MGM Mirage chairman’s letter to employees about the company’s financial condition

Tuesday, March 3, 2009 | 10:16 a.m.

My Fellow MGM MIRAGE Employees:

As you may have seen in news reports over the past several days, we have made some financial moves in order to protect and strengthen our company’s financial position. Last week, we drew down the remaining funds on our credit facility to bring our total cash balance to over $1 billion. Additionally, today we filed with the Securities and Exchange Commission notification of a delay in filing our 2008 Form 10-K, to a date no later than March 17, 2009.

In addition, today’s filing noted that we consider it likely that our auditors’ report on our 2008 financial statements will contain an explanatory paragraph concerning our ability to continue our business as a “going concern.” This is a term of art utilized by auditors. I want to be clear: This in no way reflects an assessment of the quality or soundness of our underlying business and properties, which remain world class and are enjoyed by thousands of guests every day. Rather, the challenges we face are primarily related to the financial structure of our debt. Like many companies around the world, and in the gaming industry in particular, access to capital has been limited due to turmoil in the financial markets and the global economic recession. We believe these factors are contributing to the auditors’ evaluation of our current financial position. To put this into perspective, several companies here in Las Vegas, and many others around the country, are receiving similar assessments from their auditors.

MGM MIRAGE is engaged in ongoing discussions with its lenders in order to address our financial position. We are exploring a number of options and are committed to finding the best possible solution. The economic environment in which we operate is always changing, and we will work through this period as we always have in the past. In the meantime, we are continuing to operate our properties and deliver the service and experience that our guests and clients have come to expect.

This announcement may lead to increased questions about our company from customers and business partners and will also undoubtedly lead to speculation about our company’s financial health in the media. It is extremely important we speak with one voice on this matter so as to attempt to avoid any confusion or misinformation. If you receive any inquiries from the media or other interested third parties, please refer them to the Public Affairs Department at 702-650-6947.

Our daily operations are continuing as always. Our operations, while impacted by the downturn in the national economy, remain profitable. It is more important than ever that you remain focused on what matters most – serving our guests and clients with the professionalism and service they have come to expect from MGM MIRAGE.

We will keep you as informed as possible throughout this process and thank you all for your continued hard work and dedication.

Sincerely,

James J. Murren

Chief Executive Officer & Chairman of The Board

Discussion: 5 comments so far…

By Dark_Gable70

3/4/09 at 3:34 p.m.

Suggest removal

WHAT A JOKE! MURREN MAKES A FORTUNE OFF OF THE LABOR OF OTHERS AND HE IS KILLING THIS COMPANY!!
By BorisR

3/5/09 at 5:18 a.m.

Suggest removal

To me, as an independant reader, and NON-INVESTED STOCKHOLDER, this sounds pretty much like a calm-down letter in a situation that might just as well get out of control quickly. With its head barely above water, MGM Mirage, loaded with debt up to the ceiling and not enough revenues coming in, just like many other operators, is seeking ways to reduce debt load. Eventually this will be at the cost of the bond holders or perhaps they consider a capital raise? Meaning, another 500 Million shares in the market at the price of 2 dollars-per-share, diluting the real value of each single share, etc, all ways we have seen before and ways that will happen in the future until there's nobody buying such stories any longer.
Matter-of-fact is: Vegas does not get enough visitors these days because people don't have much money left to gamble. The first thing they save on are luxury items, such as expensive dining, new cars, gambling, jewellery, etc. And since meanwhile there are so many casinos open around the world, Vegas has lost a huge market share. Now the companies are in trouble, and the stocks will probably keep tumbling until they become so cheap that potential take-overs will become real. The entire city center project as a massive plan , caused by greed and phantasy ideas, will burst. I wonder how many condos have been sold yet and how many will remain vacant for the next 5 years or so. Anyway, if you read about the possible water shortage of Vegas after 2020, which is in less than 12 years from now, then the most logical way would be to forget about Vegas and move elsewhere. If there's no more water from the dried out Lake Mead by then, caused by waste of water for golf courses and big fountains and such, then there's no more life possible for a 2.5 Million dollar capital, anyway. Good luck, Vegas.
By In2wishin

3/5/09 at 11 p.m.

Suggest removal

The year is 2050. The valley floor is puncuated by the dancing plumes of towering dust devils that shift and sway the sand dunes amongst the ruins. Maintenance droids scamper up the slope of an aged glass-walled pyramid to attend to a matrix of solar panels that send megawatts of power to cities where humans cling to the seacoast hundreds of miles to the west.
Here in the arid valley, there are no humans, only their inteligent machines to whom an utter lack of water holds no meaning.
Driven by fierce, hot winds, a twisting plume shifts course and suddenly burrows its worm-live snout into a prodigous heap of sand, like a maggot sucking sustenance from a heap of rotting offal.
For a few seconds,a faded, baked metal shroud is exposed. And if there were human eyes there to see, they might make out the words faintly etched by broken neon tubes,
"Welcome to Fabulous L....."

Boris, Amen.
By In2wishin

3/5/09 at 11:28 p.m.

Suggest removal

The year is 2050. The valley floor is punctuated by the dancing plumes of towering dust devils that shift and sway the sand dunes amongst the ruins. Maintenance droids scamper up the slope of an aged glass-walled pyramid to attend to a matrix of solar panels that send megawatts of power to cities where humans cling to the seacoast hundreds of miles to the west.
Here in the arid valley, there are no humans, only their intelligent machines to whom an utter lack of water holds no meaning.
Driven by fierce, hot winds, a twisting plume shifts course and suddenly burrows its worm-like snout into a prodigious heap of sand, like a maggot sucking sustenance from a heap of rotting offal.
For a few seconds, a faded, baked metal shroud is exposed. And if there were human eyes there to see, they might make out the words faintly etched by broken neon tubes,
"Welcome to Fabulous L....."

Boris, Amen.
By CIBIA

3/6/09 at 11:48 a.m.

Suggest removal

Thank you to everyone with the ongoing positive feedback regarding Las Vegas. To those of you who wish our fair city farewell, we would like to thank you for your concern. You may wish that CEO's and such fail and wither up and die, but are you forgetting that REAL PEOPLE live in this city and are in the same financial crisis that the rest of the country is in? Why do you wish us to fail? Are we hoping that your town withers up and dies away.

Get a life. Fill it with some positive things, like God and Country. Maybe then you will look in your own backyard and help to clean it up instead of wishing the demise of others.

I continue to pray for our great country to survive this current crisis. GOD BLESS AMERICA.

« Previous Ten Next Ten »

Live chat: Tuesday, noon PST; Chat with Krista Creelman; Problem Gambling Center executive director Krista Creelman will answer questions about gambling addiction from Las Vegas Sun readers from noon to 1 p.m. Tuesday, Nov. ... Submit question