-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, VB+hPZVQplDzL6MJTrVQO91vteZUjJObeOHOF323meF33OJ06kRrpb2PlIQjchha iKYW9YIMsE01y+vbhKU0Ew== 0000898430-94-000380.txt : 19940519 0000898430-94-000380.hdr.sgml : 19940519 ACCESSION NUMBER: 0000898430-94-000380 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MGM GRAND INC CENTRAL INDEX KEY: 0000789570 STANDARD INDUSTRIAL CLASSIFICATION: 4522 IRS NUMBER: 880215232 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10362 FILM NUMBER: 94528704 BUSINESS ADDRESS: STREET 1: 3799 LAS VEGAS BLVD S CITY: LAS VEGAS STATE: NV ZIP: 89109 BUSINESS PHONE: 7028913333 MAIL ADDRESS: STREET 1: PO BOX 98655 CITY: LAS VEGAS STATE: NV ZIP: 89193-8655 FORMER COMPANY: FORMER CONFORMED NAME: GRAND NAME CO DATE OF NAME CHANGE: 19870713 10-Q 1 FORM 10-Q OF 3/31/94 UNITED STATES SECURITIES & EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 1994 -------------------------------------------------- [_] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from - to - --------------- --------------------------------- Commission File Number: 0-16760 --------------------------------------------------------- MGM GRAND, INC. - - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 88-0215232 - - ------------------------------------ -------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3799 Las Vegas Boulevard South, Las Vegas, Nevada 89109 - - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (702) 891-3333 - - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [_] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at May 2, 1994 - - --------------------------------- --------------------------------------- Common Stock, $.01 par value 48,181,331 shares MGM GRAND, INC. AND SUBSIDIARIES FORM 10-Q I N D E X Page No. ------- Part I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Operations for the three months ended March 31, 1994 and March 31, 1993.......... 1 Condensed Consolidated Balance Sheets at March 31, 1994 and December 31, 1993.... 2 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 1994 and March 31, 1993.......... 3 Notes to Condensed Consolidated Financial Statements................................. 4-8 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations................................. 9-11 Part II. OTHER INFORMATION.......................... 12 MGM GRAND, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share data) (Unaudited)
Three Months Ended ------------------- March 31, March 31, 1994 1993 -------- -------- REVENUES: Casino................................ $106,154 $ - Rooms................................. 25,546 - Food and beverage..................... 15,470 - Other hotel/casino.................... 27,788 - Airline............................... 3,902 4,938 -------- ------- 178,860 4,938 -------- ------- EXPENSES: Casino................................ 47,203 - Rooms................................. 10,419 - Food and beverage..................... 16,135 - Other hotel/casino.................... 29,066 - Airline............................... 3,576 4,894 Selling, general and administrative... 43,886 1,945 Depreciation and amortization......... 10,896 1,609 -------- ------- 161,181 8,448 -------- ------- OPERATING INCOME (LOSS)............. 17,679 (3,510) -------- ------- NONOPERATING INCOME (EXPENSE): Interest income....................... 1,127 4,374 Interest expense, net of amounts capitalized......................... (15,435) (3,589) Other, net............................ (17) (17) -------- ------- (14,325) 768 -------- ------- INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES................................. 3,354 (2,742) Provision (benefit) for income taxes.. - - -------- ------- NET INCOME (LOSS)................... $ 3,354 $(2,742) ======== ======= PER SHARE OF COMMON STOCK: NET INCOME (LOSS)................... $ .07 $ (.06) ======== =======
The accompanying notes are an integral part of these condensed consolidated financial statements. -1- MGM GRAND, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (Unaudited)
ASSETS March 31, December 31, 1994 1993 ----------- ----------- CURRENT ASSETS: Cash and cash equivalents................. $ 141,126 $ 211,305 Accounts receivable, net.................. 48,591 30,516 Prepaid expenses.......................... 10,426 11,755 Inventories............................... 15,275 12,662 ----------- ----------- Total current assets................... 215,418 266,238 ----------- ----------- PROPERTY AND EQUIPMENT, NET................. 860,557 867,284 ----------- ----------- OTHER ASSETS: Deposits.................................. 1,719 1,330 Licensed rights and trademarks, net....... 1,145 1,154 Deferred organizational costs, net........ 1,813 1,985 Other assets, net......................... 23,395 22,132 ----------- ----------- Total other assets..................... 28,072 26,601 ----------- ----------- $ 1,104,047 $ 1,160,123 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable.......................... $ 22,906 $ 14,181 Current obligation, capital leases........ 1,958 1,830 Current maturities, long term debt........ 604 1,573 Accrued interest on long term debt........ 23,696 9,472 Construction payables..................... 37,188 96,844 Other accrued liabilities................. 32,950 41,696 ----------- ----------- Total current liabilities.............. 119,302 165,596 ----------- ----------- DEFERRED REVENUE............................ 10,669 10,784 DEFERRED INCOME TAXES....................... 6,517 6,517 LONG TERM OBLIGATION, CAPITAL LEASES........ 14,216 14,044 LONG TERM DEBT, NET OF CURRENT MATURITIES... 482,348 481,427 COMMITMENTS................................. STOCKHOLDERS' EQUITY: Common stock ($.01 par value, 75,000,000 shares authorized, 50,609,537 and 50,579,537 shares issued)................................ 506 506 Capital in excess of par value............ 662,709 662,365 Common stock in treasury (2,195,306 and 1,734,706 shares)...................... (43,948) (29,490) Retained earnings (deficit)............... (148,272) (151,626) ----------- ----------- Total stockholders' equity............. 470,995 481,755 ----------- ----------- $ 1,104,047 $ 1,160,123 =========== ===========
The accompanying notes are an integral part of these condensed consolidated financial statements. -2- MGM GRAND, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (in thousands) (Unaudited)
Three Months Ended ---------------------- March 31, March 31, 1994 1993 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss).......................... $ 3,354 $ (2,742) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation and amortization.......... 10,896 1,649 Amortization of debt offering costs.... 753 672 Aircraft overhaul amortization......... 11 560 Provision for losses on accounts receivable........................... 10,480 - Change in assets and liabilities: Accounts receivable.................. (28,555) (24) Prepaid expenses..................... 1,329 (271) Inventories.......................... (2,613) 3 Accounts payable, accrued liabilities, and other............. 14,088 11,311 Deferred income taxes................ - (101) --------- --------- Net cash from operating activities... 9,743 11,057 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment........ (4,072) (83,303) Change in construction payables............ (59,656) (15,870) Deposits and other assets.................. (2,332) (3,916) --------- --------- Net cash from investing activities... (66,060) (103,089) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock................... 344 - Repurchase of common stock................. (14,458) - Payments on long term debt and capital leases................................... 252 - --------- --------- Net cash from financing activities... (13,862) - --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................................ (70,179) (92,032) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD..................................... 211,305 579,963 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD... $ 141,126 $ 487,931 ========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements. -3- MGM GRAND, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Organization and Basis of Presentation MGM Grand, Inc. (the "Company") is a Delaware corporation, incorporated on January 29, 1986. As of March 31, 1994, approximately 73.6% of the outstanding shares of the Company's common stock were owned by Kirk Kerkorian and Tracinda Corporation ("Tracinda"), a Nevada corporation wholly-owned by Kirk Kerkorian. Through its wholly-owned subsidiary, MGM Grand Hotel, Inc., the Company owns and operates the MGM Grand Hotel, Casino and Theme Park, a hotel/casino and entertainment complex in Las Vegas. The MGM Grand Hotel, Casino and Theme Park commenced operations on December 18, 1993. Through its wholly-owned subsidiary, MGM Grand Air, Inc., the Company engages in the luxury charter airline business. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto in the 1993 Annual Report included in Form 10-K. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position as of March 31, 1994, and the results of operations for the three month period ended. The results of operations for such period are not necessarily indicative of the results to be expected for the full year. Certain reclassifications have been made to prior period financial statements to conform with the 1994 presentation. -4- MGM GRAND, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 2. Statements of Cash Flows For the three months ended March 31, 1994 and March 31, 1993, cash payments made for interest were $416,000 and $816,000, respectively. Capitalized interest for the first quarter of 1993 was $11,180,000. Cash payments made for state and federal taxes for the three months ended March 31, 1994 and March 31, 1993 were $30,000 and $51,000 respectively. Note 3. Stock Offering On August 17, 1993, the Company completed a common stock public offering. Total common stock issued at completion of the offering was 1,955,000 shares at a price of $37.75 per share, resulting in net proceeds of approximately $70,600,000. The Company intends to use such funds for general corporate purposes, including possible additions to the MGM Grand Hotel, Casino and Theme Park and the exploration of other expansion opportunities. Note 4. Treasury Stock On March 9, 1994, the Company announced that it intends to acquire in open market purchases, from time to time, as many as one million shares of its common stock. Through March 31, 1994 and May 2, 1994, the Company had acquired 460,600 and 693,500 shares respectively. -5- MGM GRAND, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 5. Long Term Debt On June 6, 1993, Grand Laundry, Inc., a wholly-owned subsidiary of the Company, obtained a $10,000,000 loan from a financial institution for a laundry facility in North Las Vegas, Nevada. As of December 31, 1993, $10,000,000 had been drawn down under the loan. Construction of the facility was completed in December, 1993. The Laundry provides the laundry and dry cleaning services for the MGM Grand Hotel. Long term debt consisted of the following (in thousands):
March 31, December 31, 1994 1993 --------- ----------- 11 3/4% First Mortgage Notes due May 1, 1999 $220,000 $220,000 12% First Mortgage Notes due May 1, 2002 253,000 253,000 Laundry Facility Loan 9,952 10,000 -------- -------- 482,952 483,000 Less: Current Maturities (604) (1,573) -------- -------- $482,348 $481,427 ======== ========
Total interest incurred for the first three months of 1994 and 1993 was $15,435,000 and $14,869,000, of which $11,280,000 was capitalized during the 1993 period. Interest was not capitalized during the 1994 period as a result of completion of construction and commencement of operations of the MGM Grand Hotel, Casino and Theme Park. -6- MGM GRAND, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 6. Income Taxes The Company adopted Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes" ("SFAS 109") effective January 1, 1993. The impact of adopting this new standard was not material to the consolidated financial statements of the Company for 1993. SFAS 109 requires the recognition of deferred tax assets, net of applicable reserves, related to net operating loss carryforwards and certain temporary differences. The standard requires recognition of a deferred tax asset to the extent that realization of such asset is more likely than not. Otherwise, a valuation allowance is applied. As of March 31, 1994, the Company determined that $50,061,000 of deferred tax assets did not satisfy the recognition criteria set forth in the standard because of the Company's prior operating results. Accordingly, a valuation allowance was recorded to reserve for the applicable deferred tax assets. The provision (benefit) for income taxes for the three months ended March 31, 1994 and 1993 is as follows (in thousands):
March 31, ------------------------ 1994 1993 --------- --------- Current: Federal...................................... $ - $ - State........................................ - - --------- --------- - - --------- --------- Deferred: Provision for income taxes................... 1,174 - Reduction in valuation allowance............. (1,174) - --------- --------- - - --------- --------- Total.......................................... $ - $ - ========= =========
-7- MGM GRAND, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Reconciliation of the Federal income tax rate and the Company's effective tax rate is as follows:
March 31, -------------------- 1994 1993 -------- -------- Federal income tax rate 35% 35% Net operating loss--no benefit recorded -- (35) Reduction in valuation allowance (35) -- -------- -------- Effective tax rate --% --% ======== ========
As of March 31, 1994, after having given effect to SFAS 109, the major tax effected components of the Company's net deferred tax liability is as follows (in thousands):
DEFERRED TAX ASSETS $ 75,411 Less: Valuation allowance (50,061) ________ Net deferred tax assets 25,350 DEFERRED TAX LIABILITIES (31,867) -------- NET DEFERRED TAX LIABILITY $ (6,517) =========
At March 31, 1994, the Company had a net operating loss carryforward for tax purposes of approximately $76,600,000. Note 7. Earnings (Loss) per Share Primary and fully diluted earnings (loss) per share has been computed based on the weighted average number of shares of common stock and common stock equivalents, if dilutive,outstanding during each period (49,713,907 and 46,803,271 shares for the three month periods ended March 31, 1994 and March 31, 1993). -8- MGM GRAND, INC. AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operation The Company operates in two industry segments--the operations of the MGM Grand Hotel, Casino and Theme Park and MGM Grand Air. The Company commenced operations of the MGM Grand Hotel, Casino and Theme Park on December 18, 1993. Prior thereto, the Company was in the construction phase with regard to the hotel/casino industry segment.
Three Months Ended March 31, ------------------- 1994 1993 ------- ------- (In thousands) Operating revenues: Hotel, Casino and Theme Park.................. $174,958 $ -- Airline....................................... 4,144 4,938 Eliminations.................................. (242) -- -------- ------- $178,860 $ 4,938 ======== ======= Operating income (loss): Hotel/Casino.................................. $ 19,307 $ -- Airline....................................... (280) (2,325) Corporate expenses............................ (1,348) (1,185) -------- ------- 17,679 (3,510) Interest income................................... 1,127 4,374 Interest expense.................................. (15,435) (3,589) Other, net........................................ (17) (17) Provision (benefit) for income taxes.............. -- -- -------- ------- Net income (loss)................................. $ 3,354 $(2,742) ======== =======
-9- MGM GRAND, INC. AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Quarter versus Quarter Results of Operations MGM Grand Hotel net revenues for the three months ended March 31, 1994 were $174,958,000. Casino revenues for the period were $106,154,000 with a table games win percentage of 20.4%. Room revenue for the period was $25,546,000 with an occupancy rate of 85%. The occupancy rate was affected by the partial availability of hotel rooms during January 1994. During February and March, 1994 occupancy rates increased to 91% and 95%, respectively. Operating expenses were $155,651,000, resulting in operating income of $19,307,000 for the start-up quarter ended March 31, 1994. MGM Grand Air revenues for the first quarter of 1994 were $4,144,000 before eliminations, compared to $4,938,000 for the first quarter of 1993, representing a decrease of $794,000 (16%). Revenues were lower than in 1993 due to the termination of a tour program unrelated to its present upscale charter service. Operating expenses decreased $2,840,000 (39%) due to a $1,553,000 reduction in depreciation expense resulting from the 1993 aircraft carrying value adjustment, and a 28% reduction in block hours flown. The operating loss of $280,000 in 1994 compares to an operating loss of $2,325,000 in 1993. Corporate expenses were $1,348,000 in the first quarter of 1994 compared to $1,185,000 in the same period last year. Interest Income was $1,127,000 for the first quarter of 1994 versus $4,374,000 for the 1993 quarter. Interest income was higher during the 1993 period as a result of short term investment of construction funds. Interest expense was $15,435,000 for the first quarter of 1994, compared to $3,589,000 in 1993 which was net of capitalized interest of $11,280,000. -10- MGM GRAND, INC. AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Liquidity and Capital Resources -- As of March 31, 1994 and December 31, 1993, the Company held cash and cash equivalents of $141,126,000 and $211,305,000, respectively. Cash provided by operating activities for the first three months of 1994 was $9,743,000 versus $11,057,000 for the first three months of 1993. Capital expenditures during the first three months of 1994, other than payments on construction payables of $59,656,000 for the quarter, were approximately $4,072,000 consisting primarily of $2,824,000 for expenditures related to the MGM Grand Hotel and Theme Park, $1,201,000 for aircraft parts and refurbishment, and $47,000 related to furniture, fixtures and equipment. In addition to final construction expenditures of $37,188,000 accrued at March 31, 1994, expenditures for 1994 are expected to be up to $19,855,000, consisting of $15,000,000 at the MGM Grand Hotel and Theme Park for general property improvements, and $4,855,000 for aircraft refurbishment by MGM Grand Air, including airframe and engine overhauls and spare parts. The Company expects to finance operations and capital expenditures through cash flow from operations, cash on hand, and the bank line of credit. The Company does not currently provide any post retirement benefits. Accordingly, the Statement of Financial Accounting Standards No. 106 will have no effect on the Company's financial position. -11- MGM GRAND, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION None of the items 1 through 5 of Part II are applicable. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MGM GRAND, INC. ------------------------------ (Registrant) Date: May 4, 1994 JOSEPH T. MURPHY ------------------------------ Joseph T. Murphy Vice President and Chief Financial Officer (principal financial and accounting officer) Date: May 4, 1994 SCOTT LANGSNER ------------------------------ Scott Langsner Secretary/Treasurer -12- -----END PRIVACY-ENHANCED MESSAGE-----