Wednesday, May 14, 2003 | 11:43 a.m.
Economic and travel concerns found their way into discussions on Monday at MGM MIRAGE's annual shareholders meeting.
"It is indeed a challenging year in many respects with the threat of terrorism and SARS (severe acute respiratory syndrome), and a war," Terry Lanni, chairman and chief executive of MGM MIRAGE, said at the meeting at the MGM Grand hotel-casino. "I think we hit three of the four horsemen of the apocalypse."
Lanni, in responding to shareholder questions at the meeting, also pointed to the economy and competition from Indian casinos as additional cause for concern.
Despite the threats, he predicted a bright future, and advised the audience to adjust to a new national climate.
"I think the economy is coming back," he said. "The war on terrorism will never be over. We're going to have to learn to live with it. It's going to be a choppy year, but this is going to be a decent year economically for this company."
James Murren, president and chief financial officer for MGM MIRAGE, said the company is tracking the effect of SARS on the volume of Asian visitors coming to the company's properties.
"It's certainly being monitored," he said. "One thing we have learned about our business model is that it is very durable."
Murren pointed to the company's ability to weather an economic collapse in Japan and other major Asian countries with a moderate impact.
"If we relied on that business as a core business, we would be a lot more concerned," he said.
The real test of SARS' impact could come in MGM MIRAGE's fourth-quarter earnings. Murren said Asian travel is at its peak during the first and fourth quarters.
"We will have to see how it plays out. ... We had a fine first quarter," he said. "We hope the SARS situation is better controlled by the fourth quarter."
MGM reported net income of $61 million for the first quarter, down from $84 million in the same 2002 quarter.
The company also outlined plans for $300 million to be spent upgrading and expanding existing properties in 2003.
Those plans include a new Cirque du Soleil show scheduled to open this summer at New York-New York and a second tower at the Bellagio scheduled to open in 2004. The expansion of the Bellagio will be accompanied by a remodeling of existing rooms at the Bellagio.
The company also pointed to the summer opening of the Borgata, an Atlantic City project being developed in partnership with Boyd Gaming Corp.
"Our capital philosophy is based on the simple premise that if you are not moving forward, you are falling behind," Murren said. "The financial performance is aligned directly to that philosophy."
Also at the meeting, the company successfully reelected 18 directors and Deloitte & Touche LLP was approved as company auditor.
Shareholders also signed off on an amendment to the company's articles of incorporation in order to comply with New Jersey gaming regulations, amendments to the non-qualified stock option plan and an executive incentive plan.
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