Maximizing Shared Services WinsWith Minimal Investment

Rick Arpin, SVP Corporate ControllerMarch 24, 2010

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Contents

• Keys to Quick Wins

• MGM MIRAGE Background

• Focus on Finance Improvement

• Finance Shared Services Center

• Past Successes

• Keys to Quick Wins

• Questions and Discussion

KEYS TO QUICK WINS

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Keys to Quick Wins

Find Your Inspiration,

Create Your Vision

and ACT…"We will either find a way, or

make one." -Hannibal

Find Your Inspiration,

Create Your Vision

and ACT…"We will either find a way, or

make one." -Hannibal

MGM MIRAGE BACKGROUND

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MGM MIRAGE Background

Company overview• 15 operating resorts; five

joint venture investments• Expansion with management

agreements worldwide• $6 billion in annual revenue,

60,000 employees

LAS VEGAS STRIPLAS VEGAS STRIP

Company growth• Two large corporate mergers-Mirage Resorts in 2000 & Mandalay

Resort Group in 2005• Inconsistencies in accounting practices, system usage, & COA structure• Legacy systems, outdated processes, reporting not streamlined

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MGM MIRAGE Background (cont.)

• Elements Unique to Hotel/Casino Businesses

FOCUS ON FINANCE IMPROVEMENT

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Focus on Finance Improvement

• Internal staff and PwC performed assessment in 2007

Benchmark group<<< optimal

average ∆ minimum median maximum1.19% 0.64% 0.00% 0.25% 0.47% 0.91% 2.38%

Yourcompany ◊

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

1

Finance Cost as a % of RevenueFinance Maturity Model

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Focus on Finance Improvement (cont.)

Accounts Payable Payroll

Accounts ReceivableTime to Bill

15 Days 6 DaysBenchmark

General Accounting

BenchmarkBenchmark

Cost Per Invoice$3.10 $3.00

# of Vendors60k 20k

Chart of Accts.2007 Today10K 4k

Auto Entries Manual10% 90%

Manual Auto Entries30% 70%

Error Rate

Benchmark

Cost Per Paycheck$2.11 $1.75

FINANCE SHARED SERVICES CENTER

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Finance Shared Services Center

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Finance Shared Services Center (cont.)

New Shared Services Leadership – 8/09

�Provide an identity to shared services at MGM MIRAGE – the Finance Shared Services Center “FSSC”

�Create an infrastructure for future shared services initiatives

�Consolidate reporting lines

Scope�2010/2011 – Accounts receivable, casino revenue accounting

�Existing services –Accounts payable, payroll, non-gaming accounting, general accounting

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Finance Shared Services Center (cont.)

“MGM MIRAGE ’s Finance Shared Services Center seeks to provide world-class finance and accounting services, including compliance with internal policies and regulatory requirements.”

MISSION STATEMENT

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Finance Shared Services Center (cont.)

CORE VALUES

• Governance and accountability– “Operate like a business and be accountable to our customers”

• Communication and measurement– “Share ideas with our customers and teams, let them know how we are doing”

• People development– “Enhance our team members’ skills and develop their careers”

• Process improvement– “Continually improve how we do our work”

• Systems optimization– “Use existing systems better and find better systems for the future”

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Finance Shared Services Center (cont.)

• Governance and accountability– Measurement focus - Key Performance Indicators

(KPIs) & Service Level Indicators (SLIs)

– Customer service focus - Service Level Agreements (SLAs) & customer feedback

• Communication– Website/newsletter/etc.

• for internal and external communications

– Develop & cultivate relationships with peer departments (Purchasing, HR, IT)

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Finance Shared Services Center (cont.)

• Staff development– Dedicated training & recruiting/hiring

resource– Robust performance evaluations process– Training elements

• process improvement, systems• mgmt/leadership, cross training

• Process improvementProject management training for directors– Continuous improvement teams– Reward ideas for improvement

Effective talent

management

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Finance Shared Services Center (cont.)

• Systems optimization

– Finance Data Repository

• Aggregate data from source systems

• Auto-populate journal entry forms for

GL and Daily Operating Report

– Overall delivery framework – dashboards, etc.

Processes•Process improvement

•Identify high-cost tasks

•Push operational changes

Systems•Finance Data Repository

•Utilize current systems better

•Information delivery

People•Hiring the right people

•Training and development

•Performance evaluations

PAST SUCCESSES

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Past Successes

• Accounts Payable (AP) background– Key element is a scanning and workflow system– Began implementation in 2003

PHASE I

• Document Storage & Retrieval – Already processed documents

• Basic Workflow

PHASE II

• Process & Payment of Non-PO Invoices

• Secondary Workflow

PHASE III• Process & Payment of

PO Invoices

• Use of 3-Way Match & Auto Approval

• Advanced workflow

IMPLEMENTED IN PHASED APPROACH

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Past Successes (cont.)

• Scalability– No FTE’s added to handle City Center invoices (18% increase)

Before City Center After City Center

• Accounts payable future opportunities– New business units – retail AP, construction, MGMM Hospitality, other

new developments– Process improvements

• OCR• e-invoicing• dynamic discounting

INVOICES 2009RETAIL 72,824

AP812,000

+

FTES 2009

Retail, 24

Accts Pay.,

45

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Past Successes (cont.)

• Key AP Statistics– Cost per invoice down to $3.23 from $6.94 in 2005– Invoices processed more than doubled since 2005

-

5,000

10,000

15,000

20,000

25,000

30,000

2005 2006 2007 2008 2009 2010 (est)

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

Invoices per FTE

Cost per Invoice

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Past Successes (cont.)

• Payroll background– Three phases – lift-and-shift, consolidation, standardization– Significant project to make operations process payroll consistently

PHASE I

• Lift and Shift• Physically moved to a

central location, with no change to processes

PHASE II

• Consolidation• Implemented

efficiencies where possible with 4 diff. systems

PHASE III

• Standardization• Move to single payroll

system and single instance of timekeeping system

IMPLEMENTED IN PHASED APPROACH

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Past Successes (cont.)

• Key Payroll Statistics– 40+% decline in staff with incrased number of payments

– Payments processed per FTE has nearly doubled

2007 2008 2009 2010 (est)65 63 63 45

2007 2008 2009 2010 (est)14.60 14.49 12.88 24.76

0

10,000

20,000

30,000

40,000

2006 2007 2008 2009 2010 (est)$0.00

$1.00

$2.00

$3.00

$4.00

Payments per FTE

Cost per FTE

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Past Successes (cont.)

• Non-Gaming Audit and Accounting– Consolidated Q4 2008– Additional opportunity for efficiencies and growth as FDR is

developed and more automated tools are implemented

• General Accounting– Consolidated Q4 2009– Began with standardization of Chart of Accounts– Additional efficiencies will be realized with the

implementation of automated tools like credit card matching

• Key statistics– Initial investment -$2+ million– Annual savings -$6+ million– ROI –> 200%

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Past Successes (cont.)

• Future additions to the FSSC– Non-gaming accts. receivable & gaming revenue accounting

• Likely to be consolidated in 2010 or 2011• Challenges to address

– Media handling– Scope (AR – credit; Casino acct. – compliance function)– Regulatory requirements in casino accounting– AR billing system

• Future departments’ ROI (estimates)– Initial investment -$2+ million– Annual savings -$6+ million– ROI –> 200%

KEYS TO QUICK WINS

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Keys to Quick Wins

Find Your Inspiration,

Create Your Vision

and ACT…"We will either find a way, or

make one." -Hannibal

Find Your Inspiration,

Create Your Vision

and ACT…"We will either find a way, or

make one." -Hannibal

QUESTIONS AND DISCUSSION