MGM Mirage Earnings Fall 11%

By TAMARA AUDI MGM Mirage reported its first-quarter profit dropped 11% from a year earlier, but the casino company said it saw signs of improvement as Las Vegas weekend hotel occupancy and rates stabilize. The company's profit was lifted by the sale of its Treasure Island casino in Las Vegas to investor Phil Ruffin for $775 million. But it wasn't enough to offset steep declines in spending by business travelers as corporations continue to cancel conventions and meetings. Earnings fell to $105.2 million, or 38 cents a share, from $118.3 million, or 40 cents a share, a year earlier. Results included a gain of 44 cents a share on the Treasure Island sale. Kirk Kerkorian MGM Mirage, controlled by billionaire investor Kirk Kerkorian, has been in turmoil in recent months as it struggles to pay down more than $14 billion in debt while casino revenue continues to decline in a global consumer recession. The company is currently considering selling off additional properties to raise enough cash to meet looming obligations. Las Vegas officials say the city's already-declining economic fortunes were made worse after President Barack Obama cited the destination in comments he made about corporate waste. The remark sparked an outcry from businessmen and officials, who in recent years have transformed the destination into one of the nation's major convention and meeting sites. Companies like MGM Mirage count on convention business to keep its hotels and restaurants full during the week. Chief Executive Jim Murren noted that between December 2008 and February 2009, Las Vegas saw a 29% decline in corporate bookings. The executive said he plans to meet with Mr. Obama when the president visits Las Vegas later this month and raise the issue with him. Mr. Murren called the beginning of the first quarter "quite brutal" but said future bookings appear to be stabilizing and occupancy is back up to 90% on weekends. Some properties, including MGM Mirage, have begun to nudge up room rates after drastic price reductions. MGM Mirage's first-quarter revenue declined 20% from a year earlier to $1.5 billion. Last week, MGM Mirage settled a dispute over City Center, an $8.5 billion resort project on the Las Vegas Strip that the company owns with Dubai World, the investment arm of the Persian Gulf state. Dubai World dropped a lawsuit accusing MGM Mirage of mismanaging the project, and agreed to resume its share of construction costs. The project's lenders also agreed to fund a $1.8 billion loan critical to completing City Center, which is scheduled to open by the end of the year. Mr. Murren said he expects City Center to increase the number of visitors to Las Vegas by 5% to 6% in 2010. "We think visitation will increase next year and we will be responsible for it," he said. Write to Tamara Audi at tammy.audi@wsj.com --- Please take note that around 12 bil long debt was reclassified as current portion of long term debt here is the explanation from company earning release Finally, on our financial position, you will note in our release that we have reclassified all of our borrowings as current liabilities, all of our long-term debt borrowings. This is an accounting requirement given we are in the – this bank-waiver process and will not impact our operations or our ability to execute transactions to improve our liquidity. We continue to work with our lenders and advisors to assist us in implementing plans to address our liquidity issues, which may result in further waivers. We are evaluating numerous possibilities including raising additional debt and/or equity capital, modifying or extending our long-term debt and disposing potentially of certain assets. We are considering all of our options and are committed to finding the best possible solution. However, we can provide no assurance that we will be successful in achieving our objective, given the fluidity of the situation and the variables involved.