(Mark One) | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] |
For the fiscal year ended December 31, 2008 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR | |
For the transition period to |
DELAWARE | 88-0215232 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |
Identification Number) |
Name of each exchange | ||
Title of each class | on which registered | |
Common Stock, $.01 Par Value | New York Stock Exchange |
Large accelerated | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
ITEM 1. | BUSINESS |
• | Developing and maintaining a strong portfolio of resorts; | |
• | Operating our resorts to ensure excellent customer service and maximize revenue and profit; | |
• | Executing a sustainable growth strategy; | |
• | Leveraging our brand and management assets. |
Approximate | Number of | Approximate | ||||||||||||||||||||||||||||||
Number of Guestrooms | Casino Square | Gaming | Guestrooms | Casino Square | Gaming | |||||||||||||||||||||||||||
Name and Location | and Suites | Footage | Slots (1) | Tables(2) | and Suites | Footage | Slots(1) | Tables(2) | ||||||||||||||||||||||||
Las Vegas Strip, Nevada | ||||||||||||||||||||||||||||||||
Bellagio | 3,933 | 155,000 | 2,365 | 144 | 3,933 | 160,000 | 2,320 | 151 | ||||||||||||||||||||||||
MGM Grand Las Vegas (3) | 5,803 | 156,000 | 2,611 | 174 | ||||||||||||||||||||||||||||
Mandalay Bay (4) | 4,756 | 157,000 | 2,010 | 120 | ||||||||||||||||||||||||||||
MGM Grand Las Vegas(3) | 6,264 | 158,000 | 2,455 | 167 | ||||||||||||||||||||||||||||
Mandalay Bay(4) | 4,752 | 160,000 | 1,962 | 117 | ||||||||||||||||||||||||||||
The Mirage | 3,044 | 118,000 | 2,063 | 111 | 3,044 | 118,000 | 1,966 | 106 | ||||||||||||||||||||||||
Luxor | 4,404 | 100,000 | 1,589 | 89 | 4,405 | 100,000 | 1,443 | 85 | ||||||||||||||||||||||||
Treasure Island (“TI”) | 2,885 | 87,000 | 1,726 | 68 | ||||||||||||||||||||||||||||
Excalibur | 3,981 | 91,000 | 1,532 | 67 | ||||||||||||||||||||||||||||
Treasure Island (“TI”)(5) | 2,885 | 87,000 | 1,620 | 65 | ||||||||||||||||||||||||||||
New York-New York | 2,024 | 84,000 | 1,850 | 75 | 2,025 | 84,000 | 1,724 | 70 | ||||||||||||||||||||||||
Excalibur | 3,990 | 90,000 | 1,887 | 73 | ||||||||||||||||||||||||||||
Monte Carlo | 3,002 | 102,000 | 1,612 | 74 | 3,002 | 102,000 | 1,556 | 63 | ||||||||||||||||||||||||
Circus Circus Las Vegas (5) | 3,764 | 133,000 | 2,350 | 92 | ||||||||||||||||||||||||||||
Circus Circus Las Vegas(6) | 3,764 | 126,000 | 1,986 | 90 | ||||||||||||||||||||||||||||
Subtotal | 37,605 | 1,182,000 | 20,063 | 1,020 | 38,055 | 1,186,000 | 18,564 | 981 | ||||||||||||||||||||||||
Other Nevada | ||||||||||||||||||||||||||||||||
Primm Valley Resorts(Primm)(6) | 2,642 | 137,000 | 2,816 | 93 | ||||||||||||||||||||||||||||
Circus Circus Reno(Reno) | 1,572 | 69,000 | 1,246 | 47 | 1,572 | 70,000 | 1,091 | 35 | ||||||||||||||||||||||||
Silver Legacy - 50% owned(Reno) | 1,710 | 87,000 | 1,677 | 68 | ||||||||||||||||||||||||||||
Gold Strike (Jean) (7) | 811 | 37,000 | 740 | 10 | ||||||||||||||||||||||||||||
Nevada Landing (Jean) (7) | 303 | 36,000 | 727 | 10 | ||||||||||||||||||||||||||||
Laughlin Properties(Laughlin)(8) | 2,524 | 102,000 | 2,199 | 72 | ||||||||||||||||||||||||||||
Silver Legacy — 50% owned(Reno) | 1,710 | 87,000 | 1,623 | 64 | ||||||||||||||||||||||||||||
Gold Strike(Jean) | 810 | 37,000 | 688 | 9 | ||||||||||||||||||||||||||||
Railroad Pass(Henderson) | 120 | 13,000 | 330 | 6 | 120 | 13,000 | 332 | 5 | ||||||||||||||||||||||||
Other Domestic Operations | ||||||||||||||||||||||||||||||||
Other Operations | ||||||||||||||||||||||||||||||||
MGM Grand Detroit(Detroit, Michigan) | N/A | 75,000 | 2,840 | 72 | 400 | 196,000 | 4,102 | 95 | ||||||||||||||||||||||||
Beau Rivage(Biloxi, Mississippi)(9) | 1,740 | 72,000 | 2,048 | 93 | ||||||||||||||||||||||||||||
Beau Rivage(Biloxi, Mississippi) | 1,740 | 75,000 | 2,050 | 93 | ||||||||||||||||||||||||||||
Gold Strike(Tunica, Mississippi) | 1,131 | 50,000 | 1,271 | 56 | 1,133 | 50,000 | 1,381 | 58 | ||||||||||||||||||||||||
Borgata - 50% owned(Atlantic City, New Jersey) | 1,971 | 137,000 | 4,068 | 178 | ||||||||||||||||||||||||||||
Grand Victoria - 50% owned(Elgin, Illinois) | N/A | 34,000 | 1,111 | 36 | ||||||||||||||||||||||||||||
MGM Grand Macau — 50% owned(Macau S.A.R.) | 593 | 215,000 | 829 | 376 | ||||||||||||||||||||||||||||
Borgata — 50% owned(Atlantic City, New Jersey) | 2,771 | 160,000 | 3,931 | 182 | ||||||||||||||||||||||||||||
Grand Victoria — 50% owned(Elgin, Illinois) | — | 35,000 | 1,144 | 30 | ||||||||||||||||||||||||||||
Grand Total | 52,129 | 2,031,000 | 41,136 | 1,761 | 48,904 | 2,124,000 | 35,735 | 1,928 | ||||||||||||||||||||||||
(1) | Includes slot machines, video poker machines and other electronic gaming devices. | |
(2) | Includes blackjack (“21”), baccarat, craps, roulette and other table games; does not include poker. | |
(3) | Includes | |
(4) | Includes the Four Seasons Hotel with 424 guest rooms and THEhotel with 1,117 suites. | |
(5) | ||
Includes | ||
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• | There are a number of gaming facilities located closer to where our customers live than our resorts; | ||
• | Additional new hotel-casinos and expansion projects at existing Las Vegas hotel-casinos are under construction or have been proposed. We |
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• | Locating our resorts in desirable leisure and business travel markets, and operating at superior sites within those | ||
• | Constructing and maintaining high-quality resorts and facilities, including luxurious guestrooms along with premier dining, entertainment and retail amenities; | ||
• | Recruiting, training and retaining well-qualified and motivated employees who provide superior and friendly customer service; | ||
• | Providing unique, “must-see” entertainment attractions; and | ||
• | Developing distinctive and memorable marketing and promotional programs. |
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• | Locked cash boxes on the casino floor; | ||
• | Daily cash | ||
• | Constant observation and supervision of the gaming area; | ||
• | Observation and recording of gaming and other areas by closed-circuit television; | ||
• | Constant computer monitoring of our slot machines; and | ||
• | Timely analysis of deviations from expected performance. |
• | Our guestroom, dining and entertainment prices are often higher than those of most of our competitors in each market, although we believe that the quality of our facilities and services is also higher; |
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• | Our hotel-casinos compete to some extent with each other for customers. Bellagio, MGM Grand Las Vegas, Mandalay Bay and The Mirage, in particular, compete for some of the same premium gaming customers; MGM Grand Las Vegas and Mandalay Bay also compete to some extent against each other in the large-scale conference and convention business; and | |
• | Additional new hotel-casinos and expansion projects at existing Las Vegas hotel-casinos are under construction or have been proposed. We are unable to determine to what extent increased competition will affect our future operating results. |
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• | Development and operation of gaming facilities in new or existing jurisdictions are subject to many contingencies. Several of these contingencies are outside of our control and may include the passage of appropriate gaming legislation, the issuance of necessary permits, licenses and approvals, the availability of appropriate financing and the satisfaction of other conditions; | |
• | Expansion projects involve risks and uncertainties. For instance, the design, timing and costs of the projects may change and are subject to risks attendant to large-scale projects. |
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Name | Age | Position | ||||
James J. Murren | ||||||
Robert H. Baldwin | ||||||
Gary N. Jacobs | Executive Vice President, General Counsel, Secretary and Director | |||||
Aldo Manzini | 45 | Executive Vice President and Chief Administrative Officer | ||||
Daniel J. D’Arrigo | ||||||
Robert C. Selwood | 53 | Executive Vice President and Chief Accounting Officer | ||||
Alan Feldman | Senior Vice | |||||
Phyllis A. James | Senior Vice President and Senior Counsel | |||||
Punam Mathur | Senior Vice | |||||
41 | ||||||
Senior Vice President, Assistant General Counsel and Assistant Secretary | ||||||
Shawn T. Sani | 43 | Senior Vice President — Taxes | ||||
Cathryn Santoro | 40 | Senior Vice President and Treasurer |
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ITEM 1A. | RISK FACTORS |
• | Our substantial indebtedness and significant financial commitments could adversely affect our operations and financial results and impact our ability to satisfy our obligations. As of December 31, 2008, we had approximately $13.5 billion of indebtedness. In late February 2009, we borrowed $842 million under our senior credit facility, which amount represented — after giving effect to $93 million in outstanding letters of credit — the total amount of unused borrowing capacity available under our $7.0 billion senior credit facility. In connection with the waiver and amendment described below, on March 17, 2009 we repaid $300 million under the senior credit facility, which amount is not available for reborrowing without the consent of the lenders. We have no other existing sources of borrowing availability, except to the extent we pay down further amounts outstanding under the senior credit facility. |
— | increasing our exposure to general adverse economic and industry conditions; | |
— | limiting our flexibility in planning for, or reacting to, changes in our business and industry; | |
— | limiting our ability to borrow additional funds; and | |
— | placing us at a competitive disadvantage compared to other less leveraged competitors. |
• | Our senior credit facility contains financial covenants, and we do not expect to be in compliance with such financial covenants in 2009. While we were in compliance with the financial covenants under our senior credit facility at December 31, 2008, if the recent adverse conditions in the economy in general — and the gaming industry in particular — continue, we believe that we will not be in compliance with those financial covenants during 2009. In fact, given these conditions and the recent borrowing under the senior credit facility, we do not expect to be in compliance with those financial covenants at March 31, 2009. As a result, on March 17, 2009 we obtained from the lenders under the senior credit facility a waiver of the requirement that we comply with such financial covenants through May 15, 2009. Additionally, we entered into an amendment of our senior credit facility which provides for, among other terms, the following: |
— | We agreed to repay $300 million of the outstanding borrowings under the senior credit facility, which amount is not available for reborrowing without the consent of the lenders; | |
— | We are prohibited from prepaying or repurchasing our outstanding long-term debt or disposing of material assets; and other restrictive covenants were added that limit our ability to make investments and incur indebtedness; |
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— | The interest rate on outstanding borrowings under the senior credit facility was increased by 100 basis points; and | |
— | Our required equity contributions in CityCenter are limited through May 15, 2009 such that we can only make contributions if Infinity World makes its required contributions; our equity contributions do not exceed specified amounts (though we believe the limitation is in excess of the amounts expected to be required through May 15, 2009); and the CityCenter senior secured credit facility has not been accelerated. |
• | There is substantial doubt about our ability to continue as a going concern. The uncertainties described above regarding 1) our ability to meet our financial commitments, and 2) our potential noncompliance with financial covenants under our senior credit facility, raise a substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. As a result, the report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2008 contains an explanatory paragraph with respect to our ability to continue as a going concern. We can provide no assurance that we will be able to secure a waiver or amendment related to potential noncompliance under our senior credit facility or be able to address our 2009 financial commitments in such a way as to be able to continue as a going concern. | |
• | Current economic conditions adversely impact our ability to service or refinance our indebtedness and to make planned expenditures. Our ability to make payments on, and to refinance, our indebtedness and to fund planned or committed capital expenditures and investments in joint ventures, such as CityCenter, depends on our ability to generate cash flow in the future and our ability to borrow under our senior credit facility to the extent of available borrowings. If adverse regional and national economic conditions persist, worsen, or fail to improve significantly, we could experience decreased revenues from our operations attributable to decreases in consumer spending levels and could fail to generate sufficient cash to fund our liquidity needs or fail to satisfy the financial and other restrictive covenants which we are subject to under our indebtedness. We cannot provide assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our senior credit facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. | |
• | Our casinos in Las Vegas and elsewhere are destination resorts that compete with other destination travel locations throughout the United States and the world. We do not believe that our competition is limited to a particular geographic area, and gaming operations in other states or countries could attract our customers. To the extent that new casinos enter our markets or hotel room capacity is expanded by others in major destination locations, competition will increase. Major competitors, including new entrants, have either recently expanded their hotel room capacity or are currently expanding their capacity or constructing new resorts in Las Vegas. Also, the growth of gaming in areas outside Las Vegas, including California, has increased the competition faced by our operations in Las Vegas and elsewhere. In particular, as large scale gaming operations in Native American tribal lands has increased, particularly in California, competition has increased. |
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• | The ownership and operation of gaming facilities are subject to extensive federal, state and local laws, regulations and ordinances, which are administered by the relevant regulatory agencies in each jurisdiction. These laws, regulations and ordinances vary from jurisdiction to jurisdiction, but generally concern the responsibility, financial stability and character of the owners and managers of gaming operations as well as persons financially interested or involved in gaming operations. As such, our gaming regulators can require us to disassociate ourselves from suppliers or business partners found unsuitable by the regulators. In addition, unsuitable activity on our part or on the part of our domestic or foreign unconsolidated affiliates in any jurisdiction could have a negative impact on our ability to continue operating in other jurisdictions. For a summary of gaming regulations that affect our business, see “Regulation and Licensing.” The regulatory environment in any particular jurisdiction may change in the future and any such change could have a material adverse effect on our results of operations. In addition, we are subject to various gaming taxes, which are subject to possible increase at any time. | |
• | Our business is affected by economic and market conditions in the markets in which we operate and in the locations our customers reside. Bellagio, MGM Grand Las Vegas, Mandalay Bay and The Mirage are particularly affected by economic conditions in the Far East, and all of our Nevada resorts are affected by economic conditions in the United States, and California in particular. A recession, economic slowdown or other economic issues affecting consumers is likely to cause a reduction in visitation to our resorts, which would adversely affect our operating results. |
• | Certain of our casino properties are located in areas that may be subject to extreme weather conditions, including, but not limited to, hurricanes. Such extreme weather conditions may interrupt our operations, damage our properties, and reduce the number of customers who visit our facilities in such areas. Although we maintain both property and business interruption insurance coverage for certain extreme weather conditions, such coverage is subject to deductibles and limits on maximum benefits, including limitation on the coverage period for business interruption, and we cannot assure you that we will be able to fully insure such losses or fully collect, if at all, on claims resulting from such extreme weather conditions. Furthermore, such extreme weather conditions may interrupt or impede access to our affected properties and may cause visits to our affected properties to decrease for an indefinite period. | |
• | We are a large consumer of electricity and other energy. Accordingly, increases in energy costs, such as those experienced in 2007 and 2008, may have a negative impact on our operating results. Additionally, higher energy and gasoline prices which affect our customers may result in reduced visitation to our resorts and a reduction in our revenues. | |
• | Many of our customers travel by air. As a result, the cost and availability of air service and the impact of any events which disrupt air travel can affect our business. We cannot control the number or frequency of flights into or out of Las Vegas, but we rely on air traffic for a significant portion or our visitors. Reductions in flights by major airlines, such as those implemented in 2008 as a result of higher fuel prices and lower demand, can impact the number of visitors to our resorts. Additionally, there is one principal interstate highway between Las Vegas and Southern California, where a large number of our customers reside. Capacity constraints of that highway or any other traffic disruptions may also affect the number of customers who visit our facilities. | |
• | Leisure and business travel, especially travel by air, are particularly susceptible to global geopolitical events, such as terrorist attacks or acts of war or hostility. These events can create economic and political uncertainties that could adversely impact our business levels. Furthermore, although we have been able to purchase some insurance coverage for certain types of terrorist acts, insurance coverage against loss or business interruption resulting from war and some forms of terrorism continues to be unavailable. |
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• | Our City Center joint venture involves significant risks. The development and ultimate operation of CityCenter is subject to unique risk given the scope of the development and financing requirements placed on us and our partner, Infinity World. If we or our partner are unable to meet our funding requirements or if City Center’s $1.8 billion senior secured credit facility is terminated — for instance, due to cross defaults at the partner level — then this could cause the development of CityCenter to be delayed or suspended indefinitely. Such an event could have adverse financial consequences to us. | |
• | Our joint venture in Macau S.A.R. involves significant risks. The operation of MGM Grand Macau, 50% owned by us, is subject to unique risks, including risks related to: (a) Macau’s 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. |
• | Our plans for future construction can be affected by a number of factors, including time delays in obtaining necessary governmental permits and approvals and legal challenges. We may make changes in project scope, budgets and schedules for competitive, aesthetic or other reasons, and these changes may also result from circumstances beyond our control. These circumstances include weather interference, shortages of materials and labor, work stoppages, labor disputes, unforeseen engineering, environmental or geological problems, and unanticipated cost increases. Any of these circumstances could give rise to delays or cost overruns. Major expansion projects at our existing resorts can also result in disruption of our business during the construction period. | |
• | Claims have been brought against us and our subsidiaries in various legal proceedings, and additional legal and tax claims arise from time to time. It is possible that our cash flows and results of operations could be affected by the resolution of these claims. Please see the further discussion in Item 3. “Legal Proceedings.” | |
• | Tracinda Corporation beneficially owned approximately 54% of our outstanding common stock as of December 31, 2008. As a result, Tracinda Corporation has the ability to elect our entire Board of Directors and determine the outcome of other matters submitted to our stockholders, such as the approval of significant transactions. | |
• | A significant portion of our labor force is covered by collective bargaining agreements. Approximately 30,000 of our 61,000 employees are covered by collective bargaining agreements. A prolonged dispute with the covered employees could have an adverse impact on our operations. In addition, wage and or benefit increases resulting from new labor agreements may be significant and could also have an adverse impact on our results of operations. The collective bargaining agreement covering approximately 4,000 employees at MGM Grand Las Vegas expired in 2008. We have signed an extension of such agreement and are currently negotiating a new agreement. |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
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ITEM 2. | PROPERTIES |
Approximate | |||||||
Name and Location | Acres | Notes | |||||
Las Vegas, Nevada operations: | |||||||
Bellagio | Two acres of the site are subject to two ground leases that expire (giving effect to our renewal options) in 2019 and 2073. | ||||||
MGM Grand Las Vegas | |||||||
Mandalay Bay | 100 | ||||||
The Mirage | Site is shared with TI. Approximately 21 acres will be transferred upon the close of the TI sale. | ||||||
Luxor | 60 | ||||||
TI | NA | See The Mirage. | |||||
New York-New York | 20 | ||||||
Excalibur | |||||||
Monte Carlo | |||||||
Circus Circus Las Vegas | 69 | Includes | |||||
Shadow Creek Golf Course | 240 | ||||||
Other Nevada operations: | |||||||
Circus Circus Reno | 10 | A portion of the site is subject to two ground leases, which expire in 2032 and 2033, respectively. | |||||
Primm Valley | |||||||
448 | Located in California, | ||||||
Railroad Pass, Henderson, Nevada | 9 | ||||||
Other domestic operations: | |||||||
MGM Grand Detroit | |||||||
Beau Rivage, Biloxi, Mississippi | 41 | Includes 10 acres of tidelands leased from the State of Mississippi under a lease that expires (giving effect to our renewal options) in | |||||
Fallen Oak Golf Course, | |||||||
Saucier, Mississippi | 508 | ||||||
Gold Strike, Tunica, Mississippi | 24 | ||||||
Other land: | |||||||
CityCenter — | |||||||
Includes approximately 10 acres behind New York-New York, being used for project administration | |||||||
Las Vegas Strip — south | 20 | Located immediately south of Mandalay Bay. | |||||
15 | Located across the Las Vegas Strip from Luxor. | ||||||
Las Vegas Strip — north | 34 | Located north of Circus Circus. | |||||
North Las Vegas, Nevada | 66 | Located adjacent to Shadow Creek. | |||||
Henderson, Nevada | 47 | Adjacent to Railroad Pass. | |||||
Jean, Nevada | Located adjacent to, and across I-15 from, Gold Strike. | ||||||
Sloan, Nevada | 89 | ||||||
Stateline, California at Primm | 125 | Adjacent to the Primm Valley Golf Club. | |||||
Detroit, Michigan | |||||||
Tunica, Mississippi | 388 | We own an undivided 50% interest in this site with another, unaffiliated, gaming company. | |||||
Atlantic City, New Jersey | Approximately 19 acres are leased to Borgata including nine acres under a short-term lease. Of the remaining land, approximately |
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ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
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ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
2006 | 2005 | |||||||||||||||
High | Low | High | Low | |||||||||||||
First quarter | $ | 43.43 | $ | 35.26 | $ | 39.80 | $ | 34.50 | ||||||||
Second quarter | 46.15 | 38.13 | 42.98 | 32.58 | ||||||||||||
Third quarter | 41.28 | 34.20 | 46.75 | 39.30 | ||||||||||||
Fourth quarter | 59.52 | 39.28 | 44.75 | 35.30 |
2008 | 2007 | |||||||||||||||
High | Low | High | Low | |||||||||||||
First quarter | $ | 84.92 | $ | 57.26 | $ | 75.28 | $ | 56.40 | ||||||||
Second quarter | 62.90 | 33.00 | 87.38 | 61.17 | ||||||||||||
Third quarter | 38.49 | 21.65 | 91.15 | 63.33 | ||||||||||||
Fourth quarter | 27.70 | 8.00 | 100.50 | 80.50 |
Number of securities | Number of securities | |||||||||||
to be issued upon | Weighted average per | remaining available | ||||||||||
exercise of | share exercise price of | for future issuance | ||||||||||
outstanding options, | outstanding options, | under equity | ||||||||||
warrants and rights | warrants and rights | compensation plans | ||||||||||
(in thousands, except per share data) | ||||||||||||
Equity compensation plans approved by security holders | 30,532 | $ | 25.37 | 4,717 |
Number of Securities | Number of Securities | |||||||||||
to be Issued Upon | Weighted Average per | Remaining Available | ||||||||||
Exercise of | Share Exercise Price of | for Future Issuance | ||||||||||
Outstanding Options, | Outstanding Options, | Under Equity | ||||||||||
Warrants and Rights | Warrants and Rights | Compensation Plans | ||||||||||
(In thousands, except per share data) | ||||||||||||
Equity compensation plans approved by security holders | 26,264 | $ | 26.98 | 17,648 |
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ITEM 6. | SELECTED FINANCIAL DATA |
For The Years Ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Net revenues | $ | 7,208,767 | $ | 7,691,637 | $ | 7,175,956 | $ | 6,128,843 | $ | 4,001,804 | ||||||||||
Operating income (loss) | (129,603 | ) | 2,863,930 | 1,758,248 | 1,330,065 | 932,613 | ||||||||||||||
Income (loss) from continuing operations | (855,286 | ) | 1,400,545 | 635,996 | 435,366 | 345,209 | ||||||||||||||
Net income (loss) | (855,286 | ) | 1,584,419 | 648,264 | 443,256 | 412,332 | ||||||||||||||
Basic earnings per share: | ||||||||||||||||||||
Income (loss) from continuing operations | $ | (3.06 | ) | $ | 4.88 | $ | 2.25 | $ | 1.53 | $ | 1.24 | |||||||||
Net income (loss) per share | (3.06 | ) | 5.52 | 2.29 | 1.56 | 1.48 | ||||||||||||||
Weighted average number of shares | 279,815 | 286,809 | 283,140 | 284,943 | 279,325 | |||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||
Income (loss) from continuing operations | $ | (3.06 | ) | $ | 4.70 | $ | 2.18 | $ | 1.47 | $ | 1.19 | |||||||||
Net income (loss) per share | (3.06 | ) | 5.31 | 2.22 | 1.50 | 1.43 | ||||||||||||||
Weighted average number of shares | 279,815 | 298,284 | 291,747 | 296,334 | 289,333 | |||||||||||||||
At year-end: | ||||||||||||||||||||
Total assets | $ | 23,274,716 | $ | 22,727,686 | $ | 22,146,238 | $ | 20,699,420 | $ | 11,115,029 | ||||||||||
Total debt, including capital leases | 13,470,618 | 11,182,003 | 12,997,927 | 12,358,829 | 5,463,619 | |||||||||||||||
Stockholders’ equity | 3,974,361 | 6,060,703 | 3,849,549 | 3,235,072 | 2,771,704 | |||||||||||||||
Stockholders’ equity per share | $ | 14.37 | $ | 20.63 | $ | 13.56 | $ | 11.35 | $ | 9.87 | ||||||||||
Number of shares outstanding | 276,507 | 293,769 | 283,909 | 285,070 | 280,740 |
For the Years Ended December 31, | ||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Net revenues | $ | 7,175,956 | $ | 6,128,843 | $ | 4,001,804 | $ | 3,657,662 | $ | 3,552,404 | ||||||||||
Operating income | 1,758,248 | 1,330,065 | 932,613 | 684,879 | 727,742 | |||||||||||||||
Income from continuing operations | 635,996 | 435,366 | 345,209 | 226,719 | 283,484 | |||||||||||||||
Net income | 648,264 | 443,256 | 412,332 | 243,697 | 292,435 | |||||||||||||||
Basic earnings per share | ||||||||||||||||||||
Income from continuing operations | $ | 2.25 | $ | 1.53 | $ | 1.24 | $ | 0.76 | $ | 0.90 | ||||||||||
Net income per share | 2.29 | 1.56 | 1.48 | 0.82 | 0.93 | |||||||||||||||
Weighted average number of shares | 283,140 | 284,943 | 279,325 | 297,861 | 315,618 | |||||||||||||||
Diluted earnings per share | ||||||||||||||||||||
Income from continuing operations | $ | 2.18 | $ | 1.47 | $ | 1.19 | $ | 0.75 | $ | 0.89 | ||||||||||
Net income per share | 2.22 | 1.50 | 1.43 | 0.80 | 0.91 | |||||||||||||||
Weighted average number of shares | 291,747 | 296,334 | 289,333 | 303,184 | 319,880 | |||||||||||||||
At year-end | ||||||||||||||||||||
Total assets | $ | 22,146,238 | $ | 20,699,420 | $ | 11,115,029 | $ | 10,811,269 | $ | 10,568,698 | ||||||||||
Total debt, including capital leases | 12,997,927 | 12,358,829 | 5,463,619 | 5,533,462 | 5,222,195 | |||||||||||||||
Stockholders’ equity | 3,849,549 | 3,235,072 | 2,771,704 | 2,533,788 | 2,664,144 | |||||||||||||||
Stockholders’ equity per share | $ | 13.56 | $ | 11.35 | $ | 9.87 | $ | 8.85 | $ | 8.62 | ||||||||||
Number of shares outstanding | 283,909 | 285,070 | 280,740 | 286,192 | 309,148 |
• | In January 2004, we sold the Golden Nugget Las Vegas and the Golden Nugget Laughlin including substantially all of the assets and liabilities of those resorts (the “Golden Nugget Subsidiaries”). |
• | In July 2004, we sold the subsidiaries that owned and operated MGM Grand Australia. |
• | In April 2007, we sold the Primm Valley Resorts. |
• | In June 2007, we sold the Colorado Belle and Edgewater resorts in Laughlin, Nevada (the “Laughlin Properties”). |
• | The Mandalay acquisition closed on April 25, 2005. |
• | Beau Rivage was closed from August 2005 to August 2006 due to Hurricane Katrina. |
• | Beginning January 1, 2006, we began to recognize stock-based compensation in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”). For the years ended December 31, 2008, 2007 and 2006, incremental expense, before tax, resulting from the adoption of SFAS 123(R) was $36 million, $46 million and $70 million, respectively. |
• | During 2007 and 2006, we recognized our share of profits from the sale of condominium units at The Signature at MGM Grand. We recognized $93 million and $117 million (pre-tax) of such income in 2007 and 2006, respectively. |
• | During 2007 and 2006, we recognized $284 million and $86 million, respectively, of pre-tax income for insurance recoveries related to Hurricane Katrina. |
• | During 2007, we recognized a $1.03 billion pre-tax gain on the contribution of CityCenter to a joint venture. |
• | During 2008, we recognized $19 million of pre-tax income for insurance recoveries related to the Monte Carlo fire. |
• | In the fourth quarter of 2008, we recognized a $1.2 billion non-cash impairment charge related to goodwill and indefinite-lived intangible assets recognized in the Mandalay acquisition. |
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19
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Contractual maturities of long-term debt totaling approximately $1.0 billion; | |
• | Interest payments on long-term debt, estimated at $0.8 billion; | |
• | CityCenter required equity contributions of approximately $0.7 billion; | |
• | Other commitments of approximately $0.3 billion, including $0.2 billion of estimated capital expenditures; |
• | Available borrowings under our senior credit facility of $1.2 billion as of December 31, 2008; | |
• | Expected proceeds in 2009 from the sale of TI of approximately $0.6 billion; | |
• | Operating cash flow: Our current expectations for 2009 indicate that operating cash flow will be lower than in 2008. In 2008, we generated approximately $1.8 billion of cash flow from operations before deducting a) cash paid for interest, which commitments are included in the list above, and b) the tax payment on the 2007 CityCenter transaction. |
• | We agreed to repay $300 million of the outstanding borrowings under the senior credit facility, which amount is not available for reborrowing without the consent of the lenders; | |
• | We are prohibited from prepaying or repurchasing our outstanding long-term debt or disposing of material assets; and other restrictive covenants were added that limit our ability to make investments and incur indebtedness; | |
• | The interest rate on outstanding borrowings under the senior credit facility was increased by 100 basis points; and | |
• | Our required equity contributions in CityCenter are limited through May 15, 2009 such that we can only make contributions if Infinity World makes its required contributions; our equity contributions do not exceed |
20
specified amounts (though we believe the limitation is in excess of the amounts expected to be required through May 15, 2009); and the CityCenter senior secured credit facility has not been accelerated. |
• | Terminate their commitments to fund additional borrowings; | |
• | Require cash collateral for outstanding letters of credit; | |
• | Demand immediate repayment of all outstanding borrowings under the senior credit facility: and | |
• | Decline to release subsidiary guarantees which would impact our ability to execute asset dispositions. |
Las Vegas, Nevada: | Bellagio, MGM Grand Las Vegas, Mandalay Bay, The Mirage, Luxor, TI, New York-New York, Excalibur, Monte Carlo, Circus Circus Las Vegas and Slots-A-Fun. | |||||
Other: | Circus Circus Reno and Silver Legacy (50% owned) in Reno, Nevada; Jean, Biloxi, Mississippi and Gold Strike Tunica in Tunica, Mississippi; Borgata (50% owned) in Atlantic City, New Jersey; Macau (50% owned). |
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• | 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 6.5% to 7.5% of slots handle; | ||
• | Hotel revenue indicators — hotel occupancy (volume indicator); average daily rate (“ADR”, price indicator); revenue per available room (“REVPAR”), a summary measure of hotel results, combining ADR and occupancy rate. |
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• | Weak housing market and significant declines in housing prices and related home equity; | |
• | Higher oil and gas prices which impact travel costs; | |
• | Weaknesses in employment and increases in unemployment; | |
• | Decreases in air capacity to Las Vegas; and | |
• | Decreases in equity market value, which impacted many of our customers. |
• | We postponed development on MGM Grand Atlantic City and our joint venture with Kerzner and Istithmar for a Las Vegas Strip project; | |
• | We have significantly reduced our estimated capital expenditures for 2009; | |
• | We entered into an agreement in December 2008 to sell TI for $775 million; | |
• | The ability of CityCenter to obtain project financing was negatively impacted by credit market conditions, leading to a longer process than anticipated, with more funding from the venture partners required than anticipated; | |
• | In connection with the September 2008 amendment to our bank credit facility to increase the maximum leverage covenant, we will incur higher interest costs; | |
• | Our recent senior secured notes offering was completed at a higher interest rate than our existing fixed-rate indebtedness; | |
• | As discussed above, in February 2009, we borrowed $842 million, the remaining amount of available funds (other than outstanding letters of credit) under our senior credit facility, which will increase our interest costs; |
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• | In February 2009, all of the major credit rating agencies — Moody’s, Standard & Poors, and Fitch — downgraded the rating on our long-term debt and in March 2009, Moody’s downgraded our rating again. These rating downgrades may make it more difficult to obtain debt financing or may increase the cost of our future debt financing; and | |
• | Based on our current financial situation, we may be required to alter our working capital management practices to, for instance, post cash collateral for purchases or pay vendors on different terms than we have in the past. |
• | |||
• | |||
• | New restaurants and bars such as BLT Burger at The Mirage, RokVegas at New York-New York, Brand Steakhouse at Monte Carlo, and Yellowtail at Bellagio. | ||
A complete re-design and |
• | In August 2007, we entered into a new five-year collective bargaining agreement covering approximately 21,000 of our Las Vegas Strip employees. The new agreement provides for increases in wages and benefits of approximately 4% annually. This does not include the collective bargaining agreement covering employees at MGM Grand Las Vegas, which expired in 2008. A new agreement for MGM Grand Las Vegas is currently being negotiated. In addition, in October 2007 we entered into a new four-year labor agreement covering approximately 2,900 employees at MGM Grand Detroit which provides for average annual increases in wages and benefits of approximately 6%. | |
• | We expect to recognize a substantial gain from the sale of TI during 2009. |
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Year Ended December 31, | ||||||||||||||||||||
Percentage | Percentage | |||||||||||||||||||
2006 | Change | 2005 | Change | 2004 | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Net revenues | $ | 7,175,956 | 17 | % | $ | 6,128,843 | 53 | % | $ | 4,001,804 | ||||||||||
Operating income | 1,758,248 | 32 | % | 1,330,065 | 43 | % | 932,613 | |||||||||||||
Income from continuing operations | 635,996 | 46 | % | 435,366 | 26 | % | 345,209 | |||||||||||||
Net income | 648,264 | 46 | % | 443,256 | 7 | % | 412,332 | |||||||||||||
Diluted income from continuing operations per share | $ | 2.18 | 48 | % | $ | 1.47 | 24 | % | $ | 1.19 | ||||||||||
Diluted net income per share | 2.22 | 48 | % | 1.50 | 5 | % | 1.43 |
Year Ended December 31, | ||||||||||||||||
Percentage | Percentage | |||||||||||||||
2008 | Change | 2007 | Change | 2006 | ||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Net revenues | $ | 7,208,767 | (6)% | $ | 7,691,637 | 7% | $ | 7,175,956 | ||||||||
Operating expenses: | ||||||||||||||||
Casino and hotel operations | 4,034,374 | 0% | 4,027,558 | 8% | 3,715,057 | |||||||||||
General and administrative | 1,278,501 | 2% | 1,251,952 | 7% | 1,169,271 | |||||||||||
Corporate expense | 109,279 | (44)% | 193,893 | 20% | 161,507 | |||||||||||
Preopening and restructuring | 23,502 | (74)% | 92,105 | 146% | 37,397 | |||||||||||
Property transactions, net | 1,210,749 | NM | (186,313 | ) | NM | (40,980 | ) | |||||||||
CityCenter gain | — | NM | (1,029,660 | ) | NM | — | ||||||||||
Depreciation and amortization | 778,236 | 11% | 700,334 | 11% | 629,627 | |||||||||||
7,434,641 | 47% | 5,049,869 | (11)% | 5,671,879 | ||||||||||||
Income from unconsolidated affiliates | 96,271 | (57)% | 222,162 | (13)% | 254,171 | |||||||||||
Operating income (loss) | $ | (129,603 | ) | (104)% | $ | 2,863,930 | 63% | $ | 1,758,248 | |||||||
Income (loss) from continuing operations | $ | (855,286 | ) | (161)% | $ | 1,400,545 | 120% | $ | 635,996 | |||||||
Net income (loss) | (855,286 | ) | (154)% | 1,584,419 | 144% | 648,264 | ||||||||||
Diluted income (loss) from continuing operations per share | $ | (3.06 | ) | (165)% | $ | 4.70 | 116% | $ | 2.18 | |||||||
Diluted net income (loss) per share | (3.06 | ) | (158)% | 5.31 | 139% | 2.22 |
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• | The | ||
• | |||
• | |||
• | |||
• | |||
The closure of Beau Rivage in August 2005 after Hurricane Katrina and subsequent reopening in August | |||
• | Recognition of our share of profits from the closings of condominium units of | ||
• | Recognition of an $88 million pre-tax gain on the repurchase of certain of our outstanding senior notes and redemption of our 7% debentures in the fourth quarter of 2008, which was recorded within “Other, net” in the accompanying consolidated statement of operations. |
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Year Ended December 31, | ||||||||||||||||||||
Percentage | Percentage | |||||||||||||||||||
2006 | Change | 2005 | Change | 2004 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net revenues | $ | 7,175,956 | 17 | % | $ | 6,128,843 | 53 | % | $ | 4,001,804 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Casino and hotel operations | 3,813,386 | 15 | % | 3,316,870 | 55 | % | 2,138,644 | |||||||||||||
General and administrative | 1,070,942 | 20 | % | 889,806 | 57 | % | 565,387 | |||||||||||||
Corporate expense | 161,507 | 24 | % | 130,633 | 68 | % | 77,910 | |||||||||||||
Preopening, restructuring and property transactions, net | (3,583 | ) | (107 | )% | 52,714 | 118 | % | 24,135 | ||||||||||||
Depreciation and amortization | 629,627 | 12 | % | 560,626 | 46 | % | 382,773 | |||||||||||||
5,671,879 | 15 | % | 4,950,649 | 55 | % | 3,188,849 | ||||||||||||||
Income from unconsolidated affiliates | 254,171 | 67 | % | 151,871 | 27 | % | 119,658 | |||||||||||||
Operating income | $ | 1,758,248 | 32 | % | $ | 1,330,065 | 43 | % | $ | 932,613 | ||||||||||
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Year Ended December 31, | ||||||||||||||||||||
Percentage | Percentage | |||||||||||||||||||
2006 | Change | 2005 | Change | 2004 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Casino revenue, net: | ||||||||||||||||||||
Table games | $ | 1,251,304 | 13 | % | $ | 1,107,337 | 18 | % | $ | 938,281 | ||||||||||
Slots | 1,770,176 | 13 | % | 1,563,485 | 44 | % | 1,083,979 | |||||||||||||
Other | 108,958 | 16 | % | 93,724 | 60 | % | 58,492 | |||||||||||||
Casino revenue, net | 3,130,438 | 13 | % | 2,764,546 | 33 | % | 2,080,752 | |||||||||||||
Non-casino revenue: | ||||||||||||||||||||
Rooms | 1,991,477 | 22 | % | 1,634,588 | 84 | % | 889,443 | |||||||||||||
Food and beverage | 1,483,914 | 17 | % | 1,271,650 | 57 | % | 807,535 | |||||||||||||
Entertainment, retail and other | 1,190,904 | 17 | % | 1,018,813 | 61 | % | 634,412 | |||||||||||||
Non-casino revenue | 4,666,295 | 19 | % | 3,925,051 | 68 | % | 2,331,390 | |||||||||||||
7,796,733 | 17 | % | 6,689,597 | 52 | % | 4,412,142 | ||||||||||||||
Less: Promotional allowances | (620,777 | ) | 11 | % | (560,754 | ) | 37 | % | (410,338 | ) | ||||||||||
$ | 7,175,956 | 17 | % | $ | 6,128,843 | 53 | % | $ | 4,001,804 | |||||||||||
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Year Ended December 31, | ||||||||||||||||
Percentage | Percentage | |||||||||||||||
2008 | Change | 2007 | Change | 2006 | ||||||||||||
(In thousands) | ||||||||||||||||
Casino revenue, net: | ||||||||||||||||
Table games | $ | 1,078,897 | (12)% | $ | 1,228,296 | (2)% | $ | 1,251,304 | ||||||||
Slots | 1,795,226 | (5)% | 1,897,610 | 7% | 1,770,176 | |||||||||||
Other | 101,557 | (10)% | 113,148 | 4% | 108,958 | |||||||||||
Casino revenue, net | 2,975,680 | (8)% | 3,239,054 | 3% | 3,130,438 | |||||||||||
Non-casino revenue: | ||||||||||||||||
Rooms | 1,907,093 | (10)% | 2,130,542 | 7% | 1,991,477 | |||||||||||
Food and beverage | 1,582,367 | (4)% | 1,651,655 | 11% | 1,483,914 | |||||||||||
Entertainment, retail and other | 1,419,055 | 3% | 1,376,417 | 16% | 1,190,904 | |||||||||||
Non-casino revenue | 4,908,515 | (5)% | 5,158,614 | 11% | 4,666,295 | |||||||||||
7,884,195 | (6)% | 8,397,668 | 8% | 7,796,733 | ||||||||||||
Less: Promotional allowances | (675,428 | ) | (4)% | (706,031 | ) | 14% | (620,777 | ) | ||||||||
$ | 7,208,767 | (6)% | $ | 7,691,637 | 7% | $ | 7,175,956 | |||||||||
Year ended December 31, | ||||
2006 | ||||
(in thousands) | ||||
Casino | $ | 13,659 | ||
Other operating departments | 5,319 | |||
General and administrative | 19,722 | |||
Corporate expense and other | 30,421 | |||
Income from discontinued operations | 1,267 | |||
$ | 70,388 | |||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Casino | $ | 10,828 | $ | 11,513 | $ | 13,659 | ||||||
Other operating departments | 3,344 | 3,180 | 5,319 | |||||||||
General and administrative | 9,485 | 12,143 | 20,937 | |||||||||
Corporate expense and other | 12,620 | 19,707 | 32,444 | |||||||||
Discontinued operations | — | (865 | ) | 1,267 | ||||||||
$ | 36,277 | $ | 45,678 | $ | 73,626 | |||||||
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
CityCenter | $ | 9,429 | $ | 5,173 | $ | — | ||||||
MGM Grand Macau | 5,057 | 1,914 | — | |||||||||
MGM Grand Detroit | 3,313 | 503 | — | |||||||||
The Signature at MGM Grand | 8,379 | 1,437 | 668 | |||||||||
Loveat The Mirage | 3,832 | — | — | |||||||||
Jet nightclub at The Mirage | — | 1,891 | — | |||||||||
Bellagio expansion | — | 665 | 3,805 | |||||||||
KÀ | — | 1,871 | 3,655 | |||||||||
Other | 6,352 | 2,298 | 2,148 | |||||||||
$ | 36,362 | $ | 15,752 | $ | 10,276 | |||||||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
CityCenter | $ | 17,270 | $ | 24,169 | $ | 9,429 | ||||||
MGM Grand Macau | — | 36,853 | 5,057 | |||||||||
MGM Grand Detroit | 135 | 26,257 | 3,313 | |||||||||
The Signature at MGM Grand | — | 1,130 | 8,379 | |||||||||
Other | 5,654 | 3,696 | 10,184 | |||||||||
$ | 23,059 | $ | 92,105 | $ | 36,362 | |||||||
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Contract termination costs | $ | — | $ | — | $ | 3,693 | ||||||
Other | 1,035 | (59 | ) | 1,932 | ||||||||
$ | 1,035 | $ | (59 | ) | $ | 5,625 | ||||||
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Impairment of assets to be disposed of | $ | 40,865 | $ | 22,651 | $ | 473 | ||||||
Write-off of abandoned capital projects | — | 5,971 | — | |||||||||
Demolition costs | 348 | 5,362 | 7,057 | |||||||||
Insurance recoveries | (86,016 | ) | — | — | ||||||||
Other net losses on asset sales or disposals | 3,823 | 3,037 | 704 | |||||||||
$ | (40,980 | ) | $ | 37,021 | $ | 8,234 | ||||||
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Goodwill and other indefinite-lived intangible assets impairment charge | $ | 1,179,788 | $ | — | $ | — | ||||||
Other write-downs and impairments | 52,170 | 33,624 | 40,865 | |||||||||
Demolition costs | 9,160 | 5,665 | 348 | |||||||||
Insurance recoveries | (9,639 | ) | (217,290 | ) | (86,016 | ) | ||||||
Other net (gains) losses on asset sales or disposals | (20,730 | ) | (8,312 | ) | 3,823 | |||||||
$ | 1,210,749 | $ | (186,313 | ) | $ | (40,980 | ) | |||||
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Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Interest cost | $ | 882,501 | $ | 670,285 | $ | 390,588 | ||||||
Less: Capitalized interest | (122,140 | ) | (29,527 | ) | (23,005 | ) | ||||||
Interest expense, net | $ | 760,361 | $ | 640,758 | $ | 367,583 | ||||||
Cash paid for interest, net of amounts capitalized | $ | 778,590 | $ | 588,587 | $ | 321,008 | ||||||
Weighted average total debt balance | $12.7 billion | $10.1 billion | $5.5 billion | |||||||||
End-of-year ratio of fixed-to-floating debt | 66/34 | 61/39 | 99/1 | |||||||||
Weighted average interest rate | 7.1 | % | 6.8 | % | 7.3 | % |
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Total interest incurred | $ | 773,662 | $ | 930,138 | $ | 900,661 | ||||||
Interest capitalized | (164,376 | ) | (215,951 | ) | (122,140 | ) | ||||||
Interest allocated to discontinued operations | — | (5,844 | ) | (18,160 | ) | |||||||
$ | 609,286 | $ | 708,343 | $ | 760,361 | |||||||
Cash paid for interest, net of amounts capitalized | $ | 622,297 | $ | 731,618 | $ | 778,590 | ||||||
Weighted average total debt balance | $ | 12.8 billion | $ | 13.0 billion | $ | 12.7 billion | ||||||
End-of-year ratio of fixed-to-floating debt | 58/42 | 71/29 | 66/34 | |||||||||
Weighted average interest rate | 6.0% | 7.1% | 7.1% |
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2008 | 2007 | 2006 | |||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||
Income from continuing operations before income tax | $ | 977,926 | $ | 667,085 | $ | 548,810 | ||||||||||||||||||
Income (loss) from continuing operations before income tax | $ | (668,988 | ) | $ | 2,158,428 | $ | 977,926 | |||||||||||||||||
Income tax provision | 341,930 | 231,719 | 203,601 | 186,298 | 757,883 | 341,930 | ||||||||||||||||||
Effective income tax rate | 35.0 | % | 34.7 | % | 37.1 | % | NM | 35.1% | 35.0% | |||||||||||||||
Cash paid for income taxes | $ | 369,450 | $ | 75,776 | $ | 128,393 | $ | 437,874 | $ | 391,042 | $ | 369,450 |
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Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2008 | 2007 | 2006 | |||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||
Net cash provided by operations | $ | 1,241,952 | $ | 1,182,796 | $ | 829,247 | ||||||||||||||||||
Net cash provided by operating activities | $ | 753,032 | $ | 994,416 | $ | 1,231,952 | ||||||||||||||||||
Investing cash flows: | ||||||||||||||||||||||||
Capital expenditures | (1,884,053 | ) | (759,949 | ) | (702,862 | ) | ||||||||||||||||||
Acquisition of Mandalay Resort Group, net | — | (4,420,990 | ) | — | ||||||||||||||||||||
Proceeds from the sale of subsidiaries, net | — | — | 345,730 | |||||||||||||||||||||
Hurricane Katrina insurance proceeds | 199,963 | 46,250 | — | |||||||||||||||||||||
Investments in unconsolidated affiliates | (86,000 | ) | (183,000 | ) | (11,602 | ) | ||||||||||||||||||
Purchases of property and equipment | (781,754 | ) | (2,917,409 | ) | (1,758,795 | ) | ||||||||||||||||||
Proceeds from contribution of CityCenter | — | 2,468,652 | — | |||||||||||||||||||||
Proceeds from disposals of discontinued operations, net | — | 578,873 | — | |||||||||||||||||||||
Purchase of convertible note | — | (160,000 | ) | — | ||||||||||||||||||||
Investments in and advances to unconsolidated affiliates | (1,279,462 | ) | (31,420 | ) | (103,288 | ) | ||||||||||||||||||
Property damage insurance recoveries | 21,109 | 207,289 | 209,963 | |||||||||||||||||||||
Other | 117,663 | 14,872 | 20,981 | 58,667 | 63,316 | 9,693 | ||||||||||||||||||
Net cash used in investing activities | (1,652,427 | ) | (5,302,817 | ) | (347,753 | ) | ||||||||||||||||||
Net cash provided by (used in) investing activities | (1,981,440 | ) | 209,301 | (1,642,427 | ) | |||||||||||||||||||
Financing cash flows: | ||||||||||||||||||||||||
Net borrowing (repayment) under bank credit facilities | (393,150 | ) | 4,725,000 | (1,574,489 | ) | |||||||||||||||||||
Net borrowings (repayments) under bank credit facilities | 2,480,450 | (1,152,300 | ) | (393,150 | ) | |||||||||||||||||||
Issuance of long-term debt | 1,500,000 | 880,156 | 1,528,957 | 698,490 | 750,000 | 1,500,000 | ||||||||||||||||||
Repayment of long-term debt | (444,500 | ) | (1,408,992 | ) | (52,149 | ) | (789,146 | ) | (1,402,233 | ) | (444,500 | ) | ||||||||||||
Issuance of common stock | 89,113 | 145,761 | 135,910 | — | 1,192,758 | — | ||||||||||||||||||
Purchase of treasury stock | (246,892 | ) | (217,316 | ) | (348,895 | ) | ||||||||||||||||||
Issuance of common stock upon exercise of stock awards | 14,116 | 97,792 | 89,113 | |||||||||||||||||||||
Purchases of common stock | (1,240,857 | ) | (826,765 | ) | (246,892 | ) | ||||||||||||||||||
Other | 5,453 | (61,783 | ) | (15,306 | ) | (40,971 | ) | 100,211 | 5,453 | |||||||||||||||
Net cash provided by (used in) financing activities | 510,024 | 4,062,826 | (325,972 | ) | 1,122,082 | (1,240,537 | ) | 510,024 | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | 99,549 | $ | (57,195 | ) | $ | 155,522 | $ | (106,326 | ) | $ | (36,820 | ) | $ | 99,549 | |||||||||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In millions) | ||||||||||||
Development and expansion projects: | ||||||||||||
CityCenter | $ | 58 | $ | 962 | $ | 520 | ||||||
MGM Grand Detroit | 19 | 336 | 262 | |||||||||
Beau Rivage | — | 63 | 446 | |||||||||
Las Vegas Strip land | — | 584 | — | |||||||||
MGM Grand Atlantic City | 24 | — | — | |||||||||
Capitalized interest on development and expansion projects | 43 | 191 | 101 | |||||||||
144 | 2,136 | 1,329 | ||||||||||
Other: | ||||||||||||
Room remodel projects | 230 | 205 | 39 | |||||||||
Corporate aircraft | — | 102 | 48 | |||||||||
Other | 408 | 474 | 343 | |||||||||
638 | 781 | 430 | ||||||||||
$ | 782 | $ | 2,917 | $ | 1,759 | |||||||
• | $180.4 million of 6.75% senior notes; and | |
• | $196.2 million of 9.5% senior notes. |
• | $230 million of our 6% senior notes due 2009; | |
• | $43 million of our 8.5% senior notes due 2010; | |
• | $3.7 million of our 6.375% senior notes due 2011; | |
• | $5.4 million of our 6.75% senior notes due 2012; | |
• | $15.8 million of our 6.75% senior notes due 2013; | |
• | $16.1 million of our 5.875% senior notes due 2014; |
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• | $7.1 million of our 6.875% senior notes due 2016; | |
• | $17.3 million of our 7.5% senior notes due 2016; and | |
• | $7 million of our 7.625% senior notes due 2017. |
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
November 2003 authorization (16 million shares purchased) | $ | — | $ | — | $ | 348,895 | ||||||
July 2004 authorization (6.5 million and 5.5 million shares purchased) | 246,892 | 217,316 | — | |||||||||
$ | 246,892 | $ | 217,316 | $ | 348,895 | |||||||
Average price of shares repurchased | $ | 37.98 | $ | 39.51 | $ | 21.80 |
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
July 2004 authorization (8 million and 6.5 million shares purchased) | $ | — | $ | 659,592 | $ | 246,892 | ||||||
December 2007 authorization (18.1 million and 1.9 million shares purchased) | 1,240,856 | 167,173 | — | |||||||||
$ | 1,240,856 | $ | 826,765 | $ | 246,892 | |||||||
Average price of shares repurchased | $ | 68.36 | $ | 83.92 | $ | 37.98 |
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2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Long-term debt | $ | 1,402 | $ | 377 | $ | 1,276 | $ | 1,123 | $ | 4,914 | $ | 3,860 | ||||||||||||
Estimated interest payments on long-term debt (1) | 865 | 772 | 733 | 630 | 548 | 1,013 | ||||||||||||||||||
Capital leases | 2 | 1 | — | — | — | — | ||||||||||||||||||
Operating leases (2) | 16 | 14 | 12 | 11 | 11 | 355 | ||||||||||||||||||
Long-term liabilities (3) | 116 | 5 | 54 | 5 | 2 | 17 | ||||||||||||||||||
Other purchase obligations: | ||||||||||||||||||||||||
Construction commitments (4) | 1,012 | 249 | 30 | 3 | — | 100 | ||||||||||||||||||
Employment agreements | 134 | 74 | 40 | 4 | — | — | ||||||||||||||||||
Entertainment agreements (5) | 128 | 30 | 15 | — | — | — | ||||||||||||||||||
Other (6) | 190 | 49 | 3 | 1 | — | 4 | ||||||||||||||||||
$ | 3,865 | $ | 1,571 | $ | 2,163 | $ | 1,777 | $ | 5,475 | $ | 5,349 | |||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | Thereafter | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Long-term debt | $ | 1,048 | $ | 1,081 | $ | 6,240 | $ | 545 | $ | 1,384 | $ | 3,216 | ||||||||||||
Estimated interest payments on long-term debt(1) | 783 | 666 | 653 | 409 | 302 | 520 | ||||||||||||||||||
Capital leases | 2 | 2 | 2 | 1 | — | — | ||||||||||||||||||
Operating leases | 14 | 11 | 9 | 8 | 6 | 44 | ||||||||||||||||||
Tax liabilities(2) | 1 | — | — | — | — | — | ||||||||||||||||||
Long-term liabilities(3) | 77 | 18 | 1 | 1 | — | 6 | ||||||||||||||||||
CityCenter funding commitments(4) | 731 | 319 | — | — | — | — | ||||||||||||||||||
Other purchase obligations: | ||||||||||||||||||||||||
Construction commitments | 54 | 3 | 1 | — | — | — | ||||||||||||||||||
Employment agreements | 113 | 65 | 21 | 3 | — | — | ||||||||||||||||||
Entertainment agreements(5) | 127 | 26 | 4 | — | — | — | ||||||||||||||||||
Other(6) | 86 | 16 | 15 | 9 | 1 | — | ||||||||||||||||||
$ | 3,036 | $ | 2,207 | $ | 6,946 | $ | 976 | $ | 1,693 | $ | 3,786 | |||||||||||||
(1) | Estimated interest payments on long-term debt are based on principal amounts outstanding at December 31, |
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(2) | ||
(3) | Includes our obligation to support $50 million of bonds issued by the Economic Development Corporation of the City of Detroit as part of our development agreement with the City. The bonds mature in 2009. | |
(4) | ||
(5) | Our largest entertainment commitments consist of minimum contractual payments to Cirque du Soleil, which performs shows at several of our resorts. We are generally contractually committed for a period of 12 months based on our ability to exercise certain termination rights; however, we expect these shows to continue for longer periods. | |
(6) | The amount for |
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At December 31, | ||||||||||||||||||||||||
At December 31, | 2008 | 2007 | 2006 | |||||||||||||||||||||
2006 | 2005 | 2004 | (In thousands) | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Casino accounts receivable | $ | 248,044 | $ | 221,873 | $ | 174,713 | $ | 243,600 | $ | 266,059 | $ | 248,044 | ||||||||||||
Allowance for doubtful casino accounts receivable | 83,327 | 68,768 | 57,111 | 92,278 | 76,718 | 83,327 | ||||||||||||||||||
Allowance as a percentage of casino accounts receivable | 34 | % | 31 | % | 33 | % | 38% | 29% | 34% | |||||||||||||||
Median age of casino accounts receivable | 46 days | 39 days | 33 days | 36 days | 28 days | 46 days | ||||||||||||||||||
Percentage of casino accounts outstanding over 180 days | 21 | % | 19 | % | 15 | % | 21% | 18% | 21% |
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ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
ITEM 9B. | OTHER INFORMATION |
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ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
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Exhibit | ||
Number | Description | |
3(1) | Certificate of Incorporation of the Company, as amended through 1997 (incorporated by reference to Exhibit 3(1) to Registration StatementNo. 33-3305 and to Exhibit 3(a) to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 1997). | |
3(2) | Certificate of Amendment to Certificate of Incorporation of the Company, dated January 7, 2000, relating to an increase in the authorized shares of common stock (incorporated by reference to Exhibit 3(2) to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 1999 (the “199910-K”)). | |
3(3) | Certificate of Amendment to Certificate of Incorporation of the Company, dated January 7, 2000, relating to a2-for-1 stock split (incorporated by reference to Exhibit 3(3) to the 199910-K). | |
3(4) | Certificate of Amendment to Certificate of Incorporation of the Company, dated August 1, 2000, relating to a change in name of the Company (incorporated by reference to Exhibit 3(i).4 to the Company’s Quarterly Report onForm 10-Q for the fiscal quarter ended September 30, 2000 (the “September 2000 | |
3(5) | Certificate of Amendment to Certificate of Incorporation of the Company, dated June 3, 2003, relating to compliance with provisions of the New Jersey Casino Control Act relating to holders of Company securities (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report onForm 10-Q for the fiscal quarter ended June 30, 2003 (the “June 200310-Q”)). | |
3(6) | Certificate of Amendment to Certificate of Incorporation of the Company, dated May 3, 2005, relating to an increase in the authorized shares of common stock (incorporated by reference to Exhibit 3.10 to Amendment No. 1 to the Company’sForm 8-A filed with the Commission on May 11, 2005). | |
3(7) | Amended and Restated Bylaws of the Company, effective | |
4(1) | Indenture dated July 21, 1993, by and between Mandalay and First Interstate Bank of Nevada, N.A., as Trustee with respect to $150 million aggregate principal amount of 7.625% Senior Subordinated Debentures due 2013 (incorporated by reference to Exhibit 4(a) to Mandalay’s Current Report onForm 8-K dated July 21, 1993). | |
4(2) | Indenture, dated February 1, 1996, by and between Mandalay and First Interstate Bank of Nevada, N.A., as Trustee (the “Mandalay February 1996 Indenture”) (incorporated by reference to Exhibit 4(b) to Mandalay’s Current Report onForm 8-K dated January 29, 1996 (the “Mandalay January 19968-K”)). | |
4(3) | Supplemental Indenture, dated as of November 15, 1996, by and between Mandalay and Wells Fargo Bank (Colorado), N.A., (successor to First Interstate Bank of Nevada, N.A.), as Trustee, to the Mandalay February 1996 Indenture, with respect to $150 million aggregate principal amount of 6.70% Senior Notes due 2096 (incorporated by reference to Exhibit 4(c) to Mandalay’s Quarterly Report onForm 10-Q for the fiscal quarter ended October 31, 1996 (the “Mandalay October 1996 10-Q”)). | |
4(4) | 6.70% Senior Notes due February 15, 2096 in the principal amount of $150,000,000 (incorporated by reference to Exhibit 4(d) to the Mandalay October 199610-Q). |
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4(5) | Indenture, dated November 15, 1996, by and between Mandalay and Wells Fargo Bank (Colorado), N.A., as Trustee (the “Mandalay November 1996 Indenture”) (incorporated by reference to Exhibit 4(e) to the Mandalay October 199610-Q). | |
4(6) | Supplemental Indenture, dated as of November 15, 1996, to the Mandalay November 1996 Indenture, with respect to $150 million aggregate principal amount of 7.0% Senior Notes due 2036 (incorporated by reference to the Mandalay October 199610-Q). | |
4(7) | 7.0% Senior Notes due February 15, 2036, in the principal amount of $150,000,000 (incorporated by reference to Exhibit 4(g) to the Mandalay October 199610-Q). | |
4(8) | Indenture, dated as of August 1, 1997, between MRI and First Security Bank, National Association, as trustee (the “MRI 1997 Indenture”) (incorporated by reference to Exhibit 4.1 to the Quarterly Report onForm 10-Q of MRI for the fiscal quarter ended June 30, 1997 (the “MRI June 199710-Q”)). |
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Exhibit | ||
Number | Description | |
4(9) | Supplemental Indenture, dated as of August 1, 1997, to the MRI 1997 Indenture, with respect to | |
4(10) | Second Supplemental Indenture, dated as of October 10, 2000, to the MRI 1997 Indenture (incorporated by reference to Exhibit 4(14) to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2000 | |
4(11) | Indenture, dated as of February 4, 1998, between MRI and PNC Bank, National Association, as trustee (the “MRI 1998 Indenture”) (incorporated by reference to Exhibit 4(e) to the Annual Report onForm 10-K of MRI for the fiscal year ended December 31, 1997 (the “MRI 199710-K”)). | |
4(12) | ||
Second Supplemental Indenture, dated as of October 10, 2000, to the MRI 1998 Indenture (incorporated by reference to Exhibit 4(15) to the 200010-K). | ||
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Indenture, dated as of September 15, 2000, among the Company, as issuer, the Subsidiary Guarantors parties thereto, as guarantors, and U.S. Trust Company, National Association, as trustee, with respect to $850 million aggregate principal amount of 8.5% Senior Notes due 2010 (incorporated by reference to Exhibit 4 to the Company’s Amended Current Report onForm 8-K/A dated September 12, 2000). | ||
First Supplemental Indenture, dated as of September 15, 2000, among the Company, Bellagio Merger Sub, LLC and U.S. Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4(11) to the | ||
Second Supplemental Indenture, dated as of December 31, 2000, among the Company, MGM Grand Hotel & Casino Merger Sub, LLC and U.S. Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4(17) to the 200010-K). | ||
Indenture, dated as of January 23, 2001, among the Company, as issuer, the Subsidiary Guarantors parties thereto, as guarantors, and United States Trust Company of New York, as trustee, with respect to $400 million aggregate principal amount of 8.375% Senior Subordinated Notes due 2011 (incorporated by reference to Exhibit 4 to the Company’s Current Report onForm 8-K dated January 18, 2001). | ||
Indenture dated as of December 20, 2001 by and among Mandalay and The Bank of New York, with respect to $300 million aggregate principal amount of 9.375% Senior Subordinated Notes due 2010 (incorporated by reference to Exhibit 4.1 to Mandalay’sForm S-4 Registration StatementNo. 333-82936). | ||
Indenture dated as of March 21, 2003 by and among Mandalay and The Bank of New York with respect to $400 million aggregate principal amount of Floating Rate Convertible Senior Debentures due 2033 (incorporated by reference to Exhibit 4.44 to Mandalay’s Annual Report onForm 10-K for the fiscal year ended January 31, 2003). | ||
First Supplemental Indenture dated as of July 26, 2004, relating to Mandalay’s Floating Rate Senior Convertible Debentures due 2033 (incorporated by reference to Exhibit 4 to Mandalay’s Current Report onForm 8-K dated July 26, 2004). | ||
Indenture, dated as of July 31, 2003, by and between Mandalay and The Bank of New York with respect to $250 million aggregate principal amount of 6.5% Senior Notes due 2009 (incorporated by reference to Exhibit 4.1 to Mandalay’s Quarterly Report onForm 10-Q for the fiscal quarter ended July 31, 2003). | ||
Indenture, dated as of September 17, 2003, among the Company, as issuer, the Subsidiary Guarantors parties thereto, as guarantors, and U.S. Bank National Association, as trustee, with respect to $1,050 million 6% Senior Notes due 2009 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated September 11, 2003). | ||
Indenture, dated as of November 25, 2003, by and between Mandalay and The Bank of New York with respect to $250 million aggregate principal amount of 6.375% Senior Notes due 2011 (incorporated by reference to Exhibit 4.1 to Mandalay’s Quarterly Report onForm 10-Q for the fiscal quarter ended October 31, 2003). | ||
Indenture dated as of February 27, 2004, among the Company, as issuer, the Subsidiary Guarantors, as guarantors, and U.S. Bank National Association, as trustee, with respect to $525 million 5.875% Senior Notes due 2014 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K, dated February 27, 2004). |
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Number | Description | |
4(24) | Indenture dated as of August 25, 2004, among the Company, as issuer, certain subsidiaries of the Company, as guarantors, and U.S. Bank National Association, as trustee, with respect to $550 million 6.75% Senior Notes due 2012 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated August 25, 2004). |
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Indenture, dated June 20, 2005, among MGM MIRAGE, certain subsidiaries of MGM MIRAGE, and U.S. Bank National Association, with respect to $500 million aggregate principal amount of 6.625% Senior Notes due 2015 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report onForm 8-K dated June 20, 2005). | ||
Supplemental Indenture, dated September 9, 2005, among MGM MIRAGE, certain subsidiaries of MGM MIRAGE, and U.S. Bank National Association, with respect to $375 million aggregate principal amount of 6.625% Senior Notes due 2015 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated September 9, 2005). | ||
Indenture, dated April 5, 2006, among MGM MIRAGE, certain subsidiaries of MGM MIRAGE, and U.S. Bank National Association, with respect to $500 million aggregate principal amount of 6.75% Senior Notes due 2013 and $250 million original principal amount of 6.875% Senior Notes due 2016 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated April 5, 2006 (the “April 20068-K”)). | ||
Registration Rights Agreement, dated April 5, 2006, among MGM MIRAGE, certain subsidiaries of MGM MIRAGE, and certain initial purchases parties thereto (incorporated by reference to Exhibit 4.2 to the April 20068-K). | ||
Indenture dated as of December 21, 2006, among MGM MIRAGE, certain subsidiaries of MGM MIRAGE, and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated December 21, 2006 (the “December 20068-K”)). | ||
Supplemental Indenture dated as of December 21, 2006, by and among MGM MIRAGE, certain subsidiaries of MGM MIRAGE, and U.S. Bank National Association, with respect to $750 million aggregate principal amount of 7.625% Senior Notes due 2017 (incorporated by reference to Exhibit 4.2 to the December 20068-K). | ||
4(31) | Second Supplemental Indenture dated as of May 17, 2007 among MGM MIRAGE, certain subsidiaries of MGM MIRAGE, and U.S. Bank National Association, with respect to $750 million aggregate principal amount of 7.5% Senior Notes due 2016 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report onForm 8-K dated May 17, 2007). | |
4(32) | Indenture dated as of November 14, 2008, among MGM MIRAGE, certain subsidiaries of MGM MIRAGE, and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated November 20, 2008). | |
4(33) | Security Agreement, dated as of November 14, 2008, between New York-New York Hotel & Casino, LLC, and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to the Company’s Current Report onForm 8-K dated November 20, 2008). | |
4(34) | Pledge Agreement, Dated as of November 14, 2008, among MGM MIRAGE, New PRMA Las Vegas Inc., and U.S. Bank National Association (incorporated by reference to Exhibit 4.3 to the Company’s Current Report onForm 8-K dated November 20, 2008). | |
10.1(1) | Guarantee, dated as of May 31, 2000, by certain subsidiaries of the Company, in favor of The Chase Manhattan Bank, as successor in interest to PNC Bank, National Association, as trustee for the benefit of the holders of Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.4 to the May 20008-K). | |
10.1(2) | Schedule setting forth material details of the Guarantee, dated as of May 31, 2000, by certain subsidiaries of the Company, in favor of U.S. Trust Company, National Association (formerly known as U.S. Trust Company of California, N.A.), as trustee for the benefit of the holders of Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.5 to the May 20008-K). |
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Exhibit | ||
Number | Description | |
10.1(3) | Schedule setting forth material details of the Guarantee (Mirage Resorts, Incorporated 6.75% Notes Due February 1, 2008), dated as of May 31, 2000, by the Company and certain of its subsidiaries, in favor of The Chase Manhattan Bank, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.7 to the May 20008-K). | |
10.1(4) | Schedule setting forth material details of the Guarantee (Mirage Resorts, Incorporated 6.75% Notes Due August 1, 2007 and 7.25% Debentures Due August 1, 2017), dated as of May 31, 2000, by the Company and certain of its subsidiaries, in favor of First Security Bank, National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.8 to the May 20008-K). | |
10.1(5) | Instrument of Joinder, dated as of May 31, 2000, by MRI and certain of its wholly owned subsidiaries, in favor of the beneficiaries of the Guarantees referred to therein (incorporated by reference to Exhibit 10.9 to the May 20008-K). | |
10.1(6) |
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Guarantee (MGM MIRAGE 8.5% Senior Notes due 2010), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York N.A., as successor to U.S. Trust Company, National Association, for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.7 to the September 200510-Q). | ||
Guarantee (Mandalay Resort Group 7.625% Senior Subordinated Notes due 2013), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.9 to the September 200510-Q). | ||
Guarantee (MGM MIRAGE 8.375% Senior Subordinated Notes due 2011), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York N.A., successor to the United States Trust Company of New York, as trustee for the benefit of holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.11 to the September 200510-Q). | ||
Guarantee (MGM MIRAGE 6.0% Senior Notes due 2009), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of U.S. Bank National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.12 to the September 200510-Q). | ||
Guarantee (MGM MIRAGE 6.0% Senior Notes due 2009 (Exchange Notes)), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of U.S. Bank National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.13 to the September 200510-Q). | ||
Guarantee (MGM MIRAGE 5.875% Senior Notes due 2014), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of U.S. Bank National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.14 to the September 200510-Q). | ||
Guarantee (MGM MIRAGE 5.875% Senior Notes due 2014 (Exchange Notes)), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of U.S. Bank National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.15 to the September 200510-Q). | ||
Guarantee (MGM MIRAGE 6.75% Senior Notes due 2012), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of U.S. Bank National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.16 to the September 200510-Q). | ||
Guarantee (Mirage Resorts, Incorporated | ||
4345
Exhibit | ||
Number | Description | |
10.1(15) | Guarantee (Mandalay Resort Group 9.375% Senior Subordinated Notes due 2010), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.20 to the September 200510-Q). | |
Guarantee (Mandalay Resort Group 6.70% Senior Notes due 2096), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York, as successor in interest to First Interstate Bank of Nevada, N.A., as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.21 to the September 200510-Q). | ||
Guarantee (Mandalay Resort Group 7.0% Senior Notes due 2036), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.22 to the September 200510-Q). | ||
Guarantee (Mandalay Resort Group Floating Rate Convertible Senior Debentures due 2033), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.24 to the September 200510-Q). | ||
Guarantee (Mandalay Resort Group 6.5% Senior Notes due 2009), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.25 to the September 200510-Q). | ||
Guarantee (Mandalay Resort Group 6.375% Senior Notes due 2011), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.26 to the September 200510-Q). | ||
Fifth Amended and Restated Loan Agreement dated as of October 3, 2006, by and among MGM MIRAGE, as borrower; MGM Grand Detroit, LLC, as co-borrower; the Lenders and Co-Documentation Agents named therein; Bank of America, N.A., as Administrative Agent; the Royal Bank of Scotland PLC, as Syndication Agent; Bank of America Securities LLC and The Royal Bank of Scotland PLC, as Joint Lead Arrangers; and Bank of America Securities LLC, The Royal Bank of Scotland PLC, J.P. Morgan Securities Inc., Citibank North America, Inc. and Deutsche Bank Securities Inc. as Joint Book Managers (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated October 3, 2006). | ||
10.1(22) | ||
10.1(23) | ||
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10.1(24) | ||
Company’s Current Report onForm 8-K dated November 6, 2008). | ||
10.2(1) | Lease, dated August 3, 1977, by and between B&D Properties, Inc., as lessor, and Mandalay, as lessee; Amendment of Lease, dated May 6, 1983 (incorporated by reference to Exhibit 10(h) to Mandalay’s Registration Statement |
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Exhibit | ||
Number | Description | |
10.2(2) | Lease by and between Robert Lewis Uccelli, guardian, as lessor, and Nevada Greens, a limited partnership, William N. Pennington, as trustee, and William G. Bennett, as trustee, and related Assignment of Lease (incorporated by reference to Exhibit 10(p) to Mandalay’s Registration Statement | |
10.2(3) | ||
Public Trust Tidelands Lease, dated February 4, 1999, between the State of Mississippi and Beau Rivage Resorts, Inc. (without exhibits) (incorporated by reference to Exhibit 10.73 to the Annual Report onForm 10-K of MRI for the fiscal year ended December 31, 1999). | ||
*10.3(1) | Nonqualified Stock Option Plan (incorporated by reference to Exhibit 10(1) to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 1996). | |
*10.3(2) | 1997 Nonqualified Stock Option Plan, Amended and Restated February 2, 2004 (incorporated by reference to Exhibit 10.1 of the June 200410-Q). | |
*10.3(3) | Amendment to the MGM MIRAGE 1997 Nonqualified Stock Option Plan (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated July 9, 2007). | |
*10.3(4) | MGM MIRAGE 2005 Omnibus Incentive Plan (incorporated by reference to Exhibit 10 to the Company’s Registration Statement onForm S-8 filed May 12, 2005). | |
* | Amended and Restated Annual Performance-Based Incentive Plan for Executive Officers, giving effect to amendment approved by the Company’s shareholders on May 9, 2006 (incorporated by reference to Appendix A to the Company’s 2006 Proxy Statement). | |
*10.3(6) | ||
Deferred Compensation Plan II, dated as of December 30, 2004 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report onForm 8-K dated January 10, 2005 (the “January 20058-K”). | ||
* | Supplemental Executive Retirement Plan II, dated as of December 30, 2004 (incorporated by reference to Exhibit 10.1 to the January 20058-K). | |
* | Amendment to Deferred Compensation Plan II, dated as of December 21, 2005 (incorporated by reference to Exhibit 10.3(9) to the 200510-K). |
45
*10.3(9) | ||
Amendment No. 1 to the Deferred Compensation Plan II, dated as of July 10, 2007 (incorporated by reference to Exhibit | ||
*10.3(10) | Amendment No. 1 to the Supplemental Executive Retirement Plan II, dated as of July 10, 2007 (incorporated by reference to Exhibit 10.3(12) to the 200710-K). | |
*10.3(11) | Amendment No. 2 to the Deferred Compensation Plan II, dated as of October 15, 2007 (incorporated by reference to Exhibit 10.3(13) to the 200710-K). | |
*10.3(12) | Amendment No. 2 to the Supplemental Executive Retirement Plan II, dated as of October 15, 2007 (incorporated by reference to Exhibit 10.3(14) to the 200710-K). | |
*10.3(13) | Amendment No. 3 to the Deferred Compensation Plan II, dated as of November 4, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated November 7, 2008). | |
*10.3(14) | Amendment No. 3 to the Supplemental Executive Retirement Plan II, dated as of November 4, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated November 7, 2008). | |
*10.3(15) | MGM MIRAGE Freestanding Stock Appreciation Right Agreement. | |
*10.3(16) | MGM MIRAGE Restricted Stock Units Agreement (performance vesting). | |
*10.3(17) | MGM MIRAGE Restricted Stock Units Agreement (time vesting). | |
*10.3(18) | Employment Agreement, dated September 16, 2005, between the Company and J. Terrence Lanni (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated September 16, 2005 (the “September 16, 20058-K”)). | |
* | Employment Agreement, dated September 16, 2005, between the Company and Robert H. Baldwin (incorporated by reference to Exhibit 10.2 to the September 16, 20058-K). | |
* | Employment Agreement, dated September 16, 2005, between the Company and John Redmond (incorporated by reference to Exhibit 10.3 to the September 16, 20058-K). |
47
Exhibit | ||
Number | Description | |
* | Employment Agreement, dated September 16, 2005, between the Company and James J. Murren (incorporated by reference to Exhibit 10.4 to the September 16, 20058-K). | |
* | Employment Agreement, dated September 16, 2005, between the Company and Gary N. Jacobs (incorporated by reference to Exhibit 10.5 to the September 16, 20058-K). | |
*10.3(23) | Employment Agreement, dated March 1, 2007, between the Company and Aldo Manzini (incorporated by reference to Exhibit 10.3(20) to the 2007 10-K). | |
*10.3(24) | Letter Agreement dated June 19, 2007, between the Company and Aldo Manzini (incorporated by reference to Exhibit 10.3(21) to the 2007 10-K). | |
*10.3(25) | Employment Agreement, dated December 3, 2007, between the Company and Dan D’Arrigo (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated December 3, 2007). | |
*10.3(26) | Amendment No. 1 to Employment Agreement, dated December 31, 2008, between MGM MIRAGE and James J. Murren (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated January 7, 2009). | |
*10.3(27) | Amendment No. 1 to Employment Agreement, dated December 31, 2008, between MGM MIRAGE and Robert H. Baldwin (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated January 7, 2009) | |
*10.3(28) | Amendment No. 1 to Employment Agreement, dated December 31, 2008, between MGM MIRAGE and Gary N. Jacobs (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated January 7, 2009). | |
*10.3(29) | Amendment No. 1 to Employment Agreement, dated December 31, 2008, between MGM MIRAGE and Daniel J. D’Arrigo (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated January 7, 2009). | |
10.4(1) | Second Amended and Restated Joint Venture Agreement of Marina District Development Company, dated as of August 31, 2000, between MAC, CORP. and Boyd Atlantic City, Inc. (without exhibits) (incorporated by reference to Exhibit 10.2 to the September 200010-Q). | |
10.4(2) | Contribution and Adoption Agreement, dated as of December 13, 2000, among Marina District Development Holding Co., LLC, MAC, CORP. and Boyd Atlantic City, Inc. (incorporated by reference to Exhibit 10.4(15) to the 200010-K). | |
10.4(3) | Amended and Restated Agreement of Joint Venture of Circus and Eldorado Joint Venture by and between Eldorado Limited Liability Company and Galleon, Inc. (incorporated by reference to Exhibit 3.3 to theForm S-4 Registration Statement of Circus and Eldorado Joint Venture and Silver Legacy Capital Corp.—Commission FileNo. 333-87202). | |
10.4(4) | Amended and Restated Joint Venture Agreement, dated as of June 25, 2002, between Nevada Landing Partnership and RBG, L.P. (incorporated by reference to Exhibit 10.1 to Mandalay’s Quarterly Report onForm 10-Q for the fiscal quarter ended July 31, 2004.) | |
10.4(5) | Amendment No. 1 to Amended and Restated Joint Venture Agreement, dated as of April 25, 2005, by and among Nevada Landing Partnership, an Illinois general partnership, and RBG, L.P., an Illinois limited partnership (incorporated by reference to Exhibit 10.4(5) to the 200510-K). | |
10.4(6) | Amended and Restated Subscription and Shareholders Agreement, dated June 19, 2004, among Pansy Ho, Grand Paradise Macau Limited, MGMM Macau, Ltd., MGM MIRAGE Macau, Ltd., MGM MIRAGE and MGM Grand Paradise Limited (formerly N.V. Limited) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated April 19, 2005). | |
10.4(7) | Amendment Agreement to the Subscription and Shareholders Agreement, dated January 20, 2007, among Pansy Ho, Grand Paradise Macau Limited, MGMM Macau, Ltd., MGM MIRAGE Macau, Ltd., MGM MIRAGE and MGM Grand Paradise Limited (formerly N.V. Limited) (incorporated by reference to Exhibit 10.4(7) to the 2007 10-K). | |
10.4(8) | Loan Agreement with the M Resort LLC dated April 24, 2007 (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated April 24, 2007). |
48
Exhibit | ||
Number | Description | |
10.4(9) | Limited Liability Company Agreement of CityCenter Holdings, LLC, dated August 21, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated August 21, 2007 (the “August 20078-K”)). | |
10.4(10) | Amendment No 1, dated November 15, 2007, to the Limited Liability Company Agreement of CityCenter Holdings, LLC, dated August 21, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated November 15, 2007). | |
10.4(11) | Amendment No 2, dated December 31, 2007, to the Limited Liability Company Agreement of CityCenter Holdings, LLC, dated August 21, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated December 31, 2007). | |
10.4(12) | Limited Liability Company Operating Agreement of IKM JV, LLC, dated September 10, 2007 (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated September 10, 2007). | |
10.5(1) | Revised Development Agreement among the City of Detroit, The Economic Development Corporation of the City of Detroit and MGM Grand Detroit, LLC (incorporated by reference to Exhibit 10.10 to the June 200210-Q). | |
10.5(2) | Revised Development Agreement effective August 2, 2002, by and among the City of Detroit, The Economic Development Corporation of the City of Detroit and Detroit Entertainment, L.L.C. (incorporated by reference to Exhibit 10.61 of Mandalay’s Annual Report onForm 10-K for the year ended January 31, 2005). | |
10.6(1) | Company Stock Purchase and Support Agreement, dated August 21, 2007, by and between MGM MIRAGE and Infinity World Investments, LLC (incorporated by reference to Exhibit 10.2 to the August 20078-K). | |
Amendment No. 1, dated October 17, 2007, to the Company Stock Purchase and Support Agreement by and between MGM MIRAGE and Infinity World Investments, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated October 17, 2007). | ||
10.6(3) | Purchase Agreement dated |
46
21 | List of subsidiaries of the Company. | |
23 | Consent of Deloitte & Touche LLP. | |
31.1 | Certification of Chief Executive Officer of Periodic Report Pursuant to Rule 13a | |
31.2 | Certification of Chief Financial Officer of Periodic Report Pursuant to Rule 13a | |
**32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350. | |
**32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350. | |
99.1 | Description of our Operating Resorts. | |
Description of Regulation and Licensing. |
* | Management contract or compensatory plan or arrangement. | |
** | Exhibits 32.1 and 32.2 shall not be deemed filed with the Securities and Exchange Commission, nor shall they be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Securities Exchange Act of 1934 or the Securities Act of 1933, whether made before or after the date hereof and irrespective of any general incorporation language in any filings. |
4749
• | Hiring skilled accounting personnel and training them appropriately; | |
• | Written accounting policies; | |
• | Written documentation of accounting systems and procedures; | |
• | Segregation of incompatible duties; | |
• | Internal audit function to monitor the effectiveness of the system of internal control; | |
• | Oversight by an independent Audit Committee of the Board of Directors. |
48
50
49
51
50
52
At December 31, | ||||||||||||||||
At December 31, | 2008 | 2007 | ||||||||||||||
2006 | 2005 | |||||||||||||||
ASSETS | ASSETS | ASSETS | ||||||||||||||
Current assets | ||||||||||||||||
Cash and cash equivalents | $ | 452,944 | $ | 377,933 | $ | 295,644 | $ | 416,124 | ||||||||
Accounts receivable, net | 362,921 | 352,673 | 303,416 | 412,933 | ||||||||||||
Inventories | 118,459 | 111,825 | 111,505 | 126,941 | ||||||||||||
Income tax receivable | 18,619 | — | 64,685 | — | ||||||||||||
Deferred income taxes | 68,046 | 65,518 | 63,153 | 63,453 | ||||||||||||
Prepaid expenses and other | 124,414 | 110,634 | 155,652 | 106,364 | ||||||||||||
Assets held for sale | 369,348 | — | 538,975 | — | ||||||||||||
Total current assets | 1,514,751 | 1,018,583 | 1,533,030 | 1,125,815 | ||||||||||||
Real estate under development | 188,433 | — | ||||||||||||||
Property and equipment, net | 17,241,860 | 16,541,651 | 16,289,154 | 16,870,898 | ||||||||||||
Other assets | ||||||||||||||||
Investments in unconsolidated affiliates | 1,092,257 | 931,154 | ||||||||||||||
Investments in and advances to unconsolidated affiliates | 4,642,865 | 2,482,727 | ||||||||||||||
Goodwill | 1,300,747 | 1,314,561 | 86,353 | 1,262,922 | ||||||||||||
Other intangible assets, net | 367,200 | 377,479 | 347,209 | 362,098 | ||||||||||||
Deposits and other assets, net | 440,990 | 515,992 | 376,105 | 623,226 | ||||||||||||
Total other assets | 3,201,194 | 3,139,186 | 5,452,532 | 4,730,973 | ||||||||||||
$ | 22,146,238 | $ | 20,699,420 | $ | 23,274,716 | $ | 22,727,686 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | LIABILITIES AND STOCKHOLDERS’ EQUITY | LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
Current liabilities | ||||||||||||||||
Accounts payable | $ | 182,154 | $ | 156,373 | $ | 142,693 | $ | 220,495 | ||||||||
Construction payable | 234,486 | 109,228 | 45,103 | 76,524 | ||||||||||||
Income taxes payable | — | 125,503 | — | 284,075 | ||||||||||||
Current portion of long-term debt | — | 14 | 1,047,614 | — | ||||||||||||
Accrued interest on long-term debt | 232,957 | 229,930 | 187,597 | 211,228 | ||||||||||||
Other accrued liabilities | 958,244 | 913,520 | 1,549,296 | 932,365 | ||||||||||||
Liabilities related to assets held for sale | 40,259 | — | 30,273 | — | ||||||||||||
Total current liabilities | 1,648,100 | 1,534,568 | 3,002,576 | 1,724,687 | ||||||||||||
Deferred income taxes | 3,441,157 | 3,378,371 | 3,441,198 | 3,416,660 | ||||||||||||
Long-term debt | 12,994,869 | 12,355,433 | 12,416,552 | 11,175,229 | ||||||||||||
Other long-term obligations | 212,563 | 195,976 | 440,029 | 350,407 | ||||||||||||
Commitments and contingencies (Note 12) | ||||||||||||||||
Commitments and contingencies (Note 13) | ||||||||||||||||
Stockholders’ equity | ||||||||||||||||
Common stock, $.01 par value: authorized 600,000,000 shares, issued 362,886,027 and 357,262,405 shares; outstanding 283,909,000 and 285,069,516 shares | 3,629 | 3,573 | ||||||||||||||
Common stock, $.01 par value: authorized 600,000,000 shares; issued 369,283,995 and 368,395,926 shares; outstanding 276,506,968 and 293,768,899 shares | 3,693 | 3,684 | ||||||||||||||
Capital in excess of par value | 2,806,636 | 2,586,587 | 4,018,410 | 3,951,162 | ||||||||||||
Deferred compensation | — | (3,618 | ) | |||||||||||||
Treasury stock, at cost (78,977,027 and 72,192,889 shares) | (1,597,120 | ) | (1,338,394 | ) | ||||||||||||
Treasury stock, at cost (92,777,027 and 74,627,027 shares) | (3,355,963 | ) | (2,115,107 | ) | ||||||||||||
Retained earnings | 2,635,989 | 1,987,725 | 3,365,122 | 4,220,408 | ||||||||||||
Accumulated other comprehensive income (loss) | 415 | (801 | ) | (56,901 | ) | 556 | ||||||||||
Total stockholders’ equity | 3,849,549 | 3,235,072 | 3,974,361 | 6,060,703 | ||||||||||||
$ | 22,146,238 | $ | 20,699,420 | $ | 23,274,716 | $ | 22,727,686 | |||||||||
51
53
Year Ended December 31, | ||||||||||||||||||||||||
Year Ended December 31, | 2008 | 2007 | 2006 | |||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Casino | $ | 3,130,438 | $ | 2,764,546 | $ | 2,080,752 | $ | 2,975,680 | $ | 3,239,054 | $ | 3,130,438 | ||||||||||||
Rooms | 1,991,477 | 1,634,588 | 889,443 | 1,907,093 | 2,130,542 | 1,991,477 | ||||||||||||||||||
Food and beverage | 1,483,914 | 1,271,650 | 807,535 | 1,582,367 | 1,651,655 | 1,483,914 | ||||||||||||||||||
Entertainment | 459,540 | 426,175 | 268,595 | 546,310 | 560,909 | 459,540 | ||||||||||||||||||
Retail | 278,695 | 253,214 | 181,630 | 261,053 | 296,148 | 278,695 | ||||||||||||||||||
Other | 452,669 | 339,424 | 184,187 | 611,692 | 519,360 | 452,669 | ||||||||||||||||||
7,796,733 | 6,689,597 | 4,412,142 | 7,884,195 | 8,397,668 | 7,796,733 | |||||||||||||||||||
Less: Promotional allowances | (620,777 | ) | (560,754 | ) | (410,338 | ) | (675,428 | ) | (706,031 | ) | (620,777 | ) | ||||||||||||
7,175,956 | 6,128,843 | 4,001,804 | 7,208,767 | 7,691,637 | 7,175,956 | |||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Casino | 1,612,992 | 1,422,472 | 1,028,351 | 1,618,914 | 1,646,883 | 1,586,448 | ||||||||||||||||||
Rooms | 539,442 | 454,082 | 237,837 | 533,559 | 542,289 | 513,522 | ||||||||||||||||||
Food and beverage | 902,278 | 782,372 | 462,864 | 930,716 | 947,475 | 870,683 | ||||||||||||||||||
Entertainment | 333,619 | 305,799 | 191,256 | 384,822 | 395,611 | 330,439 | ||||||||||||||||||
Retail | 179,929 | 164,189 | 116,556 | 168,859 | 187,386 | 177,479 | ||||||||||||||||||
Other | 245,126 | 187,956 | 101,780 | 397,504 | 307,914 | 236,486 | ||||||||||||||||||
General and administrative | 1,070,942 | 889,806 | 565,387 | 1,278,501 | 1,251,952 | 1,169,271 | ||||||||||||||||||
Corporate expense | 161,507 | 130,633 | 77,910 | 109,279 | 193,893 | 161,507 | ||||||||||||||||||
Preopening and start-up expenses | 36,362 | 15,752 | 10,276 | 23,059 | 92,105 | 36,362 | ||||||||||||||||||
Restructuring costs (credit) | 1,035 | (59 | ) | 5,625 | ||||||||||||||||||||
Restructuring costs | 443 | — | 1,035 | |||||||||||||||||||||
Property transactions, net | (40,980 | ) | 37,021 | 8,234 | 1,210,749 | (186,313 | ) | (40,980 | ) | |||||||||||||||
Gain on CityCenter transaction | — | (1,029,660 | ) | — | ||||||||||||||||||||
Depreciation and amortization | 629,627 | 560,626 | 382,773 | 778,236 | 700,334 | 629,627 | ||||||||||||||||||
5,671,879 | 4,950,649 | 3,188,849 | ||||||||||||||||||||||
7,434,641 | 5,049,869 | 5,671,879 | ||||||||||||||||||||||
Income from unconsolidated affiliates | 254,171 | 151,871 | 119,658 | 96,271 | 222,162 | 254,171 | ||||||||||||||||||
Operating income | 1,758,248 | 1,330,065 | 932,613 | |||||||||||||||||||||
Operating income (loss) | (129,603 | ) | 2,863,930 | 1,758,248 | ||||||||||||||||||||
Non-operating income (expense) | ||||||||||||||||||||||||
Interest income | 11,192 | 12,037 | 5,663 | 16,520 | 17,210 | 11,192 | ||||||||||||||||||
Interest expense, net | (760,361 | ) | (640,758 | ) | (367,583 | ) | (609,286 | ) | (708,343 | ) | (760,361 | ) | ||||||||||||
Non-operating items from unconsolidated affiliates | (16,063 | ) | (15,825 | ) | (12,298 | ) | (34,559 | ) | (18,805 | ) | (16,063 | ) | ||||||||||||
Other, net | (15,090 | ) | (18,434 | ) | (9,585 | ) | 87,940 | 4,436 | (15,090 | ) | ||||||||||||||
(780,322 | ) | (662,980 | ) | (383,803 | ) | (539,385 | ) | (705,502 | ) | (780,322 | ) | |||||||||||||
Income from continuing operations before income taxes | 977,926 | 667,085 | 548,810 | |||||||||||||||||||||
Income (loss) from continuing operations before income taxes | (668,988 | ) | 2,158,428 | 977,926 | ||||||||||||||||||||
Provision for income taxes | (341,930 | ) | (231,719 | ) | (203,601 | ) | (186,298 | ) | (757,883 | ) | (341,930 | ) | ||||||||||||
Income from continuing operations | 635,996 | 435,366 | 345,209 | |||||||||||||||||||||
Income (loss) from continuing operations | (855,286 | ) | 1,400,545 | 635,996 | ||||||||||||||||||||
Discontinued operations | ||||||||||||||||||||||||
Income from discontinued operations, including a gain on disposal of $82,538 in 2004 | 18,473 | 11,815 | 101,212 | |||||||||||||||||||||
Income from discontinued operations | — | 10,461 | 18,473 | |||||||||||||||||||||
Gain on disposal of discontinued operations | — | 265,813 | — | |||||||||||||||||||||
Provision for income taxes | (6,205 | ) | (3,925 | ) | (34,089 | ) | — | (92,400 | ) | (6,205 | ) | |||||||||||||
12,268 | 7,890 | 67,123 | — | 183,874 | 12,268 | |||||||||||||||||||
Net income (loss) | $ | (855,286 | ) | $ | 1,584,419 | $ | 648,264 | |||||||||||||||||
Net income | $ | 648,264 | $ | 443,256 | $ | 412,332 | ||||||||||||||||||
Basic income per share of common stock | ||||||||||||||||||||||||
Income from continuing operations | $ | 2.25 | $ | 1.53 | $ | 1.24 | ||||||||||||||||||
Basic income (loss) per share of common stock | ||||||||||||||||||||||||
Income (loss) from continuing operations | $ | (3.06 | ) | $ | 4.88 | $ | 2.25 | |||||||||||||||||
Discontinued operations | 0.04 | 0.03 | 0.24 | — | 0.64 | 0.04 | ||||||||||||||||||
Net income per share | $ | 2.29 | $ | 1.56 | $ | 1.48 | ||||||||||||||||||
Net income (loss) per share | $ | (3.06 | ) | $ | 5.52 | $ | 2.29 | |||||||||||||||||
Diluted income per share of common stock | ||||||||||||||||||||||||
Income from continuing operations | $ | 2.18 | $ | 1.47 | $ | 1.19 | ||||||||||||||||||
Diluted income (loss) per share of common stock | ||||||||||||||||||||||||
Income (loss) from continuing operations | $ | (3.06 | ) | $ | 4.70 | $ | 2.18 | |||||||||||||||||
Discontinued operations | 0.04 | 0.03 | 0.24 | — | 0.61 | 0.04 | ||||||||||||||||||
Net income per share | $ | 2.22 | $ | 1.50 | $ | 1.43 | ||||||||||||||||||
Net income (loss) per share | $ | (3.06 | ) | $ | 5.31 | $ | 2.22 | |||||||||||||||||
52
54
Year Ended December 31, | ||||||||||||||||||||||||
Year Ended December 31, | 2008 | 2007 | 2006 | |||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||
Net income | $ | 648,264 | $ | 443,256 | $ | 412,332 | ||||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||||
Net income (loss) | $ | (855,286 | ) | $ | 1,584,419 | $ | 648,264 | |||||||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | 653,919 | 588,102 | 403,039 | 778,236 | 700,334 | 653,919 | ||||||||||||||||||
Amortization of debt discounts, premiums and issuance costs | (3,096 | ) | 5,791 | 31,217 | 10,620 | 4,298 | (3,096 | ) | ||||||||||||||||
Provision for doubtful accounts | 47,950 | 25,846 | (3,522 | ) | 80,293 | 32,910 | 47,950 | |||||||||||||||||
Stock-based compensation | 73,626 | 7,323 | 7,170 | 36,277 | 45,678 | 73,626 | ||||||||||||||||||
Business interruption insurance — lost profits | (9,146 | ) | (66,748 | ) | — | |||||||||||||||||||
Business interruption insurance — cost recovery | (27,883 | ) | (5,962 | ) | (46,581 | ) | ||||||||||||||||||
Property transactions, net | (41,135 | ) | 36,880 | 8,661 | 1,210,749 | (186,313 | ) | (41,135 | ) | |||||||||||||||
Loss on early retirements of debt | — | 18,139 | 5,527 | |||||||||||||||||||||
(Gain) loss on disposal of discontinued operations | — | — | (82,538 | ) | ||||||||||||||||||||
Gain on early retirements of long-term debt | (87,457 | ) | — | — | ||||||||||||||||||||
Gain on CityCenter transaction | — | (1,029,660 | ) | — | ||||||||||||||||||||
Gain on disposal of discontinued operations | — | (265,813 | ) | — | ||||||||||||||||||||
Income from unconsolidated affiliates | (229,295 | ) | (134,132 | ) | (107,360 | ) | (40,752 | ) | (162,217 | ) | (229,295 | ) | ||||||||||||
Distributions from unconsolidated affiliates | 212,477 | 89,857 | 51,500 | 70,546 | 211,062 | 212,477 | ||||||||||||||||||
Deferred income taxes | 59,764 | 51,759 | 55,647 | 79,516 | 32,813 | 59,764 | ||||||||||||||||||
Tax benefit from stock option exercises | — | 94,083 | 38,911 | |||||||||||||||||||||
Changes in current assets and liabilities: | ||||||||||||||||||||||||
Accounts receivable | (65,467 | ) | (68,159 | ) | (48,533 | ) | 20,500 | (82,666 | ) | (65,467 | ) | |||||||||||||
Inventories | (10,431 | ) | (7,017 | ) | (8,557 | ) | 12,366 | (8,511 | ) | (10,431 | ) | |||||||||||||
Income taxes receivable and payable | (129,929 | ) | 8,058 | 14,891 | (346,878 | ) | 315,877 | (129,929 | ) | |||||||||||||||
Prepaid expenses and other | (21,921 | ) | 10,830 | 1,109 | 14,983 | 10,937 | (21,921 | ) | ||||||||||||||||
Accounts payable and accrued liabilities | 111,559 | 75,404 | 72,392 | (187,858 | ) | 32,720 | 111,559 | |||||||||||||||||
Increase in real estate under development | (89,724 | ) | — | — | ||||||||||||||||||||
Hurricane Katrina insurance recoveries | 108,786 | — | — | |||||||||||||||||||||
Change in Hurricane Katrina insurance receivable | (46,581 | ) | (46,275 | ) | — | |||||||||||||||||||
Real estate under development | — | (458,165 | ) | (89,724 | ) | |||||||||||||||||||
Residential sales deposits | — | 247,046 | 13,970 | |||||||||||||||||||||
Business interruption insurance recoveries | 28,891 | 72,711 | 98,786 | |||||||||||||||||||||
Other | (36,814 | ) | (16,949 | ) | (22,639 | ) | (34,685 | ) | (30,334 | ) | (50,784 | ) | ||||||||||||
Net cash provided by operating activities | 1,241,952 | 1,182,796 | 829,247 | 753,032 | 994,416 | 1,231,952 | ||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||
Capital expenditures | (1,884,053 | ) | (759,949 | ) | (702,862 | ) | ||||||||||||||||||
Acquisition of Mandalay Resort Group, net of cash acquired | — | (4,420,990 | ) | — | ||||||||||||||||||||
Proceeds from the sale of the Golden Nugget Subsidiaries and MGM Grand Australia, net | — | — | 345,730 | |||||||||||||||||||||
Hurricane Katrina insurance recoveries | 199,963 | 46,250 | — | |||||||||||||||||||||
Capital expenditures, net of construction payable | (781,754 | ) | (2,917,409 | ) | (1,758,795 | ) | ||||||||||||||||||
Proceeds from contribution of CityCenter | — | 2,468,652 | — | |||||||||||||||||||||
Proceeds from disposals of discontinued operations, net | — | 578,873 | — | |||||||||||||||||||||
Purchase of convertible note | — | (160,000 | ) | — | ||||||||||||||||||||
Investments in and advances to unconsolidated affiliates | (1,279,462 | ) | (31,420 | ) | (103,288 | ) | ||||||||||||||||||
Property damage insurance recoveries | 21,109 | 207,289 | 209,963 | |||||||||||||||||||||
Dispositions of property and equipment | 11,375 | 7,828 | 32,978 | 85,968 | 47,571 | 11,375 | ||||||||||||||||||
Investments in unconsolidated affiliates | (86,000 | ) | (183,000 | ) | (11,602 | ) | ||||||||||||||||||
Change in construction payable | 125,258 | 40,803 | 17,329 | |||||||||||||||||||||
Other | (18,970 | ) | (33,759 | ) | (29,326 | ) | (27,301 | ) | 15,745 | (1,682 | ) | |||||||||||||
Net cash used in investing activities | (1,652,427 | ) | (5,302,817 | ) | (347,753 | ) | ||||||||||||||||||
Net cash provided by (used in) investing activities | (1,981,440 | ) | 209,301 | (1,642,427 | ) | |||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||
Net borrowings (repayments) under bank credit facilities — maturities of 90 days or less | 756,850 | 325,000 | (1,574,489 | ) | 2,760,450 | (402,300 | ) | 756,850 | ||||||||||||||||
Borrowings under bank credit facilities — maturities longer than 90 days | 7,000,000 | 4,400,000 | — | 8,170,000 | 6,750,000 | 7,000,000 | ||||||||||||||||||
Repayments under bank credit facilities — maturities longer than 90 days | (8,150,000 | ) | — | — | (8,450,000 | ) | (7,500,000 | ) | (8,150,000 | ) | ||||||||||||||
Issuance of long-term debt | 1,500,000 | 880,156 | 1,528,957 | 698,490 | 750,000 | 1,500,000 | ||||||||||||||||||
Repayment of long-term debt | (444,500 | ) | (1,408,992 | ) | (52,149 | ) | ||||||||||||||||||
Retirement of senior notes | (789,146 | ) | (1,402,233 | ) | (444,500 | ) | ||||||||||||||||||
Debt issuance costs | (28,383 | ) | (50,331 | ) | (13,349 | ) | (48,700 | ) | (5,983 | ) | (28,383 | ) | ||||||||||||
Issuance of common stock | 89,113 | 145,761 | 135,910 | — | 1,192,758 | — | ||||||||||||||||||
Purchases of treasury stock | (246,892 | ) | (217,316 | ) | (348,895 | ) | ||||||||||||||||||
Issuance of common stock upon exercise of stock awards | 14,116 | 97,792 | 89,113 | |||||||||||||||||||||
Purchases of common stock | (1,240,856 | ) | (826,765 | ) | (246,892 | ) | ||||||||||||||||||
Excess tax benefits from stock-based compensation | 47,330 | — | — | 9,509 | 102,479 | 47,330 | ||||||||||||||||||
Other | (13,494 | ) | (11,452 | ) | (1,957 | ) | (1,781 | ) | 3,715 | (13,494 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 510,024 | 4,062,826 | (325,972 | ) | 1,122,082 | (1,240,537 | ) | 510,024 | ||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||
Net increase (decrease) for the year | 99,549 | (57,195 | ) | 155,522 | (106,326 | ) | (36,820 | ) | 99,549 | |||||||||||||||
Cash related to discontinued operations | (24,538 | ) | — | — | ||||||||||||||||||||
Cash related to assets held for sale | (14,154 | ) | — | (24,538 | ) | |||||||||||||||||||
Balance, beginning of year | 377,933 | 435,128 | 279,606 | 416,124 | 452,944 | 377,933 | ||||||||||||||||||
Balance, end of year | $ | 452,944 | $ | 377,933 | $ | 435,128 | $ | 295,644 | $ | 416,124 | $ | 452,944 | ||||||||||||
Supplemental cash flow disclosures | ||||||||||||||||||||||||
Interest paid, net of amounts capitalized | $ | 778,590 | $ | 588,587 | $ | 321,008 | $ | 622,297 | $ | 731,618 | $ | 778,590 | ||||||||||||
State, federal and foreign income taxes paid, net of refunds | 369,450 | 75,776 | 128,393 | 437,874 | 391,042 | 369,450 | ||||||||||||||||||
Non-cash investing and financing activities | ||||||||||||||||||||||||
Carrying value of net assets contributed to joint venture | $ | — | $ | 2,773,612 | $ | — | ||||||||||||||||||
CityCenter partial completion guarantee and delayed equity contributions | 1,111,837 | — | — |
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Accumulated Other | Accumulated Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Capital in | Comprehensive | Total | Common Stock | Capital in | Comprehensive | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Par | Excess of | Deferred | Treasury | Retained | Income | Stockholders’ | Shares | Par | Excess of | Deferred | Treasury | Retained | Income | Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding | Value | Par Value | Compensation | Stock | Earnings | (Loss) | Equity | Outstanding | Value | Par Value | Compensation | Stock | Earnings | (Loss) | Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
Balances, January 1, 2004 | 286,192 | $ | 3,366 | $ | 2,171,625 | $ | (19,174 | ) | $ | (760,594 | ) | $ | 1,132,220 | $ | 6,345 | $ | 2,533,788 | |||||||||||||||||||||||||||||||||||||||||||||||
Balances, January 1, 2006 | 285,070 | $ | 3,573 | $ | 2,586,587 | $ | (3,618 | ) | $ | (1,338,394 | ) | $ | 1,987,725 | $ | (801 | ) | $ | 3,235,072 | ||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 412,332 | — | 412,332 | — | — | — | — | — | 648,264 | — | 648,264 | ||||||||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | (10,336 | ) | (10,336 | ) | — | — | — | — | — | — | 1,213 | 1,213 | ||||||||||||||||||||||||||||||||||||||||||||||
Derivative income from unconsolidated affiliate, net | — | — | — | — | — | — | 2,824 | 2,824 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | 404,820 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 7,170 | — | — | — | 7,170 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax benefit from stock-based compensation | — | — | 38,911 | — | — | — | — | 38,911 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cancellation of restricted stock | (64 | ) | — | (64 | ) | 1,126 | (1,062 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options | 10,612 | 106 | 135,857 | — | — | (53 | ) | — | 135,910 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases of treasury stock | (16,000 | ) | — | — | — | (348,895 | ) | — | — | (348,895 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2004 | 280,740 | 3,472 | 2,346,329 | (10,878 | ) | (1,110,551 | ) | 1,544,499 | (1,167 | ) | 2,771,704 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 443,256 | — | 443,256 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | (1,631 | ) | (1,631 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative income from unconsolidated affiliate, net | — | — | — | — | — | — | 1,997 | 1,997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income from unconsolidated affiliate, net | — | — | — | — | — | — | 3 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | 443,622 | 649,480 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 7,323 | — | — | — | 7,323 | — | — | 71,186 | 3,238 | — | — | — | 74,424 | ||||||||||||||||||||||||||||||||||||||||||||||||
Tax benefit from stock-based compensation | — | — | 94,083 | — | — | — | — | 94,083 | — | — | 60,033 | — | — | — | — | 60,033 | ||||||||||||||||||||||||||||||||||||||||||||||||
Cancellation of restricted stock | (24 | ) | — | — | 422 | (422 | ) | — | — | — | (4 | ) | — | — | 70 | (70 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options | 10,115 | 101 | 145,690 | — | — | (30 | ) | — | 145,761 | 5,623 | 56 | 89,057 | — | — | — | — | 89,113 | |||||||||||||||||||||||||||||||||||||||||||||||
Purchases of treasury stock | (5,500 | ) | — | — | — | (217,316 | ) | — | — | (217,316 | ) | (6,500 | ) | — | — | — | (246,892 | ) | — | — | (246,892 | ) | ||||||||||||||||||||||||||||||||||||||||||
Restricted shares turned in for tax withholding | (261 | ) | — | — | — | (10,105 | ) | — | — | (10,105 | ) | (280 | ) | — | — | — | (11,764 | ) | — | — | (11,764 | ) | ||||||||||||||||||||||||||||||||||||||||||
Other | — | — | 485 | (485 | ) | — | — | — | — | — | — | (227 | ) | 310 | — | — | — | 83 | ||||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2005 | 285,070 | 3,573 | 2,586,587 | (3,618 | ) | (1,338,394 | ) | 1,987,725 | (801 | ) | 3,235,072 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2006 | 283,909 | 3,629 | 2,806,636 | — | (1,597,120 | ) | 2,635,989 | 415 | 3,849,549 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 648,264 | — | 648,264 | — | — | — | — | — | 1,584,419 | — | 1,584,419 | ||||||||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | 1,213 | 1,213 | — | — | — | — | — | — | 583 | 583 | ||||||||||||||||||||||||||||||||||||||||||||||||
Derivative income from unconsolidated affiliate, net | — | — | — | — | — | — | 3 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss from unconsolidated affiliate, net | — | — | — | — | — | — | (442 | ) | (442 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | 649,480 | 1,584,560 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 71,186 | 3,238 | — | — | — | 74,424 | — | — | 48,063 | — | — | — | — | 48,063 | ||||||||||||||||||||||||||||||||||||||||||||||||
Tax benefit from stock-based compensation | — | — | 60,209 | — | — | — | — | 60,209 | — | — | 115,439 | — | — | — | — | 115,439 | ||||||||||||||||||||||||||||||||||||||||||||||||
Cancellation of restricted stock | (4 | ) | — | — | 70 | (70 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options | 5,623 | 56 | 89,057 | — | — | — | — | 89,113 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | 14,200 | — | 883,980 | — | 308,778 | — | — | 1,192,758 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options and stock appreciation rights | 5,510 | 55 | 96,691 | — | — | — | — | 96,746 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases of treasury stock | (6,500 | ) | — | — | — | (246,892 | ) | — | — | (246,892 | ) | (9,850 | ) | — | — | — | (826,765 | ) | — | — | (826,765 | ) | ||||||||||||||||||||||||||||||||||||||||||
Restricted shares turned in for tax withholding | (280 | ) | — | — | — | (11,764 | ) | — | — | (11,764 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | (403 | ) | 310 | — | — | — | (93 | ) | — | — | 353 | — | — | — | — | 353 | ||||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2007 | 293,769 | 3,684 | 3,951,162 | — | (2,115,107 | ) | 4,220,408 | 556 | 6,060,703 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | (855,286 | ) | — | (855,286 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | (3,190 | ) | (3,190 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation adjustment to M Resort convertible note, net of taxes | — | — | — | — | — | — | (54,267 | ) | (54,267 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2006 | 283,909 | $ | 3,629 | $ | 2,806,636 | $ | — | $ | (1,597,120 | ) | $ | 2,635,989 | $ | 415 | $ | 3,849,549 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | (912,743 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 42,418 | — | — | — | — | 42,418 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax benefit from stock-based compensation | — | — | 10,494 | — | — | — | — | 10,494 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options and stock appreciation rights | 888 | 9 | 14,107 | — | — | — | — | 14,116 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases of treasury stock | (18,150 | ) | — | — | — | (1,240,856 | ) | — | — | (1,240,856 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | 229 | — | — | — | — | 229 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2008 | 276,507 | $ | 3,693 | $ | 4,018,410 | $ | — | $ | (3,355,963 | ) | $ | 3,365,122 | $ | (56,901 | ) | $ | 3,974,361 | |||||||||||||||||||||||||||||||||||||||||||||||
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NOTE 1 — | ORGANIZATION |
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• | Contractual maturities of long-term debt totaling approximately $1.0 billion; | |
• | Interest payments on long-term debt, estimated at $0.8 billion; | |
• | CityCenter required equity contributions of approximately $0.7 billion; | |
• | Other commitments of approximately $0.3 billion, including $0.2 billion of estimated capital expenditures; |
• | Available borrowings under its senior credit facility of $1.2 billion as of December 31, 2008; | |
• | Expected proceeds in 2009 from the sale of TI of approximately $0.6 billion; | |
• | Operating cash flow: The Company’s current expectations for 2009 indicate that operating cash flow will be lower than in 2008. In 2008, the Company generated approximately $1.8 billion of cash flow from operations before deducting a) cash paid for interest, which commitments are included in the list above, and b) the tax payment on the 2007 CityCenter transaction. |
• | The Company agreed to repay $300 million of the outstanding borrowings under the senior credit facility, which amount is not available for reborrowing without the consent of the lenders; |
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• | The Company is prohibited from prepaying or repurchasing its outstanding long-term debt or disposing of material assets; and other restrictive covenants were added that limit the Company’s ability to make investments and incur indebtedness; | |
• | The interest rate on outstanding borrowings under the senior credit facility was increased by 100 basis points; and | |
• | The Company’s required equity contributions in CityCenter are limited through May 15, 2009 such that it can only make contributions if Infinity World makes its required contributions; the Company’s equity contributions do not exceed specified amounts (though the Company believes the limitation is in excess of the amounts expected to be required through May 15, 2009); and the CityCenter senior secured credit facility has not been accelerated. |
• | Terminate their commitments to fund additional borrowings; | |
• | Require cash collateral for outstanding letters of credit; | |
• | Demand immediate repayment of all outstanding borrowings under the senior credit facility. | |
• | Decline to release subsidiary guarantees, which would impact the Company’s ability to execute asset dispositions. |
NOTE 3 — | SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION |
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Reduction of general and administrative expenses: | ||||||||||||
Hurricane Katrina | $ | — | $ | 66,748 | $ | — | ||||||
Monte Carlo fire | 9,146 | — | — | |||||||||
$ | 9,146 | $ | 66,748 | $ | — | |||||||
Reduction of property transactions, net: | ||||||||||||
Hurricane Katrina | $ | — | $ | 217,290 | $ | 86,016 | ||||||
Monte Carlo fire | 9,639 | — | — | |||||||||
$ | 9,639 | $ | 217,290 | $ | 86,016 | |||||||
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Hurricane Katrina | $ | — | $ | 72,711 | $ | 98,786 | ||||||
Monte Carlo fire | 28,891 | — | — | |||||||||
$ | 28,891 | $ | 72,711 | $ | 98,786 | |||||||
Cash flows from investing activities: | ||||||||||||
Hurricane Katrina | $ | — | $ | 207,289 | $ | 209,963 | ||||||
Monte Carlo fire | 21,109 | — | — | |||||||||
$ | 21,109 | $ | 207,289 | $ | 209,963 | |||||||
60
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Buildings and improvements | 30 to 45 years | |||
Land improvements | 10 to 20 years | |||
Furniture and fixtures | 3 to 10 years | |||
Equipment | 3 to 20 years |
61
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Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Rooms | $ | 91,799 | $ | 74,022 | $ | 57,091 | ||||||
Food and beverage | 296,866 | 229,892 | 176,092 | |||||||||
Other | 34,439 | 31,733 | 22,826 | |||||||||
$ | 423,104 | $ | 335,647 | $ | 256,009 | |||||||
57
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Rooms | $ | 91,292 | $ | 96,183 | $ | 91,799 | ||||||
Food and beverage | 288,522 | 303,900 | 296,866 | |||||||||
Other | 30,742 | 33,457 | 34,439 | |||||||||
$ | 410,556 | $ | 433,540 | $ | 423,104 | |||||||
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Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Weighted-average common shares outstanding used in the calculation of basic earnings per share | 283,140 | 284,943 | 279,325 | |||||||||
Potential dilution from stock options and restricted stock | 8,607 | 11,391 | 10,008 | |||||||||
Weighted-average common and common equivalent shares used in the calculation of diluted earnings per share | 291,747 | 296,334 | 289,333 | |||||||||
58
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Weighted-average common shares outstanding used in the calculation of basic earnings per share | 279,815 | 286,809 | 283,140 | |||||||||
Potential dilution from stock options, stock appreciation rights and restricted stock | — | 11,475 | 8,607 | |||||||||
Weighted-average common and common equivalent shares used in the calculation of diluted earnings per share | 279,815 | 298,284 | 291,747 | |||||||||
At December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Derivative loss from unconsolidated affiliate, net | $ | 137 | $ | 134 | ||||
Foreign currency translation adjustments | 278 | (935 | ) | |||||
$ | 415 | $ | (801 | ) | ||||
At December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Other comprehensive income (loss) from unconsolidated affiliates | $ | — | $ | (305 | ) | |||
Valuation adjustment to M Resort convertible note, net of taxes | (54,267 | ) | — | |||||
Currency translation adjustments | (2,634 | ) | 861 | |||||
$ | (56,901 | ) | $ | 556 | ||||
Cash consideration for Mandalay’s outstanding shares and stock options | $ | 4,831,944 | ||
Estimated fair value of Mandalay’s long-term debt | 2,849,225 | |||
Transaction costs and expenses and other | 111,944 | |||
7,793,113 | ||||
Less: Net proceeds from the sale of MotorCity Casino | (526,597 | ) | ||
$ | 7,266,516 | |||
Current assets (including cash of $134,245) | $ | 413,502 | ||
Property and equipment | 7,130,376 | |||
Goodwill | 1,221,990 | |||
Other intangible assets | 245,940 | |||
Other assets | 340,930 | |||
Assumed liabilities, excluding long-term debt | (591,113 | ) | ||
Deferred taxes | (1,495,109 | ) | ||
$ | 7,266,516 | |||
59
64
1) | Marketable securities held in connection with the Company’s deferred compensation and supplemental executive retirement plans, and the plans’ corresponding liabilities. As of December 31, 2008, the assets and liabilities related to these plans each totaled $68 million, measured entirely using “Level 1” inputs. | |
2) | The Company’s investment in The M Resort LLC convertible note and embedded call option. The fair value of the convertible note was measured using “Level 2” inputs. The fair value of the embedded call option was measured using “Level 3” inputs, consisting primarily of estimates of future cash flows. See “Comprehensive income” in Note 3 for valuation adjustment recognized during 2008. | |
3) | The partial completion guarantee provided in connection with the CityCenter credit facility, discussed in Note 13, which fair value was measured using “Level 3” inputs, consisting of budgeted and historical construction costs. |
65
NOTE 4 — | ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS |
December 31, | ||||
2008 | ||||
(In thousands) | ||||
Cash | $ | 14,154 | ||
Accounts receivable, net | 9,962 | |||
Inventories | 3,069 | |||
Prepaid expenses and other | 3,459 | |||
Total current assets | 30,644 | |||
Property and equipment, net | 494,807 | |||
Goodwill | 7,781 | |||
Other assets, net | 5,743 | |||
Total assets | 538,975 | |||
Accounts payable | 4,162 | |||
Other current liabilities | 26,111 | |||
Total current liabilities | 30,273 | |||
Other long-term obligations | — | |||
Total liabilities | 30,273 | |||
Net assets | $ | 508,702 | ||
Year Ended December 31, | ||||||||
2005 | 2004 | |||||||
(In thousands, except per share amounts) | ||||||||
Net revenues | $ | 6,977,609 | $ | 6,509,886 | ||||
Operating income | 1,488,013 | 1,399,092 | ||||||
Income from continuing operations | 454,365 | 407,176 | ||||||
Net income | 465,539 | 479,455 | ||||||
Basic earnings per share: | ||||||||
Income from continuing operations | $ | 1.59 | $ | 1.46 | ||||
Net income | 1.63 | 1.72 | ||||||
Diluted earnings per share: | ||||||||
Income from continuing operations | $ | 1.53 | $ | 1.41 | ||||
Net income | 1.57 | 1.66 |
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Net revenues of discontinued operations | $ | — | $ | 128,619 | $ | 412,032 | ||||||
Interest allocated to discontinued operations (based on the ratio of net assets of discontinued operations to total consolidated net assets and debt) | — | 5,844 | 18,160 |
NOTE 5 — | CITYCENTER TRANSACTION |
At December 31, | ||||
2006 | ||||
(In thousands) | ||||
Cash | $ | 24,538 | ||
Accounts receivable, net | 3,203 | |||
Inventories | 3,196 | |||
Prepaid expenses and other | 8,141 | |||
Total current assets | 39,078 | |||
Property and equipment, net | 316,332 | |||
Goodwill | 5,000 | |||
Other assets, net | 8,938 | |||
Total assets | 369,348 | |||
Accounts payable | 6,622 | |||
Other current liabilities | 29,142 | |||
Total current liabilities | 35,764 | |||
Other long-term obligations | 4,495 | |||
Total liabilities | 40,259 | |||
Net assets | $ | 329,089 | ||
60
66
Cash received: | ||||
Initial distribution | $ | 2,468 | ||
Post-closing adjustment | (22 | ) | ||
Net cash received | 2,446 | |||
Less: 50% of carrying value of assets contributed | (1,387 | ) | ||
Less: Liabilities resulting from the transaction | (29 | ) | ||
$ | 1,030 | |||
NOTE 6 — | ACCOUNTS RECEIVABLE, NET |
At December 31, | ||||||||||||||||
At December 31, | 2008 | 2007 | ||||||||||||||
2006 | 2005 | (In thousands) | ||||||||||||||
(In thousands) | ||||||||||||||||
Casino | $ | 248,044 | $ | 221,873 | $ | 243,600 | $ | 266,059 | ||||||||
Hotel | 175,770 | 173,049 | 112,985 | 181,983 | ||||||||||||
Other | 29,131 | 35,021 | 46,437 | 50,815 | ||||||||||||
452,945 | 429,943 | 403,022 | 498,857 | |||||||||||||
Less: Allowance for doubtful accounts | (90,024 | ) | (77,270 | ) | (99,606 | ) | (85,924 | ) | ||||||||
$ | 362,921 | $ | 352,673 | $ | 303,416 | $ | 412,933 | |||||||||
67
NOTE 7 — | PROPERTY AND EQUIPMENT, NET |
At December 31, | ||||||||||||||||
At December 31, | 2008 | 2007 | ||||||||||||||
2006 | 2005 | (In thousands) | ||||||||||||||
(In thousands) | ||||||||||||||||
Land | $ | 7,905,430 | $ | 8,018,301 | $ | 7,449,254 | $ | 7,728,488 | ||||||||
Buildings, building improvements and land improvements | 7,869,972 | 7,595,257 | 8,806,135 | 8,724,339 | ||||||||||||
Furniture, fixtures and equipment | 2,954,921 | 2,695,746 | 3,435,886 | 3,231,725 | ||||||||||||
Construction in progress | 1,306,770 | 607,447 | 407,440 | 552,667 | ||||||||||||
20,037,093 | 18,916,751 | 20,098,715 | 20,237,219 | |||||||||||||
Less: Accumulated depreciation and amortization | (2,795,233 | ) | (2,375,100 | ) | (3,809,561 | ) | (3,366,321 | ) | ||||||||
$ | 17,241,860 | $ | 16,541,651 | $ | 16,289,154 | $ | 16,870,898 | |||||||||
NOTE 8 — | INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES |
At December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Marina District Development Company — Borgata (50%) | $ | 454,354 | $ | 461,211 | ||||
Elgin Riverboat Resort-Riverboat Casino — Grand Victoria (50%) | 300,151 | 241,279 | ||||||
MGM Grand Paradise Limited — Macau (50%) | 285,038 | 187,568 | ||||||
Circus and Eldorado Joint Venture — Silver Legacy (50%) | 31,258 | 26,492 | ||||||
Other | 9,795 | 14,604 | ||||||
1,080,596 | 931,154 | |||||||
Turnberry/MGM Grand Towers — The Signature at MGM Grand (50%) | 11,661 | (7,400 | ) | |||||
$ | 1,092,257 | $ | 923,754 | |||||
At December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
CityCenter Holdings, LLC — CityCenter (50)% | $ | 3,581,188 | $ | 1,421,480 | ||||
Marina District Development Company — Borgata (50)% | 474,171 | 453,277 | ||||||
Elgin Riverboat Resort-Riverboat Casino — Grand Victoria (50)% | 296,746 | 297,328 | ||||||
MGM Grand Paradise Limited — Macau (50)% | 252,060 | 258,298 | ||||||
Circus and Eldorado Joint Venture — Silver Legacy (50)% | 27,912 | 35,152 | ||||||
Turnberry/MGM Grand Towers — The Signature at MGM Grand (50)% | 3,309 | 5,651 | ||||||
Other | 7,479 | 11,541 | ||||||
$ | 4,642,865 | $ | 2,482,727 | |||||
68
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Income from joint venture | $ | — | $ | 83,728 | $ | 102,785 | ||||||
Gain on land previously deferred | — | 8,003 | 14,524 | |||||||||
Other income (loss) | — | 776 | (108 | ) | ||||||||
$ | — | $ | 92,507 | $ | 117,201 | |||||||
61
At December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Venture-level equity | $ | 698,587 | $ | 603,015 | ||||
Fair value adjustments | 321,814 | 264,814 | ||||||
Capitalized interest | 68,806 | 52,689 | ||||||
Other adjustments | 3,050 | 3,236 | ||||||
$ | 1,092,257 | $ | 923,754 | |||||
At December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Venture-level equity | $ | 3,711,900 | $ | 2,874,157 | ||||
Fair value adjustments to investments acquired in business combinations(A) | 321,814 | 321,814 | ||||||
Capitalized interest(B) | 236,810 | 99,055 | ||||||
Adjustment to CityCenter equity upon contribution of net assets by MGM MIRAGE(C) | (662,492 | ) | (662,492 | ) | ||||
CityCenter delayed equity contribution and partial completion guarantee(D) | 883,831 | — | ||||||
Advances to CityCenter, net of discount(E) | 323,950 | — | ||||||
Other adjustments(F) | (172,948 | ) | (149,807 | ) | ||||
$ | 4,642,865 | $ | 2,482,727 | |||||
(A) | Includes: a $90 million increase for Borgata, related to land; a $267 million increase for Grand Victoria, related to indefinite-lived gaming license rights; and a $35 million reduction for Silver Legacy, related to long-term assets and long-term debt. | |
(B) | Relates to interest capitalized on the Company’s investment balance during the unconsolidated affiliates’ development and construction stages. | |
(C) | Relates to land, construction in progress, real estate under development, and other assets — see Note 5. | |
(D) | The Company recorded increases to its investment and corresponding liabilities for its partial completion guarantee and equity contributions, both as required under the CityCenter credit facility. These basis differences will be resolved as the Company makes the related payments or such liabilities are otherwise resolved. | |
(E) | The advances to CityCenter are recognized as long-term debt by CityCenter; however, since such advances were provided at below market rates, CityCenter recorded the advances at a discount with a corresponding equity contribution. This basis difference will be resolved when the advances are repaid. | |
(F) | Other adjustments include the deferred gain on the CityCenter transaction as discussed in Note 5. |
69
Year Ended December 31, | ||||||||||||||||||||||||
Year Ended December 31, | 2008 | 2007 | 2006 | |||||||||||||||||||||
2006 | 2005 | 2004 | (In thousands) | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Income from unconsolidated affiliates | $ | 254,171 | $ | 151,871 | $ | 119,658 | $ | 96,271 | $ | 222,162 | $ | 254,171 | ||||||||||||
Preopening and start-up expenses | (8,813 | ) | (1,914 | ) | — | (20,960 | ) | (41,140 | ) | (8,813 | ) | |||||||||||||
Non-operating items from unconsolidated affiliates | (16,063 | ) | (15,825 | ) | (12,298 | ) | (34,559 | ) | (18,805 | ) | (16,063 | ) | ||||||||||||
$ | 229,295 | $ | 134,132 | $ | 107,360 | $ | 40,752 | $ | 162,217 | $ | 229,295 | |||||||||||||
At December 31, | ||||||||||||||||
At December 31, | 2008 | 2007 | ||||||||||||||
2006 | 2005 | (In thousands) | ||||||||||||||
(In thousands) | ||||||||||||||||
Current assets | $ | 281,766 | $ | 220,708 | $ | 555,615 | $ | 676,746 | ||||||||
Property and other assets, net | 2,227,570 | 2,008,912 | 11,546,361 | 7,797,343 | ||||||||||||
Current liabilities | 248,931 | 213,135 | 945,412 | 817,208 | ||||||||||||
Long-term debt and other liabilities | 1,009,565 | 871,173 | 3,908,088 | 2,015,631 | ||||||||||||
Equity | 1,250,840 | 1,145,312 | 7,248,476 | 5,641,250 |
Year Ended December 31, | ||||||||||||||||||||||||
Year Ended December 31, | 2008 | 2007 | 2006 | |||||||||||||||||||||
2006 | 2005 | 2004 | (In thousands) | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Net revenues | $ | 2,020,523 | $ | 1,243,465 | $ | 966,642 | $ | 2,445,835 | $ | 1,884,504 | $ | 2,020,523 | ||||||||||||
Operating expenses, except preopening expenses | (1,536,253 | ) | (938,972 | ) | (721,998 | ) | (2,258,033 | ) | (1,447,749 | ) | (1,536,253 | ) | ||||||||||||
Preopening and start-up expenses | (12,285 | ) | (1,352 | ) | — | (41,442 | ) | (79,879 | ) | (12,285 | ) | |||||||||||||
Operating income | 471,985 | 303,141 | 244,644 | 146,360 | 356,876 | 471,985 | ||||||||||||||||||
Interest expense | (37,898 | ) | (35,034 | ) | (34,698 | ) | (81,878 | ) | (47,618 | ) | (37,898 | ) | ||||||||||||
Other non-operating income (expense) | 2,462 | 1,435 | 9,789 | (5,660 | ) | 5,194 | 2,462 | |||||||||||||||||
Net income | $ | 436,549 | $ | 269,542 | $ | 219,735 | $ | 58,822 | $ | 314,452 | $ | 436,549 | ||||||||||||
At December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Current assets | $ | 75,944 | $ | 217,415 | ||||
Property and other assets, net | 8,727,378 | 4,973,887 | ||||||
Current liabilities | 573,797 | 337,598 | ||||||
Long-term debt and other liabilities | 2,041,166 | 286,952 | ||||||
Equity | 6,188,359 | 4,566,752 |
Year Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Operating expenses, except preopening expenses | $ | (39,347 | ) | $ | (3,842 | ) | ||
Preopening andstart-up expenses | (34,420 | ) | (5,258 | ) | ||||
Operating loss | (73,767 | ) | (9,100 | ) | ||||
Interest income | 5,808 | 1,913 | ||||||
Other non-operating income | 154 | — | ||||||
Net loss | $ | (67,805 | ) | $ | (7,187 | ) | ||
62
70
NOTE 9 — | GOODWILL AND OTHER INTANGIBLE ASSETS |
At December 31, | ||||||||||||||||
At December 31, | 2008 | 2007 | ||||||||||||||
2006 | 2005 | (In thousands) | ||||||||||||||
(In thousands) | ||||||||||||||||
Goodwill: | ||||||||||||||||
Mandalay acquisition (2005) | $ | 1,216,990 | $ | 1,230,804 | ||||||||||||
Mirage Resorts acquisition (2000) | 76,342 | 76,342 | $ | 39,648 | $ | 47,186 | ||||||||||
Mandalay Resort Group acquisition (2005) | 45,510 | 1,214,297 | ||||||||||||||
Other | 7,415 | 7,415 | 1,195 | 1,439 | ||||||||||||
$ | 1,300,747 | $ | 1,314,561 | |||||||||||||
$ | 86,353 | $ | 1,262,922 | |||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||
Detroit development rights | $ | 100,056 | $ | 100,056 | $ | 98,098 | $ | 98,098 | ||||||||
Trademarks, license rights and other | 247,346 | 251,754 | 235,672 | 247,346 | ||||||||||||
347,402 | 351,810 | 333,770 | 345,444 | |||||||||||||
Other intangible assets, net | 19,798 | 25,669 | 13,439 | 16,654 | ||||||||||||
$ | 367,200 | $ | 377,479 | $ | 347,209 | $ | 362,098 | |||||||||
Year Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Balance, beginning of year | $ | 1,262,922 | $ | 1,300,747 | ||||
Goodwill impairment charge | (1,168,088 | ) | — | |||||
Resolution of Mirage Resorts acquisition tax reserves | — | (29,156 | ) | |||||
Finalization of the Mandalay purchase price allocation | — | (2,693 | ) | |||||
Other | (8,481 | ) | (5,976 | ) | ||||
Balance, end of the year | $ | 86,353 | $ | 1,262,922 | ||||
Year Ended December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Balance, beginning of period | $ | 1,314,561 | $ | 83,757 | ||||
Goodwill acquired during the period | — | 1,230,804 | ||||||
Finalization of the Mandalay purchase price allocation | (8,814 | ) | — | |||||
Goodwill assigned to discontinued operations | (5,000 | ) | — | |||||
Balance, end of the period | $ | 1,300,747 | $ | 1,314,561 | ||||
71
NOTE 10 — | OTHER ACCRUED LIABILITIES |
At December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Payroll and related | $ | 304,924 | $ | 297,946 | ||||
Advance deposits and ticket sales | 163,121 | 120,830 | ||||||
Casino outstanding chip liability | 89,574 | 100,621 | ||||||
Casino front money deposits | 71,918 | 71,768 | ||||||
Other gaming related accruals | 76,739 | 78,921 | ||||||
Taxes, other than income taxes | 66,827 | 68,632 | ||||||
Other | 185,141 | 174,802 | ||||||
$ | 958,244 | $ | 913,520 | |||||
63
At December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Payroll and related | $ | 251,750 | $ | 304,101 | ||||
Advance deposits and ticket sales | 105,809 | 137,814 | ||||||
Casino outstanding chip liability | 96,365 | 105,015 | ||||||
Casino front money deposits | 74,165 | 71,069 | ||||||
Other gaming related accruals | 82,827 | 89,906 | ||||||
Taxes, other than income taxes | 59,948 | 72,806 | ||||||
Delayed equity contribution to CityCenter | 700,224 | — | ||||||
Other | 178,208 | 151,654 | ||||||
$ | 1,549,296 | $ | 932,365 | |||||
NOTE 11 — | LONG-TERM DEBT |
At December 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Senior credit facility | $ | 4,381,850 | $ | 4,775,000 | ||||
$200 million 6.45% senior notes, repaid at maturity in 2006 | — | 200,223 | ||||||
$244.5 million 7.25% senior notes, repaid at maturity in 2006 | — | 240,353 | ||||||
$710 million 9.75% senior subordinated notes, due 2007, net | 709,477 | 708,223 | ||||||
$200 million 6.75% senior notes, due 2007, net | 197,279 | 192,977 | ||||||
$492.2 million 10.25% senior subordinated notes, due 2007, net | 505,704 | 527,879 | ||||||
$180.4 million 6.75% senior notes, due 2008, net | 175,951 | 172,238 | ||||||
$196.2 million 9.5% senior notes, due 2008, net | 206,733 | 212,895 | ||||||
$226.3 million 6.5% senior notes, due 2009, net | 227,955 | 228,518 | ||||||
$1.05 billion 6% senior notes, due 2009, net | 1,053,942 | 1,055,232 | ||||||
$297.6 million 9.375% senior subordinated notes, due 2010, net | 319,277 | 325,332 | ||||||
$825 million 8.5% senior notes, due 2010, net | 823,197 | 822,705 | ||||||
$400 million 8.375% senior subordinated notes, due 2011 | 400,000 | 400,000 | ||||||
$132.4 million 6.375% senior notes, due 2011, net | 133,529 | 133,725 | ||||||
$550 million 6.75% senior notes, due 2012 | 550,000 | 550,000 | ||||||
$150 million 7.625% senior subordinated debentures, due 2013, net | 155,351 | 155,978 | ||||||
$500 million 6.75% senior notes due 2013 | 500,000 | — | ||||||
$525 million 5.875% senior notes, due 2014, net | 522,839 | 522,604 | ||||||
$875 million 6.625% senior notes, due 2015, net | 879,592 | 879,989 | ||||||
$250 million 6.875% senior notes due 2016 | 250,000 | — | ||||||
$100 million 7.25% senior debentures, due 2017, net | 83,556 | 82,699 | ||||||
$750 million 7.625% senior notes due 2017 | 750,000 | — | ||||||
Floating rate convertible senior debentures due 2033 | 8,472 | 8,472 | ||||||
$150 million 7% debentures due 2036, net | 155,900 | 155,961 | ||||||
$4.3 million 6.7% debentures, due 2096 | 4,265 | 4,265 | ||||||
Other notes | — | 179 | ||||||
12,994,869 | 12,355,447 | |||||||
Less: Current portion | — | (14 | ) | |||||
$ | 12,994,869 | $ | 12,355,433 | |||||
At December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Senior credit facility | $ | 5,710,000 | $ | 3,229,550 | ||||
$180.4 million 6.75% senior notes, due 2008, net | — | 180,085 | ||||||
$196.2 million 9.5% senior notes, due 2008, net | — | 200,203 | ||||||
$226.3 million 6.5% senior notes, due 2009, net | 226,720 | 227,356 | ||||||
$820 million 6% senior notes, due 2009, net | 820,894 | 1,052,577 | ||||||
$297.6 million 9.375% senior subordinated notes, due 2010, net | 305,893 | 312,807 | ||||||
$782 million 8.5% senior notes, due 2010, net | 781,223 | 823,689 | ||||||
$400 million 8.375% senior subordinated notes, due 2011 | 400,000 | 400,000 | ||||||
$128.7 million 6.375% senior notes, due 2011, net | 129,399 | 133,320 | ||||||
$544.7 million 6.75% senior notes, due 2012 | 544,650 | 550,000 | ||||||
$150 million 7.625% senior subordinated debentures, due 2013, net | 153,960 | 154,679 | ||||||
$484.2 million 6.75% senior notes due 2013 | 484,226 | 500,000 | ||||||
$750 million 13% senior secured notes due 2013, net | 699,440 | — | ||||||
$508.9 million 5.875% senior notes, due 2014, net | 507,304 | 523,089 | ||||||
$875 million 6.625% senior notes, due 2015, net | 878,728 | 879,173 | ||||||
$242.9 million 6.875% senior notes due 2016 | 242,900 | 250,000 | ||||||
$732.7 million 7.5% senior notes due 2016 | 732,749 | 750,000 | ||||||
$100 million 7.25% senior debentures, due 2017, net | 85,537 | 84,499 | ||||||
$743 million 7.625% senior notes due 2017 | 743,000 | 750,000 | ||||||
Floating rate convertible senior debentures due 2033 | 8,472 | 8,472 | ||||||
$0.5 million 7% debentures due 2036, net | 573 | 155,835 | ||||||
$4.3 million 6.7% debentures, due 2096 | 4,265 | 4,265 | ||||||
Other notes | 4,233 | 5,630 | ||||||
13,464,166 | 11,175,229 | |||||||
Less: Current portion | (1,047,614 | ) | — | |||||
$ | 12,416,552 | $ | 11,175,229 | |||||
72
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Total interest incurred | $ | 795,049 | $ | 930,138 | $ | 900,661 | ||||||
Interest capitalized | (185,763 | ) | (215,951 | ) | (122,140 | ) | ||||||
Interest allocated to discontinued operations | — | (5,844 | ) | (18,160 | ) | |||||||
$ | 609,286 | $ | 708,343 | $ | 760,361 | |||||||
64
• | $230 million in principal amount of our 6% senior notes due 2009; | |
• | $43 million in principal amount of our 8.5% senior notes due 2010; | |
• | $3.7 million in principal amount of the 6.375% senior notes due 2011; | |
• | $5.4 million in principal amount of our 6.75% senior notes due 2012; | |
• | $15.8 million in principal amount of our 6.75% senior notes due 2013; | |
• | $16.1 million in principal amount of our 5.875% senior notes due 2014; | |
• | $7.1 million in principal amount of our 6.875% senior notes due 2016; | |
• | $17.3 million in principal amount of our 7.5% senior notes due 2016; and | |
• | $7 million in principal amount of our 7.625% senior notes due 2017. |
73
(In thousands) | ||||
Years ending December 31, | ||||
2007 | $ | 1,402,233 | ||
2008 | 376,663 | |||
2009 | 1,276,330 | |||
2010 | 1,122,556 | |||
2011 | 4,914,210 | |||
Thereafter | 3,860,169 | |||
12,952,161 | ||||
Debt premiums | 41,705 | |||
Swap deferred gain | 1,003 | |||
$ | 12,994,869 | |||
65
(In thousands) | ||||
Years ending December 31, | ||||
2009 | $ | 1,047,675 | ||
2010 | 1,080,891 | |||
2011 | 6,240,015 | |||
2012 | 544,879 | |||
2013 | 1,384,226 | |||
Thereafter | 3,215,837 | |||
13,513,523 | ||||
Debt premiums and discounts, net | (49,357 | ) | ||
$ | 13,464,166 | |||
NOTE 12 — | INCOME TAXES |
74
Year Ended December 31, | ||||||||||||||||||||||||
Year Ended December 31, | 2008 | 2007 | 2006 | |||||||||||||||||||||
2006 | 2005 | 2004 | (In thousands) | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Continuing operations | $ | 341,930 | $ | 231,719 | $ | 203,601 | $ | 186,298 | $ | 757,883 | $ | 341,930 | ||||||||||||
Discontinued operations | 6,205 | 3,925 | 34,089 | — | 92,400 | 6,205 | ||||||||||||||||||
$ | 348,135 | $ | 235,644 | $ | 237,690 | $ | 186,298 | $ | 850,283 | $ | 348,135 | |||||||||||||
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Current—federal | $ | 328,068 | $ | 218,901 | $ | 197,954 | ||||||
Deferred—federal | 8,152 | 4,164 | (9,048 | ) | ||||||||
Provision for federal income taxes | 336,220 | 223,065 | 188,906 | |||||||||
Current—state | 3,920 | 5,252 | 2,851 | |||||||||
Deferred—state | 1,432 | 6,811 | 11,420 | |||||||||
Provision for state income taxes | 5,352 | 12,063 | 14,271 | |||||||||
Current—foreign | (72 | ) | (2,979 | ) | 424 | |||||||
Deferred—foreign | 430 | (430 | ) | — | ||||||||
Provision for foreign income taxes | 358 | (3,409 | ) | 424 | ||||||||
$ | 341,930 | $ | 231,719 | $ | 203,601 | |||||||
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Current — federal | $ | 186,051 | $ | 729,249 | $ | 328,068 | ||||||
Deferred — federal | (14,537 | ) | 16,921 | 8,152 | ||||||||
Other noncurrent — federal | 8,627 | 6,326 | — | |||||||||
Provision for federal income taxes | 180,141 | 752,496 | 336,220 | |||||||||
Current — state | 8,608 | 2,493 | 3,920 | |||||||||
Deferred — state | (651 | ) | 728 | 1,432 | ||||||||
Other noncurrent — state | (1,800 | ) | 2,166 | — | ||||||||
Provision for state income taxes | 6,157 | 5,387 | 5,352 | |||||||||
Current — foreign | — | — | (72 | ) | ||||||||
Deferred — foreign | — | — | 430 | |||||||||
Provision for foreign income taxes | — | — | 358 | |||||||||
$ | 186,298 | $ | 757,883 | $ | 341,930 | |||||||
Year Ended December 31, | ||||||||||||||||||||||||
Year Ended December 31, | 2008 | 2007 | 2006 | |||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||
Federal income tax statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | (35.0 | )% | 35.0 | % | 35.0 | % | ||||||||||||
State income tax (net of federal benefit) | 0.4 | 1.2 | 1.7 | 0.8 | 0.1 | 0.4 | ||||||||||||||||||
Goodwill write-down | 61.1 | — | — | |||||||||||||||||||||
Reversal of reserves for prior tax years | (0.8 | ) | — | (1.0 | ) | — | (0.2 | ) | (0.8 | ) | ||||||||||||||
Foreign earnings repatriation — benefit of American Job Creation Act of 2004 | — | (1.5 | ) | — | ||||||||||||||||||||
Losses of unconsolidated foreign affiliates | 1.0 | 2.0 | — | |||||||||||||||||||||
Domestic Production Activity deduction | — | (1.8 | ) | — | ||||||||||||||||||||
Tax credits | (0.6 | ) | (1.3 | ) | (0.6 | ) | (1.0 | ) | (0.3 | ) | (0.6 | ) | ||||||||||||
Permanent and other items | 1.0 | 1.3 | 2.0 | 0.9 | 0.3 | 1.0 | ||||||||||||||||||
35.0 | % | 34.7 | % | 37.1 | % | 27.8 | % | 35.1 | % | 35.0 | % | |||||||||||||
66
75
At December 31, | At December 31, | |||||||||||||||
2006 | 2005 | 2008 | 2007 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Deferred tax assets—federal and state | ||||||||||||||||
Deferred tax assets — federal and state | ||||||||||||||||
Bad debt reserve | $ | 35,454 | $ | 32,490 | $ | 41,452 | $ | 38,144 | ||||||||
Deferred compensation | 39,039 | 31,230 | 35,978 | 48,439 | ||||||||||||
Net operating loss carryforward | 5,705 | 7,253 | 1,204 | 1,054 | ||||||||||||
Preopening and start-up costs | 5,006 | 3,801 | 4,928 | 4,278 | ||||||||||||
Accruals, reserves and other | 34,316 | 33,413 | 69,321 | 70,350 | ||||||||||||
Investments in unconsolidated affiliates | — | 265 | ||||||||||||||
Long-term debt | 6,338 | 20,902 | ||||||||||||||
Stock-based compensation | 23,662 | 2,262 | 50,677 | 37,059 | ||||||||||||
Tax credits | 2,491 | — | 2,491 | 2,491 | ||||||||||||
152,011 | 131,616 | 206,051 | 201,815 | |||||||||||||
Less: Valuation allowance | (8,308 | ) | (5,734 | ) | (4,197 | ) | (4,047 | ) | ||||||||
143,703 | 125,882 | $ | 201,854 | $ | 197,768 | |||||||||||
Deferred tax liabilities—federal and state | ||||||||||||||||
Deferred tax liabilities — federal and state | ||||||||||||||||
Property and equipment | (3,385,984 | ) | (3,350,365 | ) | $ | (3,455,987 | ) | $ | (3,420,115 | ) | ||||||
Long-term debt | (6,500 | ) | (1,479 | ) | ||||||||||||
Investments in unconsolidated affiliates | (31,839 | ) | — | (15,709 | ) | (26,643 | ) | |||||||||
Intangibles | (98,991 | ) | (88,800 | ) | (101,703 | ) | (102,738 | ) | ||||||||
(3,516,814 | ) | (3,439,165 | ) | (3,579,899 | ) | (3,550,975 | ) | |||||||||
Deferred taxes—foreign | 2,144 | 2,027 | ||||||||||||||
Deferred taxes — foreign | 2,034 | 2,214 | ||||||||||||||
Less: Valuation allowance | (2,144 | ) | (1,597 | ) | (2,034 | ) | (2,214 | ) | ||||||||
— | 430 | |||||||||||||||
Net deferred tax liability | $ | (3,373,111 | ) | $ | (3,312,853 | ) | $ | (3,378,045 | ) | $ | (3,353,207 | ) | ||||
76
Year Ended December 31, | ||||||||
2008 | 2007 | |||||||
Gross unrecognized tax benefits at January 1 | $ | 77,328 | $ | 105,139 | ||||
Gross increases — Prior period tax positions | 25,391 | 14,423 | ||||||
Gross decreases — Prior period tax positions | (12,467 | ) | (47,690 | ) | ||||
Gross increases — Current period tax positions | 13,058 | 13,220 | ||||||
Settlements with taxing authorities | (527 | ) | (7,162 | ) | ||||
Lapse in statutes of limitations | — | (602 | ) | |||||
Gross unrecognized tax benefits at December 31 | $ | 102,783 | $ | 77,328 | ||||
77
NOTE 13 — | COMMITMENTS AND CONTINGENCIES |
67
Operating | Capital | |||||||||||||||
Operating | Capital | Leases | Leases | |||||||||||||
Leases | Leases | (In thousands) | ||||||||||||||
(In thousands) | ||||||||||||||||
Years ending December 31, | ||||||||||||||||
2007 | $ | 16,367 | $ | 1,800 | ||||||||||||
2008 | 13,796 | 808 | ||||||||||||||
2009 | 11,792 | 296 | $ | 13,626 | $ | 1,887 | ||||||||||
2010 | 10,928 | 300 | 10,844 | 1,859 | ||||||||||||
2011 | 10,706 | 92 | 8,974 | 1,670 | ||||||||||||
2012 | 7,901 | 1,204 | ||||||||||||||
2013 | 5,884 | 37 | ||||||||||||||
Thereafter | 354,956 | — | 44,052 | — | ||||||||||||
Total minimum lease payments | $ | 418,545 | 3,296 | $ | 91,281 | 6,657 | ||||||||||
Less: Amounts representing interest | (238 | ) | (212 | ) | ||||||||||||
Total obligations under capital leases | 3,058 | 6,445 | ||||||||||||||
Less: Amounts due within one year | (1,610 | ) | (1,685 | ) | ||||||||||||
Amounts due after one year | $ | 1,448 | $ | 4,760 | ||||||||||||
68
78
NOTE 14 — |
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
November 2003 authorization (16 million shares purchased) | $ | — | $ | — | $ | 348,895 | ||||||
July 2004 authorization (6.5 million and 5.5 million shares purchased) | 246,892 | 217,316 | — | |||||||||
$ | 246,892 | $ | 217,316 | $ | 348,895 | |||||||
Average price of shares repurchased | $ | 37.98 | $ | 39.51 | $ | 21.80 |
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
July 2004 authorization (8 million and 6.5 million shares purchased) | $ | — | $ | 659,592 | $ | 246,892 | ||||||
December 2007 authorization (18.1 million and 1.9 million shares purchased) | 1,240,856 | 167,173 | — | |||||||||
$ | 1,240,856 | $ | 826,765 | $ | 246,892 | |||||||
Average price of shares repurchased | $ | 68.36 | $ | 83.92 | $ | 37.98 |
79
NOTE 15 — | STOCK-BASED COMPENSATION |
• | As amended, the omnibus plan allows for the issuance of up to 35 million (20 million prior to an August 2008 amendment) shares or share-based awards; | |
• | For stock options and SARs, the exercise price of the award must be at least equal to the fair market value of the stock on the date of grant and the maximum term of such an award is 10 years. |
Weighted | ||||||||||||||||
Weighted | Average | Aggregate | ||||||||||||||
Average | Remaining | Intrinsic | ||||||||||||||
Shares | Exercise | Contractual | Value | |||||||||||||
(000’s) | Price | Term | ($000’s) | |||||||||||||
Outstanding at January 1, 2008 | 26,674 | $ | 31.90 | |||||||||||||
Granted | 4,952 | 35.60 | ||||||||||||||
Exercised | (888 | ) | 16.08 | |||||||||||||
Exchanged | (4,235 | ) | 68.06 | |||||||||||||
Forfeited or expired | (1,293 | ) | 34.91 | |||||||||||||
Outstanding at December 31, 2008 | 25,210 | 26.98 | 4.02 | $ | 7,348 | |||||||||||
Vested and expected to vest at December 31, 2008 | 24,938 | 26.96 | 4.75 | $ | 7,348 | |||||||||||
Exercisable at December 31, 2008 | 16,301 | 23.34 | 3.60 | $ | 7,348 | |||||||||||
69
80
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Intrinsic value of stock options and SARs exercised | $ | 33,342 | $ | 339,154 | $ | 166,257 | ||||||
Income tax benefit from stock options and SARs exercised | 10,494 | 114,641 | 56,351 | |||||||||
Proceeds from stock option exercises | 14,116 | 97,792 | 89,113 |
Weighted | ||||||||
Average | ||||||||
Shares | Grant-Date | |||||||
(000’s) | Fair Value | |||||||
Nonvested at January 1, 2008 | — | $ | — | |||||
Granted in exchange offer | 699 | 18.90 | ||||||
Granted | 386 | 19.00 | ||||||
Vested | — | — | ||||||
Forfeited | (31 | ) | 19.00 | |||||
Nonvested at December 31, 2008 | 1,054 | 18.93 | ||||||
Year Ended | ||||
December 31, | ||||
2006 | ||||
(In thousands, except | ||||
per share amounts) | ||||
Incremental stock-based compensation under SFAS123(R) | $ | 71,186 | ||
Less: Amounts capitalized | (798 | ) | ||
Total stock-based compensation recognized as expense | $ | 70,388 | ||
Recorded in continuing operations | $ | 69,121 | ||
Recorded in discontinued operations | $ | 1,267 | ||
Reduction of income from continuing operations | $ | 45,090 | ||
Reduction in net income | $ | 45,914 | ||
Reduction in basic earnings per share | $ | 0.16 | ||
Reduction in diluted earnings per share | $ | 0.16 | ||
70
\
Weighted | ||||||||||||||||
Weighted | Average | Aggregate | ||||||||||||||
Average | Remaining | Intrinsic | ||||||||||||||
Shares | Exercise | Contractual | Value | |||||||||||||
(000’s) | Price | Term | ($000’s) | |||||||||||||
Outstanding at January 1, 2006 | 34,825 | $ | 22.93 | |||||||||||||
Granted | 1,914 | 42.54 | ||||||||||||||
Exercised | (5,623 | ) | 15.85 | |||||||||||||
Forfeited or expired | (584 | ) | 27.95 | |||||||||||||
Outstanding at December 31, 2006 | 30,532 | 25.37 | 5.6 | $ | 976,050 | |||||||||||
Vested and expected to vest at December 31, 2006 | 29,615 | 25.27 | 5.6 | $ | 921,203 | |||||||||||
Exercisable at December 31, 2006 | 10,602 | 18.89 | 5.2 | $ | 407,700 | |||||||||||
Weighted | ||||||||
Average | ||||||||
Shares | Grant-Date | |||||||
(000’s) | Fair Value | |||||||
Nonvested at January 1, 2006 | 834 | $ | 17.59 | |||||
Granted | — | — | ||||||
Vested | (830 | ) | 17.59 | |||||
Forfeited | (4 | ) | 17.62 | |||||
Nonvested at December 31, 2006 | — | — | ||||||
71
81
Year Ended December 31, | ||||||||||||||||||||||||
Year Ended December 31, | 2008 | 2007 | 2006 | |||||||||||||||||||||
2006 | 2005 | 2004 | (In thousands) | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Compensation cost: | ||||||||||||||||||||||||
Stock options and stock appreciation rights | $ | 71,386 | $ | 139 | $ | 78 | ||||||||||||||||||
Restricted stock | 3,038 | 7,184 | 7,092 | |||||||||||||||||||||
Stock options and SARs | $ | 37,766 | $ | 48,063 | $ | 71,386 | ||||||||||||||||||
Restricted stock and RSUs | 4,652 | — | 3,038 | |||||||||||||||||||||
Total compensation cost | 74,424 | 7,323 | 7,170 | 42,418 | 48,063 | 74,424 | ||||||||||||||||||
Less: CityCenter reimbursed costs | (6,019 | ) | (796 | ) | — | |||||||||||||||||||
Less: Compensation cost capitalized | (798 | ) | — | — | (122 | ) | (1,589 | ) | (798 | ) | ||||||||||||||
Compensation cost recognized as expense | 73,626 | 7,323 | 7,170 | 36,277 | 45,678 | 73,626 | ||||||||||||||||||
Less: Related tax benefit | (24,901 | ) | (1,204 | ) | (1,326 | ) | (12,569 | ) | (15,734 | ) | (24,901 | ) | ||||||||||||
Compensation expense, net of tax benefit | $ | 48,725 | $ | 6,119 | $ | 5,844 | $ | 23,708 | $ | 29,944 | $ | 48,725 | ||||||||||||
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Expected volatility | 33 | % | 37 | % | 42 | % | ||||||
Expected term | 4.1 years | 4.3 years | 5.0 years | |||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | ||||||
Risk-free interest rate | 4.9 | % | 3.8 | % | 3.4 | % | ||||||
Forfeiture rate | 4.6 | % | 0 | % | 0 | % | ||||||
Weighted-average fair value of options granted | $ | 14.50 | $ | 12.73 | $ | 9.55 |
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Expected volatility | 50 | % | 32 | % | 33 | % | ||||||
Expected term | 4.6 years | 4.1 years | 4.1 years | |||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | ||||||
Risk-free interest rate | 2.7 | % | 4.4 | % | 4.9 | % | ||||||
Forfeiture rate | 3.5 | % | 4.6 | % | 4.6 | % | ||||||
Weighted-average fair value of options granted | $ | 14.49 | $ | 25.93 | $ | 14.50 |
NOTE 16 — | EMPLOYEE BENEFIT PLANS |
Year Ended December 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Net income | ||||||||
As reported | $ | 443,256 | $ | 412,332 | ||||
Incremental stock-based compensation under SFAS 123, net of tax benefit | (47,934 | ) | (22,963 | ) | ||||
Pro forma | $ | 395,322 | $ | 389,369 | ||||
Basic earnings per share | ||||||||
As reported | $ | 1.56 | $ | 1.48 | ||||
Pro forma | $ | 1.39 | $ | 1.39 | ||||
Diluted earnings per share | ||||||||
As reported | $ | 1.50 | $ | 1.43 | ||||
Pro forma | $ | 1.33 | $ | 1.35 | ||||
72
82
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Contract termination costs | $ | — | $ | — | $ | 3,693 | ||||||
Other | 1,035 | (59 | ) | 1,932 | ||||||||
$ | 1,035 | $ | (59 | ) | $ | 5,625 | ||||||
73
NOTE 17 — | PROPERTY TRANSACTIONS, NET |
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Impairment of assets to be disposed of | $ | 40,865 | $ | 22,651 | $ | 473 | ||||||
Write-off of abandoned capital projects | — | 5,971 | — | |||||||||
Demolition costs | 348 | 5,362 | 7,057 | |||||||||
Insurance recoveries | (86,016 | ) | — | — | ||||||||
Other net losses on asset sales or disposals | 3,823 | 3,037 | 704 | |||||||||
$ | (40,980 | ) | $ | 37,021 | $ | 8,234 | ||||||
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Goodwill and other indefinite-lived intangible assets impairment charge | $ | 1,179,788 | $ | — | $ | — | ||||||
Other write-downs and impairments | 52,170 | 33,624 | 40,865 | |||||||||
Demolition costs | 9,160 | 5,665 | 348 | |||||||||
Insurance recoveries | (9,639 | ) | (217,290 | ) | (86,016 | ) | ||||||
Other net (gains) losses on asset sales or disposals | (20,730 | ) | (8,312 | ) | 3,823 | |||||||
$ | 1,210,749 | $ | (186,313 | ) | $ | (40,980 | ) | |||||
83
NOTE 18 — | RELATED PARTY TRANSACTIONS |
74
84
NOTE 19 — | CONDENSED CONSOLIDATING FINANCIAL INFORMATION |
As of and for the Year Ended December 31, 2006 | ||||||||||||||||||||
Guarantor | Non-Guarantor | |||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Elimination | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Balance Sheet | ||||||||||||||||||||
Current assets | $ | 95,361 | $ | 1,369,711 | $ | 49,679 | $ | — | $ | 1,514,751 | ||||||||||
Real estate under development | — | 188,433 | — | — | 188,433 | |||||||||||||||
Property and equipment, net | — | 16,797,263 | 456,569 | (11,972 | ) | 17,241,860 | ||||||||||||||
Investments in subsidiaries | 16,563,917 | 300,560 | — | (16,864,477 | ) | — | ||||||||||||||
Investments in unconsolidated affiliates | — | 792,106 | 300,151 | — | 1,092,257 | |||||||||||||||
Other non-current assets | 94,188 | 1,911,362 | 103,387 | — | 2,108,937 | |||||||||||||||
$ | 16,753,466 | $ | 21,359,435 | $ | 909,786 | $ | (16,876,449 | ) | $ | 22,146,238 | ||||||||||
Current liabilities | $ | 227,743 | $ | 1,364,472 | $ | 55,885 | $ | — | $ | 1,648,100 | ||||||||||
Intercompany accounts | (1,478,207 | ) | 1,339,654 | 138,553 | — | — | ||||||||||||||
Deferred income taxes | 3,441,157 | — | — | — | 3,441,157 | |||||||||||||||
Long-term debt | 10,712,047 | 2,173,972 | 108,850 | — | 12,994,869 | |||||||||||||||
Other long-term obligations | 1,177 | 161,458 | 49,928 | — | 212,563 | |||||||||||||||
Stockholders’ equity | 3,849,549 | 16,319,879 | 556,570 | (16,876,449 | ) | 3,849,549 | ||||||||||||||
$ | 16,753,466 | $ | 21,359,435 | $ | 909,786 | $ | (16,876,449 | ) | $ | 22,146,238 | ||||||||||
Statement of Income | ||||||||||||||||||||
Net revenues | $ | — | $ | 6,714,659 | $ | 461,297 | $ | — | $ | 7,175,956 | ||||||||||
Equity in subsidiaries earnings | 1,777,144 | 167,262 | — | (1,944,406 | ) | — | ||||||||||||||
Expenses: | ||||||||||||||||||||
Casino and hotel operations | 19,251 | 3,543,026 | 251,109 | — | 3,813,386 | |||||||||||||||
General and administrative | 20,713 | 993,732 | 56,497 | — | 1,070,942 | |||||||||||||||
Corporate expense | 40,151 | 121,356 | — | — | 161,507 | |||||||||||||||
Preopening and start-up expenses | 523 | 32,526 | 3,313 | — | 36,362 | |||||||||||||||
Restructuring costs | — | 1,035 | — | — | 1,035 | |||||||||||||||
Property transactions, net | 10,872 | (51,853 | ) | 1 | — | (40,980 | ) | |||||||||||||
Depreciation and amortization | 2,398 | 611,045 | 16,184 | — | 629,627 | |||||||||||||||
93,908 | 5,250,867 | 327,104 | — | 5,671,879 | ||||||||||||||||
Income from unconsolidated affiliates | — | 218,063 | 36,108 | — | 254,171 | |||||||||||||||
Operating income | 1,683,236 | 1,849,117 | 170,301 | (1,944,406 | ) | 1,758,248 | ||||||||||||||
Interest expense, net | (708,902 | ) | (40,407 | ) | 140 | — | (749,169 | ) | ||||||||||||
Other, net | (1,978 | ) | (29,962 | ) | 787 | — | (31,153 | ) | ||||||||||||
Income from continuing operations before income taxes | 972,356 | 1,778,748 | 171,228 | (1,944,406 | ) | 977,926 | ||||||||||||||
Provision for income taxes | (312,288 | ) | (25,676 | ) | (3,966 | ) | — | (341,930 | ) | |||||||||||
Income from continuing operations | 660,068 | 1,753,072 | 167,262 | (1,944,406 | ) | 635,996 | ||||||||||||||
Discontinued operations | (11,804 | ) | 24,072 | — | — | 12,268 | ||||||||||||||
Net income | $ | 648,264 | $ | 1,777,144 | $ | 167,262 | $ | (1,944,406 | ) | $ | 648,264 | |||||||||
Statement of Cash Flows | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | (896,346 | ) | $ | 1,984,375 | $ | 153,923 | $ | — | $ | 1,241,952 | |||||||||
Net cash provided by (used in) investing activities | 5,300 | (1,369,878 | ) | (283,241 | ) | (4,608 | ) | (1,652,427 | ) | |||||||||||
Net cash provided by (used in) financing activities | 874,485 | (503,801 | ) | 134,732 | 4,608 | 510,024 |
At December 31, 2008 | ||||||||||||||||||||
Guarantor | Non-Guarantor | |||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Elimination | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Balance Sheet | ||||||||||||||||||||
Current assets | $ | 126,009 | $ | 1,346,094 | $ | 60,927 | $ | — | $ | 1,533,030 | ||||||||||
Property and equipment, net | — | 15,564,669 | 736,457 | (11,972 | ) | 16,289,154 | ||||||||||||||
Investments in subsidiaries | 18,920,844 | 625,790 | — | (19,546,634 | ) | — | ||||||||||||||
Investments in and advances to unconsolidated affiliates | — | 4,389,058 | 253,807 | — | 4,642,865 | |||||||||||||||
Other non-current assets | 194,793 | 500,717 | 114,157 | — | 809,667 | |||||||||||||||
$ | 19,241,646 | $ | 22,426,328 | $ | 1,165,348 | $ | (19,558,606 | ) | $ | 23,274,716 | ||||||||||
Current liabilities | $ | 1,683,932 | $ | 1,282,641 | $ | 36,003 | $ | — | $ | 3,002,576 | ||||||||||
Intercompany accounts | (1,501,070 | ) | 1,451,897 | 49,173 | — | — | ||||||||||||||
Deferred income taxes | 3,441,198 | — | — | — | 3,441,198 | |||||||||||||||
Long-term debt | 11,320,620 | 692,332 | 403,600 | — | 12,416,552 | |||||||||||||||
Other long-term obligations | 322,605 | 66,642 | 50,782 | — | 440,029 | |||||||||||||||
Stockholders’ equity | 3,974,361 | 18,932,816 | 625,790 | (19,558,606 | ) | 3,974,361 | ||||||||||||||
$ | 19,241,646 | $ | 22,426,328 | $ | 1,165,348 | $ | (19,558,606 | ) | $ | 23,274,716 | ||||||||||
For The Year Ended December 31, 2008 | ||||||||||||||||||||
Guarantor | Non-Guarantor | |||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Elimination | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Statement of Operations | ||||||||||||||||||||
Net revenues | $ | — | $ | 6,623,068 | $ | 585,699 | $ | — | $ | 7,208,767 | ||||||||||
Equity in subsidiaries earnings | (262,825 | ) | 49,450 | — | 213,375 | — | ||||||||||||||
Expenses: | ||||||||||||||||||||
Casino and hotel operations | 14,173 | 3,688,837 | 331,364 | — | 4,034,374 | |||||||||||||||
General and administrative | 9,485 | 1,160,754 | 108,262 | — | 1,278,501 | |||||||||||||||
Corporate expense | 13,869 | 94,958 | 452 | — | 109,279 | |||||||||||||||
Preopening andstart-up expenses | — | 22,924 | 135 | — | 23,059 | |||||||||||||||
Restructuring costs | — | 443 | — | — | 443 | |||||||||||||||
Property transactions, net | — | 1,204,721 | 6,028 | — | 1,210,749 | |||||||||||||||
Depreciation and amortization | — | 724,556 | 53,680 | — | 778,236 | |||||||||||||||
37,527 | 6,897,193 | 499,921 | — | 7,434,641 | ||||||||||||||||
Income from unconsolidated affiliates | — | 84,942 | 11,329 | — | 96,271 | |||||||||||||||
Operating income | (300,352 | ) | (139,733 | ) | 97,107 | 213,375 | (129,603 | ) | ||||||||||||
Interest expense, net | (517,971 | ) | (58,468 | ) | (16,327 | ) | — | (592,766 | ) | |||||||||||
Other, net | 140,968 | (61,466 | ) | (26,121 | ) | — | 53,381 | |||||||||||||
Income (loss) from continuing operations before income taxes | (677,355 | ) | (259,667 | ) | 54,659 | 213,375 | (668,988 | ) | ||||||||||||
Provision for income taxes | (177,931 | ) | (3,158 | ) | (5,209 | ) | — | (186,298 | ) | |||||||||||
Income (loss) from continuing operations | (855,286 | ) | (262,825 | ) | 49,450 | 213,375 | (855,286 | ) | ||||||||||||
Net income (loss) | $ | (855,286 | ) | $ | (262,825 | ) | $ | 49,450 | $ | 213,375 | $ | (855,286 | ) | |||||||
Statement of Cash Flows | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | (982,489 | ) | $ | 1,658,238 | $ | 77,283 | $ | — | $ | 753,032 | |||||||||
Net cash provided by (used in) investing activities | — | (1,970,738 | ) | (4,721 | ) | (5,981 | ) | (1,981,440 | ) | |||||||||||
Net cash provided by (used in) financing activities | 962,756 | 230,120 | (76,775 | ) | 5,981 | 1,122,082 |
75
85
At December 31, 2007 | ||||||||||||||||||||
Guarantor | Non-Guarantor | |||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Elimination | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Balance Sheet | ||||||||||||||||||||
Current assets | $ | 81,379 | $ | 983,836 | $ | 60,600 | $ | — | $ | 1,125,815 | ||||||||||
Property and equipment, net | — | 16,091,836 | 791,034 | (11,972 | ) | 16,870,898 | ||||||||||||||
Investments in subsidiaries | 19,169,892 | 484,047 | — | (19,653,939 | ) | — | ||||||||||||||
Investments in and advances to unconsolidated affiliates | — | 2,224,429 | 258,298 | — | 2,482,727 | |||||||||||||||
Other non-current assets | 244,857 | 1,892,685 | 110,704 | — | 2,248,246 | |||||||||||||||
$ | 19,496,128 | $ | 21,676,833 | $ | 1,220,636 | $ | (19,665,911 | ) | $ | 22,727,686 | ||||||||||
Current liabilities | $ | 459,968 | $ | 1,217,506 | $ | 47,213 | $ | — | $ | 1,724,687 | ||||||||||
Intercompany accounts | 125,094 | (396,080 | ) | 270,986 | — | — | ||||||||||||||
Deferred income taxes | 3,416,660 | — | — | — | 3,416,660 | |||||||||||||||
Long-term debt | 9,347,527 | 1,467,152 | 360,550 | — | 11,175,229 | |||||||||||||||
Other long-term obligations | 86,176 | 209,554 | 54,677 | — | 350,407 | |||||||||||||||
Stockholders’ equity | 6,060,703 | 19,178,701 | 487,210 | (19,665,911 | ) | 6,060,703 | ||||||||||||||
$ | 19,496,128 | $ | 21,676,833 | $ | 1,220,636 | $ | (19,665,911 | ) | $ | 22,727,686 | ||||||||||
For The Year Ended December 31, 2007 | ||||||||||||||||||||
Guarantor | Non-Guarantor | |||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Elimination | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net revenues | $ | — | $ | 7,204,278 | $ | 487,359 | $ | — | $ | 7,691,637 | ||||||||||
Equity in subsidiaries earnings | 2,982,008 | 34,814 | — | (3,016,822 | ) | — | ||||||||||||||
Expenses: | ||||||||||||||||||||
Casino and hotel operations | 14,514 | 3,738,593 | 274,451 | — | 4,027,558 | |||||||||||||||
General and administrative | 11,455 | 1,167,233 | 73,264 | — | 1,251,952 | |||||||||||||||
Corporate expense | 35,534 | 158,359 | — | — | 193,893 | |||||||||||||||
Preopening andstart-up expenses | 731 | 28,264 | 63,110 | — | 92,105 | |||||||||||||||
Property transactions, net | — | (186,313 | ) | — | — | (186,313 | ) | |||||||||||||
Gain on CityCenter transaction | — | (1,029,660 | ) | — | — | (1,029,660 | ) | |||||||||||||
Depreciation and amortization | 1,497 | 667,015 | 31,822 | — | 700,334 | |||||||||||||||
63,731 | 4,543,491 | 442,647 | — | 5,049,869 | ||||||||||||||||
Income from unconsolidated affiliates | — | 222,162 | — | — | 222,162 | |||||||||||||||
Operating income | 2,918,277 | 2,917,763 | 44,712 | (3,016,822 | ) | 2,863,930 | ||||||||||||||
Interest expense, net | (599,178 | ) | (86,473 | ) | (5,482 | ) | — | (691,133 | ) | |||||||||||
Other, net | 575 | (14,890 | ) | (54 | ) | — | (14,369 | ) | ||||||||||||
Income from continuing operations before income taxes | 2,319,674 | 2,816,400 | 39,176 | (3,016,822 | ) | 2,158,428 | ||||||||||||||
Provision for income taxes | (731,456 | ) | (22,065 | ) | (4,362 | ) | — | (757,883 | ) | |||||||||||
Income from continuing operations | 1,588,218 | 2,794,335 | 34,814 | (3,016,822 | ) | 1,400,545 | ||||||||||||||
Discontinued operations | (3,799 | ) | 187,673 | — | — | 183,874 | ||||||||||||||
Net income | $ | 1,584,419 | $ | 2,982,008 | $ | 34,814 | $ | (3,016,822 | ) | $ | 1,584,419 | |||||||||
Statement of Cash Flows | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | (1,098,889 | ) | $ | 2,008,888 | $ | 84,417 | $ | — | $ | 994,416 | |||||||||
Net cash provided by (used in) investing activities | — | 621,727 | (407,745 | ) | (4,681 | ) | 209,301 | |||||||||||||
Net cash provided by (used in) financing activities | 1,108,286 | (2,675,119 | ) | 321,615 | 4,681 | (1,240,537 | ) |
As of and for the Year Ended December 31, 2005 | ||||||||||||||||||||
Guarantor | Non-Guarantor | |||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Elimination | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Balance Sheet | ||||||||||||||||||||
Current assets | $ | 89,153 | $ | 885,991 | $ | 43,439 | $ | — | $ | 1,018,583 | ||||||||||
Property and equipment, net | 7,113 | 16,373,113 | 173,397 | (11,972 | ) | 16,541,651 | ||||||||||||||
Investments in subsidiaries | 14,569,623 | 183,208 | — | (14,752,831 | ) | — | ||||||||||||||
Investments in unconsolidated affiliates | 127,902 | 904,138 | 241,279 | (342,165 | ) | 931,154 | ||||||||||||||
Other non-current assets | 86,011 | 2,018,809 | 103,212 | — | 2,208,032 | |||||||||||||||
$ | 14,879,802 | $ | 20,365,259 | $ | 561,327 | $ | (15,106,968 | ) | $ | 20,699,420 | ||||||||||
Current liabilities | $ | 345,195 | $ | 1,148,306 | $ | 41,067 | $ | — | $ | 1,534,568 | ||||||||||
Intercompany accounts | (1,794,833 | ) | 1,726,415 | 68,418 | — | — | ||||||||||||||
Deferred income taxes | 3,378,371 | — | — | — | 3,378,371 | |||||||||||||||
Long-term debt | 9,713,754 | 2,641,679 | — | — | 12,355,433 | |||||||||||||||
Other long-term obligations | 2,243 | 143,733 | 50,000 | — | 195,976 | |||||||||||||||
Stockholders’ equity | 3,235,072 | 14,705,126 | 401,842 | (15,106,968 | ) | 3,235,072 | ||||||||||||||
$ | 14,879,802 | $ | 20,365,259 | $ | 561,327 | $ | (15,106,968 | ) | $ | 20,699,420 | ||||||||||
Statement of Income | ||||||||||||||||||||
Net revenues | $ | — | $ | 5,687,750 | $ | 441,093 | $ | — | $ | 6,128,843 | ||||||||||
Equity in subsidiaries earnings | 1,228,651 | 152,107 | — | (1,380,758 | ) | — | ||||||||||||||
Expenses: | ||||||||||||||||||||
Casino and hotel operations | — | 3,082,987 | 233,883 | — | 3,316,870 | |||||||||||||||
General and administrative | — | 834,166 | 55,640 | — | 889,806 | |||||||||||||||
Corporate expense | 13,797 | 116,836 | — | — | 130,633 | |||||||||||||||
Preopening and start-up expenses | — | 15,249 | 503 | — | 15,752 | |||||||||||||||
Restructuring costs (credit) | — | (59 | ) | — | — | (59 | ) | |||||||||||||
Property transactions, net | — | 36,587 | 434 | — | 37,021 | |||||||||||||||
Depreciation and amortization | 2,390 | 531,586 | 26,650 | — | 560,626 | |||||||||||||||
16,187 | 4,617,352 | 317,110 | — | 4,950,649 | ||||||||||||||||
Income from unconsolidated affiliates | — | 120,330 | 31,541 | — | 151,871 | |||||||||||||||
Operating income | 1,212,464 | 1,342,835 | 155,524 | (1,380,758 | ) | 1,330,065 | ||||||||||||||
Interest expense, net | (517,617 | ) | (112,506 | ) | 1,402 | — | (628,721 | ) | ||||||||||||
Other, net | (14,293 | ) | (20,005 | ) | 39 | — | (34,259 | ) | ||||||||||||
Income before income taxes | 680,554 | 1,210,324 | 156,965 | (1,380,758 | ) | 667,085 | ||||||||||||||
Provision for income taxes | (227,374 | ) | — | (4,345 | ) | — | (231,719 | ) | ||||||||||||
Income from continuing operations | 453,180 | 1,210,324 | 152,620 | (1,380,758 | ) | 435,366 | ||||||||||||||
Discontinued operations | (9,924 | ) | 17,814 | — | — | 7,890 | ||||||||||||||
Net income | $ | 443,256 | $ | 1,228,138 | $ | 152,620 | $ | (1,380,758 | ) | $ | 443,256 | |||||||||
Statement of Cash Flows | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | (449,590 | ) | $ | 1,471,372 | $ | 161,014 | $ | — | $ | 1,182,796 | |||||||||
Net cash provided by (used in) investing activities | (4,587,820 | ) | (618,007 | ) | (93,687 | ) | (3,303 | ) | (5,302,817 | ) | ||||||||||
Net cash provided by (used in) financing activities | 5,043,152 | (732,145 | ) | (251,484 | ) | 3,303 | 4,062,826 |
76
86
For The Year Ended December 31, 2006 | ||||||||||||||||||||
Guarantor | Non-Guarantor | |||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Elimination | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Statement of Operations | ||||||||||||||||||||
Net revenues | $ | — | $ | 6,714,659 | $ | 461,297 | $ | — | $ | 7,175,956 | ||||||||||
Equity in subsidiaries earnings | 1,777,144 | 167,262 | — | (1,944,406 | ) | — | ||||||||||||||
Expenses: | ||||||||||||||||||||
Casino and hotel operations | 19,251 | 3,444,697 | 251,109 | — | 3,715,057 | |||||||||||||||
General and administrative | 20,713 | 1,092,061 | 56,497 | — | 1,169,271 | |||||||||||||||
Corporate expense | 40,151 | 121,356 | — | — | 161,507 | |||||||||||||||
Preopening andstart-up expenses | 523 | 32,526 | 3,313 | — | 36,362 | |||||||||||||||
Restructuring costs | — | 1,035 | — | — | 1,035 | |||||||||||||||
Property transactions, net | 10,872 | (51,853 | ) | 1 | — | (40,980 | ) | |||||||||||||
Depreciation and amortization | 2,398 | 611,045 | 16,184 | — | 629,627 | |||||||||||||||
93,908 | 5,250,867 | 327,104 | — | 5,671,879 | ||||||||||||||||
Income from unconsolidated affiliates | — | 218,063 | 36,108 | — | 254,171 | |||||||||||||||
Operating income | 1,683,236 | 1,849,117 | 170,301 | (1,944,406 | ) | 1,758,248 | ||||||||||||||
Interest income (expense), net | (708,902 | ) | (40,407 | ) | 140 | — | (749,169 | ) | ||||||||||||
Other, net | (1,978 | ) | (29,962 | ) | 787 | — | (31,153 | ) | ||||||||||||
Income from continuing operations before income taxes | 972,356 | 1,778,748 | 171,228 | (1,944,406 | ) | 977,926 | ||||||||||||||
Provision for income taxes | (312,288 | ) | (25,676 | ) | (3,966 | ) | — | (341,930 | ) | |||||||||||
Income from continuing operations | 660,068 | 1,753,072 | 167,262 | (1,944,406 | ) | 635,996 | ||||||||||||||
Discontinued operations | (11,804 | ) | 24,072 | — | — | 12,268 | ||||||||||||||
Net income | $ | 648,264 | $ | 1,777,144 | $ | 167,262 | $ | (1,944,406 | ) | $ | 648,264 | |||||||||
Statement of Cash Flows | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | (896,346 | ) | $ | 1,974,375 | $ | 153,923 | $ | — | $ | 1,231,952 | |||||||||
Net cash provided by (used in) investing activities | 5,300 | (1,359,878 | ) | (283,241 | ) | (4,608 | ) | (1,642,427 | ) | |||||||||||
Net cash provided by (used in) financing activities | 874,485 | (503,801 | ) | 134,732 | 4,608 | 510,024 |
For the Year Ended December 31, 2004 | ||||||||||||||||||||
Guarantor | Non-Guarantor | |||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Elimination | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Statement of Income | ||||||||||||||||||||
Net revenues | $ | — | $ | 3,579,862 | $ | 421,942 | $ | — | $ | 4,001,804 | ||||||||||
Equity in subsidiaries earnings | 948,143 | 117,686 | — | (1,065,829 | ) | — | ||||||||||||||
Expenses: | ||||||||||||||||||||
Casino and hotel operations | — | 1,927,258 | 211,386 | — | 2,138,644 | |||||||||||||||
General and administrative | — | 505,662 | 59,725 | — | 565,387 | |||||||||||||||
Corporate expense | 11,988 | 65,922 | — | — | 77,910 | |||||||||||||||
Preopening and start-up expenses | 129 | 10,147 | — | — | 10,276 | |||||||||||||||
Restructuring costs | — | 4,118 | 1,507 | — | 5,625 | |||||||||||||||
Property transactions, net | (1,521 | ) | 9,400 | 355 | — | 8,234 | ||||||||||||||
Depreciation and amortization | 1,039 | 351,457 | 30,277 | — | 382,773 | |||||||||||||||
11,635 | 2,873,964 | 303,250 | — | 3,188,849 | ||||||||||||||||
Income from unconsolidated affiliates | — | 119,658 | — | — | 119,658 | |||||||||||||||
Operating income | 936,508 | 943,242 | 118,692 | (1,065,829 | ) | 932,613 | ||||||||||||||
Interest expense, net | (311,825 | ) | (49,129 | ) | (966 | ) | — | (361,920 | ) | |||||||||||
Other, net | 162 | (22,092 | ) | 47 | — | (21,883 | ) | |||||||||||||
Income from continuing operations before income taxes | 624,845 | 872,021 | 117,773 | (1,065,829 | ) | 548,810 | ||||||||||||||
Provision for income taxes | (203,900 | ) | — | 299 | — | (203,601 | ) | |||||||||||||
Income from continuing operations | 420,945 | 872,021 | 118,072 | (1,065,829 | ) | 345,209 | ||||||||||||||
Discontinued operations | (8,613 | ) | 17,317 | 58,419 | — | 67,123 | ||||||||||||||
Net income | $ | 412,332 | $ | 889,338 | $ | 176,491 | $ | (1,065,829 | ) | $ | 412,332 | |||||||||
Statement of Cash Flows | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | (351,000 | ) | $ | 1,038,957 | $ | 141,290 | $ | — | $ | 829,247 | |||||||||
Net cash provided by (used in) investing activities | (20,325 | ) | (448,995 | ) | 125,856 | (4,289 | ) | (347,753 | ) | |||||||||||
Net cash provided by (used in) financing activities | 381,467 | (599,480 | ) | (112,248 | ) | 4,289 | (325,972 | ) |
77
87
NOTE 20 — | SELECTED QUARTERLY FINANCIAL RESULTS (UNAUDITED) |
Quarter | ||||||||||||||||||||
First | Second | Third | Fourth | Total | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
2008 | ||||||||||||||||||||
Net revenues | $ | 1,893,391 | $ | 1,905,333 | $ | 1,785,531 | $ | 1,624,512 | $ | 7,208,767 | ||||||||||
Operating income (loss) | 341,288 | 333,784 | 241,557 | (1,046,232 | ) | (129,603 | ) | |||||||||||||
Income (loss) from continuing operations | 118,346 | 113,101 | 61,278 | (1,148,011 | ) | (855,286 | ) | |||||||||||||
Net income (loss) | 118,346 | 113,101 | 61,278 | (1,148,011 | ) | (855,286 | ) | |||||||||||||
Basic income (loss) per share: | ||||||||||||||||||||
Income (loss) from continuing operations | $ | .41 | $ | .41 | $ | .22 | $ | (4.15 | ) | $ | (3.06 | ) | ||||||||
Net income (loss) | .41 | .41 | .22 | (4.15 | ) | (3.06 | ) | |||||||||||||
Diluted income (loss) per share: | ||||||||||||||||||||
Income (loss) from continuing operations | $ | .40 | $ | .40 | $ | .22 | $ | (4.15 | ) | $ | (3.06 | ) | ||||||||
Net income (loss) | .40 | .40 | .22 | (4.15 | ) | (3.06 | ) | |||||||||||||
2007 | ||||||||||||||||||||
Net revenues | $ | 1,929,435 | $ | 1,936,416 | $ | 1,897,070 | $ | 1,928,716 | $ | 7,691,637 | ||||||||||
Operating income | 445,133 | 468,973 | 464,613 | 1,485,211 | 2,863,930 | |||||||||||||||
Income from continuing operations | 163,010 | 182,898 | 183,863 | 870,774 | 1,400,545 | |||||||||||||||
Net income | 168,173 | 360,172 | 183,863 | 872,211 | 1,584,419 | |||||||||||||||
Basic income per share: | ||||||||||||||||||||
Income from continuing operations | $ | .57 | $ | .64 | $ | .65 | $ | 2.96 | $ | 4.88 | ||||||||||
Net income | .59 | 1.27 | .65 | 2.96 | 5.52 | |||||||||||||||
Diluted income per share: | ||||||||||||||||||||
Income from continuing operations | $ | .55 | $ | .62 | $ | .62 | $ | 2.85 | $ | 4.70 | ||||||||||
Net income | .57 | 1.22 | .62 | 2.85 | 5.31 |
Quarter | ||||||||||||||||||||
First | Second | Third | Fourth | Total | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
2006 | ||||||||||||||||||||
Net revenues | $ | 1,774,368 | $ | 1,760,508 | $ | 1,795,042 | $ | 1,846,038 | $ | 7,175,956 | ||||||||||
Operating income | 413,353 | 417,422 | 419,397 | 508,076 | 1,758,248 | |||||||||||||||
Income from continuing operations | 139,762 | 143,341 | 153,765 | 199,128 | 635,996 | |||||||||||||||
Net income | 144,037 | 146,394 | 156,262 | 201,571 | 648,264 | |||||||||||||||
Basic income per share: | ||||||||||||||||||||
Income from continuing operations | $ | 0.49 | $ | 0.50 | $ | 0.55 | $ | 0.70 | $ | 2.25 | ||||||||||
Net income | 0.51 | 0.51 | 0.55 | 0.71 | 2.29 | |||||||||||||||
Diluted income per share | ||||||||||||||||||||
Income from continuing operations | $ | 0.48 | $ | 0.49 | $ | 0.53 | $ | 0.68 | $ | 2.18 | ||||||||||
Net income | 0.49 | 0.50 | 0.54 | 0.69 | 2.22 | |||||||||||||||
2005 | ||||||||||||||||||||
Net revenues | $ | 1,145,067 | $ | 1,624,474 | $ | 1,700,802 | $ | 1,658,500 | $ | 6,128,843 | ||||||||||
Operating income | 290,109 | 369,488 | 330,578 | 339,890 | 1,330,065 | |||||||||||||||
Income from continuing operations | 110,919 | 137,891 | 89,932 | 96,624 | 435,366 | |||||||||||||||
Net income | 111,079 | 141,168 | 93,210 | 97,799 | 443,256 | |||||||||||||||
Basic income per share: | ||||||||||||||||||||
Income from continuing operations | $ | 0.39 | $ | 0.48 | $ | 0.31 | $ | 0.34 | $ | 1.53 | ||||||||||
Net income | 0.39 | 0.49 | 0.33 | 0.34 | 1.56 | |||||||||||||||
Diluted income per share: | ||||||||||||||||||||
Income from continuing operations | $ | 0.38 | $ | 0.46 | $ | 0.30 | $ | 0.33 | $ | 1.47 | ||||||||||
Net income | 0.38 | 0.48 | 0.31 | 0.33 | 1.50 |
78
88
By: | /s/ James J. Murren |
By: | /s/ Daniel J. D’Arrigo |
By: | /s/ Robert C. Selwood |
Title | Date | |||||
/s/ James J. Murren James J. Murren | Chief Executive Officer, President and Chairman of the Board (Principal Executive Officer) | March 17, 2009 | ||||
/s/ Robert H. Baldwin Robert H. Baldwin | Chief Construction and Design Officer and Director | March 17, 2009 | ||||
/s/ Gary N. Jacobs Gary N. Jacobs | Executive Vice President, General Counsel, Secretary and Director | |||||
/s/ Willie D. Davis Willie D. Davis | Director | March 17, 2009 | ||||
/s/ Kenny G. Guinn Kenny G. Guinn | Director | March 17, 2009 | ||||
/s/ Alexander M. Haig, Jr. Alexander M. Haig, Jr. | Director | March 17, 2009 | ||||
/s/ Alexis M. Herman Alexis M. Herman | Director | March 17, 2009 | ||||
/s/ Roland Hernandez Roland Hernandez | Director | March 17, 2009 |
89
Signature | Title | Date | ||||
/s/ Kirk Kerkorian | Director |
79
/s/ Anthony Mandekic | Director | |||||
March 17, 2009 | ||||||
/s/ Rose McKinney-James | Director | |||||
March 17, 2009 | ||||||
/s/ Daniel J. Taylor | Director | |||||
March 17, 2009 | ||||||
/s/ | ||||||
Melvin B. Wolzinger | ||||||
Director | ||||||
March 17, 2009 |
80
90
Additions | Deductions | Deductions | ||||||||||||||||||||||||||||||||||||||||||
Balance at | Provision for | from | Write-offs, | related to | Balance at | Balance at | Provision for | Write-offs | Related to | Balance at | ||||||||||||||||||||||||||||||||||
Beginning of | Doubtful | Mandalay | net of | Discontinued | End of | Beginning of | Doubtful | net of | Discontinued | End of | ||||||||||||||||||||||||||||||||||
Description | Period | Accounts | Acquisition | Recoveries | Operations | Period | Period | Accounts | Recoveries | Operations | Period | |||||||||||||||||||||||||||||||||
Allowance for Doubtful Accounts | ||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2008 | $ | 85,924 | $ | 80,293 | $ | (66,611 | ) | $ | — | $ | 99,606 | |||||||||||||||||||||||||||||||||
Year Ended December 31, 2007 | 90,024 | 32,910 | (37,010 | ) | — | 85,924 | ||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2006 | $ | 77,270 | $ | 47,950 | $ | — | $ | (34,658 | ) | $ | (538 | ) | $ | 90,024 | 77,270 | 47,950 | (34,658 | ) | (538 | ) | 90,024 | |||||||||||||||||||||||
Year Ended December 31, 2005 | 59,760 | 25,846 | 14,423 | (22,759 | ) | — | 77,270 | |||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2004 | 79,087 | (3,629 | ) | — | (15,698 | ) | — | 59,760 |
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91