MGM Mirage said it achieved 97 percent occupancy in the second quarter at its Las Vegas Strip resorts, but company-wide net revenue declined 2 percent. The company earned 40 cents per diluted share from continuing operations in the 2008 second quarter, compared to 62 cents in the prior year second quarter. The 2007 quarter included $63 million, or 14 cents per diluted share net of tax, of residential sales at The Signature at MGM Grand. The 2008 quarter includes $19 million, or 4 cents per diluted share net of tax, of insurance recovery income related to the Monte Carlo fire.
Overall trends were similar to those experienced in the first quarter of 2008: Guests continued to visit the company's resorts in high numbers, but at lower room rates; and current economic conditions led to lower visitor spending. Gaming revenues were impacted slightly more than non-gaming revenues, with the company experiencing a 4 percent decline in gaming revenues on a quarter-over-quarter basis. Net non-gaming revenues were flat, as relative strength in food-and-beverage and entertainment revenues offset lower revenues in rooms and retail. The company also noted that results at its regional properties in Mississippi and Michigan improved, compared to first quarter performance and exceeded 2007 results.
Among the key results for the quarter: Net revenue decreased 2 percent to $1.9 billion. Las Vegas Strip revPAR decreased 5 percent, while the occupancy rate was 97 percent at the company's Las Vegas Strip resorts versus 98 percent a year ago. Casino revenue decreased 4 percent, mainly as result of lower table games volume at the company's Las Vegas Strip resorts and a 10 percent decline in Las Vegas Strip slots revenue, offset by increased slots revenue at the larger MGM Grand Detroit and increases at Beau Rivage and Gold Strike Tunica. Property EBITDA decreased 12 percent on a comparable basis, after removing the impact of the prior-year residential profits and current year insurance recoveries. On an absolute basis, property EBITDA was $564 million in the 2008 quarter, an 18 percent decrease from the prior year. Bellagio and Mandalay Bay reported increases in property EBITDA, with Bellagio reporting its highest ever quarterly hotel revenue and leading the Las Vegas market in property EBITDA. And Mandalay Bay produced a record for second quarter EBITDA.
Casino revenue decreased 4 percent, mainly due to a decrease in table games volume of 7 percent. Room revenue decreased 6 percent, with a 5 percent decline in Las Vegas Strip revPAR. Average room rates were down 5 percent at the company's Las Vegas Strip resorts. Las Vegas Strip occupancy decreased from 98 percent in the second quarter of 2007 to 97 percent in the second quarter of 2008; and the company had approximately 32,000 fewer rooms available at its Las Vegas Strip resorts, mainly due to the lower room count at Monte Carlo. These trends are largely in line with the company's experience in the first quarter, when Las Vegas Strip revPAR decreased 4 percent. In the second quarter, the company strategically managed its room rates to ensure that occupancy was maximized in line with historical levels.
Food and beverage revenue increased 2 percent, and entertainment revenues also performed well, down 4 percent despite a difficult comparison, as the second quarter of 2007 featured the Oscar de la Hoya-Floyd Mayweather fight. The company's Cirque du Soleil production shows generated a combined 3 percent increase in revenue. The company recorded $19 million of insurance recovery income in the quarter related to the January 2008 Monte Carlo fire -- $9 million related to business interruption recorded as a reduction of general and administrative expenses, and $10 million related to property damage recorded as property transactions. Through June 30, 2008, the company had received $50 million from its insurers. Excluding the insurance recovery income, the Monte Carlo earned property EBITDA of $17 million in the 2008 second quarter compared to $32 million reported in the 2007 second quarter. The property is still without nearly 200 rooms, mostly suites, as a result of the fire. Corporate expense decreased from $44 million in the 2007 quarter to $27 million in 2008, due to the impact of cost reduction measures implemented during the quarter and lower accruals for profit-based bonuses.
MGM Grand Macau, of which the company owns 50 percent, recorded property EBITDA of $23 million and an operating loss of $5 million. The company recognized its share of MGM Grand Macau's results as follows: $4 million of loss in the "income from unconsolidated affiliates" line and $3 million of expense in "non-operating items from unconsolidated affiliates." Operating income decreased 29 percent for the quarter to $334 million, a larger percentage decrease than the 18 percent drop in property EBITDA as a result of higher depreciation expense, including the larger MGM Grand Detroit. Year-over-year comparisons for both property EBITDA and operating income were impacted by the prior year Signature profits of $63 million and the other items described earlier in the release. On a comparable basis, excluding these items in both quarterly periods, property EBITDA decreased 12 percent with a margin of 30 percent in 2008 versus 33 percent in 2007; and operating income decreased 21 percent with a margin of 17 percent versus 22 percent. Net income, including discontinued operations, decreased to $113 million, or 40 cents per diluted share, from $360 million, or $1.22 per diluted share. In addition to the factors described above, the decrease resulted from the $264 million of pre-tax gains recorded in the prior year quarter from the sale of discontinued operations (the Primm Valley Resorts and Laughlin Properties).
Second quarter capital investments totaled $221 million, including $73 million on room and suite remodel projects, primarily at The Mirage and TI; $7 million for the theater at Luxor; expenditures of $9 million for remediation efforts at Monte Carlo; and $23 million for the people mover joining CityCenter, the Monte Carlo and Bellagio, and Monte Carlo's share of a parking garage being constructed for both Monte Carlo and CityCenter. The remaining $109 million was for other capital expenditures, including various new and upgraded amenities at the company's resorts. The company repurchased 2.6 million shares of its common stock in the open market for $134 million during the second quarter, completing the company's December 2007 share repurchase authorization.
During the quarter, the company and Dubai World each funded $300 million of construction costs for CityCenter. The company and Dubai World are currently working with several relationship lenders regarding a $3 billion financing package for the joint venture. To date, CityCenter has received commitments totaling $1.65 billion from the lead banks: Bank of America, Royal Bank of Scotland, UBS, BNP Paribas and Sumitomo Mitsui. In addition, CityCenter has received commitments from Deutsche Bank, Morgan Stanley and the Bank of Nova Scotia. Visit www.mgmmirage.com.
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