Casino operator MGM Mirage (MGM), on Thursday reported that it slid to a loss in the third quarter, hurt by hefty non-cash impairment charges from its CityCenter project as well as a drop in revenues across all its operating segments.
MGM Mirage, the world's second-largest gambling company by revenue, and controlled by billionaire investor Kirk Kerkorian owns and operates 16 casinos in Nevada, Mississippi and Michigan. It also has 50% investments in four other properties in Nevada, New Jersey, Illinois and Macau.
For the third quarter, the Las Vegas, Nevada-based company reported a net loss of $750.39 million or $1.70 per share, compared to a net profit of $61.28 million or $0.22 per share in the prior-year quarter.
Results for the latest quarter included non-cash impairment charges totaling $1.17 billion or $1.72 loss per share, including a pre-tax non-cash impairment charge of $956 million related to investment in CityCenter and a pre-tax non-cash charge of $203 million related to impairment of CityCenter's residential real estate under development.
On average, 19 analysts polled by Thomson Reuters expected the company to report a loss of $0.08 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the sequentially preceding quarter, MGM Mirage reported a net loss of $212.58 million or $0.60 per share, compared to net profit of $113.10 million or $0.40 per share in the prior-year quarter.
Revenues for the recent third quarter slipped 9% to $1.53 billion from $1.78 billion last year. Street analysts' revenue estimate was $1.47 billion for the quarter.
Property-wise, Las Vegas Strip revenues for the quarter declined 23% to $1.22 billion from the prior-year quarter. Other Nevada revenues for the quarter totaled $33.07 million, lower than $41.33 million in the year-ago quarter. MGM Grand Detroit revenues dropped to $124.75 million from the same quarter last year, while Mississippi revenues decreased to $125.46 million from the comparable quarter a year ago.
Segment-wise, the company's casino revenue, however, declined a modest 1% to $699.81 million from last year as a result of strong baccarat results from the company's Strip casino, with table games revenue up 7% and slots revenue down 6%. Room revenues for the quarter dropped 21% year-over-year to $340.17 million, while food and beverage revenues dropped to $344.28 million from $395.10 million in the same quarter last year.
Entertainment revenues for the quarter declined to $128.57 million, whereas retail revenues were $54.52 million, down a year earlier. Other revenues for the quarter decreased to $138.07 million from $155.33 million in the same quarter last year.
For the preceding second quarter, MGM Mirage reported revenues that declined 21.6% to $1.49 billion from $1.90 billion a year ago.
Operating income for the quarter under review was $963.42 million, while total operating expenses were $2.36 billion, up from $1.58 billion in the year-ago quarter.
MGM Mirage's average occupancy level for the quarter was flat at 95% with last year, while average daily rates declined to $105 from $136 last year.
Jim Murren, chairman and chief executive officer, said, "We continue to show sequential improvement in our operating results over the course of 2009. We continue to earn occupancy through our superior assets and focus on the customer, resulting in increased market share. We expect CityCenter to grow our business significantly and we are extremely excited to open this tremendous asset."
For the nine-month period, net loss was $857.76 million, compared to a net loss of $292.73 million in the same period last year. Revenues for nine months dropped significantly to $4.53 billion from $5.58 billion in the corresponding period last year.
MGM Mirage also said its lenders amended its senior credit facility to provide further financial flexibility, effective November 4. At September 30, 2009, the company had nearly $4.3 billion of borrowings outstanding under its senior credit facility with available borrowings of $1.4 billion.
Amongst others in the industry, Las Vegas, Nevada-based Las Vegas Sands Corp. (LVS), on October 29, posted a wider third-quarter loss, reflecting higher income tax expense, and increases in preferred stock dividends and accretion on preferred stock. However, the company's adjusted per share results came in above analysts' expectations.
MGM is currently trading at $9.85, up $0.53 or 5.74%, on a volume of 24.73 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $1.81 - $16.89, with a three-month average volume of 36.74 million shares.
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