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Consolidated net revenue increases 9% year over year; 24% growth in Adjusted Property EBITDA driven by strength in Macau and Las Vegas

Click here to view full press release and tables: http://mgmresorts.investorroom.com/2013-10-31-MGM-Resorts-International-Reports-Third-Quarter-Results

LAS VEGAS, Oct. 31, 2013--  MGM Resorts International (NYSE: MGM) today reported financial results for the quarter ended September 30, 2013.  Loss per share improved to ($0.07) compared to ($0.37) in the third quarter of 2012.  Comparability of the current and prior year consolidated results was affected by certain items discussed below.

"I am pleased to report another solid quarter with double digit EBITDA growth and increased margins, led by strength at MGM China and our Las Vegas Strip properties," said Jim Murren, MGM Resorts International Chairman and CEO.  "These results are reflective of the continued market share gains from programs such as M life and our focus on international marketing strategies combined with our best in class collection of resorts and amenities."

Key results for the third quarter of 2013 include the following:

  • Consolidated net revenue increased 9% over the prior year quarter to $2.5 billion;
  • Consolidated casino revenue increased 13% over the prior year quarter;
  •  Rooms revenue at wholly owned domestic resorts increased 5%, with a 3% increase in REVPAR(1) at the Company's Las Vegas Strip resorts;
  • Adjusted Property EBITDA(2) was $546 million, a 24% increase compared to the prior year quarter;
  • The Company's wholly owned domestic resorts earned Adjusted Property EBITDA of $350 million, an 8% increase compared to the prior year quarter;
  • The Company's wholly owned Las Vegas Strip resorts earned Adjusted Property EBITDA of $280 million, a 12% increase compared to the prior year quarter;
  • MGM China's Adjusted EBITDA increased 25% to $191 million;
  • CityCenter's Adjusted EBITDA related to resort operations was $62 million, a 6% increase compared to the prior year quarter; and
  • Consolidated operating income increased to $248 million compared to $137 million in the prior year quarter.

Certain Items Affecting Third Quarter Results

The following table lists items that affect the comparability of the current and prior year quarterly results (approximate EPS impact shown, net of tax, per share; negative amounts represent charges to income):

Three months ended September 30, 2013 2012

Property transactions, net $   (0.03) $   (0.01)

Income (loss) from unconsolidated affiliates:  

    CityCenter residential impairment charge   - (0.02)

    CityCenter Harmon demolition cost     - (0.02)

Income tax provision:  

    Deferred tax valuation allowance (0.06) (0.09)

The current year third quarter results were affected by non-cash impairment charges of $26 million, primarily related to land holdings in Jean and Sloan, Nevada. The current year third quarter income tax provision was affected by $28 million of valuation allowance on U.S. deferred tax assets, including a valuation allowance related to tax benefit reflected in other items in the above table.

The prior year third quarter results were affected by the Company's share of CityCenter's non-cash residential impairment charge related to Mandarin Oriental, estimated costs accrued for the demolition of the Harmon, and by a valuation allowance for a portion of U.S. deferred tax assets. 

Wholly Owned Domestic Resorts

Casino revenue related to wholly owned domestic resorts increased 3% compared to the prior year quarter. Table games revenue increased 10% and the overall table games hold percentage in the third quarter of 2013 was 21.5% compared to 20.4% for the prior year quarter.  Slots revenue increased 1% with a 3% increase at the Company's Las Vegas Strip resorts.

Rooms revenue increased 5% with a 3% increase in Las Vegas Strip REVPAR. The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

Three months ended September 30,     2013 2012

Occupancy %   93% 92%

Average Daily Rate (ADR)   $    127 $   124

Revenue per Available Room (REVPAR) $    117 $   114

Operating income for the Company's wholly owned domestic resorts for the third quarter of 2013 was $199 million, an increase of 2% compared to the prior year quarter.

MGM China

Key results for the third quarter of 2013 for MGM China include the following:

  • MGM China earned net revenue of $808 million, a 22% increase over the prior year quarter, due primarily to increases in VIP revenues and main floor table games revenues;
  • VIP table games turnover increased 28% from the prior year quarter, while hold percentage was 2.8% in the current year quarter compared to 3.0% in the prior year quarter;
  • Main floor table games and slots win increased 31% and 4%, respectively, compared to the prior year quarter;
  • Adjusted EBITDA of $191 million, a 25% increase over the prior year quarter, including $8 million of branding fee expense in the current quarter versus $5 million in the prior year quarter; and
  • MGM China's operating income was $114 million compared to $61 million in the prior year quarter.

MGM China is currently developing a second resort and casino, MGM Cotai, on an approximately 17.8 acre site in Cotai, Macau.  MGM Cotai will feature approximately 1,600 hotel rooms, casino, convention and meeting space, entertainment, spa, retail outlets and food and beverage offerings.  Current plans include introducing the Company's Mansion luxury villas.  Groundbreaking took place in February 2013 and the project continues to remain on pace for an anticipated early 2016 opening.  In May 2013, MGM China signed a deal with China State Construction to serve as sole general contractor for the project. The total project budget, excluding capitalized interest and land, is $2.6 billion.

Income (Loss) from Unconsolidated Affiliates

The following table summarizes information related to the Company's share of operating income (loss) from unconsolidated affiliates, adjusted for the effect of certain basis differences:

Three months ended September 30,   2013 2012

  (In thousands)  

CityCenter   $   (2,881) $     (42,814)

Other   6,809 4,871

  $ 3,928 $ (37,943)   

Key results for the third quarter of 2013 for CityCenter Holdings, LLC include the following (see schedules accompanying this release for further detail on CityCenter's third quarter results):

  • Net revenue from resort operations increased to $268 million, a 2% increase from the prior year quarter;
  • Adjusted EBITDA from resort operations increased 6% to $62 million compared to the prior year quarter;
  • Aria's table games hold percentage was 22.5% in the current year quarter compared to 29.3% in the prior year quarter; and
  • Aria's occupancy percentage was 89% and its ADR was $197, resulting in REVPAR of $177, a 4% increase compared to the prior year quarter.

CityCenter's results for the third quarter of 2012 included approximately $36 million for a residential impairment charge related to Mandarin Oriental and $32 million for accrued costs related to the future demolition of the Harmon.

As announced earlier this month, CityCenter closed a $1.775 billion senior secured credit facility comprised of a $75 million revolving facility, which matures in October 2018, and a $1.7 billion term loan B facility, which matures in October 2020.  Concurrent with the closing of the new senior secured credit facility, CityCenter issued a notice of full redemption with respect to its existing 7.625% senior secured first lien notes and 10.75% senior secured second lien PIK toggle notes and deposited sufficient funds to discharge the notes.  The new revolving facility was undrawn at closing. 

Financial Position

"We continue to execute on our goals of improving the Company's free cash flow," said Dan D'Arrigo, MGM Resorts International Executive Vice President, CFO and Treasurer.  "This is evidenced by our year to date EBITDA growth of 17% as well as an expected reduction in our cash interest expense this year of approximately $220 million. We continue to be opportunistic in accessing the capital markets as indicated by our recent CityCenter refinancing, which will lower its annual cash interest expense by approximately $80 million."

The Company's cash balance at September 30, 2013 was $1.4 billion, which included $925 million at MGM China.  At September 30, 2013 the Company had $2.9 billion of borrowings outstanding under its $4.0 billion senior credit facility and $553 million outstanding under the $2.0 billion MGM China credit facility. The Company repaid net long-term debt of $77 million during the third quarter, bringing total net repayments during 2013 to $553 million.

Conference Call Details

MGM Resorts International will host a conference call at 11:00 a.m. Eastern Time today which will include a brief discussion of these results followed by a question and answer period. The call will be accessible via the Internet through www.mgmresorts.com under the Investors section or by calling 1-800-560-7376 for domestic callers and 1-706-758-3659 for international callers.  The conference call access code is 83280135. A replay of the call will be available through Thursday, November 7, 2013.  The replay may be accessed by dialing 1-855-859-2056 or 1-404-537-3406.  The replay access code is 83280135. The call will be archived at www.mgmresorts.com.

1  REVPAR is hotel revenue per available room.

2  "Adjusted EBITDA" is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses and property transactions, net.  "Adjusted Property EBITDA" is Adjusted EBITDA before corporate expense and stock compensation expense related to the MGM Resorts stock option plan, which is not allocated to each property. MGM China recognizes stock compensation expense related to its stock compensation plan which is included in the calculation of Adjusted EBITDA for MGM China.  Adjusted EBITDA information is presented solely as a supplemental disclosure to reported GAAP measures because management believes these measures are 1) widely used measures of operating performance in the gaming industry, and 2) a principal basis for valuation of gaming companies. 

Management believes that while items excluded from Adjusted EBITDA and Adjusted Property EBITDA may be recurring in nature and should not be disregarded in evaluation of the Company's earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods because these items can vary significantly depending on specific underlying transactions or events that may not be comparable between the periods being presented. Also, management believes excluded items may not relate specifically to current operating trends or be indicative of future results. For example, preopening and start-up expenses will be significantly different in periods when the Company is developing and constructing a major expansion project and will depend on where the current period lies within the development cycle, as well as the size and scope of the project(s). Property transactions, net includes normal recurring disposals, gains and losses on sales of assets related to specific assets within the Company's resorts, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period.

In addition, capital allocation, tax planning, financing and stock compensation awards are all managed at the corporate level. Therefore, management uses Adjusted Property EBITDA as the primary measure of the Company's operating resorts' performance.

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

About MGM Resorts International

MGM Resorts International (NYSE: MGM) is one of the world's leading global hospitality companies, operating a peerless portfolio of destination resort brands, including Bellagio, MGM Grand, Mandalay Bay and The Mirage.  In addition to its 51% interest in MGM China Holdings, Limited, which owns the MGM Macau resort and casino and is in the process of developing a gaming resort in Cotai, the Company has significant holdings in gaming, hospitality and entertainment, owns and operates 15 properties located in Nevada, Mississippi and Michigan, and has 50% investments in three other properties in Nevada and Illinois. One of those investments is CityCenter, an unprecedented urban resort destination on the Las Vegas Strip featuring its centerpiece ARIA Resort & Casino. Leveraging MGM Resorts' unmatched amenities, the M life loyalty program delivers one-of-a-kind experiences, insider privileges and personalized rewards for guests at the Company's renowned properties nationwide. Through its hospitality management subsidiary, the Company holds a growing number of development and management agreements for casino and non-casino resort projects around the world. MGM Resorts International supports responsible gaming and has implemented the American Gaming Association's Code of Conduct for Responsible Gaming at its gaming properties. The Company has been honored with numerous awards and recognitions for its industry-leading Diversity Initiative, its community philanthropy programs and the Company's commitment to sustainable development and operations. For more information about MGM Resorts International, visit the Company's website at www.mgmresorts.com.

Contact: Investment Community, DANIEL D'ARRIGO, Executive Vice President, CFO & Treasurer

702) 693-8895

Contact: News Media, CLARK DUMONT, Senior Vice President of Corporate Communications

cdumont@mgmresorts.com / (702) 891-1836

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