<PAGE>
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 SEPTEMBER 30, 1998
-------------------------------------------------
[ ] 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 November 6, 1998
- -------------------------------- ---------------------------------
Common Stock, $.01 par value 52,033,094 shares
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
FORM 10-Q
I N D E X
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of
Operations for the Three Months and Nine Months
Ended September 30, 1998 and September 30, 1997............... 1
Condensed Consolidated Balance Sheets
at September 30, 1998 and December 31, 1997 .................. 2
Condensed Consolidated Statements of
Cash Flows for the Nine Months Ended
September 30, 1998 and September 30, 1997 .................... 3
Notes to Condensed Consolidated Financial
Statements ................................................... 4-9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations ............. 10-15
PART II. OTHER INFORMATION
Item 6. Legal Proceedings............................................. 16
Signatures.................................................... 16
</TABLE>
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- ---------------------------
1998 1997 1998 1997
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Casino $ 99,506 $115,192 $291,655 $335,396
Rooms 42,575 40,999 126,668 127,420
Food and beverage 27,087 23,915 75,630 69,342
Entertainment, retail and other 31,757 30,492 83,117 86,723
Income from unconsolidated affiliate 9,849 12,923 29,526 42,351
-------- -------- -------- --------
210,774 223,521 606,596 661,232
Less: promotional allowances 17,067 15,122 47,677 46,250
-------- -------- -------- --------
193,707 208,399 558,919 614,982
-------- -------- -------- --------
EXPENSES:
Casino 54,063 52,948 163,304 164,480
Rooms 12,265 11,942 36,066 34,770
Food and beverage 17,692 14,695 48,212 40,949
Entertainment, retail and other 18,237 20,379 55,011 59,981
Provision for doubtful accounts and discounts 8,378 8,405 26,151 22,735
General and administrative 27,606 27,377 78,316 77,616
Depreciation and amortization 20,570 16,234 56,314 47,626
-------- -------- -------- --------
158,811 151,980 463,374 448,157
-------- -------- -------- --------
OPERATING PROFIT BEFORE MASTER PLAN ASSET
DISPOSITION AND CORPORATE EXPENSE 34,896 56,419 95,545 166,825
Master Plan asset disposition - 28,566 - 28,566
Corporate expense (income) 714 (3,466) 6,102 1,312
-------- -------- -------- --------
OPERATING INCOME 34,182 31,319 89,443 136,947
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest income 2,910 381 12,120 961
Interest expense, net of amounts capitalized (7,691) - (17,735) (1,242)
Interest expense from unconsolidated affiliate (2,117) (2,511) (6,473) (7,519)
Other, net (641) (205) (1,788) (649)
-------- -------- -------- --------
(7,539) (2,335) (13,876) (8,449)
-------- -------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES
AND EXTRAORDINARY ITEM 26,643 28,984 75,567 128,498
Provision for income taxes (9,591) (10,290) (27,854) (46,655)
-------- -------- -------- --------
NET INCOME BEFORE EXTRAORDINARY ITEM 17,052 18,694 47,713 81,843
Loss on early extinguishment of debt, net
of income tax benefit of $2,333 - (4,238) - (4,238)
-------- -------- -------- --------
NET INCOME $ 17,052 $ 14,456 $ 47,713 $ 77,605
======== ======== ======== ========
PER SHARE OF COMMON STOCK:
Basic:
Net income per share before extraordinary item $ 0.31 $ 0.32 $ 0.84 $ 1.41
Extraordinary item, net - (0.07) - (0.07)
-------- -------- -------- --------
Net income per share $ 0.31 $ 0.25 $ 0.84 $ 1.34
======== ======== ======== ========
Weighted Average Shares Outstanding (000's) 54,765 57,973 56,907 57,912
======== ======== ======== ========
Diluted:
Net income per share before extraordinary item $ 0.31 $ 0.32 $ 0.83 $ 1.39
Extraordinary item, net - (0.07) - (0.07)
-------- -------- -------- --------
Net income per share $ 0.31 $ 0.25 $ 0.83 $ 1.32
======== ======== ======== ========
Weighted Average Shares Outstanding (000's) 55,390 58,812 57,659 58,799
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-1-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 90,772 $ 34,606
Accounts receivable, net 56,668 78,977
Prepaid expenses and other 9,773 10,452
Inventories 12,701 16,462
Deferred tax asset 34,098 30,294
---------- ----------
Total current assets 204,012 170,791
---------- ----------
PROPERTY AND EQUIPMENT, NET 1,280,941 1,032,708
OTHER ASSETS:
Investments in unconsolidated affiliates, net 126,463 108,121
Excess of purchase price over fair market value
of net assets acquired, net 37,830 38,598
Deposits and other assets, net 60,156 48,156
---------- ----------
Total other assets 224,449 194,875
---------- ----------
$1,709,402 $1,398,374
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 20,859 $ 20,484
Construction payable 17,276 33,376
Income taxes payable 741 -
Current obligation, capital leases 5,514 6,088
Current obligation, long term debt 9,729 10,589
Accrued interest on long term debt 5,788 -
Other accrued liabilities 88,162 110,953
---------- ----------
Total current liabilities 148,069 181,490
---------- ----------
DEFERRED REVENUES 4,429 4,743
DEFERRED INCOME TAXES 72,236 58,831
LONG TERM OBLIGATION, CAPITAL LEASES 2,993 4,447
LONG TERM DEBT 536,026 47,241
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock ($.01 par value, 75,000,000 shares
authorized, 58,033,094 and 57,984,873
shares issued and outstanding) 580 580
Capital in excess of par value 968,140 966,487
Treasury stock, at cost (210,459) -
Retained earnings 171,952 124,239
Other comprehensive income 15,436 10,316
---------- ----------
Total stockholders' equity 945,649 1,101,622
---------- ----------
$1,709,402 $1,398,374
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-2-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------------
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 47,713 $ 77,606
Adjustments to reconcile net income to net cash from
operating activities:
Master Plan asset disposition - 28,566
Loss on early extinguishment of debt - 6,671
Depreciation and amortization 56,549 47,731
Amortization of debt offering costs 1,359 960
Provision for doubtful accounts and discounts 26,151 22,735
Earnings in excess of distributions-unconsolidated affiliate (18,933) (22,212)
Deferred income taxes 9,601 22,373
Change in assets and liabilities:
Accounts receivable (3,842) 12,956
Inventories 2,947 (3,210)
Prepaid expenses and other 679 2,522
Income taxes payable 741 (16,122)
Accounts payable, accrued liabilities and other (18,970) (53,145)
Currency translation adjustment 246 407
--------- ---------
Net cash from operating activities 104,241 127,737
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (297,624) (119,084)
Disposition of property and equipment, net 533 130
Investments in unconsolidated affiliates - (7,183)
Change in construction payable (16,100) 86
Change in deposits and other assets, net (18,977) 2,693
--------- ---------
Net cash from investing activities (332,068) (123,458)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments to banks and others (7,201) (9,192)
Issuance of long term debt 500,000 -
Borrowings under bank line of credit 31,000 23,000
Repayments of bank line of credit (31,000) (23,000)
Purchase of treasury stock (210,459) -
Issuance of common stock 1,653 2,494
--------- ---------
Net cash from financing activities 283,993 (6,698)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 56,166 (2,419)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 34,606 61,412
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 90,772 $ 58,993
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-3-
<PAGE>
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 September 30, 1998, approximately
73% 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 MGM Grand Hotel/Casino ("MGM Grand Las Vegas"),
a hotel/casino and entertainment complex in Las Vegas, Nevada.
Through its wholly-owned subsidiary, MGM Grand Australia Pty Ltd., the
Company owns and operates the MGM Grand Hotel/Casino in Darwin, Australia
("MGM Grand Australia").
The Company and Primadonna Resorts, Inc. ("Primadonna") each owns 50%
of New York-New York Hotel and Casino, LLC ("NYNY LLC"), which completed
development of the $460 million themed destination resort called New York-
New York Hotel and Casino ("NYNY") in Las Vegas, Nevada in December 1996.
NYNY commenced operations on January 3, 1997, and is located on
approximately 20 acres at the northwest corner of Tropicana Avenue and Las
Vegas Boulevard, across from MGM Grand Las Vegas.
Through its wholly-owned subsidiary, MGM Grand South Africa, Inc., the
Company manages three casinos throughout various provinces of the Republic
of South Africa. The casino in Nelspruit began operations on October 15,
1997, the casino in Witbank began operations on March 10, 1998 and the
casino in Johannesburg began operations on September 28, 1998. The Company
receives development and management fees from its partner, Tsogo Sun Gaming
& Entertainment, which is responsible for providing all project costs.
Through its wholly-owned subsidiary, MGM Grand Detroit, Inc., the
Company and its local partners in Detroit, Michigan, formed MGM Grand
Detroit, LLC ("MGM Grand Detroit") to develop a hotel/casino and
entertainment complex at an approximate cost of $800 million. On November
20, 1997, MGM Grand Detroit was chosen as a finalist for a development
agreement to construct, own and operate one of Detroit's three new casinos.
On April 9, 1998, the Detroit City Council approved MGM Grand Detroit's
development agreement with the City of Detroit. Construction of the project
is subject to the receipt of various governmental approvals. The plans for
the permanent facility call for an 800-room hotel, a 100,000 square-foot
casino, signature restaurants and retail outlets, a showroom and other
entertainment venues. On July 22, 1998, the Michigan Gaming Control Board
adopted a resolution which allows the issuance of casino licenses to
conduct gaming operations in temporary facilities. Pending receipt of a
license, MGM Grand Detroit anticipates the opening of a temporary gaming
facility in the summer of 1999.
Through its wholly-owned subsidiary, MGM Grand Atlantic City, Inc.,
the Company intends to construct, own and operate a destination resort
hotel/casino, entertainment and retail facility in Atlantic City, New
Jersey, at an approximate cost of $700 million, on approximately 35 acres
of land on the Atlantic City Boardwalk. Construction of the project is
subject to the receipt of various governmental approvals. On July 24,
1996, the Company was found suitable for licensing by the New Jersey Casino
Control Commission.
Certain information and footnote disclosures normally included in the
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
-4-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
the consolidated financial statements and notes thereto included in the
1997 Annual Report included on 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 September 30, 1998, and the results of operations
for the three month and nine month periods ended September 30, 1998 and
1997. The results of operations for such periods are not necessarily
indicative of the results to be expected for the full year.
Recently issued Statement of Position - In April 1998, the American
Institute of Certified Public Accountants issued SOP 98-5, "Reporting on
the Costs of Start-up Activities." The new standard requires that all
companies expense costs of start-up activities as those costs are incurred.
The term "start-up" includes pre-opening, pre-operating and organization
activities. Previously, the Company had capitalized these items until the
development of the property was substantially complete and ready to open,
at which time the cumulative costs were expensed. As of September 30,
1998, the Company capitalized start-up costs of $.7 million related to
Atlantic City and $9.1 million related to Detroit. The Company will adopt
SOP 98-5 in the first quarter of fiscal year 1999.
Certain reclassifications have been made to prior period financial
statements to conform with the 1998 presentation, which have no effect on
previously reported net income.
NOTE 2. STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1998 and 1997, cash payments
made for interest were $22.1 million and $6.2 million, respectively.
Cash payments made for state and federal taxes for the nine months
ended September 30, 1998 and 1997 were $9.4 million and $36.1 million,
respectively.
NOTE 3. LONG TERM DEBT AND NOTES PAYABLE
Long term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Australian Hotel/Casino Loan, due December 1, 2000 $ 45,755 $ 57,830
6.95% Senior Collateralized Notes, due February 1, 2005 300,000 -
6.875% Senior Collateralized Notes, due February 6, 2008 200,000 -
-------- --------
545,755 57,830
Less: Current Maturities (9,729) (10,589)
-------- --------
$536,026 $ 47,241
======== ========
</TABLE>
-5-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 3. LONG TERM DEBT AND NOTES PAYABLE (CONTINUED)
Total interest incurred for the first nine months of 1998 was $29.3
million of which $11.6 million was capitalized, and $7.1 million was
incurred for the first nine months of 1997 of which $5.9 million was
capitalized. During the first nine months of 1998 and 1997, the Company
recognized interest expense from its unconsolidated affiliate of $6.5
million and $7.5 million, respectively.
On July 1, 1996, the Company secured a $500 million Senior Reducing
Revolving Credit Facility with BA Securities (the "Facility"), an affiliate
of Bank of America NT&SA. In August 1996, the Facility was increased to
$600 million. In July 1997, the Facility was amended, extended and
increased to $1.25 billion (the "New Facility"), with provisions to allow
an increase of the New Facility to $1.5 billion as well as to allow
additional pari passu debt financing up to $500 million. As a result of the
New Facility, the Company recognized an extraordinary loss of approximately
$4.2 million, net of tax benefits, of unamortized debt costs from the
Facility during the third quarter of 1997. The New Facility contains
various restrictive covenants on the Company which include the maintenance
of certain financial ratios and limitations on additional debt, dividends,
capital expenditures and disposition of assets. The New Facility also
restricts certain acquisitions and similar transactions. Interest on the
New Facility is based on the bank reference rate or Eurodollar rate. The
New Facility matures in December 2002, with the opportunity to extend the
maturity for successive one year periods. During the nine months ended
September 30, 1998, $31 million was drawn down and repaid against the New
Facility, and no amounts remained outstanding as of September 30, 1998.
The Company filed a Shelf Registration Statement with the Securities
and Exchange Commission which became effective on August 4, 1997. The Shelf
Registration Statement allows the Company to issue up to $600 million of
debt and equity securities. On February 2 and February 6, 1998, the Company
completed public offerings totaling $500 million of Senior Collateralized
Notes in tranches of 7 and 10 years. The 7-year tranche of $300 million
carries a coupon of 6.95%, while the 10-year tranche of $200 million
carries a coupon of 6.875%. Both tranches are initially secured equally and
ratably with the New Facility, and the security may be removed equally with
the New Facility at the Company's option upon the occurrence of certain
events, including the maintenance of investment grade ratings.
The Australian bank facility originally provided a total availability
of approximately $62.2 million (AUD $105 million), which has been reduced
by principal payments totaling $19 million (AUD $28.4 million) made in
accordance with the terms of the bank facility, including $7.2 million (AUD
$12.2 million) during the nine months ended September 30, 1998. As of
September 30, 1998, $45.8 million (AUD $77.3 million) remained outstanding.
The bank facility includes funding for general corporate purposes. Interest
on the bank facility is based on the Australian Bank Bill rate. The
indebtedness, for which a bank agreement has been reached to extend
maturity to December 2002, has been wholly guaranteed by the Company.
MGM Grand Australia has an $11.8 million (AUD $20 million)
uncommitted standby line of credit, with a funding period of 91 days for
working capital purposes. No amount was outstanding during the nine months
ended September 30, 1998.
Upon commencement of operations of NYNY on January 3, 1997 (see
Note 1), the $285 million non-revolving construction line of credit
converted to a five-year reducing revolver. The Company and Primadonna (the
"Partners") have executed a joint and several unlimited Keep-Well
Agreement, which provides that in the event of insufficient cash flow from
NYNY to comply
-6-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 3. LONG TERM DEBT AND NOTES PAYABLE (CONTINUED)
with financial covenants, the Partners will make cash infusions which are
sufficient to bring NYNY LLC into compliance with the financial covenants.
During the first nine months of 1998, $49.5 million in principal repayments
were made by NYNY LLC. As of September 30, 1998 and December 31, 1997, a
total of $195.6 million and $245.1 million was outstanding, respectively.
On January 21, 1997, NYNY LLC completed an additional $20 million equipment
financing with a financial institution. As of September 30, 1998 and
December 31, 1997, $15.2 million and $17.5 million were outstanding related
to the equipment financing, respectively.
NOTE 4. ISSUANCE OF COMMON STOCK
On May 7, 1996, the Company made a commitment to grant 15 shares of
Company common stock to each of its employees in exchange for continued
active employment through the one year anniversary date of the commitment.
As a result of the stock grant commitment, deferred compensation was
charged to stockholders' equity and amortized monthly to compensation
expense over the one year commitment period. On May 7, 1997, 99,045 shares
were issued to employees as a result of the commitment. Over the life of
the commitment, approximately $4 million was amortized to expense, of which
$1.1 million of such expense was recognized during the nine months ended
September 30, 1997.
In 1995, the Company entered into an agreement with Don King
Productions, Inc. ("DKP"), to present six of Mike Tyson's fights. Pursuant
to the agreement, the Company made a non-interest bearing working capital
advance of $15 million to DKP, sold to DKP 618,557 treasury shares of the
Company's common stock (the "Shares") for $15 million, and provided a
guaranteed future share price. The original agreement was amended during
1996, the Shares were placed in the custody of an independent trustee, and
the Company and DKP subsequently determined to terminate the agreement. On
September 25, 1997, the Shares were sold to Tracinda for an aggregate
consideration of $27.5 million, the Company was repaid the $15 million
working capital advance and the remaining consideration in the amount of
$12.5 million was paid to DKP. As a result of this transaction, the Company
reversed approximately $5.9 million of previously expensed stock price
guarantee amortization during 1997.
On June 23, 1998, the Company announced a $35.00 per share cash
tender offer for up to 6 million shares of Company common stock as part of
a 12 million share repurchase program. The offer commenced on July 2, 1998
and expired on July 31, 1998. A total of 10.8 million shares of the
Company's common stock were tendered, and accordingly, the shares were
prorated. The total acquisition cost of the tendered shares was
approximately $210.5 million. The Company anticipates that, depending on
market conditions, the remaining 6 million shares in the repurchase program
may be acquired in the open market, in private transactions, through a
tender offer, offers or otherwise.
NOTE 5. COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
Reporting Comprehensive Income, requires that the Company disclose
comprehensive income and its components. The objective of SFAS 130 is to
report a measure of all changes in equity of a company that result from
transactions and other economic events of the period other than
transactions with stockholders. Comprehensive income is the total of net
income and all other non-stockholder changes in equity ("Other
Comprehensive Income").
-7-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 5. COMPREHENSIVE INCOME (CONTINUED)
The Company has recorded currency translation adjustments as Other
Comprehensive Income in the accompanying financial statements.
Comprehensive income is calculated as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $17,052 $14,456 $47,713 $77,605
Currency translation adjustment 2,157 2,564 5,120 7,399
------- ------- ------- -------
Comprehensive income $19,209 $17,020 $52,833 $85,004
======= ======= ======= =======
</TABLE>
NOTE 6. EARNINGS PER SHARE
The Company calculates earnings per share ("EPS") in accordance with
the Statement of Financial Accounting Standards No. 128 ("SFAS 128")
Earnings per Share. SFAS 128 presents two EPS calculations: (i) basic
earnings per common share which is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the
periods presented, and (ii) diluted earnings per common share which is
determined on the assumptions that options issued to employees are
exercised and repurchased at the average price for the periods presented
(in thousands except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Income $17,052 $14,456 $47,713 $77,605
======= ======= ======= =======
Weighted Average Basic Shares 54,765 57,973 56,907 57,912
======= ======= ======= =======
Basic Earnings per Share $ 0.31 $ 0.25 $ 0.84 $ 1.34
======= ======= ======= =======
Weighted Average Diluted Shares 55,390 58,812 57,659 58,799
======= ======= ======= =======
Diluted Earnings per Share $ 0.31 $ 0.25 $ 0.83 $ 1.32
======= ======= ======= =======
</TABLE>
Weighted average diluted shares include the following: options to
purchase 625,000 and 839,000 shares issued to employees for the three month
periods ended September 30, 1998 and 1997, respectively; 752,000 and
848,000 for the nine month periods ended September 30, 1998 and 1997,
respectively; and employee grant shares (see Note 4) of 39,000 for the nine
month period ended September 30, 1997.
NOTE 7. INVESTMENT IN UNCONSOLIDATED AFFILIATE
The Company and Primadonna each hold a 50% interest in a joint venture
which owns and operates the NYNY (see Note 1). The hotel/casino opened to
the public on January 3, 1997. The Company contributed land on which the
property is located and cash totaling $70.7 million. The joint venture
initially secured bank financing of $285 million and term loan financing of
$20 million (see Note 3), and the joint venture Partners executed a Keep-
Well Agreement in conjunction with the financing.
-8-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 7. INVESTMENT IN UNCONSOLIDATED AFFILIATE (CONTINUED)
Summary condensed financial information for NYNY LLC is as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Revenues $ 55,851 $ 61,709 $164,584 $196,978
======== ======== ======== ========
Operating Income $ 19,745 $ 25,998 $ 59,082 $ 84,833
======== ======== ======== ========
Interest Expense, net $ 4,234 $ 5,023 $ 12,946 $ 15,039
======== ======== ======== ========
Net Income $ 15,511 $ 20,975 $ 46,136 $ 69,794
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
As of As of
September 30, 1998 December 31, 1997
------------------ ------------------
<S> <C> <C>
Total Assets $455,411 $470,252
======== ========
Long Term Debt $208,304 $246,403
======== ========
Members' Equity $221,247 $183,350
======== ========
</TABLE>
NOTE 8. MASTER PLAN ASSET DISPOSITION
As a result of the MGM Grand Las Vegas property construction
enhancements associated with the transformation of the facility into "The
City of Entertainment", the Company wrote-off assets during the third
quarter of 1997. The net book value of these assets was $28.6 million (pre-
tax) which included the original swimming pool facility to be replaced by
the Mansion at the MGM Grand, consisting of 29 suites and villas, and
certain theme park assets on the site intended for a 500 room Ritz-Carlton
Hotel.
-9-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Company, through its wholly-owned subsidiaries, owns and operates
MGM Grand Las Vegas and MGM Grand Australia (see Note 1). The Company also
owns 50% of New York-New York Hotel and Casino, which commenced operations
on January 3, 1997 (see Note 1).
<TABLE>
<CAPTION>
(in thousands) (in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Revenues:
MGM Grand Las Vegas $173,758 $185,754 $502,639 $546,972
MGM Grand Australia 9,228 9,814 25,033 26,336
MGM Grand South Africa 1,305 - 2,564 -
Income from unconsolidated affiliate 9,849 12,923 29,526 42,351
Eliminations and other (433) (92) (843) (677)
-------- -------- -------- --------
$193,707 $208,399 $558,919 $614,982
======== ======== ======== ========
Operating Profit (Loss):
MGM Grand Las Vegas $ 21,654 $ 41,595 $ 59,080 $121,915
MGM Grand Australia 2,423 1,901 5,403 2,559
MGM Grand South Africa 970 - 1,536 -
Income from unconsolidated affiliate 9,849 12,923 29,526 42,351
-------- -------- -------- --------
34,896 56,419 95,545 166,825
Master Plan asset disposition - 28,566 - 28,566
Corporation expense (income) 714 (3,466) 6,102 1,312
-------- -------- -------- --------
Operating income 34,182 31,319 89,443 136,947
Interest income 2,910 381 12,120 961
Interest expense, net of amounts capitalized (7,691) - (17,735) (1,242)
Interest expense from unconsolidated affiliate (2,117) (2,511) (6,473) (7,519)
Other, net (641) (205) (1,788) (649)
-------- -------- -------- --------
Income before provision for income taxes and
extraordinary item 26,643 28,984 75,567 128,498
Provision for income taxes (9,591) (10,290) (27,854) (46,655)
-------- -------- -------- --------
Net income before extraordinary item 17,052 18,694 47,713 81,843
Extraordinary item, net - (4,238) - (4,238)
-------- -------- -------- --------
Net income $ 17,052 $ 14,456 $ 47,713 $ 77,605
======== ======== ======== ========
</TABLE>
-10-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
QUARTER VERSUS QUARTER
Net revenues for the third quarter of 1998 were $193.7 million,
representing a decrease of $14.7 million (7.1%) when compared with $208.4
million during the same period last year. The decrease in net revenues was
largely due to lower casino and retail revenues, and lower earnings from
the Company's 50% ownership in NYNY (see Note 1), somewhat offset by higher
food and beverage revenues.
Consolidated casino revenues for the third quarter of 1998 were $99.5
million, representing a decrease of $15.7 million (13.6%) when compared
with $115.2 million during the same period in the prior year. MGM GRAND LAS
VEGAS casino revenues were $92.2 million, representing a decrease of $15.4
million (14.3%) when compared with $107.6 million during the same period in
the prior year. The reduction in casino revenues at MGM Grand Las Vegas was
a result of lower baccarat volume and win percentage. MGM GRAND AUSTRALIA
reported casino revenues of $7.3 million, representing a decrease of $.3
million (3.9%) when compared with $7.6 million during the same period in
the prior year. The reduction of casino revenue was a result of lower
average exchange rate in the current year's quarter (.5989), compared with
a higher average rate in the prior year's quarter (.7356).
Consolidated room revenues were $42.6 million for the third quarter of
1998 compared with $41 million in the prior year's third quarter,
representing an increase of $1.6 million (3.9%). MGM GRAND LAS VEGAS room
revenues were $42 million, representing an increase of $1.7 million (4.2%)
when compared with $40.3 million in the same period of the prior year. The
increase was primarily due to a higher average room rate for the 1998 third
quarter of $94 compared with $90 for the 1997 third quarter. The increase
was partially offset by a decrease in occupancy to 97.8% for the third
quarter of 1998 when compared with 99% in the same period of the prior
year. MGM GRAND AUSTRALIA room revenues decreased $.2 million (25%) from
$.8 million in 1997 to $.6 million in 1998 due to lower room rates and
average exchange rate, somewhat offset by higher occupancy.
Consolidated food and beverage revenues were $27.1 million in the
third quarter of 1998, representing an increase of $3.2 million (13.4%)
when compared with $23.9 million in the third quarter of the prior year.
The increase was attributable to MGM GRAND LAS VEGAS which had food and
beverage revenues of $25.5 million during the third quarter of 1998,
representing an increase of $3.3 million (14.9%) when compared with $22.2
million in the third quarter of 1997. This increase resulted from the
banquet revenue generated from the Conference Center which opened on April
16, 1998, and the operation of the Studio 54 night club which opened late
December 1997. MGM GRAND AUSTRALIA reported food and beverage revenues of
$1.6 million, which were slightly lower when compared with the same period
in the prior year due to a lower average exchange rate in the current year.
Consolidated entertainment, retail and other revenues increased $1.3
million (4.3%) from $30.5 million in the 1997 period to $31.8 million in
the 1998 period. The increase is primarily a result of strengthened MGM
GRAND LAS VEGAS entertainment revenues and the addition of management and
development fees from MGM GRAND SOUTH AFRICA of $1.3 million. These
increases were partially offset by decreases in theme park revenues due to
the abbreviated seasonal operating schedule during this year's quarter.
Income from unconsolidated affiliate was $9.8 million for the third
quarter of 1998, compared with $12.9 million in 1997, representing the
Company's 50% share of NYNY's operating income. The reduction of earnings
from NYNY is a result of the unprecedented public response in the prior
(first) year of operations.
-11-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
QUARTER VERSUS QUARTER (CONTINUED)
Consolidated operating expenses (before Master Plan asset disposition
and Corporate expenses) were $158.8 million in the third quarter of 1998,
representing an increase of $6.8 million (4.5%) when compared with $152
million for the same period last year. The overall increase was
attributable to MGM GRAND LAS VEGAS which included increased depreciation
expense and operating expenses due to Master Plan assets placed in service
and higher food and beverage expenses associated with increased revenues.
The increases were somewhat offset by decreases in retail expenses in the
current year's quarter due to the abbreviated seasonal operating schedule
of the theme park. MGM GRAND AUSTRALIA operating expenses decreased from
$7.9 million in the 1997 period to $6.8 million in the 1998 period as a
result of continuing cost containment efforts and lower average exchange
rate in the current year.
Master Plan asset disposition relates to the write-off of various
assets related to the transformation of MGM Grand Las Vegas into "The City
of Entertainment." The prior year's quarter write-off of $28.6 million
(pre-tax) is the result of management's decision to enhance and expand the
Master Plan project from $250 million to over $700 million.
Corporate expense for 1998 was $.7 million compared with income of
$3.5 million in 1997, representing an increase of $4.2 million. The 1997
third quarter corporate expense was reduced by a $5.9 million reversal of
previously expensed stock price guarantee amortization (see Note 4), which
was somewhat offset by a payroll-related reversal of $1.6 million in the
1998 period.
Interest income of $2.9 million for the three months ended September
30, 1998 increased by $2.5 million from $.4 million in the third quarter of
1997. The increase was attributable to higher invested cash balances
primarily from the proceeds of the Senior Collateralized Notes (see Note
3).
Interest expense in the third quarter of 1998 was $7.7 million (net of
amounts capitalized) compared with no interest expense in the same period
of 1997, reflecting the issuance of the Senior Collateralized Notes (see
Note 3). Also, the Company recognized interest expense from unconsolidated
affiliate of $2.1 million during the 1998 period compared with $2.5 million
in 1997, reflecting a reduced outstanding balance on the NYNY facility (see
Note 3).
Extraordinary loss in the prior year's third quarter of $4.2 million,
net of income tax benefit, reflects the write-off of unamortized debt costs
from the previous $600 million credit facility (see Note 3).
NINE MONTHS VERSUS NINE MONTHS
Net revenues for the nine months ended September 30, 1998 were $558.9
million, representing a decrease of $56.1 million (9.1%) when compared with
$615 million during the same period last year. The decrease in net revenues
was largely due to lower casino, other retail revenue, and lower earnings
from the Company's 50% ownership in NYNY (see Note 1), somewhat offset by
higher food and beverage revenues.
Consolidated casino revenues for the nine months ended September 30,
1998 were $291.7 million, representing a decrease of $43.7 million (13%)
when compared with $335.4 million during the same period in the prior year.
MGM GRAND LAS VEGAS casino revenues were $271.7 million, representing a
decrease of $43.3 million (13.7%) when compared with $315 million during
the same period in the prior year. The reduction in casino revenues at MGM
Grand Las Vegas was a result of lower table game and baccarat volume and
-12-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
NINE MONTHS VERSUS NINE MONTHS (CONTINUED)
win percentages. MGM GRAND AUSTRALIA reported casino revenues of $20
million which was $.4 million lower than the same period in the prior year,
primarily due to a lower average exchange rate in the current year (.6317)
and a higher average exchange rate in 1997 (.7609).
Consolidated room revenues for the period were $126.7 million compared
with $127.4 million for the same period in 1997, representing a decrease of
$.7 million (.5%). MGM GRAND LAS VEGAS room revenues were $125.4 million,
representing a decrease of $.4 million (.3%) when compared with $125.8
million in the same period of the prior year. The decrease was due to a
lower average room rate for the 1998 period of $97 compared with $98 in
1997. MGM GRAND AUSTRALIA room revenues were $1.4 million for the nine
months ended September 30, 1998, representing a decrease of $.4 million
(22.2%) when compared with $1.8 million for the prior year period, due to
lower room rates and average exchange rates partially offset by higher
occupancy.
Consolidated food and beverage revenues for the period were $75.6
million, representing an increase of $6.3 million (9.1%) when compared with
$69.3 million for the same period of the prior year. The increase was
attributable to MGM GRAND LAS VEGAS which had food and beverage revenues of
$71.5 million during the current period, representing an increase of $7.2
million (11.2%) when compared with $64.3 million in the same period of
1997. This increase resulted from the Company's decision to operate the
Studio Cafe coffee shop which during the 1997 period had been a leased
facility until March 1997, the opening of the Studio 54 night club in late
December 1997, and banquets from the Conference Center which opened in
April 1998. MGM GRAND AUSTRALIA reported food and beverage revenues of
$4.3 million, representing a decrease of $.9 million (17.3%) when compared
with $5.2 million during the same period in the prior year as a result of
lower average exchange rate in the current year.
Consolidated entertainment, retail and other revenues decreased $3.6
million (4.2%) from $86.7 million in the 1997 period to $83.1 million in
the 1998 period. The decrease in entertainment, retail and other revenues
is a result of lower MGM GRAND LAS VEGAS theme park revenues from reduced
covers and the abbreviated seasonal operating schedule during the current
third quarter. The decrease was partially offset by increases in
entertainment revenues from events in the Grand Garden Arena, increased EFX
attendance, increased convention entertainment /audio visual revenue, and
the addition of management and development fees from MGM GRAND SOUTH
AFRICA.
Income from unconsolidated affiliate was $29.5 million for the nine
months ended September 30, 1998, compared with $42.4 million in 1997,
representing the Company's 50% share of NYNY's operating income. The
reduction of earnings from NYNY is a result of the unprecedented public
response in the prior (first) year of operations.
Consolidated operating expenses (before Master Plan asset disposition
and Corporate expenses) for the 1998 period were $463.4 million,
representing an increase of $15.2 million (3.4%) when compared with $448.2
million for the same period last year. The overall increase was
attributable to MGM GRAND LAS VEGAS which had higher operating expenses in
the 1998 period as a result of higher food and beverage expenses associated
with the addition of Studio 54 and the longer operating period for the
Studio Cafe and higher banquets expense for the Conference Center.
Additionally, provisions for doubtful accounts were higher due to changes
in anticipated collectability of receivables and uncertain economic
conditions in Asia, higher depreciation expense due to Master Plan assets
placed in service and room expenses for the addition of sales staffing for
-13-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
NINE MONTHS VERSUS NINE MONTHS (CONTINUED)
the Conference Center. These increases were partially offset by lower
casino expenses due to a reduction in casino taxes, as well as decreased
retail expenses relating to the lower retail revenue. MGM GRAND AUSTRALIA
operating expenses decreased $4.2 million (17.6%) from $23.8 million in the
1997 period to $19.6 million in the 1998 period as a result of continuing
cost containment efforts and lower average exchange rate in the current
year.
Master Plan asset disposition relates to the write-off of various
assets related to the transformation of MGM Grand Las Vegas into "The City
of Entertainment." The prior year's quarter write-off of $28.6 million
(pre-tax) is the result of management's decision to enhance and expand the
Master Plan project from $250 million to over $700 million.
Corporate expense for the 1998 period was $6.1 million compared with
$1.3 million in 1997, representing an increase of $4.8 million. The
increase was due to higher operating expenses in the current year and the
$5.9 million reversal of the stock price guarantee amortization that
occurred in the prior year. This was somewhat offset by the current year's
quarter payroll-related reversal of $1.6 million.
Interest income of $12.1 million for the period ended September 30,
1998 increased by $11.1 million from $1 million in the same period of
1997. The increase was attributable to higher invested cash balances
primarily from the proceeds of the Senior Collateralized Notes (see Note
3).
Interest expense for the nine months ended September 30, 1998 of $17.7
million (net of amount capitalized) increased by $16.5 million when
compared with $1.2 million (net of amount capitalized) in the same period
of 1997. The increase in the 1998 period was primarily due to the issuance
of the Senior Collateralized Notes (see Note 3). Also, the Company
recognized interest expense from unconsolidated affiliate of $6.5 million
during the 1998 period compared with $7.5 million in 1997, reflecting a
reduced outstanding balance on the NYNY facility (see Note 3).
Extraordinary loss in the prior year's third quarter of $4.2 million,
net of income tax benefit, reflects the write-off of unamortized debt costs
from the previous $600 million credit facility (see Note 3).
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1998 and December 31, 1997, the Company held cash
and cash equivalents of $90.8 million and $34.6 million, respectively.
Cash provided by operating activities for the first nine months of 1998 was
$104.2 million compared with $127.7 million for the same period of 1997.
On May 6, 1996, MGM Grand Las Vegas announced details of a 30-month,
$250 million Master Plan designed to transform the facility into "The City
of Entertainment." The Master Plan, which on June 3, 1997 was enhanced and
increased to more than $700 million, calls for a new 1,500-room "Marriott
Marquis"; expansion of the resort's casino capacity by nearly 20 percent to
more than 200,000 square feet; and a "Mansion at the MGM Grand" offering 29
exclusive suites and villas. The Company's 380,000 square foot state-of-
the-art conference center opened in April 1998, and the 50 foot tall
polished bronze lion sculpture along with the "Entertainment Casino"
(previously known as the Emerald City casino) were completed during the
first quarter of 1998. Additionally, the new pool and spa complex was
completed and opened for operations in July 1998. Approximately $309.4
-14-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
million is anticipated to be expended during 1998 related to the Master
Plan, of which $255.7 million had been expended through September 30, 1998.
Capital expenditures during the first nine months of 1998 were $297.5
million, consisting primarily of $24.6 million related to MGM Grand Las
Vegas for general property improvements, $255.7 million for the Master Plan
project, $11.7 million related to the purchase of a Company airplane, $1.3
million at MGM Grand Australia for general property improvements and $4.2
million for MGM Grand Atlantic City land acquisition costs and pre-
construction activities. Anticipated capital expenditures remaining for
1998 are approximately $105.4 million, consisting of approximately $53.7
million related to the Master Plan, approximately $20.9 million related to
general property improvements for MGM Grand Las Vegas, approximately $29
million for MGM Grand Detroit, approximately $1.6 million related to land
acquisitions and pre-construction activities for MGM Grand Atlantic City
and approximately $.2 million for MGM Grand Australia.
On June 23, 1998, the Company announced a $35.00 per share cash tender
offer for up to 6 million shares of Company common stock as part of a 12
million share repurchase program. The offer commenced on July 2, 1998 and
expired on July 31, 1998. Based upon the final results, 10.8 million shares
of the Company's common stock were tendered, and accordingly, the shares
were prorated. The total acquisition cost of the tendered shares was
approximately $210.5 million. The Company anticipates that, depending on
market conditions, the remaining 6 million shares in the repurchase program
may be acquired in the open market, in private transactions, through a
tender offer, offers or otherwise.
The Company expects to finance operations and capital expenditures
through cash flow from operations, cash on hand, and the bank lines of
credit.
SAFE HARBOR PROVISION
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in
this report contains statements that are forward-looking, such as
statements relating to plans for future expansion and other business
development activities, as well as other capital spending, financing
sources, the effects of regulation (including gaming and tax regulations)
and competition. Such forward-looking information involves important risks
and uncertainties that could significantly affect anticipated results in
the future and, accordingly, such results may differ from those expressed
in any forward-looking statements made by or on behalf of the Company.
These risks and uncertainties include, but are not limited to, those
relating to development and construction activities, dependence on existing
management, leverage and debt service (including sensitivity to
fluctuations in interest rates), domestic or global economic conditions
(including sensitivity to fluctuations in foreign currencies), changes in
federal or state tax laws or the administration of such laws, changes in
gaming laws or regulations (including the legalization of gaming in certain
jurisdictions) and application for licenses and approvals under applicable
jurisdictional laws and regulations (including gaming laws and
regulations).
-15-
<PAGE>
MGM GRAND, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Items 2, 3, 4, 5 and 6 of Part II are not applicable.
ITEM 1. LEGAL PROCEEDINGS
On July 22, 1998, MGM Dist., Inc. (formerly MGM Grand Desert Inn, Inc.
and a subsidiary of the Company ) was granted a dismissal in an adversary
proceeding in the United States Bankruptcy Court for the Central District
of California, in which the plaintiff sought to collect funds previously
paid to the Company in settlement of gaming activities. The plaintiff
subsequently filed a motion for reconsideration which is pending judicial
consideration.
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: November 10, 1998 /s/ ALEJANDRO YEMENIDJIAN
-------------------------------------
Alejandro Yemenidjian
President and
Chief Operating Officer
Date: November 10, 1998 /s/ JAMES J. MURREN
-------------------------------------
James J. Murren
Executive Vice President
and Chief Financial Officer
(principal accounting officer)
-16-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> JUL-01-1998 JAN-01-1998
<PERIOD-END> SEP-30-1998 SEP-30-1998
<CASH> 0 90,772
<SECURITIES> 0 0
<RECEIVABLES> 0 89,739
<ALLOWANCES> 0 33,071
<INVENTORY> 0 12,701
<CURRENT-ASSETS> 0 204,012
<PP&E> 0 1,519,305
<DEPRECIATION> 0 238,364
<TOTAL-ASSETS> 0 1,709,402
<CURRENT-LIABILITIES> 0 148,069
<BONDS> 0 0
0 0
0 0
<COMMON> 0 580
<OTHER-SE> 0 945,069
<TOTAL-LIABILITY-AND-EQUITY> 0 1,709,402
<SALES> 210,774 606,596
<TOTAL-REVENUES> 193,707 558,919
<CGS> 0 0
<TOTAL-COSTS> 150,433 437,223
<OTHER-EXPENSES> 714 6,102
<LOSS-PROVISION> 8,378 26,151
<INTEREST-EXPENSE> 9,808 24,208
<INCOME-PRETAX> 26,643 75,567
<INCOME-TAX> 9,591 27,854
<INCOME-CONTINUING> 17,052 47,713
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 17,052 47,713
<EPS-PRIMARY> .31 .84
<EPS-DILUTED> .31 .83
</TABLE>
