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Published Thursday, Feb. 18, 2010 | 6:57 a.m.
Updated Thursday, Feb. 18, 2010 | 7:08 a.m.
Sun Coverage
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.
Murren said "We generated significant cash flows and kept our buildings occupied at 90%", and MGM still lost $433.9 million. I've gotta say, that's pretty remarkable. Wonder how much they'd lose at 100% occupancy.
I love how they are happy when their losses this past quarter were not as big as their losses last quarter. They are all operating in the red nuff said..
You don't have an occupancy of over 80% and consider yourself "operating in the red." The article states there was a NET revenue of $1.45 BILLION. That's still pretty good. No one is talking of anyone going under. MGM Mirage almost went that way with getting City Center done, but Vegas' downturn is finally slowing as the declining numbers get smaller and smaller. Eventually they'll get level and bring the place back to over 95% occupancy. (If they stay smart and keep some of those room prices lower so there's more money to be spent at the tables and slots.) Harrah's bought Planet Hollywood, 2.5 acres across from City Center next to Planet Hollywood went for $25 million to developers, the .vegas extension controversy shows someone is looking ahead, Ichon has thrown his checkbook into the Fountainbleu(sp) and in this issue of The Sun is an article that shows even if Vegas is down China can hold up the Sands people. (Venetian and Palazzo.)
However, unless you have tens of thousands of dollars of stock in any of these companies, there's not much you can do anyway but hope they can make things work. More attention from residents should be placed on the unionizing of the dealers and seeing to it any worker's lifestyle, no matter the industry, is treated with dignity and respect. Perhaps that would change the recently announced low numbers of Nevadans being at almost the bottom of the list for "happy" states.
Wow, they only lost a half a billion dollars in the last quarter.
LOL
"Nevadans being at almost the bottom of the list for "happy" states."
Almost at the bottom? Not exactly: Las Vegas was LAST in the large metro category.
Dumb, dumb, dumb... people, with write-offs of intangibles like goodwill and impairing of assets, the loss is deceiving.
"In the 2009 quarter, the company wrote down the value of its undeveloped Atlantic City land holdings by $548 million."
That means without that SINGLE writedown, the company was operating at a profit of $114million. Take out depreciation and the impairment of goodwill, and you have an even larger operating profit.
I don't know how many of you posters are CPAs, but before shooting off of the hip, consult your local accountant.
Also, the Wall Street's moderate expectations was a loss of $0.13, which wasn't even close to the actual loss, but again, it's due to non-cash writeoffs...
"Happy" list:
http://www.gallup.com/poll/125864/Among-...
Well put 'acountmakr'!
MGM had a SIGNIFICANT OPERATING PROFIT in the 4th quarter of 2009 when you exclude non-cash accounting tricks like goodwill and investment write-downs.
However, I don't think they're wrong in keeping John Q. Public thinking that they're hurting. I think the public perception is that if the casinos are reporting quarterly losses they'll keep doing more to lure back patrons.
VegasVeniceDude, they HAVE to include those write-downs. The principle is called being 'marked to market'. MGM has to record any probable expenses and write down any assets to market value if it significantly decreased.
For instance, if they had bought the land in Atlantic City for $1billion and the market value is $500million, people would clamor that they are overstating their assets. It's what we have to do in the accounting industry.
I get a bit butt-hurt when people complain about MGM cooking the books, since it's not really solely their choice as to what is on these financial statements. If they want to do crooked sh!t, then their auditors that sign off on the audit report won't go with it.
The bonuses of executives would be interesting, tho. I wonder if Kirk and his boys are still pulling in ridiculous bonuses each quarter.
"Casino stocks tumble after Vegas disappoints" http://www.tickerspy.com/newswire/?p=155...
Boyd,Wynn, Isle of Capri are all losing today. Gaming technologies down double digits. The Street is setting up for a buyer's rush or a seller's panic sell-out!
Like I've said before-business is the worst I've seen it in 30 years. Domestic play has been hit the most--people are coming for fri-sat and bringing $200, instead of thru-mon and $2000. The customers coming are just mostly walking around and looking at the tourist stuff--not gambling. Even the asian play is down, but not as much as domestic that just fell off a cliff. These joints are lucky the asians keep playing and dropping money or these numbers would be MUCH worse.
wynn and lvs seem better positioned than the other companies because of their macau properties as far as long term investment goes--no doubt macau is the center of the gambling world now.
Accountmkr, I am glad someone else can read inbetween the lines. MGM is still cash flow positive when you take out one time charges and depreciation. It's how enron showed a profit to it's end, while being cash flow negative. Your comments show the difference between a trader and an investor. Comment on...
Mr Lucky, MGM has MGM Grand Macau as well.
Thanks Stratboy! I bought into LVS and MGM when they were both under $3, sold with a considerable gain at $16.50 and $11.70, respectively, then bought back into MGM at $10 recently. This morning, I bought some LVS and MGM when they had reached their bottom.
Give it a few months and I'll at least make something back. I'm not trading thousands of shares, but whatever. Gain is gain, in my book, regardless of how small.
And if I lose money, that's the risk I take. Still, though, these companies aren't dead. If you want to see a cash flow negative company, look to SIRI satellite radio. Lol...
Acountmakr, I absolutely agree with what you wrote about the one-time write downs and how MGM could be operating at a profit.
However...
I do not believe any of the occupancy rates MGM has given to the public. I would even dare so much to question the occupancy rates they would put in their financial reports.
Mandalay Bay (MGM property) was claiming 98% occupancy for a majority of the 1st, 2nd, 3rd quarter last year. I call b.s.
You can tell me I don't know a thing about it and you're right, but when Mandalay Bay was telling us they were at 98% we would find out they were around 50%.
I wouldn't trust MGM at all right now. Enron was "trust-worthy" right? Mmmm-hmmm... I do wonder if MGM is cooking their books.
I am glad to hear you're making money with them in the short-term, but I'm not sold on their long-term success just yet.
Acountmakr:
It looks like you might have done a bit better than I did trading MGM (although I have to scratch my head and wonder how you could have bought at $3 and sold at $16.50 since the intraday peak after the 3/6/09 low of $1.81 was $14.25 on 9/16), but what the heck -- good for you.
I bought at $5.24 on 2/13/09, sweated it out below $2, and sold 4/30/09 at $9.81. Here we are now, 10 months later, and MGM closed at $10.83. Sure, I could have held onto this for another ten months and be up another 10%, but why bother given so many better opportunities out there? You seem to favor fundamentals, and if you trade MGM based on this, I wish you lots of luck. IMO MGM is purely a technical trade, and if you see anything promising in either technicals or fundamentals, I would love to see it, too.
(PS: you wrote "If they want to do crooked s**t, then their auditors that sign off on the audit report won't go with it." Remember the once venerable Arthur Andersen???)