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MGM Mirage posts smaller loss in fourth quarter

Updated Thursday, Feb. 18, 2010 | 7:08 a.m.

MGM Mirage properties

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MGM Mirage lowered room rates to attract customers to its Las Vegas Strip resorts in the fourth quarter, with the reduced revenue contributing to a quarterly loss of $434 million or 98 cents per share.

Net revenue of $1.45 billion was down from $1.62 billion in 2008's fourth quarter.

The loss was an improvement from 2008's fourth quarter, when the company lost $1.15 billion or $4.15 per share. And key indicators showed business improved from the third quarter to the fourth quarter as the company navigated the worst recession in memory and a related downturn in visitation to Las Vegas.

However, the year-to-year comparisons were affected by one-time expenses.

In the 2009 quarter, the company wrote down the value of its undeveloped Atlantic City land holdings by $548 million. The company has been negotiating a settlement with New Jersey regulators concerning its partner in Atlantic City that could see MGM Mirage put its Atlantic City holdings -- the land and its stake in the Borgata resort -- into a divestiture trust.

Special costs a year earlier for goodwill and intangible asset impairment charges totaled $1.2 billion.

Highlights of the 2009 fourth quarter included:

-- Aria, the centerpiece casino resort at the newly opened CityCenter complex on the Las Vegas Strip, generated operating income of $7 million during 15 days of operations in the quarter.

-- "Same-store" net revenue overall fell 6 percent compared to a 9 percent year-over-year decease in the third quarter. Those numbers exclude Treasure Island, which was sold. Actual net revenue in the 2009 quarter fell 10.5 percent.

-- Casino revenue decreased 7 percent, partially offset by strong baccarat results including baccarat volume increasing 44 percent.

MGM Mirage said it maintained high occupancy levels at its most important Las Vegas resorts -- but had to cut room rates to do so.

In year-to-year comparisons, for instance, Bellagio occupancy fell from 93 percent to 92 percent and the average daily room rate fell from $243 to $206. MGM Grand occupancy was up slightly to 89.8 percent with its rate falling from $131 to $112. At the Mirage, the occupancy fell from 91.9 percent to 89.5 percent, with the rate down $20 to $125. And Mandalay Bay's occupancy jumped from 79.2 percent to 85.5 percent, with the rate falling from $199 to $153.

Overall on the Las Vegas Strip, revenue per available room decreased 16 percent vs. a 23 percent decrease in the third quarter.

"This has been a challenging but momentous year for MGM Mirage culminating with the opening of CityCenter in December," Jim Murren, MGM Mirage chairman and chief executive officer, said in a statement. "We generated significant cash flows and kept our buildings occupied at 90 percent even in a brutal economy because we are equipped with the highest quality resorts, the preeminent brands and the finest employees in the industry. We have profoundly improved our cost structure and are actively building revenue to maximize operating leverage as the economy shifts into recovery mode.

:Our forward convention booking pace accelerated again in the fourth quarter with over 440,000 future room nights booked. We are keenly focused on strengthening our financial foundation and made historic progress last year," Murren said.

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