Daniel J. D'Arrigo - Chief Financial Officer, Executive Vice President and Treasurer James Joseph Murren - Chairman and Chief Executive Officer Robert H.

Baldwin - Chief Design & Construction Officer, Director, President of Project Citycenter and Chief Executive Officer of Project CC LLC Grant R. Bowie - President Corey I.

Sanders - Chief Operating Officer

Joseph Greff - JP Morgan Chase & Co, Research Division Harry C. Curtis - Nomura Securities Co.

Ltd., Research Division David Bain - Sterne Agee & Leach Inc., Research Division Kelly Knybel - Deutsche Bank AG, Research Division Grant Govertsen Felicia R. Hendrix - Barclays Capital, Research Division Shaun C.

Kelley - BofA Merrill Lynch, Research Division Thomas Allen - Morgan Stanley, Research Division Robin M. Farley - UBS Investment Bank, Research Division Kevin Coyne - Goldman Sachs Group Inc., Research Division Richard A.

Hightower - ISI Group Inc., Research Division

Well, thank you, Jennifer, and good morning, and welcome to our second quarter earnings call. This call is being broadcast live on the Internet at www.mgmresorts.com, and a replay of the call will be made available on our company website.

This morning, we furnished our press release on Form 8-K to the SEC, as well. And before turning over to Jim, I'd like to read the Safe Harbor disclosure.

So on this call, we will make forward-looking statements under the Safe Harbor provisions of the federal securities laws. Actual results might differ materially from those projected in the forward-looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in these forward-looking statements is contained in today's press release and in our periodic filings with the SEC, including our most recent Form 10-K. During the call, we will also discuss non-GAAP financial measures in talking about the company's performance.

You can find the reconciliation of these measures to GAAP financial measures in our press release which is available on our website. Finally, please note that this presentation is being recorded.

And with that, I'll turn it over to Jim.

Well, thank you, Dan, and good morning, everyone. I'm happy to say that today, we reported a very solid second quarter.

Our EBITDA was up by 9%, led by a broad-based recovery here on the Las Vegas Strip, where our cash flows were up 15%. Grant will get into this in a moment but MGM China, we're very proud to say, had yet another record quarter, a tremendous growth there in that market.

And we've been busy on our strategic plans. We've set out on these calls many of our goals and I'm happy to say we're executing on them.

The targeted capital here in Las Vegas is yielding very strong results. The room upgrades and food and beverage offerings at MGM and Bellagio are obviously yielding higher cash flows.

And I think you'll see Mandalay Bay to be the next beneficiary of this. We recently opened a new nightclub and a day club, and debuted the Michael Jackson One show, that is doing great.

The occupancies are as strong as O and people love the show and it's doing extraordinarily well for our food and beverage and gaming, as well. Down the road, as you know, at that compound, we're going to have the Delano there, which will replace the hotel at Mandalay Bay, which we think will continue to drive higher revenue and cash flows at Mandalay.

Next year, we'll see quite a bit of growth, we think, at New York-New York and Monte Carlo because they'll both benefit from the capital we're spending this year to significantly upgrade their food and beverage offerings and retail offerings and their street frontage. Our M life customer loyalty program is working.

We've seen significant growth in our database, and that has yielded higher bookings in our rooms. And our partnerships are also leading to room growth.

The recent ones with Southwest Airlines and Hyatt have been particularly impactful. On the development front, our second property in Macau is well underway, a bunch of us were there just last week, and we came away very, very pleased with the progress.

Excavation is largely completed, and we are well over halfway done with our deep piles and, if anything, we're nicely ahead of schedule. We picked our architect quite a while ago.

I don't know if we've disclosed that, but I can now, it's KPF. KPF is the designer of the Mandarin here in Las Vegas, which we're very proud of, and One Central in Macau.

They've been progressing with our other designs -- designers and architects on the exteriors and interiors and, again, we're ahead of plan there as well. I could tell you some of the features of MGM Cotai will include a tremendous atrium.

In fact, that will be about 3x the size of the one we have here at Bellagio, and it's already being programmed with pretty special retail, food and beverage and we have some good surprises on the entertainment front as well. We are also going to be building a mansion in that property.

Many of you know the mansion that we have here in Las Vegas. If you don't know it, it's probably because you weren't invited.

It's within the MGM Grand here. It's our most popular destination for our Asian customers, it's really spectacular and we are to develop one we think will set the bar even higher in Cotai.

The mansion in the MGM Cotai will be really over the top. Grant has done a good job, I have to say, on the operating team and working with our development team, which is led by Ken Rosevear and Hunter Clayton.

They have quite an operation going on the ground in Macau to rapidly get this beautiful property to get to conclusion. Back here in the U.S., as you know, we submitted a proposal for a destination resort at National Harbor, that's in Prince George's County, Maryland.

We did that in May. The Location Commission is in the midst of its review process and is expected to announce a date for public presentations.

We think those presentations will happen in either late September or October. They've indicated a final decision is still expected by year end.

We're extremely excited about this opportunity and feel like we have the winning proposal. In Massachusetts, we had a big win with the special election in Springfield to approve the host city agreement.

Now the company is finalizing the details of our RFP response, which is due by the end of this year. We think we can play a major role in the revitalization of that city in Western Mass., and we look forward to delivering a very comprehensive proposal to the state.

The state's indicated that, that final decision is expected around April of next year. On the international front, we've been very active in Japan, just to remind people of that.

We've been meeting with a lot of stakeholders there over the last few years and we are actively pursuing that. There's a growing consensus there that gaming will be expanded and we plan to participate in that process.

I think our operating and development expertise as well as our ability to be good partners, I think, are great advantages for us. And in Korea, you may know the government is considering legislation to permit integrated resorts.

We've been working with other gaming companies and engaged with the market there. And I think, also there, the view is becoming more favorable, so we'll have to see.

But that is potentially, again, a very large opportunity. I just have to say that we're proud of how we're doing, and we're off to a good start for this year, and I think the best is yet to come.

And I'll turn it over to the Dan.

Thanks Jim. Our strong second quarter results were led by increased margins at our wholly-owned domestic resorts, which increased by over 150 basis points year-over-year, driven by a 250 basis points increase at our Strip properties.

In fact, we're able to maintain our margins on a sequential basis as well on the Strip, which is pretty impressive given the whole dynamic on our table games play. Our regional properties remain best-in-class and market share leaders, but these markets remain highly competitive and increasingly crowded.

With that in mind, we continue to believe that the growth in Las Vegas will outperform our existing regional markets for the foreseeable future. We truly have the best revenue yield management team and, thanks to them, we're able to drive our ADR up over 2% in the quarter and increase our occupancy despite having roughly over 70,000 more room nights available this quarter than last year as the room remodel at the MGM Grand was in full force in the second quarter last year, and those rooms now are fully back online.

Convention trends for 2013 remain in line with our expectations that we had coming into the year. Our second quarter convention mix increased slightly and our rate grew mid single-digits.

We continue to see moderate growth in convention room nights going into the third quarter and, based on that, along with some solid retail booking trends we're seeing, we expect REVPAR in the third quarter to be up 3%. From a productivity standpoint, the team is doing an outstanding job.

The second quarter was our highest Strip convention room nights booking quarter for future dates. Importantly, the composition of those future bookings is impressive with over 50% of those convention room nights booked in the second quarter coming from corporate business.

That's pretty important, as you all know, because that is the most profitable segment in the convention room nights, and 2014 and beyond are getting stronger by the day. These strong sales trends are a solid indicator for our business in 2014 and going forward, and our 14-pace remains up double-digits.

Recall in March of 2014, we have CON/AGG, big citywide convention back in Las Vegas, some 150,000 attendees usually show up for that show. They come in every 3 years, they're a great event for the entire town, that's one of the key drivers to pace next year.

But looking beyond that, we're seeing significant pace increases in each of the second, third and fourth quarter next year. In fact, we're up at least high single-digits each quarter next year when you're looking at the non-CON/AGG piece of the business.

So we're pretty excited about the pace of 2014 and the traction that we continue to make in the important segment of our room booking pace on the convention and meeting side. Looking at the balance sheet and helping with some of your modeling.

We currently have over $1 billion of available liquidity on our corporate revolver and some excess cash as well. Excluding MGM China, our current debt is approximately $12.6 billion.

At the end of the second quarter, MGM China had cash of approximately $840 million and debt of $553 million. And as you saw in the release this morning, MGM China announced its first semi-annual dividend as part of its regular dividend policy.

They declared a dividend of roughly $113 million, of which $57 million will be distributed to MGM Resorts and approximately $55 million to all other shareholders on/or about September 2. As we stated before, the MGM China Board will also continue to consider special dividends from time to time as well as the annual dividend policy.

In total, MGM China has distributed $312 million in dividends to MGM Resorts this year alone. CityCenter currently has approximately $1.85 billion in outstanding senior notes and excess cash of approximately $365 million, and they also have about $72 million remaining in the condo proceeds account.

Our second quarter CapEx at our wholly-owned resorts was approximately $65 million, and our full year CapEx for MGM Resorts wholly-owned properties remains unchanged at roughly $350 million. Our corporate expense in the quarter came in slightly above our guidance, primarily due to our ongoing development initiatives in Maryland and Massachusetts.

We expect corporate expense to be in the range of $45 million to $50 million per quarter for the remainder of the year. Our stock compensation is estimated to be approximately $6 million to $7 million in the third quarter and depreciation expense is estimated to be consistent with the second quarter.

Following the repricing of our term loan this past May, we also had a step-down in pricing on our revolver in our Term Loan A along with the step-down in pricing at MGM China's credit facility. We estimate that our gross interest expense for the third quarter will be approximately $210 million, including about $5 million from MGM China and about $9 million in noncash amortization.

And with that, I'll turn it over to Bobby to talk about CityCenter.

Thank you, Dan, and good morning, everyone. ARIA's EBITDA was $50 million, a decrease of $6 million or 11% year-over-year, as it was negatively impacted by approximately $10 million in whole when compared to the 24-month average whole percentage.

Our hotel business continues to improve due to greater brand awareness and increased convention room nights. This was our best REVPAR quarter ever at $194.

Our best-in-class convention facility continues to drive bookings, as we had our highest future convention bookings quarter since opening. These future bookings are solidifying our convention base over the next several years.

Our food and beverage profit is growing, driven by strength in catering for conventions and the increasing popularity of our fine dining restaurants. We recently welcomed Five50, a pizza restaurant by James Beard award-winning Chef, Shawn McClain, which opened July 4.

Five50 is a great casual addition to the restaurant offerings at ARIA and the public's initial reaction has been extremely positive. If you've been to Las Vegas Strip lately, you'll notice our 250-foot LED marquee sign on Las Vegas Boulevard, which made its debut in mid-April and is the largest digital screen on the Las Vegas Strip.

The marquee increases our brand visibility, promotes ARIA's restaurant collection, our M life rewards programs, Crystals retail outlets and features customized welcome messages for our large convention groups. This marquee is a game-changing symbol for marketing on the Strip, and it's captivating pedestrians from both north and south ends of Las Vegas Boulevard.

I would like to also highlight that Crystals had its best quarter ever, up 21% year-over-year, and we continue to add tenants as our second Starbucks is now open and we recently executed 2 additional leases. As the real estate market in Las Vegas continues to improve, and we are seeing increased sales for our Las Vegas CityCenter condos.

During the quarter, we sold 45 units at Mandarin Oriental and 7 units at Veer, for a total of $54 million of proceeds. In July, we sold another 21 units at Mandarin Oriental.

And that concludes my report. I'll turn it over to you, Grant.

Thanks, Bobby. For the second quarter, MGM China net revenues increased 18% to $835 million and generated an all-time record EBITDA around $205 million, and that was up 10% year-over-year.

This number includes a branding fee of $15 million. Our strong results was driven by record performance in both the VIP and our main floor gaming table segments where our growth outpaced the market.

The VIP turnover reached another property record with approximately 34% growth year-over-year and we continue to see success from the addition of our 2 second-floor VIP area and the introduction of a new operator in mid-April. Our overall VIP win for the quarter was approximately 2.9%, and that was versus 3.3% for the prior year.

We also had a record main floor table games quarter. We're able to drive main floor table game volumes up 11% and revenue up 29% year-over-year with our continued focus on table yield management and strategically targeting the premium segment.

Slot handle increased by 11% during the quarter and we remain the market leader for single property in terms of slot gross gaming revenues. During the second quarter, our total CapEx was $80 million.

Our MGM total expenditures were approximately $78 million during the second quarter. We expect our full year totalized spend to be approximately $290 million.

Our overall budget remains unchanged at $2.6 billion for MGM Cotai, excluding land and capitalized interest. And based on our progress to that, we are now anticipating an early 2016 opening.

At MGM Macau, we expect to spend approximately $56 million in 2013. We believe our continuous upgrade of our product on offer is one of the keys to remain competitive in this market.

And during the third quarter, both our high-limit slot room and our Las Vegas table games room will be temporarily off-line for refurbishment. And with that, I'd like to turn back to Jim for his closing remarks.

Thank you, Grant. Thanks for being up so late.

Well, before we get to the questions, just a couple of final points. Clearly, we see here in Las Vegas a continuation of the recovery.

Housing in general in the U.S. obviously is improving, so is the case here in Las Vegas.

That's important to our business. We've talked about that before, but we see a great correlation between housing and our core business.

Airline carriers are starting to add more seats to Las Vegas, it's really important to the entire market, important to us. Flight capacities are trending higher, and that means domestic and international carriers are adding planes.

We've been working with the LVCVA to increase international visitation in particular. And as you know, the extreme growth in South America has benefited many U.S.

cities, beginning to benefit Las Vegas. Copa Airlines are bringing in more flights from Brazil, as a matter of fact, through Panama City to Las Vegas, so that's a big deal for us.

Las Vegas recovery, I think, will be felt more by us. Our market share is growing in this market, as we strategically add the capital to upgrade the rooms, add the F&B, add the entertainment.

By the way, on the entertainment front, next month, we're going to have one of the biggest fights in the history of Las Vegas, the Mayweather-Canelo Alvarez fight. It's going to set all kinds of records in terms of at the gate, in closed circuit.

And we're hosting many parties at our venues closed circuit. So up and down the Strip, quite a bit of activity in September.

September ends with the I Heart Music Festival, that's another big event for the city and for ourselves, of course, at the MGM Grand. And for the first time, we're also going to have an outdoor concert in the Festival Grounds we just literally finished across from Luxor.

I mention that because the way to drive more productivity in these buildings, we believe, is to continue to create excitement, relatively low cost ways. Festival Grounds don't cost a lot of money to build, but they generate a lot of traffic and, of course, a lot of traffic in the neighborhood, and we own most of the neighborhood.

I think that you'll find as we move to the balance of this year and into next year, continued targeted capital, which we believe will continue to build our share of this market. Revenues is, obviously, growing for us, and we've been watching cost, as Dan mentioned, very aggressively.

Margin expansion is the result. Free cash flow is growing, and we reduced the debt by almost $0.5 billion.

And of course, our objective is clear: to drive cash flows, improve our balance sheet. We think that's the surest way to work for our owners.

And so with that, we can turn over to the operator, please, for questions.

Dan, Jim, the group trends that you talked about for 2014 are encouraging, particularly in relation to what all of us are hearing from some of the traditional hotel companies, look no further than Ryman this morning. Why do you think the Strip is experiencing positive pace whereas maybe the traditional hotel industry is not?

And maybe you can kind of talk about it in the context of in the year, for the year, how important or critical that is for you to kind of get to these mix levels as a percentage of room nights?

I think, Joe, I'll start. And I think the key is the Las Vegas market, from a composition standpoint, is much different.

Coming in to given year, we have roughly about 80% to 90% of our contracted room nights on the books and solid going into a given year. So we don't rely on as much in the year, for the year.

That really helps us fill up the rest of that, call it 15% to 20% level of the room nights and allows us to kind of offset attrition throughout the year. So I think when you look at this market vis-à-vis some of the other hotel markets, they rely a lot more on in the year, for the year and in this market, it's less reliant on it.

And I think that's probably the biggest factor.

Yes, Dan, I'll just add that the trade show component of Las Vegas has held up really well, I mean, in fact, it has grown. What Las Vegas got hurt by was the corporate business and the incentive business.

That's still down dramatically from where it was in '07. And of course, that business is the highest margin business in the group sales side.

And what's most encouraging about the number that Dan cited in terms of our bookings is that, 51%, Corey? 51% of what we booked lately is in the corporate and incentive side.

So not only are the bookings improving, but the weakest part of the business, which is the highest margin part, we're starting to see significant growth. And I was thinking of a couple of groups, I can't mention the names, but the big conventions in the incentive side and corporate side that left us in '07, started doing virtual conferences, and now they've just booked multi-year deals with a lot of revenue.

So I think it's not only the in the year, for the year, which is not as important to us, as Dan mentioned, but the composition of the rooms that we're booking now give us a lot more pricing flexibility going forward.

Great. And then the next question, my final question is, there was a recent media report on efforts to market for sale Crystals.

I was hoping you can just talk about that broadly.

Sure, I'll tackle that one. I saw that in the Wall Street Journal.

We've gotten, over the year, I don't know, 3 or 4 different inquiries about selling Crystals as retail become hot again and cap rates have fallen. And so, we felt like we need to respond to that.

And we have been doing some exploratory work on that. And all I could say is that the interest is high, but also the value of Crystals is high to us.

And so, I can't say what's going to happen there specifically, but for the fact that cap rates are still pretty low, which means multiples for assets like that are dramatically higher than what we're getting credit for in the marketplace. We recognize that big valuation discrepancy and we're taking a look at that, but I can't tell you how that's going to go.

I have 2 questions. The first is your margin continued to surprise on the upside.

Can you talk about what you're doing on the cost side, both on the casino and non-casino side that is making a difference and its sustainability as we look into 2014?

Maybe I'll do 2 and then turn it over to you, Dan, or Corey.

Sure.

I think we mentioned a few calls ago, we moved Anton Nikodemus over from Monte Carlo to head up Casino Marketing. He's put together quite a program, a great program with all our marketing folks, and we have found tremendous opportunities to be less wasteful in our -- some of our promotional activity.

And so on the casino side, it's been really a function of being smarter on our promotional activity, being more targeted to our best customers, being more thoughtful in how we're marketing broadly, and M life is certainly helping quite a bit in that -- on that front. And I think on the non-gaming side, I'd have to point to room remodels, it's -- they don't sound sexy, but sure -- they sure generate a lot of cash flow, incremental.

And when you upgrade rooms like we have done here at Bellagio and MGM and also some of this new food and beverage offerings, which are very high ROI projects, I think you're seeing a better mix of people in the rooms, which generates more gaming and non-gaming revenue, which improves margins. On the cost side, our FTEs are just flat year-over-year, continue to manage all of our costs and we've -- Rick Arpin and his team have done a great job on our financials shared services department and other ways of being more clever internally on how we manage this business more efficiently.

And again, Dan or...

No.

Okay, then moving on. Moving on to my second question, it's related to your alliance on the third party travel providers, the vendors.

Have you begun to see any improved ability to actually control more of your room blocks? And if so, to what degree is it moving the needle?

And when you replace a customer that comes in through a third party vendor with one of your own that has been sourced, what is the differential in the value per customer per room?

Harry, it's Corey. With regards to the third party operators, we have been able to move some of it.

We're focused on it with, not only our M life, but our myVegas game has actually been able to convert some people into the FIT channels. That channel has grown and will continue to grow because a lot of the international customers are booking through Expedia and booking.com.

So our goal is how we maximize that channel and how we put it into our mix and yield our rooms up the best we can. We will constantly have strategies to try to shift that channel as much as we can but, right now, it's at excellent pace, it's a good block for us to be able to yield our rates upwards.

From a comparison of customers and the value of those customers, the lines have blurred from an FIT and leisure customer over the years. I would say the FIT customer does have a little bit more value, but we're seeing that value come to a little bit closer to the leisure customer.

Okay. Do you get the sense -- as a follow-up, do you get the sense that the international customers that you're booking, do they come with bigger wallets?

Are they spending more on food and beverage and entertainment and in the casino?

Yes. And not only that, the survey information from the LVCVA will back that up also.

They'll come a few extra nights, probably a little bit less in the casino and more on the entertainment and food and beverage venues that they're spending, but they're probably worth about 15% to 20% more than the domestic leisure customers.

Just following up on the Crystals discussion. Obviously, a sale could lead to a potential dividend to MGM.

But could you also look to use those proceeds to potentially consolidate CityCenter? And then can we get an update on CityCenter refi, just given the strong performance in 2Q in the credit market?

Well, I don't know how much we'll answer on that one, but you want to start on the refi, Dan?

Yes. I mean, clearly, David, there's an opportunity as CityCenter has been ramping up its cash flows and its operation.

Its -- net debt, it's kind of in the $1.5 billion range and its trailing 12-month EBITDA is just inside of $300 million in cash flows. So the clear profile of CityCenter is improving.

The cost structure on the debt side today is pretty expensive, that first call date through January of 2014 on the notes, and that will be an undertaking that the partners will start looking at here in the back half of the year and early next year from a refi perspective.

And I guess, the only thing I'd add to that is so many of the challenges we had at the end of '09 and 2010, residential inventory that we could not sell, hotel condo that we couldn't sell as hotel condo, Crystals not being occupied well, Mandarin not having any sea legs underneath it, almost all of those challenges we've met and we've overcome. Residential story is now a positive one.

Instead of having an anvil around our neck, which seem like we had for many years, it's an asset, not a liability. Crystals is doing better literally every month.

The hotel condo, which is Vdara, is actually making a decent amount of money for us. And so both partners, I feel I could speak for our side, are very pleased with the progress of CityCenter.

And that's all I would say about it at this point.

Okay. And then just 2 more.

Not to get picky, just given the solid broad base margin performance in Vegas, but the one we're expecting to see a little bit more flow-through on was the Grand, given the non-gaming adds, can you speak to that one a little bit? How we should we view it going forward?

Well, I think, it was up -- what was it up, 7%? I think there are a few things -- I think it was pretty good.

But expect more because if you've been in it lately, obviously, Hakkasan has been a tremendous revenue generator. But there's going to be quite a bit more work done in that area.

The space that used to occupy sleeping lions in the Lion Habitat is going to be redone into food and beverage venue. I don't think we've announced that yet, but that will be a big deal there.

And that whole corner is going to be significantly upgraded as we open that up to the Strip. I think that's going to have a big impact on the Grand.

And the other is -- in next year, in particular, citywide -- I don't think we talked to much about it, but the citywides are going to have a significant impact on properties like the Grand being more business in the city next year will benefit those big box properties like MGM.

And I think when you look at it, I mean, their performance year-over-year is up some 70% in terms of cash flow. When you look at the -- that flow-through, I mean that's about 80% in terms of flow-through when you look at the results.

So I think it's pretty impressive by the Grand.

Okay. My bad, I was looking sequentially.

Anyway, the -- Grant, I just had one question for you. We've heard some chatter on the air quality test results and that may be followed by a debate in the assembly surrounding smoking regs.

Can you give us any thoughts on how that plays out?

On the process it's going forward, we have a -- the government continues to test and we continue to test ourselves. And in reality, the process is, I guess, working itself through in terms of how the government perceives people's commitment to improving air quality.

Obviously, we have invested significantly and we'll continue to do that to ensure that we provide the best environment that we possibly can. So it's an evolving process.

I think all of these health and safety initiatives are an ongoing -- a progressive thing, and that's -- and we, obviously, just staying as close as we can and working with the government and with the other operators to try and make sure we have the best environment we can.

This is Kelly filling in. I'm just wondering if you could maybe give a little bit more color on the rates that you guys are seeing in your 2014 convention business that you have on the books right now?

It's pacing right now, up about mid single-digits right now in terms of its pace.

I've got a couple for Grant in Macau. Grant, in your prepared remarks, you're highlighting premium as one of the key drivers of the mass floor.

I'm wondering if you could just give us a little bit more color on growth rates between premium and mass mass at the property?

It's a little bit difficult for us to do that because we are such a strong performer in the premium side in terms of -- and the way we allocate the capacity. But from our perspective, it's pretty consistent across the breadth of the play through the categories.

And as I say, we really don't really penetrate into the deep mass mass. We -- I think we've -- you and I have discussed together, we really are a mid- to upper-mass operator.

So with what I see coming through to some of the other operators that are into that area, it seems to be pretty strong right across the mass segments.

Okay great. And then just a follow-up, and not to sound too nitpicky, but on the -- on your slot floor, the sequential decline of about 8% from the first quarter, could you just remind us, was there some anomaly in the first quarter that caused a spike and then a little trail off in handle into the second quarter?

I think it's fair to say in that first period, we had some exceptionally high performances at the very top end of the market, and a couple of those -- we've lost a couple of visits as a result of that. So I think that's something of an anomaly from the prior quarter and a strength to the prior quarter.

But the strength of the price across the range now is actually very pleasing, but it's not just limited to the very top end, it's actually coming across the product range. And we've also been doing some refurbishments and that's meant -- we'd be moving some machines around, so we actually lost some capacity -- we lost some units off the floor for a little period of time as we are moving that through.

So it's not really apples-for-apples in terms of absolute number of units and revenue per unit per day calculation either.

Jim, on your luxury side, you obviously did well this quarter with nice flow-through. You've talked about that a lot.

So just wondering, we're also starting to see some improvement out of your retail or core properties, I'm just wondering if you can just discuss what you're seeing there.

Sure. We did have some growth in the second quarter, it was minimal, but it was growth.

I think that it's a combination of two things. One is as the luxuries are lifting off, but not only ourselves but our competitors, we're able to draft the core properties off to luxuries.

And so you're seeing some of that occur, although I don't frankly think it's going to happen significantly until next year, and I'll get to that in a second. And the second is a few of the properties have had nice shots of excitement.

Obviously, Monte Carlo is doing significantly better, it's got a new show, it's got some F&B; Luxor, the same thing, with a new show. And so some, I think some of the core properties have benefited from that.

I really am not expecting a significant amount of growth. I shouldn't say this because the property president is probably listening in, but I'm not expecting too much growth out of the core this year.

I do expect a significant increase in cash flows next year at those properties because what we're doing at New York-New York and Monte Carlo and because of the citywides, which will most benefit those properties.

And then if you just -- and then just, I know your overall hold on the Strip was just in the normal range, but were there any properties that either held well or poorly that you could discuss outside of ARIA?

Well, Mirage held poorly again.

Yes. Mirage was high single-digits last year, and they beat that by just barely going into double-digits this year.

Bellagio was actually down year-over-year and the Grand was up a little bit. So despite the strong performance at Bellagio, their hold was still outside of what I would say would be in their normal range.

And then -- and really, the only outlier was Mirage being 10%, basically.

Yes.

Okay. And then just my last question.

Grant, you mentioned that there's going to be some disruption in your high limit flat room in the Las Vegas table games rooms. So I was just wondering how we should think about that disruption over the next period from that being off-line?

I guess I'm just telegraphing it, but frankly, I don't expect it to have an overall negative impact over the whole half because we -- obviously, with the refurbishment, we expect to see a pickup in the win rates coming out. So I think it may have some impact and we're just indicating that, but I don't think that it's going to have anything detrimental over the entire half.

It might move some business between the third quarter to the fourth quarter.

I was just wondering if you could start by maybe talking about the gaming side. Maybe a little bit more big picture in Vegas, but it does look, relative to the market, that your volume numbers were pretty good on both tables and slots, so it seems like you're picking up some share.

Could you talk about, is it M life or kind of what do you think is driving that? Is it disruption from across the street or just kind of what you think some of the drivers are behind that?

Well, slots side, definitely, M life is helped quite a bit. The international, it's still strong.

I mean, I think our competitors saw that as well. We certainly did at our luxury properties.

The domestic side was the weak part in '11 and '12. That's even getting a little bit better.

So I would say, the higher end properties or the quality properties within different price points are seeing a little bit more than their fair share. I know our fair share is growing, but I think the market is lifting in general.

And so I would expect that the other properties that don't break out specifically their cash flows like we do, probably also have seen that kind of -- they should've seen that kind of improvement. We're definitely seeing it.

And I -- what's most gratifying, I think, because international business has been strong even during the recession, it was the only bright spot. What's most gratifying for us is continued growth in our slot business.

That was an area where we felt, in self-reflection, we were weaker than we should have been and I don't think we were smart as we could have been on slot marketing, on loyalty marketing. That is definitely yielding higher revenues for us.

And then we can't take credit for a U.S. recovery, but we can be a beneficiary of it.

And we're seeing that in our domestic table play.

Great. And then maybe one for Dan, just on CapEx.

But as we look at where you're at kind of through the first half and compare it to the $350 million budget, it looks like you're actually meaningfully below that. So we were just kind of wondering, do you expect a pickup in spending?

Is that related more to the some of the activity at New York-New York and Monte Carlo or is spending -- the spending picked up for the arena project or is there something else?

It is a little back-half-of-the-year-loaded because you do have the ongoing projects at Monte Carlo and New York-New York that are in the back half of the year just getting started here in June and July, so those will pick up through the course of the year. And we aim to complete those early next year as those start coming online.

And you do have the Delano room remodel project that will start late this year, probably looking at November, December time frame, and for completion by kind of April of next year. So there are some big-ticket items in the back half of the year that's throw off kind of the spending trend.

That's helpful. And just maybe one more -- maybe just one in CapEx for Cotai, but do you guys have a sense of the budget including the $2.6 billion excludes land concession, cap interest and, I imagine, the preopening costs?

Do you have a sense for like all in, what the $2.6 billion will be?

Well, the $2.6 billion includes preopening, but it does exclude the land concession and cap interest as that will get squirrely between corporate and the project itself going forward. Grant, do you recall what the total concession payments were?

I don't have that in front of me.

Neither do I because, obviously, I came in over an extended 5-year period as well, so that's why we pulled those out because it's not all paid. We can get back to you on that.

We'll get that for you, Shaun. Those are public information [indiscernible].

You mentioned earlier your new loyalty partnerships with Hyatt and Southwest Airlines. As we think about your Vegas operations improving going forward, can you give us examples of how such partnerships like these drive heads and beds, pricing power and other revenues?

And I have a follow-up.

[indiscernible]?

Yes, I could take it. The Hyatt and Southwest partnerships, what they allow us to do is take some of that base that may have been even their leisure or going to our competitors and fill them into our FIT channels.

And those additional rooms just allow us to yield up our rooms a lot higher. The Hyatt partnership is a perfect partnership for us because their convention business model is very conducive for our business here.

So I think that we're seeing some benefit there especially in our luxury properties, it fits nicely there. The Southwest partnership, to be able to get the points, you have to become an M life member.

So it allows us to convert some -- and improve our database for M life with these customers that are loyal, not only to Southwest, but they'll become loyal to us. So we've seen some very good lift from both of those partnerships.

And in times, especially when it's competitive in the summer, it only helps us gain market share, especially in the core properties on the Southwest side.

And then you mentioned earlier that 51% of your recent convention bookings were corporate and incentives, it seems like that's much higher than it's been the past few years. Can you give us a sense of where it was over the past few years?

It's about twice what it was. I mean, in the last few years, it never got over like 25%.

That's by far the biggest incremental growth in our booking we've seen in the corporate side. And now, as I said, it's little over half of it.

Yes. We've lost about 30% of our corporate room nights from peak and we're seeing that beginning to recover.

I wonder if you could talk a little bit about Baccarat volume in Vegas in the quarter? I mean, the city had it declining which hasn't happened in a little while, and I wonder if you could talk about that.

And if that maybe -- was that intentional in terms of cutting back on some Baccarat events and is that part of what helps -- helped in terms of your margins and cost saves in Vegas?

We'll take a look at that, Robin. Do you have that?

I'm guessing it was an events-driven difference because I know we had a big fight in that quarter a year ago, but we're looking at that.

And I'm just wondering if that was also maybe part of the margin improvement. Was -- if there were some high-end events that weren't as profitable or weren't as high margin, is that kind of what -- so the result was lower volume in Baccarat but higher margin and profitability overall?

No, I don't think that would have been the case. The margin would have been higher if we had more Baccarat business.

But the events I was talking about were slot events and some of the lower end table events and some of the mailings, and some of the other promotional activity we do. The Baccarat margins haven't declined, they're actually flat or up a little bit.

But I know we had a big -- we had a Mayweather fight in the second quarter, didn't we, last year?

Yes, we did this year.

This year too.

But it wasn't as good...

No.

But if you look at -- without ARIA, we actually had more win on the international side in table games play. And for the year, year-to-date, we have had record international win.

But ARIA had a little bit of a challenge for the quarter, partially because they held really well last year, and they had some pretty strong play. But I would say the play is still there, maybe 1 or 2 customers that may came in last year, I think -- and this year for the quarter.

But the solid base is still there, we're seeing a good volume of people coming in, and I think we're pretty happy with the international number.

And the drop at ARIA is up for the 6 months, and so is the win in Baccarat.

It sounds like for the wholly-owned, so Q2, maybe volume was down, win was up but volume was down or something?

It was slightly down, yes. Yes, it was down.

But win was up.

And then for convention rooms as I know you made a couple of comments about 2014. I don't know if you mentioned what room nights, both number of room nights and rates for '13 will end up year-over-year, how you're tracking?

Convention room nights as a percentage of mix, Robin, we're pacing right now for '13, about 14.5% to kind of 15% kind of is the range that we're pacing with [indiscernible] up over last year.

First, I was just wondering, how many unsold condos there are at the Veer and Mandarin after the July sale?

There are 4 unsold Veer penthouses and 89 units at Mandarin.

Great. Just turning to Detroit, obviously, it's been in the headlines with the bankruptcy.

And I don't know if anyone really knows how it's going to unfold. But has your business been impacted since the headlines?

And where -- what do you think could happen going forward?

At this point in time, Kevin, we haven't seen any impact. The planners in Detroit from a convention and meeting standpoint are not forecasting any impact at this point to the future business.

So right now, in Detroit, other than what we talked about from the competitive nature, it's business as usual in Detroit.

I actually felt it get a little better. Yes.

And one final one on Internet gaming, just a general update on the rollout in Nevada. And I guess as it relates to that, how is maybe the progress on the relicensing in New Jersey?

I'll take the relicensing in New Jersey. From that standpoint, Kevin, that process is underway.

We made and continue to make the applications and the follow-ups, so which usually about a 9- to 12-month process from that standpoint. Obviously, the folks in New Jersey are busy on their Internet gaming and licensing requirements there, so there's a bandwidth issue, I'm sure back there with everything they're trying to get accomplished on a parallel path.

But our relicensing process is underway and we're moving forward on that front.

Yes. And on the Internet side, we have a number of initiatives that are kind of on a parallel path.

One is, of course, still federally, we haven't given up hope although it's becoming very challenging there. And on a state-by-state basis, Nevada is moving quite rapidly along.

There's already one launched. I think Caesar's is going to be the next they're coming up soon.

We've going to be following them, but we've really been focusing on the -- Nevada's ability to compact with other states to create more liquidity and we've been focusing on those other states as well. So we have a big team that is preparing ourselves on a state-by-state basis in the states that we believe would be the most productive for us.

And we've been working with the State of Nevada on their efforts to compact with other states. So I think from our standpoint, the opportunity becomes interesting once Nevada has the ability to compact with another state.

As a standalone opportunity, there's just not a lot of people that live in our state here. So the market size is relatively small compared to what we think it ultimately will be as more states come online.

Just one quick question on Macau for Grant. Obviously, revenues were up nicely in terms of the mass segment especially, but overall EBITDA margins dropped, it looks like a couple hundred basis points.

And I'm just curious, was this a function of lower VIP hold year-over-year? Is there something else going on in terms of promotions and give backs and so forth in the mass segment or some of those other areas?

The principal reason was actually the mix of revenues. This quarter, we had a lower hold particularly in our in-house play, so it's really just a revenue mix that's affected the margins.

And the other point I'd make, Grant, is that branding fee is actually up year-over-year, so that expense is up year-over-year, and that impacts the margin. But you should look at it pretty that branding fee.

Okay, I appreciate it. Then actually, one more question, if I may, just quickly on Las Vegas.

It does like FTEs have been flat for the past couple of quarters. But I'm just wondering when we should expect that to round-trip and then show some natural cost inflation going forward again.

And then maybe if you could fold in your expectations, your updated expectations on the Affordable Care Act when that kicks in, I'd appreciate it.

FTE, obviously, is full time equivalent, that's the hours worked, so there's no component of wages in that, it's just -- what our headcount is. And that's been basically flat for 3 years, and I expect it to remain that way.

We might have some increase in FTE counts as in the banqueting area, in the convention area, particularly as we get into higher citywides in '14, but don't expect -- I don't expect that to grow demonstrably at all. As it [indiscernible] negotiations are going well as they typically have constructive [indiscernible] agreement on a going-forward basis and [indiscernible] on health care as well as it relates to the culinary.

On non-union members, we do know that this is going to -- there'll be a cost to us. We haven't quantified internally exactly what it is.

It's a few million dollars, it could be $5 million, but it's not more, it's in that kind of range, and it's just something we'll have to absorb. So our costs are pretty low in terms of their inflation growth.

Managing our expenses outside of labor is also a big factor here, which we didn't get into, but we're finding great efficiencies in procurement in consolidations, and we've been able to mitigate some wage growth by cost savings in other expense areas. And that's why we believe that, in general, any revenue growth that we get should flow to the bottom line because our costs are pretty flat.

And I would add, we've been able to manage our health cost, so where they're flat this year. We think we have ways to offset any of that cost increase.

So we would expect a little to normal inflation in our health cost going forward. Thanks, Rich.

And Jennifer, I think, with that, that will conclude today's call.

Thank you.