rooms |
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111,711 |
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|
108,273 |
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|
320,466 |
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325,247 |
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Food and beverage |
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|
197,836 |
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|
196,778 |
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|
585,123 |
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|
590,137 |
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Entertainment |
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91,129 |
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91,422 |
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272,386 |
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267,786 |
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Retail |
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32,093 |
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33,684 |
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90,671 |
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99,760 |
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Other |
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88,144 |
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75,737 |
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250,298 |
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218,082 |
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Reimbursed costs |
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|
88,551 |
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|
15,524 |
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|
272,235 |
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|
42,480 |
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General and administrative |
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|
292,456 |
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290,766 |
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850,914 |
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|
825,623 |
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Corporate expense |
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30,715 |
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31,928 |
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87,543 |
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|
99,295 |
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Preopening and start-up expenses |
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30 |
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10,058 |
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4,061 |
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27,539 |
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Property transactions, net |
|
|
318,154 |
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|
971,208 |
|
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|
1,445,125 |
|
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|
779,331 |
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Depreciation and amortization |
|
|
158,857 |
|
|
|
170,651 |
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|
486,757 |
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|
|
521,877 |
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
1,756,482 |
|
|
|
2,363,749 |
|
|
|
5,704,697 |
|
|
|
4,890,225 |
|
|
|
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|
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Loss from unconsolidated affiliates |
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(7,124 |
) |
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(132,893 |
) |
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(114,236 |
) |
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(113,169 |
) |
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Operating loss |
|
|
(205,901 |
) |
|
|
(963,419) |
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|
(1,266,141 |
) |
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|
(477,221 |
) |
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Non-operating income (expense) |
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Interest income |
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|
1,142 |
|
|
|
857 |
|
|
|
2,784 |
|
|
|
11,535 |
|
Interest expense, net |
|
|
(285,139 |
) |
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|
(181,899 |
) |
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(840,483 |
) |
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|
(554,822 |
) |
Non-operating items from
unconsolidated affiliates |
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(27,185 |
) |
|
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(14,613 |
) |
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(82,109 |
) |
|
|
(38,058 |
) |
Other, net |
|
|
6,156 |
|
|
|
826 |
|
|
|
154,958 |
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(234,693 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(305,026 |
) |
|
|
(194,829 |
) |
|
|
(764,850 |
) |
|
|
(816,038 |
) |
|
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Loss before income taxes |
|
|
(510,927 |
) |
|
|
(1,158,248) |
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|
|
(2,030,991 |
) |
|
|
(1,293,259 |
) |
Benefit for income taxes |
|
|
192,936 |
|
|
|
407,860 |
|
|
|
732,783 |
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|
435,495 |
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Net loss |
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$ |
(317,991 |
) |
|
$ |
(750,388) |
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|
$ |
(1,298,208 |
) |
|
$ |
(857,764 |
) |
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|
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Loss per share of common stock |
|
|
|
|
|
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|
|
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|
Basic |
|
$ |
(0.72 |
) |
|
$ |
(1.70 |
) |
|
$ |
(2.94 |
) |
|
$ |
(2.40 |
) |
|
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|
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|
Diluted |
|
$ |
(0.72 |
) |
|
$ |
(1.70 |
) |
|
$ |
(2.94 |
) |
|
$ |
(2.40 |
) |
|
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|
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|
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|
The accompanying notes are an integral part of these consolidated financial statements.
2
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
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Nine Months Ended September 30, |
|
|
|
2010 |
|
|
2009 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,298,208 |
) |
|
$ |
(857,764 |
) |
Adjustments to reconcile net loss to net cash provided
by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
486,757 |
|
|
|
521,877 |
|
Amortization of debt discounts, premiums and issuance costs |
|
|
64,177 |
|
|
|
36,204 |
|
(Gain) loss on retirement of long-term debt |
|
|
(140,642 |
) |
|
|
58,631 |
|
Provision for doubtful accounts |
|
|
22,722 |
|
|
|
43,054 |
|
Stock-based compensation |
|
|
26,156 |
|
|
|
27,076 |
|
Business interruption insurance lost profits |
|
|
|
|
|
|
(15,115 |
) |
Property transactions, net |
|
|
1,445,125 |
|
|
|
779,331 |
|
Convertible note investment impairment |
|
|
|
|
|
|
175,690 |
|
Loss from unconsolidated affiliates |
|
|
199,839 |
|
|
|
178,628 |
|
Distributions from unconsolidated affiliates |
|
|
27,910 |
|
|
|
43,527 |
|
Change in deferred income taxes |
|
|
(587,172 |
) |
|
|
(271,736 |
) |
Change in current assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(12,578 |
) |
|
|
(50,875 |
) |
Inventories |
|
|
8,330 |
|
|
|
10,259 |
|
Income taxes receivable and payable, net |
|
|
195,831 |
|
|
|
(114,659 |
) |
Prepaid expenses and other |
|
|
(11,528 |
) |
|
|
(20,627 |
) |
Accounts payable and accrued liabilities |
|
|
(46,654 |
) |
|
|
(22,392 |
) |
Business interruption insurance recoveries |
|
|
|
|
|
|
16,391 |
|
Other |
|
|
333 |
|
|
|
(19,184 |
) |
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
380,398 |
|
|
|
518,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Capital expenditures, net of construction payable |
|
|
(128,539 |
) |
|
|
(122,684 |
) |
Proceeds from sale of Treasure Island, net |
|
|
|
|
|
|
746,266 |
|
Dispositions of property and equipment |
|
|
6,674 |
|
|
|
22,067 |
|
Investments in and advances to unconsolidated affiliates |
|
|
(408,000 |
) |
|
|
(922,067 |
) |
Distributions from cost method investments |
|
|
110,176 |
|
|
|
|
|
Property damage insurance recoveries |
|
|
|
|
|
|
7,186 |
|
Other |
|
|
(1,233 |
) |
|
|
(5,054 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(420,922 |
) |
|
|
(274,286 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Net repayments under bank credit facilities maturities of 90 days or less |
|
|
(2,902,807 |
) |
|
|
(2,485,000 |
) |
Borrowings under bank credit facilities maturities longer than 90 days |
|
|
8,302,606 |
|
|
|
6,661,492 |
|
Repayments under bank credit facilities maturities longer than 90 days |
|
|
(7,521,601 |
) |
|
|
(5,576,340 |
) |
Issuance of senior notes, net |
|
|
1,995,000 |
|
|
|
1,921,751 |
|
Retirement of senior notes |
|
|
(1,154,479 |
) |
|
|
(1,119,090 |
) |
Debt issuance costs |
|
|
(98,531 |
) |
|
|
(113,227 |
) |
Issuance of common stock in public offering, net |
|
|
|
|
|
|
1,103,737 |
|
Capped call transactions |
|
|
(81,478 |
) |
|
|
|
|
Payment of Detroit Economic Development Corporation bonds |
|
|
|
|
|
|
(49,393 |
) |
Other |
|
|
(1,636 |
) |
|
|
(768 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
(1,462,926 |
) |
|
|
343,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
Net increase (decrease) for the period |
|
|
(1,503,450 |
) |
|
|
587,192 |
|
Change in cash related to assets held for sale |
|
|
|
|
|
|
14,154 |
|
Balance, beginning of period |
|
|
2,056,207 |
|
|
|
295,644 |
|
|
|
|
|
|
|
|
Balance, end of period |
|
$ |
552,757 |
|
|
$ |
896,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow disclosures |
|
|
|
|
|
|
|
|
Interest paid, net of amounts capitalized |
|
$ |
759,557 |
|
|
$ |
500,429 |
|
Federal, state and foreign income taxes paid, net of refunds |
|
|
(331,218 |
) |
|
|
(55,323 |
) |
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities |
|
|
|
|
|
|
|
|
Increase (decrease) in investment in CityCenter related to change in
completion guarantee liability |
|
$ |
348,317 |
|
|
$ |
(141,000 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
3
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1 ORGANIZATION AND BASIS OF PRESENTATION
Organization. MGM Resorts International (the Company) is a Delaware corporation, formerly
named MGM MIRAGE. As of September 30, 2010, approximately 37% of the outstanding shares of the
Companys common stock were owned by Tracinda Corporation, a Nevada corporation wholly owned by
Kirk Kerkorian. Giving effect to the October 2010 issuance of common stock by the Company and the
sale of common stock owned by Tracinda in connection with that transaction (see Note 7), Tracinda
Corporations ownership percentage decreased to 28%. Tracinda Corporation has significant
influence with respect to the election of directors and other matters, but it does not have the
power to solely determine these matters. MGM Resorts International acts largely as a holding
company and, through wholly-owned subsidiaries, owns and/or operates casino resorts.
The Company owns and operates the following casino resorts in Las Vegas, Nevada: Bellagio,
MGM Grand Las Vegas, The Mirage, Mandalay Bay, Luxor, New York-New York, Monte Carlo, Excalibur,
and Circus Circus Las Vegas. Operations at MGM Grand Las Vegas include management of The Signature
at MGM Grand Las Vegas, a condominium-hotel consisting of three towers. Other Nevada operations
include Circus Circus Reno, Gold Strike in Jean, and Railroad Pass in Henderson. The Company and
its local partners own and operate MGM Grand Detroit in Detroit, Michigan. The Company also owns
and operates two resorts in Mississippi: Beau Rivage in Biloxi and Gold Strike Tunica. The Company
also owns Shadow Creek, an exclusive world-class golf course located approximately ten miles north
of its Las Vegas Strip resorts, Primm Valley Golf Club at the California/Nevada state line and
Fallen Oak golf course in Saucier, Mississippi. The Company completed
the sale of Treasure Island (TI)
casino resort in March 2009.
The Company owns 50% of CityCenter, located between Bellagio and Monte Carlo. The other 50% of
CityCenter is owned by Infinity World Development Corp (Infinity World), a wholly-owned
subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity. CityCenter
consists of Aria, a 4,000-room casino resort; Mandarin Oriental Las Vegas, a 400-room non-gaming
boutique hotel; Crystals, a 425,000 square foot retail district; and Vdara, a 1,495-room luxury
condominium-hotel. In addition, CityCenter features residential units in the Residences at Mandarin
Oriental 225 units and Veer approximately 670 units. Aria, Vdara, Mandarin Oriental and
Crystals all opened in December 2009 and the residential units within CityCenter began closing in
early 2010. The Company receives a management fee of 2% of gross revenues for the management of
Aria and Vdara, and 5% of EBITDA (as defined in the agreements governing the Companys management
of Aria and Vdara). In addition, the Company receives an annual fee of $3 million for the
management of Crystals.
The Company has 50% interests in MGM Macau, Grand Victoria and Silver Legacy. Pansy Ho
Chiu-King owns the other 50% of MGM Macau. Grand Victoria is a riverboat casino in Elgin, Illinois;
an affiliate of Hyatt Gaming owns the other 50% of Grand Victoria and also operates the resort.
Silver Legacy is located in Reno, adjacent to Circus Circus Reno, and the other 50% is owned by
Eldorado LLC.
The Company also has a 50% economic interest in Borgata Hotel Casino Spa located on
Renaissance Pointe in the Marina area of Atlantic City, New Jersey; the Companys interest is held
in trust and currently offered for sale. Boyd Gaming Corporation owns the other 50% of Borgata and
also operates the resort. See Note 2 for further discussion of Borgata.
The Company owns additional land adjacent to Borgata, a portion of which consists of common
roads, landscaping and master plan improvements, and a portion of which was planned for a
wholly-owned development, MGM Grand Atlantic City. As part of the settlement discussed in Note 2,
the Company has agreed that an affiliate of the Company would withdraw its license application for
this development.
MGM Hospitality seeks to leverage the Companys management expertise and well-recognized
brands through strategic partnerships and international expansion opportunities, both gaming and
non-gaming, while focusing on international growth. The Company has entered into management
agreements for casino and non-casino resorts throughout the world including developments located in
the Peoples Republic of China, India, Egypt, Vietnam and the United Arab Emirates.
Financial statement impact of the Monte Carlo fire. The Company maintains insurance for both
property damage and business interruption relating to catastrophic events, such as the rooftop fire
at Monte Carlo in January 2008. Business interruption insurance covers lost profits and other
costs incurred during the closure period and up to six months following re-opening.
4
Non-refundable insurance recoveries received in excess of the net book value of damaged
assets, clean-up and demolition costs, and post-event costs are recognized as income in the period
received or committed based on the Companys estimate of the total claim for property damage and
business interruption compared to the recoveries received at that time. Gains on insurance
recoveries related to business interruption are recorded within General and administrative
expenses and gains related to property damage are recorded within Property transactions, net.
Insurance recoveries related to business interruption are classified as operating cash flows and
recoveries related to property damage are classified as investing cash flows in the statement of
cash flows.
The Company settled its final claim with its insurance carriers related to the Monte Carlo
fire in the first quarter of 2009 for a total of $74 million. The pre-tax impact on the Companys
statements of operations for the nine month period ending September 30, 2009 related to such
insurance recoveries included a $15 million reduction of General and administrative expense and a
$7 million offset to Property transactions, net.
Fair value measurement. Fair value measurements affect the Companys accounting and
impairment assessments of its long-lived assets, investments in unconsolidated affiliates, cost
method investments, goodwill, and other intangibles. Fair value measurements also affect the
Companys accounting for certain of its financial assets and liabilities. Fair value is defined as
the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date and is measured according to a
hierarchy that includes: Level 1 inputs, such as quoted prices in an active market; Level 2
inputs, which are observable inputs for similar assets; or Level 3 inputs, which are unobservable
inputs.
In connection with its accounting for the March 2010 amended and restated credit facility as
discussed in Note 3, the Company estimated fair value of its senior credit facility using Level 1
inputs. The Company also uses Level 1 inputs for its long-term debt fair value disclosures. When
assessing impairment of its investments in unconsolidated affiliates, the Company estimates such
fair value using a discounted cash flow analysis utilizing Level 3 inputs, including market
indicators of discount rates and terminal year capitalization rates.
Reimbursed expenses. The Company recognizes costs reimbursed pursuant to management services
as revenue in the period it incurs the costs. Reimbursed costs relate mainly to the Companys
management of CityCenter.
Recently issued accounting standards. Certain amendments to Accounting Standards Codification
(ASC) Topic 810, Consolidation, became effective for the Company beginning January 1, 2010.
Such amendments include changes to the quantitative approach to determine the primary beneficiary
of a variable interest entity (VIE). An enterprise must determine if its variable interest or
interests give it a controlling financial interest in a VIE by evaluating whether 1) the enterprise
has the power to direct activities of the VIE that have a significant effect on economic
performance, and 2) the enterprise has an obligation to absorb losses or the right to receive
benefits from the entity that could potentially be significant to the VIE. The amendments to ASC
810 also require ongoing reassessments of whether an enterprise is the primary beneficiary of a
VIE. The adoption of these amendments did not have a material effect on the Companys consolidated
financial statements.
Basis of presentation. As permitted by the rules and regulations of the Securities and
Exchange Commission, certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles have been condensed
or omitted. These consolidated financial statements should be read in conjunction with the
Companys 2009 annual consolidated financial statements and notes thereto included in the Companys
Annual Report on Form 10-K for the year ended December 31, 2009.
In the opinion of management, the accompanying unaudited consolidated financial statements
contain all adjustments which include only normal recurring adjustments necessary to present
fairly the Companys financial position as of September 30, 2010 and the results of its operations
and cash flows for the three and nine month periods ended September 30, 2010 and 2009. The results
of operations for such periods are not necessarily indicative of the results to be expected for the
full year. Certain reclassifications, which have no effect on previously reported net income, have
been made to the 2009 financial statements to conform to the 2010 presentation. The prior year
reclassifications relate to the classification of reimbursed costs as separate financial statement
line items, while in past periods these costs were recorded to Other revenues and expenses. The
total amount reclassified to reimbursed costs revenue and expense for the three and nine months
ended 2009 was $16 million and $42 million, respectively.
5
NOTE 2 INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
Investments in and advances to unconsolidated affiliates consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
CityCenter Holdings, LLC CityCenter (50%) |
|
$ |
1,471,435 |
|
|
$ |
2,546,099 |
|
Marina District Development Company Borgata (50%) |
|
|
|
|
|
|
466,774 |
|
Elgin Riverboat ResortRiverboat Casino Grand Victoria (50%) |
|
|
293,703 |
|
|
|
296,248 |
|
MGM Grand Paradise Limited Macau (50%) |
|
|
310,684 |
|
|
|
258,465 |
|
Circus and Eldorado Joint Venture Silver Legacy (50%) |
|
|
27,603 |
|
|
|
28,345 |
|
Other |
|
|
12,335 |
|
|
|
15,868 |
|
|
|
|
|
|
|
|
|
|
$ |
2,115,760 |
|
|
$ |
3,611,799 |
|
|
|
|
|
|
|
|
The Company recorded its share of the results of operations of unconsolidated affiliates as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
|
Loss from unconsolidated affiliates |
|
$ |
(7,124 |
) |
|
$ |
(132,893 |
) |
|
$ |
(114,236 |
) |
|
$ |
(113,169 |
) |
Preopening and start-up expenses |
|
|
|
|
|
|
(10,671 |
) |
|
|
(3,494 |
) |
|
|
(27,401 |
) |
Non-operating items from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
unconsolidated affiliates |
|
|
(27,185 |
) |
|
|
(14,613 |
) |
|
|
(82,109 |
) |
|
|
(38,058 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(34,309 |
) |
|
$ |
(158,177 |
) |
|
$ |
(199,839 |
) |
|
$ |
(178,628 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CityCenter. In accordance with the CityCenter joint venture agreement, as amended, and the
CityCenter bank credit facility, as amended, the Company has provided an unlimited completion and
cost overrun guarantee see Note 4 for further discussion. The first $250 million of net
residential sales proceeds are allowed to be used to fund project costs which would otherwise be
funded under the completion guarantee. As of September 30, 2010, the Company has funded $408
million under the completion guarantee. The Company has recorded a receivable from CityCenter of
$129 million related to these amounts, which represents amounts reimbursable to the Company from
CityCenter from future residential proceeds.
The joint venture agreement provides that the first $494 million of available distributions
must be distributed on a priority basis to Infinity World, with the next $494 million of
distributions made to the Company, and distributions shared equally thereafter. In July 2010, the
Company and Infinity World made capital contributions of $32.5 million each. The Companys
contribution was made through a reduction in its receivable from CityCenter. A portion of Infinity
Worlds cash contribution was used to repay an additional portion of the amounts owed to the
Company for costs paid by the Company on behalf of the joint venture.
At June 30, 2010 the Company reviewed its CityCenter investment for impairment using revised
operating forecasts developed by CityCenter management late in the second quarter. Based on current
and forecasted market conditions and because CityCenters results of operations through June 30,
2010 were below previous forecasts, and the revised operating forecasts were lower than previous
forecasts, management concluded it should review the carrying value of its investment. The Company
determined that the carrying value of its investment exceeded its fair value determined using a
discounted cash flow analysis and therefore an impairment was indicated. The Company intends to and
believes it will be able to retain its investment in CityCenter; however, due to the extent of the
shortfall and the Companys assessment of the uncertainty of fully recovering its investment, the
Company determined that the impairment was other-than-temporary and recorded an impairment charge
of $1.12 billion included in Property transactions, net.
At September 30, 2010, the Company recognized an increase of $232 million in its total net
obligation under its CityCenter completion guarantee, and a corresponding increase in its
investment in CityCenter. The increase primarily reflects revisions to prior estimates based on the
Companys assessment of the most current information derived from the CityCenter close-out and
litigation processes and does not reflect certain potential recoveries that are being pursued as
part of the litigation process. The Company completed an impairment review as of September 30,
2010 and as a result recorded an additional other-than-temporary impairment of $182 million in
the third quarter of 2010, included in Property transactions, net.
The Companys discounted cash flow analyses for CityCenter as of June 30, 2010 and September
30, 2010 included future cash inflows from operations, including residential sales, and estimated
future cash
6
outflows for capital expenditures. Both analyses used an 11% discount rate and a long term growth
rate of 4% related to forecasted cash flows for CityCenters operating assets.
Included in loss from unconsolidated affiliates for the three and nine months ended September
30, 2010 is the Companys share of impairment charges relating to completed CityCenter residential
inventory. Due to the completion of construction of the Mandarin Oriental residential inventory in
the first quarter and completion of the Veer residential inventory in the second quarter,
CityCenter is required to carry its residential inventory at the lower of its carrying value or
fair value less costs to sell. CityCenter determines fair value of its residential inventory using
a discounted cash flow analysis based on managements current expectations of future cash flows.
The key inputs in the discounted cash flow analysis included estimated sales prices of units
currently under contract and new unit sales, the absorption rate over the sell-out period, and the
discount rate. CityCenter management determined the fair value less costs to sell was below
carrying value and as a result recorded impairment charges for the Mandarin Oriental residential
inventory in the first quarter of $171 million and the Veer residential inventory in the second
quarter of $57 million. In addition, CityCenter recorded residential impairment charges of $93
million in the third quarter due to an increase in estimated final construction costs of the
residential components. The Company recognized its 50% share of such impairment charges, resulting
in pre-tax charges of approximately $46 million and $161 million in the three and nine month
periods ended September 30, 2010, respectively.
Included in loss from unconsolidated affiliates for the three and nine months ended September
30, 2009 is the Companys share of an impairment charge relating to CityCenter residential real
estate under development (REUD). CityCenter was required to review its REUD for impairment as of
September 30, 2009, mainly due to CityCenters September 2009 decision to discount the prices of
its residential inventory by 30%. This decision and related market conditions led to CityCenter
managements conclusion that the carrying value of the REUD is not recoverable based on estimates
of undiscounted cash flows. As a result, CityCenter was required to compare the fair value of its
REUD to its carrying value and record an impairment charge for the shortfall. Fair value of the
REUD was determined using a discounted cash flow analysis based on managements current
expectations of future cash flows. The key inputs in the discounted cash flow analysis included
estimated sales prices of units currently under contract and new unit sales, the absorption rate
over the sell-out period, and the discount rate. This analysis resulted in an impairment charge of
approximately $348 million of the REUD. The Company recognized its 50% share of such impairment
charge, adjusted by certain basis differences, resulting in a pre-tax charge of $203 million.
During the third quarter of 2010, CityCenter management determined that it is
unlikely that the Harmon Hotel & Spa (Harmon) will
be completed using the building as it now stands. As a result, CityCenter recorded an impairment
charge of $279 million in the third quarter of 2010 related to construction in progress assets.
The impairment of Harmon did not affect the Companys loss from unconsolidated affiliates, because
the Companys 50% share of the impairment charge had previously been recognized by the Company in
connection with prior impairments of its investment balance.
Summary balance sheet information for CityCenter is provided below:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
Current assets |
|
$ |
197,787 |
|
|
$ |
234,383 |
|
Property and other assets, net |
|
|
9,572,733 |
|
|
|
10,499,278 |
|
Current liabilities |
|
|
589,636 |
|
|
|
983,419 |
|
Long-term debt and other liabilities |
|
|
2,670,670 |
|
|
|
2,620,869 |
|
Equity |
|
|
6,510,214 |
|
|
|
7,129,373 |
|
Summary results of operations for CityCenter are provided below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
|
Net revenues |
|
$ |
412,895 |
|
|
$ |
|
|
|
$ |
1,073,441 |
|
|
$ |
2,648 |
|
Operating
expenses, except preopening expenses |
|
|
(813,394 |
) |
|
|
(351,046 |
) |
|
|
(1,851,159 |
) |
|
|
(359,435 |
) |
Preopening and start-up expenses |
|
|
|
|
|
|
(21,343 |
) |
|
|
(6,202 |
) |
|
|
(53,171 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(400,499 |
) |
|
|
(372,389 |
) |
|
|
(783,920 |
) |
|
|
(409,958 |
) |
Other non-operating expense |
|
|
(65,807 |
) |
|
|
(1,516 |
) |
|
|
(179,252 |
) |
|
|
(8,668 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(466,306 |
) |
|
$ |
(373,905 |
) |
|
$ |
(963,172 |
) |
|
$ |
(418,626 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
7
Borgata. In March 2010, the New Jersey Casino Control Commission (the CCC) approved the
Companys settlement agreement with the New Jersey Division of Gaming Enforcement (the DGE)
pursuant to which the Company placed its 50% ownership interest in the Borgata Hotel Casino & Spa
and related leased land in Atlantic City into a divestiture trust. Following the transfer of these
interests into trust, the Company ceased to be regulated by the CCC or the DGE, except as otherwise
provided by the trust agreement and the settlement agreement. Boyd Gaming Corporations (Boyd)
50% interest is not affected by the settlement.
The terms of the settlement mandate the sale of the trust property within a 30-month period.
During the first 18 months, the Company has the right to direct the trustee to sell the trust
property, subject to approval of the CCC. If a sale is not concluded by that time, the trustee is
responsible for selling the trust property during the following 12-month period. Prior to the
consummation of the sale, the divestiture trust will retain any cash flows received in respect of
the trust property, but will pay property taxes and other costs attributable to the trust property
to the extent that minimum trust cash balances are maintained. The Company is the sole economic
beneficiary of the trust and will be permitted to reapply for a New Jersey gaming license beginning
30 months after the completion of the sale of the trust assets.
As a result of the Companys ownership interest in Borgata being placed into a trust the
Company no longer has significant influence over Borgata; therefore, the Company discontinued the
equity method of accounting for Borgata at the point the assets were placed in the trust, and
accounts for its rights under the trust agreement under the cost method of accounting. The Company
also reclassified the carrying value of its investment related to Borgata to Other long-term
assets, net. Earnings and losses that relate to the investment that were previously accrued
remain as a part of the carrying amount of the investment. Distributions received by the trust that
do not exceed the Companys share of earnings are recognized currently in earnings. However,
distributions to the trust that exceed the Companys share of earnings for such periods will be
applied to reduce the carrying amount of its investment. The trust received distributions from the
joint venture of $105 million and $120 million for the three and nine months ended September 30,
2010, respectively, of which $10 million was paid to Boyd in accordance with the joint venture
agreement, as amended. The Company recorded $88 million and $94 million as a reduction of the carrying value
and $7 million and $16 million was recorded as Other, net non-operating income in the three and
nine months ended September 30, 2010, respectively.
In connection with the settlement agreement discussed above, the Company entered into an
amendment to its joint venture agreement with Boyd to permit the transfer of its 50% ownership
interest into trust in connection with the Companys settlement agreement with the DGE. In
accordance with such agreement, Boyd received a priority partnership distribution of approximately
$31 million (equal to the excess prior capital contributions by Boyd) upon successful refinancing
of the Borgata credit facility in August 2010.
In July 2010, the Company entered into an agreement to sell four long-term ground leases and
their respective underlying real property parcels, approximately 11.3 acres, underlying the Borgata
for $73 million. The transaction is subject to customary closing conditions contained in the
purchase and sale agreement, including approval by the CCC and the
DGE. The Company closed the transaction in November 2010.
In October 2010, the Company received an offer for its 50% economic interest in the Borgata
based on an enterprise value of $1.35 billion for the entire asset and on October 12, 2010, the
Companys Board of Directors authorized submission of this offer to Boyd Gaming Corporation which
owns the other 50% interest, in accordance with the right of first refusal provisions included in
the joint venture agreement. Subsequently, Boyd announced that it does not intend to exercise its
right of refusal in connection with such offer. The Company intends to pursue negotiations with
the original bidder. Based on Borgatas September debt balances, the offer equates to slightly in
excess of $250 million for the Companys 50% interest. This was less than the carrying value of
the Companys investment in Borgata; therefore, the Company recorded a pre-tax impairment charge of
approximately $128 million at September 30, 2010, recorded in Property transactions, net. The
consummation of any transaction as a result of the offer is subject to negotiation of final
documents, due diligence, and regulatory approval.
8
NOTE 3 LONG-TERM DEBT
Long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
Senior credit facility: |
|
|
|
|
|
|
|
|
Term loans, net |
|
$ |
2,570,060 |
|
|
$ |
2,119,037 |
|
Revolving loans |
|
|
660,000 |
|
|
|
3,392,806 |
|
$297 million 9.375% senior subordinated notes, repaid in 2010 |
|
|
|
|
|
|
298,135 |
|
$645.8 million 8.5% senior notes, repaid in 2010 |
|
|
|
|
|
|
781,689 |
|
$325.5 million 8.375% senior subordinated notes, due 2011 |
|
|
325,470 |
|
|
|
400,000 |
|
$128.7 million 6.375% senior notes, due 2011, net |
|
|
128,973 |
|
|
|
129,156 |
|
$544.7 million 6.75% senior notes, due 2012 |
|
|
544,650 |
|
|
|
544,650 |
|
$484.2 million 6.75% senior notes, due 2013 |
|
|
484,226 |
|
|
|
484,226 |
|
$150 million 7.625% senior subordinated debentures, due 2013, net |
|
|
152,576 |
|
|
|
153,190 |
|
$750 million 13% senior secured notes, due 2013, net |
|
|
713,695 |
|
|
|
707,144 |
|
$508.9 million 5.875% senior notes, due 2014, net |
|
|
507,844 |
|
|
|
507,613 |
|
$650 million 10.375% senior secured notes, due 2014, net |
|
|
635,768 |
|
|
|
633,463 |
|
$875 million 6.625% senior notes, due 2015, net |
|
|
877,878 |
|
|
|
878,253 |
|
$1,150 million 4.25% convertible senior notes, due 2015 |
|
|
1,150,000 |
|
|
|
|
|
$242.9 million 6.875% senior notes, due 2016 |
|
|
242,900 |
|
|
|
242,900 |
|
$732.7 million 7.5% senior notes, due 2016 |
|
|
732,749 |
|
|
|
732,749 |
|
$743 million 7.625% senior notes, due 2017 |
|
|
743,000 |
|
|
|
743,000 |
|
$850 million 11.125% senior secured notes, due 2017, net |
|
|
829,766 |
|
|
|
828,438 |
|
$475 million 11.375% senior notes, due 2018, net |
|
|
463,622 |
|
|
|
462,906 |
|
$845 million 9% senior secured notes, due 2020 |
|
|
845,000 |
|
|
|
|
|
Floating rate convertible senior debentures, due 2033 |
|
|
8,472 |
|
|
|
8,472 |
|
$0.6 million 7% debentures, due 2036, net |
|
|
573 |
|
|
|
573 |
|
$4.3 million 6.7% debentures, due 2096 |
|
|
4,265 |
|
|
|
4,265 |
|
Other notes |
|
|
2,364 |
|
|
|
3,196 |
|
|
|
|
|
|
|
|
|
|
|
12,623,851 |
|
|
|
14,055,861 |
|
Less: Current portion |
|
|
|
|
|
|
(1,079,824 |
) |
|
|
|
|
|
|
|
|
|
$ |
12,623,851 |
|
|
$ |
12,976,037 |
|
|
|
|
|
|
|
|
As of September 30, 2010, long-term debt due within one year of the balance sheet date is
classified as long-term because the Company has both the intent and ability to repay these amounts
with available borrowings under the senior credit facility.
Interest expense, net consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
|
Total interest incurred |
|
$ |
285,139 |
|
|
$ |
257,406 |
|
|
$ |
840,483 |
|
|
$ |
765,275 |
|
Interest capitalized |
|
|
|
|
|
|
(75,507 |
) |
|
|
|
|
|
|
(210,453 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
285,139 |
|
|
$ |
181,899 |
|
|
$ |
840,483 |
|
|
$ |
554,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior credit facility. The Companys senior credit facility was amended and restated in March
2010, and consisted of approximately $2.7 billion in term loans (of which approximately $874
million was required to be repaid by October 3, 2011) and a $2.0 billion revolving loan (of which
approximately $302 million was required to be repaid by October 3, 2011). The Company had
approximately $1.3 billion of available borrowing capacity under its senior credit facility at
September 30, 2010.
The Company accounted for the modification related to the extending term loans as an
extinguishment of debt because the applicable cash flows under the extended term loans are more
than 10% different from the applicable cash flows under the previous loans. Therefore, the extended
term loans were recorded at fair value resulting in a $181 million gain and a discount of $181
million to be amortized to interest expense over the
9
term of the extended term loans. In the three and nine months ended September 30, 2010, the
Company had $10 million and $21 million, respectively, of interest related to the amortization of
these loans. Fair value of the estimated term loans was based on trading prices immediately after
the transaction. In addition, the Company wrote off $15 million of existing debt issuance costs
related to the previous term loans and had expense of $22 million for new debt issuance costs
incurred related to amounts paid to extending term loan lenders in connection with the
modification. The Company also wrote off $2 million of existing debt issuance costs related to the
reduction in capacity under the non-extending revolving portion of the senior credit facility. In
total, the Company recognized a net pre-tax gain on extinguishment of debt of $142 million in
Other, net non-operating income in the first quarter of 2010.
Because net proceeds from the Companys October 2010 common stock offering discussed in Note 7
were in excess of $500 million, the Company was required to ratably repay indebtedness under the
senior credit facility of $5.9 million, which equals 50% of such excess. The Company used the net
proceeds from its October 2010 senior notes offering discussed below and a portion of the net
proceeds from its October 2010 common stock offering to repay the remaining amounts owed to
non-extending lenders under its senior credit facility. Loans and revolving commitments
aggregating approximately $3.6 billion (the extending loans) were extended to February 21, 2014,
which consists of approximately $1.9 billion in term loans and $1.7 billion in revolving loans. The
restated loan agreement allows the Company to refinance indebtedness maturing prior to February 21,
2014, but limits the Companys ability to prepay later maturing indebtedness until the extended
facilities are paid in full. The Company may issue unsecured debt, equity-linked and equity
securities to refinance its outstanding indebtedness; however, a) indebtedness issued in amounts in
excess of $250 million over amounts used to refinance indebtedness requires ratable prepayment of
the credit facilities in an amount equal to 50% of the net cash proceeds of such excess, and b)
equity issued in amounts in excess of $500 million (which limit the Company reached with its
October 2010 stock offering) requires ratable prepayment of the credit facilities in an amount
equal to 50% of the net cash proceeds of such excess except to the extent such equity was issued in
exchange for the Companys indebtedness.
Interest on the senior credit facility is based on a LIBOR margin of 5.00% (or, in the case of
the non-extending loans, 4.00%), with a LIBOR floor of 2.00%, and a base rate margin of 4.00% (or,
in the case of the non-extending loans, 3.00%), with a base rate floor of 4.00%. The weighted
average interest rate on outstanding borrowings under the senior credit facility at September 30,
2010 and December 31, 2009 was 6.7% and 6.0%, respectively.
At September 30, 2010, the Company was required under its senior credit facility to maintain a
minimum trailing annual EBITDA (as defined) of $1.0 billion. Additionally, the Company is limited
to $400 million of annual capital expenditures (as defined) during 2010. At September 30, 2010,
the Company was in compliance with the minimum EBITDA and maximum capital expenditures covenants.
Senior notes. In February 2010, the Company repaid the $297 million of outstanding principal
amount of its 9.375% senior subordinated notes due 2010 at maturity. During the second quarter of
2010 the Company repurchased $136 million principal amount of its 8.5% senior notes due 2010 and
$75 million principal amount of its 8.375% senior notes due 2011 essentially at par. In September
2010, the Company repaid the remaining $646 million of outstanding principal of its 8.5% senior
notes due 2010 at maturity.
In March 2010, the Company issued $845 million of 9% senior secured notes due 2020 for net
proceeds to the Company of $826 million. The notes are secured by the equity interests and
substantially all of the assets of MGM Grand Las Vegas and otherwise rank equally in right of
payment with the Companys existing and future senior indebtedness. Upon the issuance of such
notes, the holders of the Companys 13% senior notes due 2013 obtained an equal and ratable lien in
all collateral securing these notes. The Company used the net proceeds from the senior note
issuance to permanently repay approximately $820 million of loans previously outstanding under its
credit facility.
In October 2010, the Company issued $500 million of 10% senior notes due 2016, issued at a
discount to yield 10.25%, for net proceeds to the Company of approximately $486 million. The notes
are unsecured and otherwise rank equally in right of payment with the Companys existing and future
senior indebtedness.
Senior convertible notes. In April 2010, the Company issued $1.15 billion of 4.25% convertible
senior notes due 2015 for net proceeds to the Company of $1.12 billion. The notes are general
unsecured obligations of the Company and rank equally in right of payment with the Companys other
existing senior unsecured indebtedness. The Company used the net proceeds from the senior
convertible note issuance to temporarily repay amounts outstanding under its senior credit
facility.
The notes are convertible at an initial conversion rate of approximately 53.83 shares of the
Companys common stock per $1,000 principal amount of the notes, representing an initial conversion
price of approximately $18.58 per share of the Companys common stock. The initial conversion rate
was determined
10
based on the closing trading price of the Companys common stock on the date of the
transaction, plus a 27.5% premium. The terms of the notes do not provide for any beneficial
conversion features.
In connection with the offering, the Company entered into capped call transactions to reduce
the potential dilution of the Companys stock upon conversion of the notes. The capped call
transactions have a cap price equal to approximately $21.86 per share. The Company paid
approximately $81 million for the capped call transactions, which is reflected as a decrease in
Capital in excess of par value net of $29 million of associated tax benefits.
Financial instruments that are indexed to an entitys own stock and are classified as
stockholders equity in an entitys statement of financial position are not considered within the
scope of derivative instruments. The Company performed an evaluation of the embedded conversion
option and capped call transactions, which included an analysis of contingent exercise provisions
and settlement requirements, and determined that the embedded conversion option and capped call
transactions are considered indexed to the Companys stock and should be classified as equity, and
therefore are not accounted for as derivative instruments. Accordingly, the entire face amount of
the notes was recorded as debt until converted or retired at maturity, and the capped call
transactions were recorded within equity as described above.
Fair value of long-term debt. The estimated fair value of the Companys long-term debt at
September 30, 2010 was approximately $12.1 billion,
compared to its book value of $12.6 billion. At
December 31, 2009, the estimated fair value of the Companys long-term debt was approximately $12.9
billion, compared to its book value of $14.1 billion. The estimated fair value of the Companys
senior notes, senior subordinated notes and senior credit facility were based on quoted market
prices.
NOTE 4 COMMITMENTS AND CONTINGENCIES
CityCenter completion guarantee. The Company entered into a completion guarantee requiring an
unlimited completion and cost overrun guarantee from the Company, secured by its interests in the
assets of Circus Circus Las Vegas and certain adjacent undeveloped land. The terms of the
completion guarantee provide for the ability to utilize up to $250 million of net residential
proceeds to fund construction costs, though the timing of receipt of such proceeds is uncertain.
As of September 30, 2010 the Company has funded $408 million under the completion guarantee.
The Company has recorded a receivable from CityCenter of $129 million related to these amounts,
which represents amounts reimbursable to the Company from CityCenter from future residential
proceeds. At September 30, 2010, the Company recognized an increase of $232 million in its total
net obligation under its CityCenter completion guarantee. The increase primarily reflects revision
to prior estimates based on the Companys assessment of the most current information derived from
the CityCenter close-out and litigation processes and does not reflect certain potential recoveries
that are being pursued as part of the litigation process. Giving effect to the increase in its
accrual, the Company has a remaining estimated net obligation under the completion guarantee of
$219 million which includes estimated litigation costs related to the resolution of disputes with
contractors as to the final construction costs and reflects certain estimated offsets to the
amounts claimed by the contractors. CityCenter has reached, or expects to reach, settlement
agreements with most of the construction subcontractors. However, significant disputes remain with
the general contractor and certain subcontractors. Amounts claimed by such parties exceed amounts
included in the Companys completion guarantee accrual by approximately $200 million.
CityCenter
construction litigation. In March 2010, Perini Building
Company, Inc. (Perini), general contractor for the CityCenter development project (the Project), filed a lawsuit in the
Eighth Judicial District Court for Clark County, State of Nevada, against MGM MIRAGE Design Group
(a wholly-owned subsidiary of the Company which was the original party to the Perini construction
agreement) and certain direct or indirect subsidiaries of CityCenter Holdings, LLC (the CityCenter
Owners). Perini asserts that the Project was substantially completed, but the defendants failed to
pay Perini approximately $490 million allegedly due and owing under the construction agreement for
labor, equipment and materials expended on the Project. The complaint further charges the
defendants with failure to provide timely and complete design documents, late delivery to Perini of
design changes, mismanagement of the change order process, obstruction of Perinis ability to
complete the Harmon Hotel & Spa component, and fraudulent inducement of Perini to compromise
significantly amounts due for its general conditions. The complaint advances claims for breach of
contract, breach of the implied covenant of good faith and fair dealing, tortious breach of the
implied covenant of good faith and fair dealing, unjust enrichment and promissory estoppel, and
fraud and intentional misrepresentation. Perini seeks compensatory damages, punitive damages,
attorneys fees and costs.
In April 2010, Perini served an amended complaint in this case which joins as defendants
many owners of CityCenter residential condominium units (the Condo Owner Defendants), adds a
count for foreclosure of Perinis recorded master mechanics lien against the CityCenter property
in the amount of approximately $491 million, and asserts the priority of this mechanics lien over the
interests of the CityCenter Owners, the Condo
11
Owner Defendants and the Project lenders in the CityCenter property. In October 2010, Perini
recorded an amended notice of lien reducing its lien to approximately $418 million.
The CityCenter Owners and the other defendants dispute Perinis allegations, and contend that
the defendants are entitled to substantial amounts from Perini, including offsets against amounts
claimed to be owed to Perini and its subcontractors and damages based on breach of their
contractual and other duties to CityCenter, duplicative payment requests, non-conforming work, lack
of proof of alleged work performance, defective work related to the Harmon Hotel & Spa component,
property damage and Perinis failure to perform its obligations to pay Project subcontractors and
to prevent filing of liens against the Project. The CityCenter Owners and the other defendants
intend to vigorously assert and protect their interests in the lawsuit. The range of loss beyond
the asserted amount or any gain the joint venture may realize related to the defendants
counterclaims cannot be reasonably estimated at this time.
Other guarantees. The Company is party to various guarantee contracts in the normal course of
business, which are generally supported by letters of credit issued by financial institutions. The
Companys senior credit facility limits the amount of letters of credit that can be issued to $250
million, and the amount of available borrowings under the senior credit facility is reduced by any
outstanding letters of credit. At September 30, 2010, the Company had provided $37 million of
total letters of credit. Though not subject to a letter of credit, the Company had an agreement
with the Nevada Gaming Control Board to maintain $128 million of cash at September 30, 2010 at the
corporate level to support normal bankroll requirements at the Companys Nevada operations.
Other litigation. The Company is a party to various legal proceedings, most of which relate
to routine matters incidental to its business. Management does not believe that the outcome of
such proceedings will have a material adverse effect on the
Companys financial position, results of operations or cash flows.
NOTE 5 LOSS PER SHARE OF COMMON STOCK
The weighted-average number of common and common equivalent shares used in the calculation of basic
and diluted loss per share consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
Weighted-average common shares outstanding
(used in the calculation of basic loss per share) |
|
|
441,328 |
|
|
|
441,214 |
|
|
|
441,289 |
|
|
|
357,348 |
|
Potential dilution from stock options and restricted stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common and common equivalent shares
(used in the calculation of diluted loss per share) |
|
|
441,328 |
|
|
|
441,214 |
|
|
|
441,289 |
|
|
|
357,348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company had a loss from continuing operations for the three and nine months ended
September 2010 and 2009. Therefore, the approximately 26.0 million shares and 28.3 million shares
at September 30, 2010 and 2009, respectively, underlying outstanding stock-based awards were
excluded from the computation of diluted earnings per share for these periods because to include
these awards would be anti-dilutive. In addition, the effect of an assumed conversion of the
Companys convertible senior notes due 2015 would be anti-dilutive.
NOTE 6 COMPREHENSIVE LOSS
Comprehensive loss consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
Net loss |
|
$ |
(317,991 |
) |
|
$ |
(750,388 |
) |
|
$ |
(1,298,208 |
) |
|
$ |
(857,764 |
) |
Currency translation adjustment |
|
|
1,151 |
|
|
|
45 |
|
|
|
388 |
|
|
|
867 |
|
Reclassification of comprehensive
income to earnings- M Resort note |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,305 |
|
Other |
|
|
|
|
|
|
|
|
|
|
(70 |
) |
|
|
1,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(316,840 |
) |
|
$ |
(750,343 |
) |
|
$ |
(1,297,890 |
) |
|
$ |
(802,465 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
12
NOTE 7 STOCKHOLDERS EQUITY
Stock sale. In October 2010, the Company issued 40.9 million shares of its common stock
for total net proceeds to the Company of approximately $512 million. Concurrently
with the Companys issuance, Tracinda sold approximately 27.8 million shares of the Companys
common stock. The Company will not receive any proceeds from the sale of such common stock by
Tracinda. The underwriter has the ability to purchase an additional 6.1 million shares from the
Company and 4.2 million shares from Tracinda up to 30 days
after the original offering to cover overallotments. Proceeds
from the common stock offering were used to repay outstanding amounts under the Companys senior
credit facility (see Note 3) and for general corporate purposes.
Giving effect to the common stock offering, the Company has
approximately 3.7 million authorized shares in excess of its
outstanding shares, the underwriters overallotment option, and
shares underlying its outstanding convertible senior notes and
share-based awards.
NOTE 8 STOCK-BASED COMPENSATION
Activity under share-based payment plans. As of September 30, 2010, the Company had an
aggregate of approximately 14 million shares of common stock available for grant as share-based
awards under the Companys omnibus incentive plan. Such capacity
is limited as a result of the Companys October 2010 common
stock offering as discussed in Note 7. If the underwriter does not
exercise the overallotment, such shares will be available to be
issued under the omnibus incentive plan. A summary of activity under the Companys
share-based payment plans for the nine months ended September 30, 2010 is presented below:
Stock options and stock appreciation rights (SARs)
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Weighted Average |
|
|
|
(000s) |
|
|
Exercise Price |
|
Outstanding at January 1, 2010 |
|
|
28,211 |
|
|
$ |
23.17 |
|
Granted |
|
|
516 |
|
|
|
12.25 |
|
Exercised |
|
|
(111 |
) |
|
|
10.36 |
|
Forfeited or expired |
|
|
(3,502 |
) |
|
|
22.71 |
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2010 |
|
|
25,114 |
|
|
|
23.13 |
|
|
|
|
|
|
|
|
|
Exercisable at September 30, 2010 |
|
|
17,462 |
|
|
|
26.60 |
|
|
|
|
|
|
|
|
|
As of September 30, 2010, there was a total of $43 million of unamortized compensation related
to stock options and stock appreciation rights expected to vest, which is expected to be recognized
over a weighted-average period of 1.7 years.
Restricted stock units (RSUs)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Average |
|
|
|
Shares |
|
|
Grant-Date |
|
|
|
(000s) |
|
|
Fair Value |
|
Nonvested at January 1, 2010 |
|
|
1,080 |
|
|
$ |
15.85 |
|
Granted |
|
|
|
|
|
|
|
|
Vested |
|
|
(143 |
) |
|
|
18.87 |
|
Forfeited |
|
|
(43 |
) |
|
|
15.42 |
|
|
|
|
|
|
|
|
|
Nonvested at September 30, 2010 |
|
|
894 |
|
|
|
15.39 |
|
|
|
|
|
|
|
|
|
As of September 30, 2010, there was a total of $38 million of unamortized compensation related
to RSUs which is expected to be recognized over a weighted-average period of 1.5 years.
The following table includes additional information related to stock options, SARs and RSUs:
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
Intrinsic value of share-based awards exercised or RSUs vested |
|
$ |
2,125 |
|
|
$ |
1,594 |
|
Income tax benefit from share-based awards exercised or RSUs vested |
|
|
739 |
|
|
|
558 |
|
Proceeds from stock option exercises |
|
|
|
|
|
|
637 |
|
13
In 2009, the Company began to net settle stock option exercises, whereby shares of common
stock are issued equivalent to the intrinsic value of the option less applicable taxes.
Accordingly, the Company no longer receives proceeds from the exercise of stock options.
Recognition of compensation cost. Compensation cost was recognized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
Compensation cost
Stock options and SARS |
|
$ |
4,951 |
|
|
$ |
5,650 |
|
|
$ |
14,971 |
|
|
$ |
16,318 |
|
RSUs |
|
|
4,870 |
|
|
|
5,070 |
|
|
|
14,996 |
|
|
|
15,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total compensation cost |
|
|
9,821 |
|
|
|
10,720 |
|
|
|
29,967 |
|
|
|
31,712 |
|
Less: CityCenter reimbursed costs |
|
|
(1,222 |
) |
|
|
(1,381 |
) |
|
|
(3,811 |
) |
|
|
(4,573 |
) |
Less: Compensation cost capitalized |
|
|
|
|
|
|
(20 |
) |
|
|
|
|
|
|
(63 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation cost recognized
as expense |
|
|
8,599 |
|
|
|
9,319 |
|
|
|
26,156 |
|
|
|
27,076 |
|
Less: Related tax benefit |
|
|
(2,996 |
) |
|
|
(3,244 |
) |
|
|
(9,102 |
) |
|
|
(9,381 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense,
net of tax benefit |
|
$ |
5,603 |
|
|
$ |
6,075 |
|
|
$ |
17,054 |
|
|
$ |
17,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation costs for SARs is based on the fair value of each award, measured by applying the
Black-Scholes model on the date of grant, using the following weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Expected volatility |
|
|
74 |
% |
|
|
86 |
% |
|
|
74 |
% |
|
|
84 |
% |
Expected term |
|
4.8 |
yrs. |
|
4.7 |
yrs. |
|
4.8 |
yrs. |
|
4.7 |
yrs. |
Expected dividend yield |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
Risk-free interest rate |
|
|
1.2 |
% |
|
|
2.2 |
% |
|
|
1.6 |
% |
|
|
2.2 |
% |
Forfeiture rate |
|
|
4.8 |
% |
|
|
3.4 |
% |
|
|
4.8 |
% |
|
|
3.4 |
% |
Weighted-average fair value of options granted |
|
$ |
6.24 |
|
|
$ |
5.17 |
|
|
$ |
7.32 |
|
|
$ |
4.54 |
|
Expected volatility is based in part on historical volatility and in part on implied
volatility based on traded options on the Companys stock. The expected term considers the
contractual term of the option as well as historical exercise and forfeiture behavior. The
risk-free interest rate is based on the rates in effect on the grant date for U.S. Treasury
instruments with maturities matching the relevant expected term of the award.
NOTE 9 PROPERTY TRANSACTIONS, NET
Net property transactions consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
CityCenter investment impairment |
|
$ |
182,236 |
|
|
$ |
955,898 |
|
|
$ |
1,304,692 |
|
|
$ |
955,898 |
|
Insurance recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,186 |
) |
Borgata impairment |
|
|
128,395 |
|
|
|
|
|
|
|
128,395 |
|
|
|
|
|
Gain on sale of TI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(187,442 |
) |
Other property transactions, net |
|
|
7,523 |
|
|
|
15,310 |
|
|
|
12,038 |
|
|
|
18,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
318,154 |
|
|
$ |
971,208 |
|
|
$ |
1,445,125 |
|
|
$ |
779,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Note 2 for discussion of the CityCenter investment and Borgata impairment charges.
14
NOTE 10 CONSOLIDATING CONDENSED FINANCIAL INFORMATION
Excluding MGM Grand Detroit, LLC and certain minor subsidiaries, the Companys subsidiaries
that are 100% directly or indirectly owned have fully and unconditionally guaranteed, on a joint
and several basis, payment of the senior credit facility, the senior
notes, senior secured notes and the senior
subordinated notes. Separate condensed financial statement information for the subsidiary
guarantors and non-guarantors as of September 30, 2010 and December 31, 2009 and for the three and
nine month periods ended September 30, 2010 and 2009 is as follows:
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2010 |
|
|
|
|
|
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
|
|
|
|
|
|
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Elimination |
|
|
Consolidated |
|
|
|
(In thousands) |
|
Current assets |
|
$ |
389,831 |
|
|
$ |
787,652 |
|
|
$ |
111,318 |
|
|
$ |
|
|
|
$ |
1,288,801 |
|
Property and equipment, net |
|
|
|
|
|
|
14,060,691 |
|
|
|
648,473 |
|
|
|
(11,972 |
) |
|
|
14,697,192 |
|
Investments in subsidiaries |
|
|
16,475,240 |
|
|
|
443,375 |
|
|
|
|
|
|
|
(16,918,615 |
) |
|
|
|
|
Investments in and advances to
unconsolidated affiliates |
|
|
|
|
|
|
2,115,760 |
|
|
|
|
|
|
|
|
|
|
|
2,115,760 |
|
Other non-current assets |
|
|
306,460 |
|
|
|
293,145 |
|
|
|
435,014 |
|
|
|
|
|
|
|
1,034,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
17,171,531 |
|
|
$ |
17,700,623 |
|
|
$ |
1,194,805 |
|
|
$ |
(16,930,587 |
) |
|
$ |
19,136,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
$ |
438,286 |
|
|
$ |
853,087 |
|
|
$ |
27,584 |
|
|
$ |
|
|
|
$ |
1,318,957 |
|
Intercompany accounts |
|
|
(273,661 |
) |
|
|
144,281 |
|
|
|
129,380 |
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
2,400,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400,984 |
|
Long-term debt |
|
|
11,876,627 |
|
|
|
297,224 |
|
|
|
450,000 |
|
|
|
|
|
|
|
12,623,851 |
|
Other long-term obligations |
|
|
188,924 |
|
|
|
62,671 |
|
|
|
614 |
|
|
|
|
|
|
|
252,209 |
|
Stockholders equity |
|
|
2,540,371 |
|
|
|
16,343,360 |
|
|
|
587,227 |
|
|
|
(16,930,587 |
) |
|
|
2,540,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
17,171,531 |
|
|
$ |
17,700,623 |
|
|
$ |
1,194,805 |
|
|
$ |
(16,930,587 |
) |
|
$ |
19,136,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009 |
|
|
|
|
|
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
|
|
|
|
|
|
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Elimination |
|
|
Consolidated |
|
|
|
(In thousands) |
|
Current assets |
|
$ |
2,143,019 |
|
|
$ |
810,991 |
|
|
$ |
99,491 |
|
|
$ |
|
|
|
$ |
3,053,501 |
|
Property and equipment, net |
|
|
|
|
|
|
14,391,733 |
|
|
|
690,191 |
|
|
|
(11,972 |
) |
|
|
15,069,952 |
|
Investments in subsidiaries |
|
|
17,927,664 |
|
|
|
447,336 |
|
|
|
|
|
|
|
(18,375,000 |
) |
|
|
|
|
Investments in and advances to
unconsolidated affiliates |
|
|
|
|
|
|
3,353,334 |
|
|
|
258,465 |
|
|
|
|
|
|
|
3,611,799 |
|
Other non-current assets |
|
|
152,205 |
|
|
|
507,500 |
|
|
|
123,253 |
|
|
|
|
|
|
|
782,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
20,222,888 |
|
|
$ |
19,510,894 |
|
|
$ |
1,171,400 |
|
|
$ |
(18,386,972 |
) |
|
$ |
22,518,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
$ |
344,707 |
|
|
$ |
926,780 |
|
|
$ |
32,290 |
|
|
$ |
|
|
|
$ |
1,303,777 |
|
Current portion of long-term debt |
|
|
1,079,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,079,824 |
|
Intercompany accounts |
|
|
(227,808 |
) |
|
|
120,603 |
|
|
|
107,205 |
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
3,031,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,031,303 |
|
Long-term debt |
|
|
11,929,050 |
|
|
|
596,987 |
|
|
|
450,000 |
|
|
|
|
|
|
|
12,976,037 |
|
Other long-term obligations |
|
|
195,380 |
|
|
|
60,867 |
|
|
|
590 |
|
|
|
|
|
|
|
256,837 |
|
Stockholders equity |
|
|
3,870,432 |
|
|
|
17,805,657 |
|
|
|
581,315 |
|
|
|
(18,386,972 |
) |
|
|
3,870,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
20,222,888 |
|
|
$ |
19,510,894 |
|
|
$ |
1,171,400 |
|
|
$ |
(18,386,972 |
) |
|
$ |
22,518,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, 2010 |
|
|
|
|
|
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
|
|
|
|
|
|
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Elimination |
|
|
Consolidated |
|
|
|
(In thousands) |
|
Net revenues |
|
$ |
|
|
|
$ |
1,438,205 |
|
|
$ |
119,500 |
|
|
$ |
|
|
|
$ |
1,557,705 |
|
Equity in subsidiaries earnings |
|
|
(261,353 |
) |
|
|
36,205 |
|
|
|
|
|
|
|
225,148 |
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino and hotel operations |
|
|
2,822 |
|
|
|
891,289 |
|
|
|
62,159 |
|
|
|
|
|
|
|
956,270 |
|
General and administrative |
|
|
2,171 |
|
|
|
266,745 |
|
|
|
23,540 |
|
|
|
|
|
|
|
292,456 |
|
Corporate expense |
|
|
3,681 |
|
|
|
27,140 |
|
|
|
(106 |
) |
|
|
|
|
|
|
30,715 |
|
Preopening and start-up expenses |
|
|
|
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
30 |
|
Property transactions, net |
|
|
|
|
|
|
318,638 |
|
|
|
(484 |
) |
|
|
|
|
|
|
318,154 |
|
Depreciation and amortization |
|
|
|
|
|
|
148,617 |
|
|
|
10,240 |
|
|
|
|
|
|
|
158,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,674 |
|
|
|
1,652,459 |
|
|
|
95,349 |
|
|
|
|
|
|
|
1,756,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
unconsolidated affiliates |
|
|
|
|
|
|
(36,504 |
) |
|
|
29,380 |
|
|
|
|
|
|
|
(7,124 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(270,027 |
) |
|
|
(214,553 |
) |
|
|
53,531 |
|
|
|
225,148 |
|
|
|
(205,901 |
) |
Interest income (expense), net |
|
|
(266,643 |
) |
|
|
(9,483 |
) |
|
|
(7,871 |
) |
|
|
|
|
|
|
(283,997 |
) |
Other, net |
|
|
21,133 |
|
|
|
(34,074 |
) |
|
|
(8,088 |
) |
|
|
|
|
|
|
(21,029 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(515,537 |
) |
|
|
(258,110 |
) |
|
|
37,572 |
|
|
|
225,148 |
|
|
|
(510,927 |
) |
Benefit (provision) for income taxes |
|
|
197,546 |
|
|
|
(3,407 |
) |
|
|
(1,203 |
) |
|
|
|
|
|
|
192,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(317,991 |
) |
|
$ |
(261,517 |
) |
|
$ |
36,369 |
|
|
$ |
225,148 |
|
|
$ |
(317,991 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, 2009 |
|
|
|
|
|
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
|
|
|
|
|
|
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Elimination |
|
|
Consolidated |
|
|
|
(In thousands) |
|
Net revenues |
|
$ |
|
|
|
$ |
1,400,768 |
|
|
$ |
132,455 |
|
|
$ |
|
|
|
$ |
1,533,223 |
|
Equity in subsidiaries earnings |
|
|
(918,785 |
) |
|
|
32,808 |
|
|
|
|
|
|
|
885,977 |
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino and hotel operations |
|
|
3,617 |
|
|
|
811,887 |
|
|
|
73,634 |
|
|
|
|
|
|
|
889,138 |
|
General and administrative |
|
|
2,783 |
|
|
|
264,685 |
|
|
|
23,298 |
|
|
|
|
|
|
|
290,766 |
|
Corporate expense |
|
|
4,702 |
|
|
|
28,143 |
|
|
|
(917 |
) |
|
|
|
|
|
|
31,928 |
|
Preopening and start-up expenses |
|
|
|
|
|
|
10,058 |
|
|
|
|
|
|
|
|
|
|
|
10,058 |
|
Property transactions, net |
|
|
|
|
|
|
971,208 |
|
|
|
|
|
|
|
|
|
|
|
971,208 |
|
Depreciation and amortization |
|
|
|
|
|
|
161,683 |
|
|
|
8,968 |
|
|
|
|
|
|
|
170,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,102 |
|
|
|
2,247,664 |
|
|
|
104,983 |
|
|
|
|
|
|
|
2,363,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
unconsolidated affiliates |
|
|
|
|
|
|
(156,463 |
) |
|
|
23,570 |
|
|
|
|
|
|
|
(132,893 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(929,887 |
) |
|
|
(970,551 |
) |
|
|
51,042 |
|
|
|
885,977 |
|
|
|
(963,419 |
) |
Interest income (expense), net |
|
|
(239,732 |
) |
|
|
65,595 |
|
|
|
(6,905 |
) |
|
|
|
|
|
|
(181,042 |
) |
Other, net |
|
|
3,605 |
|
|
|
(8,139 |
) |
|
|
(9,253 |
) |
|
|
|
|
|
|
(13,787 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(1,166,014 |
) |
|
|
(913,095 |
) |
|
|
34,884 |
|
|
|
885,977 |
|
|
|
(1,158,248 |
) |
Benefit (provision) for income taxes |
|
|
414,722 |
|
|
|
(5,690 |
) |
|
|
(1,172 |
) |
|
|
|
|
|
|
407,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(751,292 |
) |
|
$ |
(918,785 |
) |
|
$ |
33,712 |
|
|
$ |
885,977 |
|
|
$ |
(750,388 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, 2010 |
|
|
|
|
|
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
|
|
|
|
|
|
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Elimination |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
|
|
|
$ |
4,147,213 |
|
|
$ |
405,579 |
|
|
$ |
|
|
|
$ |
4,552,792 |
|
Equity in subsidiaries earnings |
|
|
(1,384,862 |
) |
|
|
100,859 |
|
|
|
|
|
|
|
1,284,003 |
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino and hotel operations |
|
|
8,542 |
|
|
|
2,606,889 |
|
|
|
214,866 |
|
|
|
|
|
|
|
2,830,297 |
|
General and administrative |
|
|
6,802 |
|
|
|
769,424 |
|
|
|
74,688 |
|
|
|
|
|
|
|
850,914 |
|
Corporate expense |
|
|
12,195 |
|
|
|
76,871 |
|
|
|
(1,523 |
) |
|
|
|
|
|
|
87,543 |
|
Preopening and start-up
expenses |
|
|
|
|
|
|
4,061 |
|
|
|
|
|
|
|
|
|
|
|
4,061 |
|
Property transactions, net |
|
|
|
|
|
|
1,445,609 |
|
|
|
(484 |
) |
|
|
|
|
|
|
1,445,125 |
|
Depreciation and amortization |
|
|
|
|
|
|
456,174 |
|
|
|
30,583 |
|
|
|
|
|
|
|
486,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,539 |
|
|
|
5,359,028 |
|
|
|
318,130 |
|
|
|
|
|
|
|
5,704,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from unconsolidated affiliates |
|
|
|
|
|
|
(185,600 |
) |
|
|
71,364 |
|
|
|
|
|
|
|
(114,236 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(1,412,401 |
) |
|
|
(1,296,556 |
) |
|
|
158,813 |
|
|
|
1,284,003 |
|
|
|
(1,266,141 |
) |
Interest income (expense), net |
|
|
(800,370 |
) |
|
|
(14,753 |
) |
|
|
(22,576 |
) |
|
|
|
|
|
|
(837,699 |
) |
Other, net |
|
|
168,597 |
|
|
|
(65,724 |
) |
|
|
(30,024 |
) |
|
|
|
|
|
|
72,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(2,044,174 |
) |
|
|
(1,377,033 |
) |
|
|
106,213 |
|
|
|
1,284,003 |
|
|
|
(2,030,991 |
) |
Benefit (provision) for income taxes |
|
|
745,966 |
|
|
|
(9,425 |
) |
|
|
(3,758 |
) |
|
|
|
|
|
|
732,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(1,298,208 |
) |
|
$ |
(1,386,458 |
) |
|
$ |
102,455 |
|
|
$ |
1,284,003 |
|
|
$ |
(1,298,208 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, 2009 |
|
|
|
|
|
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
|
|
|
|
|
|
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Elimination |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Net Revenues |
|
$ |
|
|
|
$ |
4,114,402 |
|
|
$ |
411,771 |
|
|
$ |
|
|
|
$ |
4,526,173 |
|
Equity in subsidiaries earnings |
|
|
(373,834 |
) |
|
|
53,520 |
|
|
|
|
|
|
|
320,314 |
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino and hotel operations |
|
|
10,551 |
|
|
|
2,398,939 |
|
|
|
227,070 |
|
|
|
|
|
|
|
2,636,560 |
|
General and administrative |
|
|
6,816 |
|
|
|
748,545 |
|
|
|
70,262 |
|
|
|
|
|
|
|
825,623 |
|
Corporate Expense |
|
|
29,129 |
|
|
|
73,484 |
|
|
|
(3,318 |
) |
|
|
|
|
|
|
99,295 |
|
Preopening and start-up
expenses |
|
|
|
|
|
|
27,539 |
|
|
|
|
|
|
|
|
|
|
|
27,539 |
|
Property transactions, net |
|
|
|
|
|
|
779,331 |
|
|
|
|
|
|
|
|
|
|
|
779,331 |
|
Depreciation and amortization |
|
|
|
|
|
|
491,483 |
|
|
|
30,394 |
|
|
|
|
|
|
|
521,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,496 |
|
|
|
4,519,321 |
|
|
|
324,408 |
|
|
|
|
|
|
|
4,890,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from unconsolidated affiliates |
|
|
|
|
|
|
(128,062 |
) |
|
|
14,893 |
|
|
|
|
|
|
|
(113,169 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(420,330 |
) |
|
|
(479,461 |
) |
|
|
102,256 |
|
|
|
320,314 |
|
|
|
(477,221 |
) |
Interest income (expense), net |
|
|
(700,749 |
) |
|
|
173,986 |
|
|
|
(16,524 |
) |
|
|
|
|
|
|
(543,287 |
) |
Other, net |
|
|
(193,196 |
) |
|
|
(54,345 |
) |
|
|
(25,210 |
) |
|
|
|
|
|
|
(272,751 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(1,314,275 |
) |
|
|
(359,820 |
) |
|
|
60,522 |
|
|
|
320,314 |
|
|
|
(1,293,259 |
) |
Benefit (provision) for income taxes |
|
|
453,169 |
|
|
|
(14,014 |
) |
|
|
(3,660 |
) |
|
|
|
|
|
|
435,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) |
|
$ |
(861,106 |
) |
|
$ |
(373,834 |
) |
|
$ |
56,862 |
|
|
$ |
320,314 |
|
|
$ |
(857,764 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, 2010 |
|
|
|
|
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor |
|
|
Guarantor |
|
|
|
|
|
|
|
|
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Elimination |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
$ |
(315,301 |
) |
|
$ |
640,617 |
|
|
$ |
55,082 |
|
|
$ |
|
|
|
$ |
380,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, net of construction payable |
|
|
|
|
|
|
(125,666 |
) |
|
|
(2,873 |
) |
|
|
|
|
|
|
(128,539 |
) |
Dispositions of property and equipment |
|
|
|
|
|
|
365 |
|
|
|
6,309 |
|
|
|
|
|
|
|
6,674 |
|
Investments in and advances to unconsolidated affiliates |
|
|
(408,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(408,000 |
) |
Distributions from cost method investments, net |
|
|
|
|
|
|
110,176 |
|
|
|
|
|
|
|
|
|
|
|
110,176 |
|
Other |
|
|
|
|
|
|
(1,233 |
) |
|
|
|
|
|
|
|
|
|
|
(1,233 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
(408,000 |
) |
|
|
(16,358 |
) |
|
|
3,436 |
|
|
|
|
|
|
|
(420,922 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments under bank credit
facilities maturities of 90 days or less |
|
|
(2,732,807 |
) |
|
|
|
|
|
|
(170,000 |
) |
|
|
|
|
|
|
(2,902,807 |
) |
Borrowings under bank credit facilities -
maturities longer than 90 days |
|
|
6,952,606 |
|
|
|
|
|
|
|
1,350,000 |
|
|
|
|
|
|
|
8,302,606 |
|
Repayments under bank credit facilities -
maturities longer than 90 days |
|
|
(6,341,601 |
) |
|
|
|
|
|
|
(1,180,000 |
) |
|
|
|
|
|
|
(7,521,601 |
) |
Issuance of senior notes, net |
|
|
1,995,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,995,000 |
|
Retirement of senior notes |
|
|
(857,523 |
) |
|
|
(296,956 |
) |
|
|
|
|
|
|
|
|
|
|
(1,154,479 |
) |
Debt issuance costs |
|
|
(98,531 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(98,531 |
) |
Intercompany accounts |
|
|
356,238 |
|
|
|
(302,844 |
) |
|
|
(53,394 |
) |
|
|
|
|
|
|
|
|
Capped call transactions |
|
|
(81,478 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(81,478 |
) |
Other |
|
|
(635 |
) |
|
|
(951 |
) |
|
|
(50 |
) |
|
|
|
|
|
|
(1,636 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(808,731 |
) |
|
|
(600,751 |
) |
|
|
(53,444 |
) |
|
|
|
|
|
|
(1,462,926 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) for the period |
|
|
(1,532,032 |
) |
|
|
23,508 |
|
|
|
5,074 |
|
|
|
|
|
|
|
(1,503,450 |
) |
Balance, beginning of period |
|
|
1,718,616 |
|
|
|
263,386 |
|
|
|
74,205 |
|
|
|
|
|
|
|
2,056,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
|
$ |
186,584 |
|
|
$ |
286,894 |
|
|
$ |
79,279 |
|
|
$ |
|
|
|
$ |
552,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, 2009 |
|
|
|
|
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor |
|
|
Guarantor |
|
|
|
|
|
|
|
|
|
Parent |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Elimination |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
$ |
(446,908 |
) |
|
$ |
968,950 |
|
|
$ |
(3,726 |
) |
|
$ |
|
|
|
$ |
518,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, net of construction payable |
|
|
|
|
|
|
(121,801 |
) |
|
|
(883 |
) |
|
|
|
|
|
|
(122,684 |
) |
Proceeds from sale of Treasure Island, net |
|
|
|
|
|
|
746,266 |
|
|
|
|
|
|
|
|
|
|
|
746,266 |
|
Dispositions of property and equipment |
|
|
|
|
|
|
22,067 |
|
|
|
|
|
|
|
|
|
|
|
22,067 |
|
Investments in and advances to unconsolidated affiliates |
|
|
|
|
|
|
(916,144 |
) |
|
|
|
|
|
|
(5,923 |
) |
|
|
(922,067 |
) |
Property damage insurance recoveries |
|
|
|
|
|
|
7,186 |
|
|
|
|
|
|
|
|
|
|
|
7,186 |
|
Other |
|
|
|
|
|
|
(5,054 |
) |
|
|
|
|
|
|
|
|
|
|
(5,054 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
|
|
|
|
(267,480 |
) |
|
|
(883 |
) |
|
|
(5,923 |
) |
|
|
(274,286 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments under bank credit
facilities maturities of 90 days or less |
|
|
(2,271,400 |
) |
|
|
|
|
|
|
(213,600 |
) |
|
|
|
|
|
|
(2,485,000 |
) |
Borrowings under bank credit facilities
maturities longer than 90 days |
|
|
6,211,492 |
|
|
|
|
|
|
|
450,000 |
|
|
|
|
|
|
|
6,661,492 |
|
Repayments under bank credit facilities
maturities longer than 90 days |
|
|
(5,386,340 |
) |
|
|
|
|
|
|
(190,000 |
) |
|
|
|
|
|
|
(5,576,340 |
) |
Issuance of senior notes, net |
|
|
1,921,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,921,751 |
|
Retirement of senior notes |
|
|
(762,648 |
) |
|
|
(356,442 |
) |
|
|
|
|
|
|
|
|
|
|
(1,119,090 |
) |
Debt issuance costs |
|
|
(113,227 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(113,227 |
) |
Issuance of common stock in public
offering, net |
|
|
1,103,737 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,103,737 |
|
Intercompany accounts |
|
|
1,111,254 |
|
|
|
(1,165,111 |
) |
|
|
47,934 |
|
|
|
5,923 |
|
|
|
|
|
Payment of Detroit Economic Development
Corporation bonds |
|
|
|
|
|
|
|
|
|
|
(49,393 |
) |
|
|
|
|
|
|
(49,393 |
) |
Other |
|
|
233 |
|
|
|
(954 |
) |
|
|
(47 |
) |
|
|
|
|
|
|
(768 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
1,814,852 |
|
|
|
(1,522,507 |
) |
|
|
44,894 |
|
|
|
5,923 |
|
|
|
343,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) for the period |
|
|
1,367,944 |
|
|
|
(821,037 |
) |
|
|
40,285 |
|
|
|
|
|
|
|
587,192 |
|
Change in cash related to assets held for sale |
|
|
|
|
|
|
14,154 |
|
|
|
|
|
|
|
|
|
|
|
14,154 |
|
Balance, beginning of period |
|
|
(2,444 |
) |
|
|
267,602 |
|
|
|
30,486 |
|
|
|
|
|
|
|
295,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
|
$ |
1,365,500 |
|
|
$ |
(539,281 |
) |
|
$ |
70,771 |
|
|
$ |
|
|
|
$ |
896,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
|
|
|
Item 2. |
|
Managements Discussion and Analysis of Financial Condition and Results of Operations |
This managements discussion and analysis of financial condition and results of operations
(MD&A) contains forward-looking statements that involve risks and uncertainties. Please see
Forward-Looking Statements for a discussion of the uncertainties, risks and assumptions that may
cause our actual results to differ materially from those discussed in the forward-looking
statements. This discussion should be read in conjunction with our historical financial statements
and related notes thereto and the other disclosures contained elsewhere in this Quarterly Report on
Form 10-Q, and the audited combined financial statements and notes for the fiscal year ended
December 31, 2009, which were included in our Form 10-K, filed with the SEC on February 26, 2010.
The results of operations for the periods reflected herein are not necessarily indicative of
results that may be expected for future periods. MGM Resorts International together with its
subsidiaries may be referred to as we, us or our.
Executive Overview
General
Our primary business is the ownership and operation of casino resorts, which includes offering
gaming, hotel, dining, entertainment, retail and other resort amenities. Over half of our net
revenue is derived from non-gaming activities, a higher percentage than many of our competitors, as
our operating philosophy is to provide a complete resort experience for our guests, including
non-gaming amenities that allow us to charge premium prices based on their quality. Our significant
convention and meeting facilities allow us to maximize hotel occupancy and customer volumes during
off-peak times such as mid-week or during traditionally slower leisure travel periods, which also
leads to better labor utilization. We believe that we own several of the premier casino resorts in
the world and have continually reinvested in our resorts to maintain our competitive advantage.
As a resort-based company, our operating results are highly dependent on the volume of
customers and demand for our hotel rooms and other amenities, which in turn affects the prices we
can charge. We also generate a significant portion of our operating income from high-end gaming
customers, which can cause variability in our results. Key performance indicators related to
revenue are:
|
|
|
Gaming revenue indicators table games drop and slots handle (volume
indicators); win or hold percentage, which is not fully controllable by us. Our normal
table games win percentage is in the range of 18% to 22% of table games drop and our normal
slots win percentage is in the range of 7% to 8% of slots handle; and |
|
|
|
|
Hotel revenue indicators hotel occupancy (a volume indicator); average
daily rate (ADR, a price indicator); revenue per available room (REVPAR, a summary
measure of hotel results, combining ADR and occupancy rate). |
Most of our revenue is essentially cash-based, through customers wagering with cash or paying
for non-gaming services with cash or credit cards. Our resorts, like many in the industry,
generate significant operating cash flow. Our industry is capital intensive and we rely heavily on
the ability of our resorts to generate operating cash flow to repay debt financing, fund
maintenance capital expenditures and provide excess cash for future development.
We generate a majority of our net revenues and operating income from our resorts in Las Vegas,
Nevada, which exposes us to certain risks outside of our control, such as increased competition
from new or expanded Las Vegas resorts, and from the expansion of gaming in California. We are
also exposed to risks related to tourism and the general economy, including national and global
economic conditions and terrorist attacks or other global events.
Our results of operations do not tend to be seasonal in nature, although a variety of factors
may affect the results of any interim period, including the timing of major Las Vegas conventions,
the amount and timing of marketing and special events for our high-end customers, and the level of
play during major holidays, including New Years and Chinese New Year. We market to different
customer segments to manage our hotel occupancy, such as targeting large conventions to ensure
mid-week occupancy. Our results do not depend on key individual customers, although our success in
marketing to customer groups, such as convention customers, or the financial health of customer
segments, such as business travelers or high-end gaming customers from a particular country or
region, can affect our results.
Effect of Economic Factors on Results of Operations
The state of the U.S. economy has negatively affected our results of operations over the past
several years and we expect to continue to be affected by certain aspects of the current economic
conditions, including, for example, high unemployment and the weak housing market. The decrease in
liquidity in the credit markets
19
which began in late 2007 and accelerated in late 2008 also significantly affected our results of
operations and financial condition.
Uncertain economic conditions continue to affect our customers spending levels. Travel and
travel-related expenditures have been affected as businesses and consumers have altered their
spending patterns which led to decreases in visitor volumes and customer spending. Businesses
responded to the difficult economic conditions by reducing travel budgets. This factor, along with
negative perceptions surrounding certain types of business travel, adversely affected convention
attendance in Las Vegas in 2009 and 2010. Convention and catering customers cancelled or postponed
a significant number of events occurring during 2009 and early 2010. Other conditions currently or
recently present in the economic environment which tend to negatively affect our operating results
include:
|
|
|
Weaknesses in employment and increases in unemployment; |
|
|
|
|
Weak consumer confidence; |
|
|
|
|
Weak housing market and significant declines in housing prices and
related home equity; and |
|
|
|
|
Decreases in airline capacity to Las Vegas. |
Because of these economic conditions, we have increasingly focused on managing costs and
continue to review all areas of operations for efficiencies. We continually manage staffing levels
across all our resorts and have reduced our salaried management positions.
In addition, we suspended company contributions to our 401(k) plan and our nonqualified
deferred compensation plans in 2009; we rescinded cost of living increases for non-union employees
in 2009; and we reached an agreement with our primary union to defer the 2009 contractual pay
increase. We paid discretionary bonuses for 2009 in February 2010 and we have provided general
salary increases to certain salaried employees in 2010. However, company matching contributions to
our 401(k) plan and our nonqualified deferred compensation plans will remain frozen until such time
as we believe it is prudent to reinstate these benefits.
Our results of operations are also affected by decisions we make related to our capital
allocation, our access to capital, and our cost of capital all of which are affected by the
uncertain state of the global economy and the continued instability in the capital markets. For
example, we will incur higher interest costs in connection with the amendments to our senior credit
facility in 2009 and 2010. Also, our cost of debt has increased over the past few years. These
factors may affect our ability to access future capital and cause future borrowings to carry higher
interest rates.
October Equity Offering
In October 2010, we issued 40.9 million shares of our common stock for
total net proceeds to us of approximately $512 million. Concurrently with our issuance, Tracinda
sold approximately 27.8 million shares of our common stock. We will not receive any proceeds from
the sale of such common stock by Tracinda. The underwriter has the ability to purchase an
additional 6.1 million shares from us and 4.2 million shares from Tracinda up to 30 days after the
original offering to cover overallotments. Proceeds from the common stock offering were used to repay outstanding amounts
under our senior credit facility and for general corporate purposes.
October Debt Issuance
In October 2010, we issued $500 million of 10% senior notes due 2016, issued at a discount to
yield 10.25%, for net proceeds to us of approximately $486 million. The notes are unsecured and
otherwise rank equally in right of payment with our existing and future senior indebtedness.
Senior Credit Facility
Our senior credit facility was amended and restated in March 2010, and consisted of
approximately $2.7 billion in term loans (of which approximately $874 million was required to be
repaid by October 3, 2011) and a $2.0 billion revolving loan (of which approximately $302 million
was required to be repaid by October 3, 2011) as of September 30, 2010. We had approximately $1.3
billion of available borrowing capacity under our senior credit facility at September 30, 2010.
We accounted for the modification related to the extending term loans as an extinguishment of
debt because the applicable cash flows under the extended term loans are more than 10% different
from the applicable cash flows under the previous loans. Therefore, the extended term loans were
recorded at fair value resulting in a $181 million gain and a discount of $181 million to be
amortized to interest expense over the term of the extended term loans. In the three and nine
months ended September 30, 2010, we had $10 million and $21 million, respectively, of interest
related to the amortization of these loans. Fair value of the estimated term loans was based on
trading prices immediately after the transaction. In addition, we wrote-off $15
20
million of existing debt issuance costs related to the previous term loans and had expense of $22
million for new debt issuance costs incurred related to amounts paid to extending term loan lenders
in connection with the modification. We also wrote off $2 million of existing debt issuance costs
related to the reduction in capacity under the non-extending revolving portion of the senior credit
facility. In total, we recognized a net pre-tax gain on extinguishment of debt of $142 million in
Other, net non-operating income in the first quarter of 2010.
Because net proceeds from our October 2010 common stock offering were in excess of $500
million, we were required to ratably repay indebtedness under the senior credit facility of $5.9
million, which equals 50% of such excess. We used the net proceeds from our October 2010 senior
notes offering discussed above and a portion of the net proceeds from our October 2010 common stock
offering to repay the remaining amounts owed to non-extending lenders under our senior credit
facility. Loans and revolving commitments aggregating approximately $3.6 billion (the extending
loans) were extended to February 21, 2014, which consists of approximately $1.9 billion in term
loans and $1.7 billion in revolving loans. The restated loan agreement allows us to refinance
indebtedness maturing prior to February 21, 2014, but limits our ability to prepay later maturing
indebtedness until the extended facilities are paid in full. We may issue unsecured debt,
equity-linked and equity securities to refinance our outstanding indebtedness; however, a)
indebtedness issued in amounts in excess of $250 million over amounts used to refinance
indebtedness requires ratable prepayment of the credit facilities in an amount equal to 50% of the
net cash proceeds of such excess, and b) equity issued in amounts in excess of $500 million (which
limit we reached with our October 2010 stock offering) requires ratable prepayment of the credit
facilities in an amount equal to 50% of the net cash proceeds of such excess except to the extent
such equity was issued in exchange for our indebtedness.
Impairments
A complete discussion of our critical accounting policies related to impairments of long-lived
assets and investments in unconsolidated affiliates is included in our Form 10-K for the period
ending December 31, 2009. We did not review any of our wholly-owned long-lived asset groups
generally our operating resorts for impairment as of September 30, 2010 as we did not identify
circumstances that existed that would indicate the carrying value of our long-lived assets may not
be recoverable. Historically, the undiscounted cash flows of our significant long-lived assets have
exceeded their carrying values by a substantial margin such that any recent decline in operating
performance would not be indicative of a potential impairment. However, we reviewed the carrying
value of our investment in CityCenter and the carrying value of our Borgata asset as discussed
further below.
CityCenter
At June 30, 2010 we reviewed our CityCenter investment for impairment using revised operating
forecasts developed by CityCenter management late in the second quarter. Based on current and
forecasted market conditions and because CityCenters results of operations through June 30, 2010
were below previous forecasts, and the revised operating forecasts were lower than previous
forecasts, we concluded that we should review the carrying value of our investment. We determined
that the carrying value of our investment exceeded our fair value determined using a discounted
cash flow analysis and therefore an impairment was indicated. We intend to and believe we will be
able to retain our investment in CityCenter; however, due to the extent of the shortfall and our
assessment of the uncertainty of fully recovering our investment, we determined that the impairment
was other-than-temporary and recorded an impairment charge of $1.12 billion included in Property
transactions, net.
At September 30, 2010, we recognized an increase of $232 million in our total net obligation
under our CityCenter completion guarantee, and a corresponding increase in our investment in
CityCenter. The increase primarily reflects revision to prior estimates based on our assessment of
the most current information derived from our close-out and litigation processes and does not
reflect certain potential recoveries that CityCenter is pursuing as part of the litigation process.
We completed an impairment review as of September 30, 2010 and as a result recorded an additional
other-than-temporary impairment of $182 million in the third quarter of 2010.
Our discounted cash flow analyses for CityCenter as of June 30, 2010 and September 30, 2010
included future cash inflows from operations, including residential sales, and estimated future
cash outflows for capital expenditures. Both analyses used an 11% discount rate and a long term
growth rate of 4% related to forecasted cash flows for CityCenters operating assets.
In addition, due to the completion of construction of the Mandarin Oriental residential
inventory in the first quarter and completion of the Veer residential inventory in the second
quarter, CityCenter is required to carry its residential inventory at the lower of its carrying
value or fair value less costs to sell. CityCenter determines fair value of its residential
inventory using a discounted cash flow analysis based on managements current expectations of
future cash flows. The key inputs in the discounted cash flow analysis
21
included estimated sales prices of units currently under contract and new unit sales, the
absorption rate over the sell-out period, and the discount rate. CityCenter management determined
the fair value less costs to sell was below carrying value and as a result recorded impairment
charges for the Mandarin Oriental residential inventory in the first quarter of $171 million and
the Veer residential inventory in the second quarter of $57 million. In addition, CityCenter
recorded residential impairment charges of $93 million in the third quarter due to an increase in
estimated final construction costs of the residential components. We recognized our 50% share of
such impairment charges, resulting in pre-tax charges of approximately $46 million and $161 million
in the three and nine month periods ended September 30, 2010,
respectively, included in Loss from unconsolidated affiliates.
Included in loss from unconsolidated affiliates for the three and nine months ended September
30, 2009 is our share of an impairment charge relating to CityCenter residential real estate under
development (REUD). CityCenter was required to review its REUD for impairment as of September
30, 2009, mainly due to CityCenters September 2009 decision to discount the prices of its
residential inventory by 30%. This decision and related market conditions led to CityCenter
managements conclusion that the carrying value of the REUD is not recoverable based on estimates
of undiscounted cash flows. As a result, CityCenter was required to compare the fair value of its
REUD to its carrying value and record an impairment charge for the shortfall. Fair value of the
REUD was determined using a discounted cash flow analysis based on managements current
expectations of future cash flows. The key inputs in the discounted cash flow analysis included
estimated sales prices of units currently under contract and new unit sales, the absorption rate
over the sell-out period, and the discount rate. This analysis resulted in an impairment charge of
approximately $348 million of the REUD. We recognized our 50% share of such impairment charge,
adjusted by certain basis differences, resulting in a pre-tax charge of $203 million.
During the third quarter of 2010, CityCenter management determined that it is
unlikely that the Harmon will be completed using the building as it
now stands. As a result, CityCenter recorded an impairment
charge of $279 million in the third quarter of 2010 related to construction in progress assets.
The impairment of Harmon did not affect our loss from unconsolidated affiliates, because we had
previously recognized our 50% share of the impairment charge in connection with prior impairments
of our investment balance.
Borgata
In March 2010, the New Jersey Casino Control Commission (the CCC) approved our settlement
agreement with the New Jersey Division of Gaming Enforcement (the DGE) pursuant to which we
placed our 50% ownership interest in the Borgata Hotel Casino & Spa and related leased land in
Atlantic City into a divestiture trust. Following the transfer of these interests into trust, we
ceased to be regulated by the CCC or the DGE, except as otherwise provided by the trust agreement
and the settlement agreement. Boyd Gaming Corporations (Boyd) 50% interest is not affected by
the settlement.
The terms of the settlement mandate the sale of the trust property within a 30-month period.
During the first 18 months, we have the right to direct the trustee to sell the trust property,
subject to approval of the CCC. If a sale is not concluded by that time, the trustee is responsible
for selling the trust property during the following 12-month period. Prior to the consummation of
the sale, the divestiture trust will retain any cash flows received in respect of the trust
property, but will pay property taxes and other costs attributable to the trust property to the
extent that minimum trust cash balances are maintained. We are the sole economic beneficiary of the
trust and will be permitted to reapply for a New Jersey gaming license beginning 30 months after
the completion of the sale of the trust assets.
As a result of our ownership interest in Borgata being placed into the trust, we no longer
have significant influence over Borgata; therefore, we discontinued the equity method of accounting
for Borgata at the point the assets were placed in the trust, and account for our rights under the
trust arrangement under the cost method of accounting. We also reclassified the carrying value of
our investment related to Borgata to Other long-term assets, net. Earnings and losses that relate
to the investment that were previously accrued remain as a part of the carrying amount of the
investment. Distributions received by the trust that do not exceed our share of earnings are
recognized currently in earnings. However, distributions to the trust that exceed our share of
earnings for such periods will be applied to reduce the carrying amount of our investment. The
trust received distributions from the joint venture of $105 million and $120 million in the three
and nine months ended September 30, 2010, respectively, of which $10 million was paid to Boyd in
accordance with the joint venture agreement. We recorded $88 million and $94 million as a
reduction of the carrying value and $7 million and $16 million as Other, net non-operating income
in the three and nine months ended September 30, 2010, respectively.
In connection with the settlement agreement discussed above, we entered into an amendment to
our joint venture agreement with Boyd to permit the transfer of our 50% ownership interest into
trust in connection with our settlement agreement with the DGE. In accordance with such agreement,
Boyd received a priority
22
partnership distribution of approximately $31 million (equal to the excess prior capital
contributions by Boyd) upon successful refinancing of the Borgata credit facility in August 2010.
In July 2010, we entered into an agreement to sell four long-term ground leases and their
respective underlying real property parcels, approximately 11.3 acres, underlying the Borgata for
$73 million. The transaction is subject to customary closing conditions contained in the purchase
and sale agreement, including approval by the New Jersey Casino Control Commission and the New
Jersey Division of Gaming Enforcement. We closed the transaction in
November 2010.
In October 2010, we received an offer for our 50% economic interest in the Borgata based on an
enterprise value of $1.35 billion for the entire asset and on October 12, 2010, our Board of
Directors authorized submission of this offer to Boyd Gaming Corporation, which owns the other 50%
interest, in accordance with the right of first refusal provisions included in the joint venture
agreement. Subsequently Boyd announced that it does not intend to exercise its right of refusal in
connection with such offer. We intend to pursue negotiations with the original bidder. Based on
Borgatas September debt balances, the offer equates to slightly in excess of $250 million for our
50% interest. This is less than the carrying value of our investment in Borgata; therefore, we
recorded a pre-tax impairment charge of approximately $128 million in the third quarter of 2010
included in Property transactions, net. The consummation of any transaction as a result of the
offer is subject to negotiation of final documents, due diligence, and regulatory approval.
Reimbursed Costs
Reimbursed costs revenue represents reimbursement of costs, primarily payroll-related,
incurred by us in connection with the provision of management services. We recognize costs
reimbursed pursuant to management services as revenue in the period we incur the costs. Reimbursed
costs, which are related mainly to our management of CityCenter, were $89 million and $16 million
for the third quarter of 2010 and 2009, respectively, and $272 million and $42 million for the nine
months ended September 30, 2010 and 2009, respectively.
Results of Operations
The following discussion is based on our consolidated financial statements for the three and
nine months ended September 30, 2010 and 2009. Certain results referenced in this section are on a
same store basis excluding the results of Treasure Island, which we sold in March 2009.
Summary Financial Results
Our net revenue increased 2% for the third quarter of 2010 compared to the same quarter in the
prior year and included $89 million of reimbursed costs revenue in the current year compared to $16
million in the third quarter of 2009. Excluding reimbursed costs revenue, net revenue decreased
3%. Net revenue for the nine month period of 2010 was up 2% compared to the prior year, and down
3% excluding reimbursed costs. Revenues in general continue to be negatively affected by a
reduction in consumer discretionary spending. See further discussion of revenue trends below in
Operating Results Detailed Revenue Information.
Operating loss for the third quarter of 2010 was $206 million compared to an operating loss of
$963 million in the third quarter of 2009. The 2010 results were negatively affected by a $182
million impairment charge related to our CityCenter investment, $128 million impairment of our
economic interest in Borgata, and $46 million related to our share of the residential inventory
impairment charge at CityCenter; these charges were partially offset by $14 million of income
related to our share of forfeited residential deposits at CityCenter. The 2009 results were
negatively affected by a $956 million impairment charge related to our CityCenter investment and
our share of the residential inventory impairment charges at CityCenter of approximately $203
million, partially offset by our share of insurance recoveries at Borgata of $14 million. Excluding
the impairment charges, forfeited residential deposit income, Borgata insurance recoveries, preopening
expenses and other property transactions, operating income decreased 30% for the three month period
and operating margin was 10% in the current year compared to 14% in the prior year.
For the nine month period, operating loss was $1.27 billion, compared to an operating
loss of $477 million in the nine months of 2009. The 2010 operating loss was negatively affected
by the items discussed above, as well as a CityCenter investment impairment and our share of
residential impairment charges at CityCenter in the first half of the year, offset by our share of
residential deposits at CityCenter. CityCenter investment impairment charges for the nine months
totaled $1.3 billion, our share of the residential inventory impairment charges at CityCenter
totaled $160 million, and our share of forfeited residential deposits at CityCenter totaled $54
million. The 2009 year to date results were affected by the items discussed above, as well as the
pre-tax gain of $187 million on Treasure Island and $22 million of insurance recoveries related to
the Monte Carlo fire. Excluding the impairment charges, forfeited residential deposit income,
insurance recoveries, preopening expenses and other property transactions, operating income
decreased 46% for the
23
nine month period and operating margin was 7% in the current year compared to 12% in the prior
year. These decreases are largely the result of our share of the operating losses at CityCenter.
Operating Results Detailed Revenue Information
The following table presents details of our net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
|
|
|
|
Percentage |
|
|
|
|
|
|
|
|
|
|
Percentage |
|
|
|
|
|
|
2010 |
|
|
Change |
|
|
2009 |
|
|
2010 |
|
|
Change |
|
|
2009 |
|
|
|
(In thousands) |
|
Casino revenue, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table games |
|
$ |
227,322 |
|
|
|
(18 |
%) |
|
$ |
277,265 |
|
|
$ |
632,358 |
|
|
|
(14 |
%) |
|
$ |
736,431 |
|
Slots |
|
|
388,731 |
|
|
|
(3 |
%) |
|
|
402,264 |
|
|
|
1,145,548 |
|
|
|
(4 |
%) |
|
|
1,190,666 |
|
Other |
|
|
17,930 |
|
|
|
(12 |
%) |
|
|
20,277 |
|
|
|
56,226 |
|
|
|
(11 |
%) |
|
|
63,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino revenue, net |
|
|
633,983 |
|
|
|
(9 |
%) |
|
|
699,806 |
|
|
|
1,834,132 |
|
|
|
(8 |
%) |
|
|
1,990,103 |
|
Non-casino revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms |
|
|
331,424 |
|
|
|
(3 |
%) |
|
|
340,165 |
|
|
|
990,546 |
|
|
|
(5 |
%) |
|
|
1,045,504 |
|
Food and beverage |
|
|
343,180 |
|
|
|
|
|
|
|
344,284 |
|
|
|
1,019,553 |
|
|
|
(2 |
%) |
|
|
1,040,540 |
|
Entertainment, retail and other |
|
|
410,451 |
|
|
|
28 |
% |
|
|
321,166 |
|
|
|
1,187,542 |
|
|
|
26 |
% |
|
|
946,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-casino revenue |
|
|
1,085,055 |
|
|
|
8 |
% |
|
|
1,005,615 |
|
|
|
3,197,641 |
|
|
|
5 |
% |
|
|
3,032,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,719,038 |
|
|
|
1 |
% |
|
|
1,705,421 |
|
|
|
5,031,773 |
|
|
|
|
|
|
|
5,022,178 |
|
Less: Promotional allowances |
|
|
(161,333 |
) |
|
|
(6 |
%) |
|
|
(172,198 |
) |
|
|
(478,981 |
) |
|
|
(3 |
%) |
|
|
(496,005 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,557,705 |
|
|
|
2 |
% |
|
$ |
1,533,223 |
|
|
$ |
4,552,792 |
|
|
|
1 |
% |
|
$ |
4,526,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table games revenue decreased 18% for the third quarter and was negatively affected by a lower
table games hold percentage approximately 210 basis points compared to the prior year quarter.
Table games hold percentage was above the midpoint of our normal hold range in the current year
quarter and above the high end in the prior year quarter. Total table games revenue was also
affected by table games volume decreasing 7% compared to the prior year quarter. Baccarat volume
decreased 6% while other table games volume decreased 7%. Slots revenue decreased 3% in the third
quarter with a 9% decrease at our Las Vegas Strip resorts.
For the nine months, table games revenue decreased 13% on a same store basis, affected by a
150 basis point decrease in table games hold. Hold percentage in the 2010 and 2009 year to date
periods were both within our normal hold range. Table games volume including baccarat decreased 4%,
with baccarat volumes increasing 5% year to date. Slots revenue was down 3% on a same store basis
with a 7% decrease at our Las Vegas Strip resorts.
Rooms revenue in the third quarter decreased 3%, with a 2% decrease in Las Vegas Strip REVPAR.
On a same store basis, rooms revenue for the nine month period decreased 3% with a decrease in Las
Vegas Strip REVPAR of 4%. The following table shows key hotel statistics for our Las Vegas Strip
Resorts on a same store basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Occupancy |
|
|
93 |
% |
|
|
95 |
% |
|
|
90 |
% |
|
|
92 |
% |
Average Daily Rate (ADR) |
|
$ |
105 |
|
|
$ |
105 |
|
|
$ |
109 |
|
|
$ |
111 |
|
Revenue per Available Room (REVPAR) |
|
|
97 |
|
|
|
100 |
|
|
|
98 |
|
|
|
102 |
|
Food and beverage revenue was flat compared to the prior year third quarter and down 1%
for the year to date period on a same store basis. Entertainment revenues decreased 4% for
the third quarter due mainly to lower production show revenue and
increased 1% year to date on a same store basis due to new entertainment including Disneys The Lion King, which opened during the second
quarter of 2009.
Operating Results Details of Certain Charges
Preopening and start-up expenses largely consisted of our share of CityCenters preopening
costs in 2010 and 2009.
24
Property transactions, net consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
CityCenter investment impairment |
|
$ |
182,236 |
|
|
$ |
955,898 |
|
|
$ |
1,304,692 |
|
|
$ |
955,898 |
|
Insurance recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,186 |
) |
Borgata impairment |
|
|
128,395 |
|
|
|
|
|
|
|
128,395 |
|
|
|
|
|
Gain on sale of TI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(187,442 |
) |
Other property transactions, net |
|
|
7,523 |
|
|
|
15,310 |
|
|
|
12,038 |
|
|
|
18,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
318,154 |
|
|
$ |
971,208 |
|
|
$ |
1,445,125 |
|
|
$ |
779,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Results Loss from Unconsolidated Affiliates
Loss
from unconsolidated affiliates was $7 million in the current year
quarter compared to $133 million in the third quarter of 2009 and was $114
million in 2010 compared to $113 million in 2009 for the nine month periods. The current
quarter included our share of the residential inventory impairment charge of approximately $46
million. The prior year quarter included our share of the residential inventory impairment charge
of approximately $203 million. The current year nine month period was affected by our share of the
net losses at CityCenter of $221 million, which included $161 million related to our share of the
residential inventory impairment charges. Prior year nine month period was affected by our share of
the net losses at CityCenter of $207 million, which included $203 million related to our share of
the residential inventory impairment charges.
We ceased recording Borgata operating results as income from unconsolidated affiliates under
the equity method of accounting in the first quarter of 2010. Income from unconsolidated
affiliates from Borgata was $38 million in the third quarter of 2009, and $7 million and $64
million for the nine month 2010 and 2009 periods, respectively.
Loss from unconsolidated affiliates benefited from our share of operating income at MGM Macau,
which earned operating income of $61 million in the third quarter of 2010, including depreciation
expense of $22 million, compared to operating income of $50 million in the 2009 third quarter,
which included depreciation expense of $23 million. MGM Macau earned operating income of $150
million in the nine month period of 2010, including $65 million of depreciation expense, compared
to operating income of $38 million in the 2009 period, which included depreciation expense of $66
million.
Non-operating Results
Net interest expense increased to $285 million in the 2010 third quarter from $182 million in
the 2009 period and increased to $840 million in the 2010 nine month period compared to $555
million for the 2009 nine month period. Interest expense increased due to higher borrowing rates
under our senior credit facility, higher interest rates on public debt issued in 2009 and 2010, and
amortization of discount on the senior credit facility of $10 million and $21 million in the three
and nine months ended 2010, respectively. Additionally, we ceased capitalization of interest
expense related to CityCenter in December 2009 and do not have any other major construction
projects ongoing; therefore, we did not have any capitalized interest in 2010.
We recorded $7 million and $16 million in Other, net related to income from Borgata in the
three and nine month periods ended September 30, 2010, respectively. Other, net for the 2010
nine month period also included a $141 million gain on debt redemption. The prior year nine month
period included a $176 million impairment charge related to our M Resort LLC convertible note, as
well as a $58 million loss associated with retirement of long-term debt in connection with our May
2009 senior secured note issuance.
Non-GAAP Measures
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 and Adjusted Property EBITDA information is presented solely as a
supplemental disclosure to reported GAAP measures because we believe that these measures are 1)
widely used measures of operating performance in the gaming industry, and 2) a principal basis for
valuation of gaming companies.
We believe that while items excluded from Adjusted EBITDA and Adjusted Property EBITDA may be
recurring in nature and should not be disregarded in evaluation of our earnings performance, it is
useful to
25
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, we believe 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 we are developing
and constructing a major expansion project and dependent 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 and gains and losses on sales of assets related to specific
assets within our 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, we use Adjusted Property EBITDA as the primary measure
of our operating resorts performance.
Adjusted EBITDA or Adjusted Property EBITDA should not be construed as an alternative to
operating income or net income, as an indicator of our 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. We have significant uses of cash flows,
including capital expenditures, interest payments, taxes and debt principal repayments, which are
not reflected in Adjusted EBITDA. Also, other companies in the gaming and hospitality industries
that report Adjusted EBITDA information may calculate Adjusted EBITDA in a different manner.
The following table presents a reconciliation of Adjusted EBITDA to net loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
(In thousands) |
|
Adjusted EBITDA |
|
$ |
271,140 |
|
|
$ |
188,498 |
|
|
$ |
669,802 |
|
|
$ |
851,526 |
|
Preopening and start-up expenses |
|
|
(30 |
) |
|
|
(10,058 |
) |
|
|
(4,061 |
) |
|
|
(27,539 |
) |
Property transactions, net |
|
|
(318,154 |
) |
|
|
(971,208 |
) |
|
|
(1,445,125 |
) |
|
|
(779,331 |
) |
Depreciation and amortization |
|
|
(158,857 |
) |
|
|
(170,651 |
) |
|
|
(486,757 |
) |
|
|
(521,877 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(205,901 |
) |
|
|
(963,419 |
) |
|
|
(1,266,141 |
) |
|
|
(477,221 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(285,139 |
) |
|
|
(181,899 |
) |
|
|
(840,483 |
) |
|
|
(554,822 |
) |
Other, net |
|
|
(19,887 |
) |
|
|
(12,930 |
) |
|
|
75,633 |
|
|
|
(261,216 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(510,927 |
) |
|
|
(1,158,248 |
) |
|
|
(2,030,991 |
) |
|
|
(1,293,259 |
) |
Benefit for income taxes |
|
|
192,936 |
|
|
|
407,860 |
|
|
|
732,783 |
|
|
|
435,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(317,991 |
) |
|
$ |
(750,388 |
) |
|
$ |
(1,298,208 |
) |
|
$ |
(857,764 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA increased 44% and decreased 21% for the three and nine month periods,
respectively. Adjusted EBITDA for the third quarter of 2010 was affected by our share of losses at
CityCenter, which includes the residential impairment charge of approximately $46 million, offset
by $14 million of income related to forfeited residential deposits. The prior year quarter
included $203 million related to our share of the CityCenter residential impairment charge and our
share of Borgata insurance recoveries of $14 million. Excluding these items, Adjusted EBITDA
decreased 19%. Adjusted EBITDA for the nine month period of 2010 includes $161 million related to
our share of the residential impairment charges at CityCenter and $54 million of income related to
forfeited residential deposits at CityCenter. The 2009 year to date period includes $203 million
related to our share of the residential impairment charges at CityCenter, an impairment charge of
$12 million related to our North Las Vegas Strip joint venture and Monte Carlo insurance recoveries
of $15 million. Excluding these items, Adjusted EBITDA decreased 26% for the nine month period.
Adjusted Property EBITDA for our wholly-owned resorts decreased 13% and 17% for the three and
nine month periods (on a same store basis). The decreases in Adjusted Property EBITDA were largely
due to the factors discussed in Summary Financial Results and Affect of Economic Factors on
Results of Operations.
26
The following tables present reconciliations of operating income (loss) to Adjusted Property
EBITDA and Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2010 |
|
|
|
|
|
|
|
Preopening |
|
|
Property |
|
|
Depreciation |
|
|
|
|
|
|
Operating |
|
|
and Start-up |
|
|
Transactions, |
|
|
and |
|
|
Adjusted |
|
|
|
Income (Loss) |
|
|
Expenses |
|
|
Net |
|
|
Amortization |
|
|
EBITDA |
|
|
|
(In thousands) |
|
Bellagio |
|
$ |
52,040 |
|
|
$ |
|
|
|
$ |
(18 |
) |
|
$ |
23,836 |
|
|
$ |
75,858 |
|
MGM Grand Las Vegas |
|
|
20,855 |
|
|
|
|
|
|
|
(45 |
) |
|
|
19,201 |
|
|
|
40,011 |
|
Mandalay Bay |
|
|
5,023 |
|
|
|
|
|
|
|
2,181 |
|
|
|
23,231 |
|
|
|
30,435 |
|
The Mirage |
|
|
16,104 |
|
|
|
|
|
|
|
450 |
|
|
|
15,426 |
|
|
|
31,980 |
|
Luxor |
|
|
3,666 |
|
|
|
|
|
|
|
11 |
|
|
|
10,437 |
|
|
|
14,114 |
|
New York-New York |
|
|
14,307 |
|
|
|
|
|
|
|
763 |
|
|
|
6,873 |
|
|
|
21,943 |
|
Excalibur |
|
|
10,300 |
|
|
|
|
|
|
|
|
|
|
|
5,581 |
|
|
|
15,881 |
|
Monte Carlo |
|
|
(1,954 |
) |
|
|
|
|
|
|
3,765 |
|
|
|
6,119 |
|
|
|
7,930 |
|
Circus Circus Las Vegas |
|
|
1,024 |
|
|
|
|
|
|
|
4 |
|
|
|
5,098 |
|
|
|
6,126 |
|
MGM Grand Detroit |
|
|
30,724 |
|
|
|
|
|
|
|
(484 |
) |
|
|
10,226 |
|
|
|
40,466 |
|
Beau Rivage |
|
|
4,950 |
|
|
|
|
|
|
|
348 |
|
|
|
12,339 |
|
|
|
17,637 |
|
Gold Strike Tunica |
|
|
7,532 |
|
|
|
|
|
|
|
549 |
|
|
|
3,623 |
|
|
|
11,704 |
|
Management operations |
|
|
(4,986 |
) |
|
|
|
|
|
|
|
|
|
|
3,432 |
|
|
|
(1,554 |
) |
Other operations |
|
|
(53 |
) |
|
|
30 |
|
|
|
(1 |
) |
|
|
1,917 |
|
|
|
1,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly-owned operations |
|
|
159,532 |
|
|
|
30 |
|
|
|
7,523 |
|
|
|
147,339 |
|
|
|
314,424 |
|
CityCenter (50%) |
|
|
(46,420 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(46,420 |
) |
Macau (50%) |
|
|
29,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,372 |
|
Other unconsolidated resorts |
|
|
9,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
152,408 |
|
|
|
30 |
|
|
|
7,523 |
|
|
|
147,339 |
|
|
|
307,300 |
|
Stock compensation |
|
|
(8,599 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,599 |
) |
Corporate |
|
|
(349,710 |
) |
|
|
|
|
|
|
310,631 |
|
|
|
11,518 |
|
|
|
(27,561 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(205,901 |
) |
|
$ |
30 |
|
|
$ |
318,154 |
|
|
$ |
158,857 |
|
|
$ |
271,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2009 |
|
|
|
|
|
|
|
Preopening |
|
|
Property |
|
|
Depreciation |
|
|
|
|
|
|
Operating |
|
|
and Start-up |
|
|
Transactions, |
|
|
and |
|
|
Adjusted |
|
|
|
Income (Loss) |
|
|
Expenses |
|
|
Net |
|
|
Amortization |
|
|
EBITDA |
|
|
|
(In thousands) |
|
Bellagio |
|
$ |
29,495 |
|
|
$ |
|
|
|
$ |
1,206 |
|
|
$ |
31,175 |
|
|
$ |
61,876 |
|
MGM Grand Las Vegas |
|
|
50,634 |
|
|
|
|
|
|
|
5 |
|
|
|
20,088 |
|
|
|
70,727 |
|
Mandalay Bay |
|
|
13,822 |
|
|
|
145 |
|
|
|
(73 |
) |
|
|
22,328 |
|
|
|
36,222 |
|
The Mirage |
|
|
37,368 |
|
|
|
|
|
|
|
17 |
|
|
|
17,128 |
|
|
|
54,513 |
|
Luxor |
|
|
10,542 |
|
|
|
(759 |
) |
|
|
(12 |
) |
|
|
9,218 |
|
|
|
18,989 |
|
New York-New York |
|
|
6,775 |
|
|
|
|
|
|
|
1,394 |
|
|
|
9,821 |
|
|
|
17,990 |
|
Excalibur |
|
|
13,413 |
|
|
|
|
|
|
|
(14 |
) |
|
|
5,777 |
|
|
|
19,176 |
|
Monte Carlo |
|
|
(5,685 |
) |
|
|
|
|
|
|
2,456 |
|
|
|
7,159 |
|
|
|
3,930 |
|
Circus Circus Las Vegas |
|
|
1,910 |
|
|
|
|
|
|
|
80 |
|
|
|
5,763 |
|
|
|
7,753 |
|
MGM Grand Detroit |
|
|
17,889 |
|
|
|
|
|
|
|
5,906 |
|
|
|
8,934 |
|
|
|
32,729 |
|
Beau Rivage |
|
|
5,819 |
|
|
|
|
|
|
|
|
|
|
|
12,227 |
|
|
|
18,046 |
|
Gold Strike Tunica |
|
|
7,774 |
|
|
|
|
|
|
|
|
|
|
|
3,760 |
|
|
|
11,534 |
|
Management operations |
|
|
847 |
|
|
|
|
|
|
|
2,473 |
|
|
|
1,027 |
|
|
|
4,347 |
|
Other operations |
|
|
238 |
|
|
|
|
|
|
|
|
|
|
|
1,466 |
|
|
|
1,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly-owned operations |
|
|
190,841 |
|
|
|
(614 |
) |
|
|
13,438 |
|
|
|
155,871 |
|
|
|
359,536 |
|
CityCenter (50%) |
|
|
(215,006 |
) |
|
|
10,672 |
|
|
|
|
|
|
|
|
|
|
|
(204,334 |
) |
Macau (50%) |
|
|
23,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,557 |
|
Other unconsolidated resorts |
|
|
48,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,462 |
|
|
|
10,058 |
|
|
|
13,438 |
|
|
|
155,871 |
|
|
|
226,829 |
|
Stock compensation |
|
|
(9,319 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,319 |
) |
Corporate |
|
|
(1,001,562 |
) |
|
|
|
|
|
|
957,770 |
|
|
|
14,780 |
|
|
|
(29,012 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(963,419 |
) |
|
$ |
10,058 |
|
|
$ |
971,208 |
|
|
$ |
170,651 |
|
|
$ |
188,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2010 |
|
|
|
|
|
|
|
Preopening |
|
|
Property |
|
|
Depreciation |
|
|
|
|
|
|
Operating |
|
|
and Start-up |
|
|
Transactions, |
|
|
and |
|
|
Adjusted |
|
|
|
Income (Loss) |
|
|
Expenses |
|
|
Net |
|
|
Amortization |
|
|
EBITDA |
|
|
|
(In thousands) |
|
Bellagio |
|
$ |
122,871 |
|
|
$ |
|
|
|
$ |
(125 |
) |
|
$ |
72,391 |
|
|
$ |
195,137 |
|
MGM Grand Las Vegas |
|
|
72,134 |
|
|
|
|
|
|
|
(45 |
) |
|
|
58,515 |
|
|
|
130,604 |
|
Mandalay Bay |
|
|
23,758 |
|
|
|
|
|
|
|
2,840 |
|
|
|
69,579 |
|
|
|
96,177 |
|
The Mirage |
|
|
29,535 |
|
|
|
|
|
|
|
311 |
|
|
|
50,778 |
|
|
|
80,624 |
|
Luxor |
|
|
12,237 |
|
|
|
|
|
|
|
1 |
|
|
|
32,217 |
|
|
|
44,455 |
|
New York-New York |
|
|
31,737 |
|
|
|
|
|
|
|
6,858 |
|
|
|
20,966 |
|
|
|
59,561 |
|
Excalibur |
|
|
31,103 |
|
|
|
|
|
|
|
784 |
|
|
|
17,271 |
|
|
|
49,158 |
|
Monte Carlo |
|
|
1,928 |
|
|
|
|
|
|
|
3,765 |
|
|
|
18,345 |
|
|
|
24,038 |
|
Circus Circus Las Vegas |
|
|
(2,529 |
) |
|
|
|
|
|
|
229 |
|
|
|
15,650 |
|
|
|
13,350 |
|
MGM Grand Detroit |
|
|
88,391 |
|
|
|
|
|
|
|
(484 |
) |
|
|
30,529 |
|
|
|
118,436 |
|
Beau Rivage |
|
|
13,768 |
|
|
|
|
|
|
|
351 |
|
|
|
36,921 |
|
|
|
51,040 |
|
Gold Strike Tunica |
|
|
21,336 |
|
|
|
|
|
|
|
(551 |
) |
|
|
10,805 |
|
|
|
31,590 |
|
Management operations |
|
|
(19,453 |
) |
|
|
|
|
|
|
|
|
|
|
10,333 |
|
|
|
(9,120 |
) |
Other operations |
|
|
(3,546 |
) |
|
|
567 |
|
|
|
4 |
|
|
|
5,007 |
|
|
|
2,032 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly-owned operations |
|
|
423,270 |
|
|
|
567 |
|
|
|
13,938 |
|
|
|
449,307 |
|
|
|
887,082 |
|
CityCenter (50%) |
|
|
(224,087 |
) |
|
|
3,494 |
|
|
|
|
|
|
|
|
|
|
|
(220,593 |
) |
Macau (50%) |
|
|
71,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,165 |
|
Other unconsolidated resorts |
|
|
35,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
305,832 |
|
|
|
4,061 |
|
|
|
13,938 |
|
|
|
449,307 |
|
|
|
773,138 |
|
Stock compensation |
|
|
(26,156 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,156 |
) |
Corporate |
|
|
(1,545,817 |
) |
|
|
|
|
|
|
1,431,187 |
|
|
|
37,450 |
|
|
|
(77,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(1,266,141 |
) |
|
$ |
4,061 |
|
|
$ |
1,445,125 |
|
|
$ |
486,757 |
|
|
$ |
669,802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2009 |
|
|
|
|
|
|
|
Preopening |
|
|
Property |
|
|
Depreciation |
|
|
|
|
|
|
Operating |
|
|
and Start-up |
|
|
Transactions, |
|
|
and |
|
|
Adjusted |
|
|
|
Income (Loss) |
|
|
Expenses |
|
|
Net |
|
|
Amortization |
|
|
EBITDA |
|
|
|
(In thousands) |
|
Bellagio |
|
$ |
115,925 |
|
|
$ |
|
|
|
$ |
2,360 |
|
|
$ |
88,051 |
|
|
$ |
206,336 |
|
MGM Grand Las Vegas |
|
|
99,022 |
|
|
|
|
|
|
|
81 |
|
|
|
68,937 |
|
|
|
168,040 |
|
Mandalay Bay |
|
|
56,954 |
|
|
|
897 |
|
|
|
(70 |
) |
|
|
70,278 |
|
|
|
128,059 |
|
The Mirage |
|
|
66,158 |
|
|
|
|
|
|
|
313 |
|
|
|
50,140 |
|
|
|
116,611 |
|
Luxor |
|
|
30,300 |
|
|
|
(759 |
) |
|
|
259 |
|
|
|
29,997 |
|
|
|
59,797 |
|
Treasure Island |
|
|
12,730 |
|
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
|
12,729 |
|
New York-New York |
|
|
35,549 |
|
|
|
|
|
|
|
1,631 |
|
|
|
24,407 |
|
|
|
61,587 |
|
Excalibur |
|
|
39,543 |
|
|
|
|
|
|
|
(12 |
) |
|
|
17,609 |
|
|
|
57,140 |
|
Monte Carlo |
|
|
18,521 |
|
|
|
|
|
|
|
(4,737 |
) |
|
|
18,388 |
|
|
|
32,172 |
|
Circus Circus Las Vegas |
|
|
7,413 |
|
|
|
|
|
|
|
(35 |
) |
|
|
17,483 |
|
|
|
24,861 |
|
MGM Grand Detroit |
|
|
70,658 |
|
|
|
|
|
|
|
5,906 |
|
|
|
30,334 |
|
|
|
106,898 |
|
Beau Rivage |
|
|
16,139 |
|
|
|
|
|
|
|
157 |
|
|
|
36,609 |
|
|
|
52,905 |
|
Gold Strike Tunica |
|
|
24,636 |
|
|
|
|
|
|
|
|
|
|
|
12,329 |
|
|
|
36,965 |
|
Management operations |
|
|
4,699 |
|
|
|
|
|
|
|
2,473 |
|
|
|
6,086 |
|
|
|
13,258 |
|
Other operations |
|
|
(1,131 |
) |
|
|
|
|
|
|
6 |
|
|
|
4,537 |
|
|
|
3,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly-owned operations |
|
|
597,116 |
|
|
|
138 |
|
|
|
8,331 |
|
|
|
475,185 |
|
|
|
1,080,770 |
|
CityCenter (50%) |
|
|
(233,790 |
) |
|
|
26,586 |
|
|
|
|
|
|
|
|
|
|
|
(207,204 |
) |
Macau (50%) |
|
|
14,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,866 |
|
Other unconsolidated resorts |
|
|
78,940 |
|
|
|
815 |
|
|
|
|
|
|
|
|
|
|
|
79,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
457,132 |
|
|
|
27,539 |
|
|
|
8,331 |
|
|
|
475,185 |
|
|
|
968,187 |
|
Stock compensation |
|
|
(27,076 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27,076 |
) |
Corporate |
|
|
(907,277 |
) |
|
|
|
|
|
|
771,000 |
|
|
|
46,692 |
|
|
|
(89,585 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(477,221 |
) |
|
$ |
27,539 |
|
|
$ |
779,331 |
|
|
$ |
521,877 |
|
|
$ |
851,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
Liquidity and Capital Resources
Cash Flows Operating Activities
Cash provided by operating activities was $380 million for the nine months ended September 30,
2010, compared to $518 million in the prior year period primarily due to an increase in operating
loss. As previously discussed, operating loss increased by approximately $800 million, but the
majority of this increase related to non-cash impairment charges. At September 30, 2010, we held
cash and cash equivalents of $553 million.
Cash Flows Investing Activities
In the nine months ended September 30, 2010, we paid $408 million related to our completion
guarantee for CityCenter, of which $129 million is payable to us from CityCenter out of future
residential proceeds. Capital expenditures of $129 million in 2010 mainly relate to maintenance
capital expenditures at various resorts and the purchase of an airplane. Our New Jersey trust
account received $110 million of net distributions from Borgata. All amounts in the trust account,
including the proceeds from the sale of our Borgata interest and the underlying land parcels, will
be distributed to us upon consummation of the sale of our Borgata interest.
During the nine month period ended September 30, 2009, we received $746 million of net
proceeds from the sale of TI and invested $904 million in CityCenter, including capitalized
interest of $174 million. Capital expenditures of $123 million in 2009 were primarily maintenance
capital expenditures and our portion of the construction costs related to the people mover
connecting Monte Carlo and Bellagio to CityCenter.
Cash Flows Financing Activities
In the nine months ended September 30, 2010, excluding the $1.6 billion we repaid immediately
after year end on our senior credit facility, we borrowed net debt of $302 million. During 2010 we
issued $1.15 billion of 4.25% convertible senior notes due 2015 for net proceeds of $1.12 billion
and issued $845 million of 9% senior secured notes due 2020 for net proceeds of $826 million. We
paid $81 million for capped call transactions entered into in connection with the issuance of our
convertible senior notes.
We repaid the following principal amounts of senior and senior subordinated notes during 2010:
|
|
|
$75 million 8.375% senior subordinated notes (redeemed prior to maturity essentially at
par); |
|
|
|
|
$297 million 9.375% senior notes (repaid at maturity); and |
|
|
|
|
$782 million of our 8.5% senior notes (redeemed $136 million prior to maturity
essentially at par and repaid $646 million at maturity). |
In the nine months ended September 30, 2009, we repaid net debt of $597 million. In addition,
pursuant to our development agreement, we repaid $50 million of bonds issued by the Economic
Development Corporation of the City of Detroit. In May 2009, we issued approximately 164.5 million
shares of our common stock at $7 per share, for total net proceeds to us of $1.1 billion, and issued
$650 million of 10.375% senior secured notes due 2014 and $850 million of 11.125% senior secured
notes due 2017 for combined net proceeds of $1.4 billion. In September 2009, we issued $475 million
of 11.375% senior unsecured notes due 2018 for net proceeds of $451 million.
Other Factors Affecting Liquidity
Senior notes payable. We have $454 million of senior and senior subordinated notes maturing
in 2011 and $545 million of senior notes maturing in 2012.
MGM Macau. On September 27, 2010, MGM China Holdings Limited, a Cayman Islands company formed
by us and Ms. Pansy Ho, filed a proposed listing application on Form A1 with The Stock Exchange of
Hong Kong Limited (Hong Kong Exchange) in connection with a possible listing of its shares on the
main board of the Hong Kong Exchange. There have not been any decisions made regarding the timing
or terms of any such listing, whether MGM China Holdings Limited will ultimately proceed with this
transaction, or whether the application will be approved by the Hong Kong Exchange.
29
We received approximately $125 million from MGM Macau during October 2010, which represents a
partial repayment of principal and accrued interest on our interest and non-interest bearing notes
to that entity.
Borgata settlement. As discussed in Executive Overview Borgata, we entered into a
settlement agreement with the DGE agreement under which we will sell our 50% ownership interest in
Borgata and related leased land in Atlantic City. Prior to the consummation of the sale, the
divestiture trust will retain any cash flows received in respect of the trust property, but will
pay property taxes and other costs attributable to the trust property to the extent that minimum
trust cash balances are maintained. We have received significant distributions from Borgata in the
past few years, and not receiving such distributions until the ultimate sale could negatively
affect our liquidity in interim periods.
CityCenter completion guarantee. In accordance with the CityCenter joint venture agreement,
as amended, we entered into a completion guarantee requiring an unlimited completion and cost
overrun guarantee, secured by our interests in the assets of Circus Circus Las Vegas and certain
adjacent undeveloped land. The terms of the completion guarantee provide for the ability to utilize
up to $250 million of net residential proceeds to fund construction costs, though the timing of
receipt of such proceeds is uncertain.
As of September 30, 2010 we had funded $408 million under the completion guarantee. We have
recorded a receivable from CityCenter of $129 million related to these amounts, which represents
amounts reimbursable to us from CityCenter from future residential proceeds. At September 30, 2010,
we recognized an increase of $232 million in our total net obligation under our CityCenter
completion guarantee. The increase primarily reflects revision to prior estimates based on our
assessment of the most current information derived from the CityCenter close-out and litigation
processes and does not reflect certain potential recoveries that are being pursued as part of the
litigation process. Giving effect to the increase in our accrual, we had a remaining estimated
total net obligation under the completion guarantee of $219 million which includes estimated
litigation costs related to the resolution of disputes with contractors as to the final
construction costs and reflects certain estimated offsets to the amounts claimed by the
contractors. CityCenter has reached, or expects to reach, settlement agreements with most of the
construction subcontractors. However, significant disputes remain with the general contractor and
certain subcontractors. Amounts claimed by such parties exceed amounts included in our completion
guarantee accrual by approximately $200 million. See Legal Proceedings for the discussion of
Perini litigation.
CityCenter July 2010 capital call. We and Infinity World made capital contributions to
CityCenter of $32.5 million each in July 2010. Our contribution was made through a reduction in
our receivable from CityCenter. A portion of Infinity Worlds cash contribution was used to repay
an additional portion of the amounts owed to us for costs paid by us on behalf of the joint
venture. If CityCenter is unable to generate sufficient cash flows to fund its future obligations,
the joint venture may request additional capital contributions from its partners.
CityCenter credit facility. In September 2010, CityCenter Holdings, LLC obtained an amendment
lasting through December 31, 2010 to its credit facility that allows for mechanics liens in an
aggregate amount (after elimination of duplicative subcontractor liens) that is adequate to permit
existing mechanics liens. The limitation reduces on December 31, 2010, however, the credit
facility also allows for mechanics liens to exist above the stated limits to the extent that bonds
or other security are provided with respect to any such mechanics liens, in each case in form
acceptable to the administrative agent under the credit facility. We can provide no assurance that
additional mechanics liens will not be filed in the future, or that CityCenter will be able to
resolve current outstanding liens prior to December 31, 2010, or that sufficient or adequate
security could be provided, or that further amendments to its credit facility could be retained if
required.
CityCenters credit facility contains certain financial covenants including requiring
CityCenter to maintain certain financial ratios commencing June 30, 2011. At that time, CityCenter
will be required to maintain a maximum leverage ratio (debt to EBITDA, as defined) of 5.00:1, and
maintain a minimum coverage ratio (EBITDA to interest charges, as defined) of 1.50:1. If
CityCenters operating results do not improve significantly or its outstanding debt is not reduced
it will not meet such financial covenants. We can provide no assurance that CityCenters operating
results will improve, or that its outstanding debt will be reduced, or that amendments to its
credit facility could be obtained if required.
Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices, such
as interest rates and foreign currency exchange rates. Our primary exposure to market risk is
interest rate risk associated
with our variable rate long-term debt. We attempt to limit our exposure to interest rate risk by
managing the mix of our long-term fixed rate borrowings and short-term borrowings under our bank
credit facilities. A
30
change in interest rates generally does not have an impact upon our future earnings and cash flow
for fixed-rate debt instruments. As fixed-rate debt matures, however, and if additional debt is
acquired to fund the debt repayment, future earnings and cash flow may be affected by changes in
interest rates. This effect would be realized in the periods subsequent to the periods when the
debt matures.
As of September 30, 2010, long-term variable rate borrowings represented approximately 26% of
our total borrowings. Assuming a 100 basis-point increase in LIBOR over the 2% floor specified in
our senior credit facility, our annual interest cost would change by approximately $34 million
based on gross amounts outstanding at September 30, 2010. The following table provides additional
information about our gross long-term debt subject to changes in interest rates:
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Debt maturing in, |
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|
Fair Value |
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|
2010 |
|
|
2011 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
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Thereafter |
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Total |
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|
September 30, |
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|
|
(In millions) |
|
|
2010 |
|
Fixed rate |
|
$ |
|
|
|
$ |
455 |
|
|
$ |
546 |
|
|
$ |
1,384 |
|
|
$ |
1,159 |
|
|
$ |
5,927 |
|
|
$ |
9,471 |
|
|
|
9,131 |
|
Average interest rate |
|
|
N/A |
|
|
|
7.8 |
% |
|
|
6.8 |
% |
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|
10.2 |
% |
|
|
8.4 |
% |
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|
7.8 |
% |
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8.2 |
% |
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|
Variable rate |
|
$ |
|
|
|
$ |
973 |
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|
$ |
|
|
|
$ |
|
|
|
$ |
2,417 |
|
|
$ |
|
|
|
$ |
3,390 |
|
|
|
2,991 |
|
Average interest rate |
|
|
N/A |
|
|
|
6.0 |
% |
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|
N/A |
|
|
|
N/A |
|
|
|
7.0 |
% |
|
|
N/A |
|
|
|
6.7 |
% |
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|
Forward-looking Statements
This Form 10-Q contains forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words
such as anticipates, intends, plans, seeks, believes, estimates, expects, and similar
references to future periods. Examples of forward-looking statements include, but are not limited
to, statements we make regarding our ability to generate significant cash flow, amounts that we
expect to receive in federal tax refunds, amounts we will invest in capital expenditures, amounts
we will pay under the CityCenter completion guarantee, amounts we receive from the sale of
residential units at CityCenter and statements relating to future actions, business plans and
prospects. The foregoing is not a complete list of all forward-looking statements we make.
Forward-looking statements are based on our current expectations and assumptions regarding our
business, the economy and other future conditions. Because forward-looking statements relate to
the future, they are subject to inherent uncertainties, risks, and changes in circumstances that
are difficult to predict. Our actual results may differ materially from those contemplated by the
forward-looking statements. They are neither statements of historical fact nor guarantees or
assurances of future performance. Therefore, we caution you not to put undue reliance on
forward-looking statements. Important factors that could cause actual results to differ materially
from those in the forward-looking statements include, among others, regional, national or global
political, economic, business, competitive, market, and regulatory conditions and the following:
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our substantial indebtedness and significant financial commitments and our
ability to satisfy our obligations; |
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economic and credit market conditions and our ability to refinance our
indebtedness and make planned capital expenditures; |
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restrictions in our senior credit facility and other senior indebtedness; |
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competition with other destination travel locations throughout the United
States and the world; |
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the fact that several of our businesses are subject to extensive regulation; |
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disruption due to extreme weather conditions; |
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changes in energy prices; |
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our concentration of gaming resorts on the Las Vegas Strip; |
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leisure and business travel is susceptible to global geopolitical events, such
as terrorism or acts of war; |
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investing through partnerships or joint ventures, including CityCenter and MGM
Macau, decreases our ability to manage risk; |
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plans for future construction can be affected by a variety of factors,
including timing delays and legal challenges; |
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the outcome of any ongoing and future litigation; |
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the fact that Tracinda Corporation owns a significant portion of our stock and
may have interests that differ from the interests of our other shareholders; and |
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a significant portion of our labor force is covered by collective bargaining
agreements. |
Any forward-looking statement made by us in this Form 10-Q speaks only as of the date on which
it is made. Other factors or events that could cause our actual results to differ may emerge from
time to time, and it is not possible for us to predict or identify all such factors. Consequently,
you should not consider the following to be a complete discussion of all potential risks or
uncertainties. We undertake no obligation to
31
publicly update any forward-looking statement, whether as a result of new information, future
developments or otherwise, except as may be required by law. You are advised, however, to consult
any further disclosures we make on related subjects in our Forms 10-K, 10-Q and 8-K reports and our
other filings with the Securities and Exchange Commission. This discussion is provided as
permitted by the Private Securities Litigation Reform Act of 1995.
You should also be aware that while we from time to time communicate with securities analysts,
we do not disclose to them any material non-public information, internal forecasts or other
confidential business information. Therefore, you should not assume that we agree with any
statement or report issued by any analyst, irrespective of the content of the statement or report.
To the extent that reports issued by securities analysts contain projections, forecasts or
opinions, those reports are not our responsibility.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We incorporate by reference the information appearing under Market Risk in Part I, Item 2 of
this Form 10-Q.
Item 4. Controls and Procedures
Our Chief Executive Officer (principal executive officer) and Chief Financial Officer
(principal financial officer) have concluded that our disclosure controls and procedures were
effective as of September 30, 2010 to provide reasonable assurance that information required to be
disclosed in the Companys reports under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange Commission rules and
regulations and to provide that such information is accumulated and communicated to management to
allow timely decisions regarding required disclosures. This conclusion is based on an evaluation as
required by Rule 13a- 15(e) under the Exchange Act conducted under the supervision and
participation of the principal executive officer and principal financial officer along with company
management.
During the quarter ended September 30, 2010, there were no changes in our internal control
over financial reporting that materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
For a complete description of the facts and circumstances surrounding material litigation we
are a party to, see our Annual Report on Form 10-K for the year ended December 31, 2009. There
have been no significant developments in any of the cases disclosed in our Form 10-K in the nine
months ended September 30, 2010, except as follows:
CityCenter construction litigation. In March 2010, Perini Building Company, Inc., general
contractor for the CityCenter development project (the Project), filed a lawsuit in the Eighth
Judicial District Court for Clark County, State of Nevada, against MGM MIRAGE Design Group (a
wholly-owned subsidiary of the Company which was the original party to the Perini construction
agreement) and certain direct or indirect subsidiaries of CityCenter Holdings, LLC (the CityCenter
Owners). Perini asserts that the Project was substantially completed, but the defendants failed to
pay Perini approximately $490 million allegedly due and owing under the construction agreement for
labor, equipment and materials expended on the Project. The complaint further charges the
defendants with failure to provide timely and complete design documents, late delivery to Perini of
design changes, mismanagement of the change order process, obstruction of Perinis ability to
complete the Harmon Hotel & Spa component, and fraudulent inducement of Perini to compromise
significantly amounts due for its general conditions. The complaint advances claims for breach of
contract, breach of the implied covenant of good faith and fair dealing, tortious breach of the
implied covenant of good faith and fair dealing, unjust enrichment and promissory estoppel, and
fraud and intentional misrepresentation. Perini seeks compensatory damages, punitive damages,
attorneys fees and costs.
In April 2010, Perini served an amended complaint in this case which joins as defendants many
owners of CityCenter residential condominium units (the Condo Owner Defendants), adds a count for
foreclosure of Perinis recorded master mechanics lien against the CityCenter property in the
amount of approximately $491 million, and asserts the priority of this mechanics lien over the
interests of the CityCenter Owners, the Condo Owner Defendants and the Project lenders in the
CityCenter property. In October 2010, Perini recorded an amended notice of lien reducing its lien
to approximately $418 million.
32
The CityCenter Owners and the other defendants dispute Perinis allegations, and contend that the
defendants are entitled to substantial amounts from Perini, including offsets against amounts
claimed to be owed to Perini and its subcontractors and damages based on breach of their
contractual and other duties to CityCenter, duplicative payment requests, non-conforming work, lack
of proof of alleged work performance, defective work related to the Harmon Hotel & Spa component,
property damage and Perinis failure to perform its obligations to pay Project subcontractors and
to prevent filing of liens against the Project. The CityCenter Owners and the other defendants
intend to vigorously assert and protect their interests in the lawsuit. The range of loss beyond
the asserted amount or any gain the joint venture may realize related to the defendants
counterclaims cannot be reasonably estimated at this time.
Securities and derivative litigation. Sanjay Israni v. Robert H. Baldwin, et al.
Filed September 25, 2009. Case No. CV-09-02914, Second Judicial District Court, Washoe County,
Nevada. This purported shareholder derivative action against certain former and current directors
and a Company officer alleges, among other things, breach of fiduciary duty by defendants asserted
insider selling and misappropriation of information; abuse of control; gross mismanagement; waste
of corporate assets; unjust enrichment; and contribution and indemnification. MGM Resorts
International is named as a nominal defendant. In May 2010, plaintiffs amended the complaint to,
among other things, allege additional bases for their claims based upon the decision of the
defendants to approve our joint venture with Pansy Ho, MGM Macau. In May 2010 the Second Judicial District Court in Washoe County transferred this case to the Eight Judicial District Court in Clark County,
Nevada, and in September 2010 the latter court consolidated this
action with the Charles Kim v. James J. Murren, et al., shareholder derivative action, Case No. A-09-599937-C, pending before that court.
Item 1A. Risk Factors
A complete description of certain factors that may affect our future results and risk factors
is set forth in our Annual Report on Form 10-K for the year ended December 31, 2009. There have
been no material changes to those factors in the nine months ended September 30, 2010. We have
provided a revised risk factor related to our joint venture investments and Tracinda ownership
percentage below.
Investing through partnerships or joint ventures including CityCenter and MGM
Macau decreases our ability to manage risk. In addition to acquiring or developing hotels and
resorts or acquiring companies that complement our business directly, we have from time to time
invested, and expect to continue to invest, as a co-venturer. Joint venturers often have shared
control over the operation of the joint venture assets. Therefore, the operation of a joint
venture is subject to inherent risk due to the shared nature of the enterprise and the need to
reach agreements on material matters. In addition, joint venture investments may involve risks
such as the possibility that the co-venturer in an investment might become bankrupt or not have
the financial resources to meet its obligations, or have economic or business interests or
goals that are inconsistent with our business interests or goals, or be in a position to take
action contrary to our instructions or requests or contrary to our policies or objectives.
Consequently, actions by a co-venturer might subject hotels and resorts owned by the joint
venture to additional risk. Further, we may be unable to take action without the approval of
our joint venture partners. Alternatively, our joint venture partners could take actions
binding on the joint venture without our consent. Additionally, should a joint venture partner
become bankrupt, we could become liable for our partners or coventurers share of joint
venture liabilities.
For instance, if CityCenter, which is 50% owned and managed by us, is unable to meet its
financial commitments and we and our partners are unable to support future funding
requirements, as necessary, or if CityCenters $1.8 billion senior secured credit facility is
terminated for any reason, such event could have adverse financial consequences to us. Such
credit facility contains certain financial covenants including requiring CityCenter to maintain
certain financial ratios commencing June 30, 2011. At that time, CityCenter will be required to
maintain a maximum leverage ratio (debt to EBITDA, as defined) of 5.00:1, and maintain a
minimum coverage ratio (EBITDA to interest charges, as defined) of 1.50:1. If CityCenters
operating results do not improve significantly or its outstanding debt is not reduced it will
not meet such financial covenants. We can provide no assurance that CityCenters operating
results will improve, or that its outstanding debt will be reduced, or that amendments to its
credit facility could be obtained if required.
The CityCenter credit facility also contains covenants limiting the maximum aggregate amount of
mechanics liens filed against CityCenter. CityCenter obtained an amendment lasting through
December 31, 2010 to the credit facility that allows for mechanics liens in an aggregate
amount (after elimination of duplicative subcontractor liens) that is adequate to permit
existing mechanics liens. The limitation reduces on December 31, 2010, however, the credit
facility also allows for mechanics liens to exist above the stated limits to the extent that
bonds or other security are provided with respect to any such mechanics liens, in each case in
form acceptable to the administrative agent under the credit facility. We can provide no
assurance that additional mechanics liens will not be filed in the future, or that CityCenter
will be able to resolve current outstanding liens prior to December 31, 2010, or that
sufficient or
adequate security could be provided, or that further amendments to its credit facility could be
obtained if required.
33
In addition, in accordance with our joint venture agreement and the CityCenter credit facility,
we provided a cost overrun guarantee which is secured by our interests in the assets of Circus
Circus Las Vegas and certain adjacent undeveloped land.
Also, the operation of MGM Macau, 50% owned by us, is subject to unique risks, including risks
related to: (a) Macaus regulatory framework; (b) our ability to adapt to the different
regulatory and gaming environment in Macau while remaining in compliance with the requirements
of the gaming regulatory authorities in the jurisdictions in which we currently operate, as
well as other applicable federal, state, or local laws in the United States and Macau; (c)
potential political or economic instability; and (d) the extreme weather conditions in the
region.
Furthermore, such operations in Macau or any future operations in which we may engage in any
other foreign territories are subject to risk pertaining to international operations. These may
include financial risks, such as foreign economy, adverse tax consequences, and inability to
adequately enforce our rights. These may also include regulatory and political risks, such as
foreign government regulations, general geopolitical risks such as political and economic
instability, hostilities with neighboring countries, and changes in diplomatic and trade
relationships.
Tracinda Corporation owns a significant amount of our common stock
and may have interests that differ from the interests of other holders of our stock. As of
September 30, 2010, Tracinda Corporation beneficially owned approximately 37% of our
outstanding common stock, all of which shares owned by Tracinda have been pledged under its
bank credit facility. Following the consummation of the equity offering on October 18, 2010,
Tracinda beneficially owned approximately 28% of our outstanding common stock, without taking
into account the underwriters overallotment option. In addition, Tracinda may be required in
the future, under its bank credit facility, to liquidate some or all of the shares of our
common stock it owns and has pledged under its bank credit facility, if the value of the
collateral falls below a specified level. A liquidation of this nature of sufficient size may
trigger a change of control under certain of the instruments governing our outstanding
indebtedness. Upon a change of control, the lenders obligation to make advances under our
senior credit facility may be terminated at the option of the
lenders.
In addition, Tracinda may be able to exercise significant influence over us as a result of its
significant ownership of our outstanding common stock. As a result, actions requiring
stockholder approval that may be supported by other stockholders could be effectively blocked
by Tracinda Corporation.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
Our share repurchases are only conducted under repurchase programs approved by our Board of
Directors and publicly announced. We did not repurchase shares of our common stock during the
quarter ended September 30, 2010. The maximum number of shares available for repurchase under our
May 2008 repurchase program was 20 million as of September 30, 2010.
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31.1
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Certification of Chief Executive Officer of Periodic Report Pursuant to Rule
13a-14(a) and Rule 15d-14(a). |
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31.2
|
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Certification of Chief Financial Officer of Periodic Report Pursuant to Rule
13a-14(a) and Rule 15d-14(a). |
|
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32.1
|
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Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350. |
|
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32.2
|
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Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350. |
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101* |
|
The following information from the
Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2010 formatted in eXtensible Business Reporting
Language: (i) Consolidated Balance Sheets at September 30, 2010
(unaudited) and December 31, 2009 (audited); (ii) Unaudited
Statements of Operations for the three and nine months ended
September 30, 2010 and 2009; (iii) Unaudited Statements of Cash Flows
for the nine months ended September 30, 2010 and 2009; and (iv) Notes
to the Unaudited Consolidated Financial Statements (tagged as blocks
of text). |
* This
exhibit is furnished and not filed or a part of a registration
statement or prospectus for purposes of Sections 11 or 12 of the
Securities Act of 1933, as amended, is deemed not filed for the
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, and otherwise is not subject to liability under these
sections.
34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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MGM Resorts International
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Date: November 5, 2010 |
By: |
/s/ JAMES J. MURREN
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James J. Murren |
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Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer) |
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Date: November 5, 2010 |
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/s/ DANIEL J. DARRIGO
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Daniel J. DArrigo |
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Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer) |
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35