UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
Form 10-K
 
   
(Mark One) (Mark One)
þ[X]
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended December 31, 20082010
OR
o[ ]
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition periodto
 
Commission FileNo. 001-10362
 
 
 
 
MGM MIRAGEResorts International
(Exact name of Registrant as specified in its charter)
 
   
DELAWARE
 88-0215232
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification Number)
 
3600 Las Vegas Boulevard South —- Las Vegas, Nevada 89109
(Address of principal executive office) (Zip Code)
 
(702) 693-7120
(Registrant’s telephone number, including area code)
 
 
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
   
  Name of each exchange
Title of each class on which registered
Common Stock, $.01$0.01 Par Value
 New York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act:
None
 
Indicate by check mark whether the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ  X   No o
 
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ X     
 
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:  Yes   X            No 
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofþRegulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes   X  No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm10-K or any amendment to thisForm 10-K: þ
 
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” inRule 12b-2 of the Exchange Act (check one):
 
Large accelerated filer þ  X  Accelerated filer oNon-accelerated filer oSmaller reporting company o     
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the Registrant is a shell company (as defined inRule 12b-2 of the Act):
 Yes o     No þ  X  
 
The aggregate market value of the Registrant’s Common Stock held by non-affiliates of the Registrant as of June 30, 20082010 (based on the closing price on the New York Stock Exchange Composite Tape on June 30, 2008)2010) was $4.2$3.0 billion. As of March 9, 2009, 276,557,345February 18, 2011, 488,528,607 shares of Registrant’s Common Stock, $.01$0.01 par value, were outstanding.
 
Portions of the Registrant’s definitive Proxy Statement for its 20092011 Annual Meeting of Stockholders are incorporated by reference into Part III of thisForm 10-K.

TABLE OF CONTENTS

PART I
ITEM 1. BUSINESS1.BUSINESS
ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES2.PROPERTIES
ITEM 3. LEGAL3.LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS(REMOVED AND RESERVED)
PART II
ITEM 5. MARKET5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT’S7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
NOTE 1 -- ORGANIZATION
NOTE 2 -- LIQUIDITY AND FINANCIAL POSITION
NOTE 3 -- SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
NOTE 4 -- ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
NOTE 5 -- CITYCENTER TRANSACTION
NOTE 6 -- ACCOUNTS RECEIVABLE, NET
NOTE 7 -- PROPERTY AND EQUIPMENT, NET
NOTE 8 -- INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
NOTE 9 -- GOODWILL AND OTHER INTANGIBLE ASSETS
NOTE 10 -- OTHER ACCRUED LIABILITIES
NOTE 11 -- LONG-TERM DEBT
NOTE 12 -- INCOME TAXESEX-10.03.31
EX-10.3(15)EX-10.03.32
EX-10.3(16)
EX-10.3(17)EX-10.03.33
EX-21
EX-23
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-99.1
EX-99.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

 
PART I
 
ITEM 1.  BUSINESS
 
MGM MIRAGEResorts International is referred to as the “Company” or the “Registrant,” and together with our subsidiaries may also be referred to as “we,” “us” or “our.”
 
Liquidity and Financial Position
For discussion of our liquidity and financial position, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Overview — Liquidity and Financial Position” and Note 2 to the accompanying consolidated financial statements.
Overview
 
MGM MIRAGEResorts International is one of the world’s leading developmentand most respected companies with significant holdings in gaming, hospitality and resort operations.entertainment. We believe the resorts we own, manage and invest in are among the world’s finest casino resorts. MGM MIRAGE was organized as MGM Grand, Inc. on January 29, 1986 andResorts International is a Delaware corporation. MGM MIRAGEcorporation that acts largely as a holding company and itscompany; our operations are conducted through itsour wholly-owned subsidiaries.
 
Our strategy is based on developingto generate sustainable, profitable growth by creating and maintaining competitive advantages inand through the following areas:execution of our business plan, which is focused on:
 
 •  DevelopingOwning, developing, operating and maintainingstrategically investing in a strong portfolio of resorts;
 
 •  Operating our resorts to ensurein a manner that emphasizes the delivery of excellent customer service and maximizewith the goal of maximizing revenue and profit;
• Executing a sustainable growth strategy; and
 
 •  Leveraging our brandstrong brands and taking advantage of significant management assets.experience and expertise.
 
Resort Portfolio
 
We execute our strategy through a portfolio approach, seeking to ensure that we own, manage and invest in and manage resorts in each market segment that are superior to our competitors’ resorts. resorts in the markets in which our resorts are located, as well as across our customer base. Our customer base is discussed below under “Resort Operation.”
We also seek to own andselectively acquire, invest in superior real estate assets, with a blend of developing these assets on our own, partnering with others, and strategically buying and selling real estate.
Our approach to resort ownership and investment is based on operating the premierdevelop resorts in each geographic market and each customer segment in which we operate. We discuss customer segments in the “Resort Operation” section. Regarding our approach to resort locations, we feel it is important to selectively operate in markets with a stable regulatory environments.history and environment. As seen in the table below, this means that a large portion of our resorts are located in Nevada. In addition, weWe target markets with growth potential. We alsopotential and we believe there is growth potential in investing in and managing both gaming and non-gaming resorts. See theOur growth strategies are discussed in greater detail below under “Sustainable Growth”Growth and “LeveragingLeveraging Our Brand and Management Assets” sections for further details on these initiatives.Assets.”

Our Operating Resorts
 
We have provided below certain information below about our resorts as of December 31, 2008.2010. Except as otherwise indicated, we wholly own and operate the resorts shown below.
 
                 
  Number of
  Approximate
       
  Guestrooms
  Casino Square
     Gaming
 
Name and Location and Suites  Footage  Slots(1)  Tables(2) 
 
Las Vegas Strip, Nevada
                
Bellagio  3,933   160,000   2,320   151 
MGM Grand Las Vegas(3)  6,264   158,000   2,455   167 
Mandalay Bay(4)  4,752   160,000   1,962   117 
The Mirage  3,044   118,000   1,966   106 
Luxor  4,405   100,000   1,443   85 
Excalibur  3,981   91,000   1,532   67 
Treasure Island (“TI”)(5)  2,885   87,000   1,620   65 
New York-New York  2,025   84,000   1,724   70 
Monte Carlo  3,002   102,000   1,556   63 
Circus Circus Las Vegas(6)  3,764   126,000   1,986   90 
                 
Subtotal  38,055   1,186,000   18,564   981 
                 
Other Nevada
                
Circus Circus Reno(Reno)
  1,572   70,000   1,091   35 
Silver Legacy — 50% owned(Reno)
  1,710   87,000   1,623   64 
Gold Strike(Jean)
  810   37,000   688   9 
Railroad Pass(Henderson)
  120   13,000   332   5 
                 
Other Operations
                
MGM Grand Detroit(Detroit, Michigan)
  400   196,000   4,102   95 
Beau Rivage(Biloxi, Mississippi)
  1,740   75,000   2,050   93 
Gold Strike(Tunica, Mississippi)
  1,133   50,000   1,381   58 
MGM Grand Macau — 50% owned(Macau S.A.R.)
  593   215,000   829   376 
Borgata — 50% owned(Atlantic City, New Jersey)
  2,771   160,000   3,931   182 
Grand Victoria — 50% owned(Elgin, Illinois)
  —   35,000   1,144   30 
                 
Grand Total  48,904   2,124,000   35,735   1,928 
                 
                 
  Number of
  Approximate
       
  Guestrooms
  Casino Square
     Gaming
 
Name and Location and Suites  Footage  Slots (1)  Tables (2) 
Las Vegas Strip, Nevada
                
CityCenter - 50% owned (3)  5,735   150,000   1,991   131 
Bellagio  3,933   160,000   2,241   155 
MGM Grand Las Vegas (4)  6,264   158,000   2,105   165 
Mandalay Bay  4,752   160,000   1,811   93 
The Mirage  3,044   118,000   1,923   89 
Luxor  4,396   100,000   1,321   68 
Excalibur  3,981   91,000   1,444   57 
New York-New York  2,025   84,000   1,556   69 
Monte Carlo  2,992   102,000   1,430   59 
Circus Circus Las Vegas  3,767   122,000   1,624   54 
                 
Subtotal  40,889   1,245,000   17,446   940 
                 


1

                 
  Number of
  Approximate
       
  Guestrooms
  Casino Square
     Gaming
 
Name and Location and Suites  Footage  Slots (1)  Tables (2) 
Other Nevada
                
Circus Circus Reno (Reno)  1,572   70,000   919   35 
Silver Legacy - 50% owned (Reno)  1,709   87,000   1,414   63 
Gold Strike (Jean)  810   37,000   645   10 
Railroad Pass (Henderson)  120   13,000   333   5 
Other Operations
                
MGM Grand Detroit (Detroit, Michigan)(5)  400   100,000   4,166   96 
Beau Rivage (Biloxi, Mississippi)  1,740   75,000   2,022   88 
Gold Strike (Tunica, Mississippi)  1,133   50,000   1,326   55 
MGM Macau - 50% owned (Macau S.A.R.)  593   215,000   1,061   409 
Grand Victoria - 50% owned (Elgin, Illinois)  -   34,000   1,133   27 
                 
Grand Total  48,966   1,926,000   30,465   1,728 
                 
 
 
(1)Includes slot machines, video poker machines and other electronic gaming devices.
(2)Includes blackjack (“21”), baccarat, craps, roulette and other table games; does not include poker.
(3)Includes Aria with 4,004 rooms and Mandarin Oriental Las Vegas with 392 rooms. Vdara includes 1,495 units, of which 156 have been sold as condominium-hotel units. 945 units in Vdara are currently available for rent, including 854 company-owned units and 91 from units owned by third parties.
(3)(4)Includes 1,220 rooms available for rent as of December 31, 2008 at The Signature at MGM Grand.
(4)Includes the Four Seasons Hotel with 424 guest rooms and THEhotel with 1,117 suites.
(5)In December 2008 we entered intoOur local partners have an agreement to sell TI; the sale is expected to close no later than March 31, 2009.
(6)IncludesSlots-A-Fun.ownership interest of approximately 3% of MGM Grand Detroit.
 
More detailed information about each of our operating resorts can be found in Exhibit 99.1 to this Annual Report onForm 10-K, which Exhibit is incorporated herein by reference.
 
Investing in Existing ResortsPortfolio Strategy
 
We believe that ensuringwe operate the highest quality resorts in each of the markets in which we operate. Ensuring our resorts are the premier resorts in their respective markets requires significant capital investment.investments that target our goal of creating the best possible experiences for our guests. We have a track record of reinvesting cash flows into our existing resorts and we have achieved strong returns on these investments in the past. We havehistorically made significant investments in our resorts overthrough the past few years, we do not expect to reinvest significantly in our resorts in 2009 or 2010.
For instance, between 2003addition of new restaurants, entertainment and 2006 we invested a significant amount of capital at MGM Grand Las Vegas, with additions such asKÁ, the acclaimed show by Cirque du Soleil; the Skyloftsnightlife offerings, and West Wing room enhancements; two highly acclaimed restaurants by Joël Robuchon;other new features and new poker and race and sports areas. That resort


2

earned $290 million of operating income in 2007, a dramatic increase from the $127 million earned in 2002. Similarly, we transformed The Mirage, a resort many market observers credit with changing the face of the Las Vegas Strip. We felt strongly about the allure of the resort, but also believed that customers need fresh, updated experiences. Therefore, we invested significant capital at The Mirage between 2004 and 2006, adding several new restaurants; a category-defining nightclub,Jet; upgraded high-limit gaming areas; and the Beatles-themedLoveshow by Cirque du Soleil. The Mirage earned $108 million of operating income in 2003; in 2007, The Mirage earned $173 million of operating income.
Capital additions have not had the same impact on profitability due to the severe downturn in economic conditions in general and the impact on tourism and travel spending specifically — see “Management’s Discussion and Analysis.” For instance, we invested in new amenities and remodeled the standard rooms at Mandalay Bay in 2007, but operating income did not rise appreciably in 2008. However, we believe these improvements, and improvements at other resorts such as Luxor and New York-New York, still increase our relative market position during times where we and our competitors are trying to draw from a smaller customer base.amenities. In addition, we believehave made regular capital investments to maintain the quality of our hotel rooms and public spaces. The quality of our resorts and amenities can be measured by our success in winning numerous awards, such investments will allow us to earn an above — market return when economic conditions improve.as several Four and Five Diamond designations from the American Automobile Association and Four and Five Star designations from Mobil Travel.
 
We also actively manage our portfolio of land holdings. We own approximately 700670 acres of land on the Las Vegas Strip, with a meaningful portion of those acres undeveloped acreage or considered by usacreage we consider to be under-developed.
 
Risks Associated with Our Portfolio Strategy
 
TheCertain principal risk factors relating to our current portfolio of resorts are:
 
 •  Our limited geographic diversification —– our major resorts are concentrated on the Las Vegas Strip and some of our largest competitors operate in more gaming markets than we do;
 
 •  There are a number of gaming facilities located closer to where our customers livecustomers’ homes than our resorts; and
 
 •  Additional new hotel-casinosresort casinos and expansion projects at existing Las Vegas hotel-casinos are under construction orresort casinos have been proposed.recently opened and new resorts could open in future periods. We are unable to determine to what extent increased competition will affect our future operating results.
 
See “Item 1A. Risk Factors” for a more detailed discussion of these and other risk factors.

2

Resort Operation
 
Our operating philosophy is predicated on creatingto create resorts of memorable character, treatingto treat our employees wellas valued and providingrespected team members and to provide superior service for our guests. WeIn addition, we also seek to develop competitive advantages in specific markets and among specific customer groups.
 
General
 
We primarily own and operate casino resorts which includes offeringthat include gaming, hotel, dining, entertainment, retail and other resort amenities. Over half of our net revenue is derived from non-gaming activities, a higher percentage than many of our competitors, as our operating philosophy is towe provide a complete resort experience for our guests, including high quality non-gaming amenities for which commandour guests are willing to pay a premium price based on their quality.premium.
 
As a resort-based company, our operating results are highly dependent on the volume of customers at our resorts, which in turn impactsaffects the price we can charge for our hotel rooms and other amenities. Since we believe that the number of walk-in customers affects the success of our casino resorts, we design our facilities to maximize their attraction to guests of other hotels. We also generate a significant portion of our operating income from the high-end gaming segment, which can cause variability in our results.
 
Most of our revenue is essentially cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit cards. Our resorts, like many in the industry, generate significant operating cash flow. Our industry is capital intensive and we rely heavily on the ability of our resorts to generate operating cash flow to repay debt financing, fund maintenance capital expenditures and provide excess cash for future development.


3

Our results of operations do not tend to be seasonal in nature, though a variety of factors can affect the results of any interim period, including the timing of major Las Vegas conventions, the amount and timing of marketing and special events for our high-end customers, and the level of play during major holidays, including New Year and Chinese New Year. Our significant convention and meeting facilities allow usare utilized to maximize hotel occupancy and customer volumes during off-peak times, such as mid-week or during traditionally slower leisure travel periods, which also leads to better labor utilization. Our results do not depend on key individual customers, thoughalthough our success in marketing to customer groups, — such as convention customers, — or the financial health of customer segments, — such as business travelers or high-end gaming customers from a particular country or region, — can impactaffect our results.
 
All of our casino resorts operate 24 hours a day, every day of the year, with the exception of Grand Victoria which operates 22 hours a day, every day of the year. At our wholly-owned resorts, our primary casino and hotel operations are owned and managed by us. Other resort amenities may be owned and operated by us, owned by us but managed by third parties for a fee, or leased to third parties. We generally have an operating philosophy that prefersfavors ownership and management of amenities, since guests have direct contact with staff in these areas and we prefer to control all aspects of the guest experience. However,experience; however, we do lease space to retail and food and beverage operators, in certain situations, particularly for branding opportunities.opportunities and when capital investment by us is not desirable or feasible. We also operate many “managed” outlets, utilizing third partythird-party management for specific expertise in areas such asoperations of restaurants and nightclubs, as well as for branding opportunities.
 
Customers and Competition
 
Our casino resorts generally operate in highly competitive environments. We compete against other gaming companies, as well as other hospitality and leisure and business travel companies. Our primary methods of competing successfullysuccessful competition include:
 
 •  Locating our resorts in desirable leisure and business travel markets, and operating at superior sites within those markets;
 
 •  Constructing and maintaining high-quality resorts and facilities, including luxurious guestrooms, along withstate-of-the-art convention facilities and premier dining, entertainment, retail and retailother amenities;
 
 •  Recruiting, training and retaining well-qualified and motivated employees who provide superior and friendly customer service;


3

 •  Providing unique, “must-see” entertainment attractions; and
 
 •  Developing distinctive and memorable marketing and promotional programs.
 
Our Las Vegas casino resorts compete for customers with a large number of other hotel-casinoshotel casinos in the Las Vegas area, including major hotel-casinoshotel casinos on or near the Las Vegas Strip, major hotel-casinoshotel casinos in the downtown area, which is about five miles from the center of the Strip, and several major facilitieshotel casinos elsewhere in the Las Vegas area. Our Las Vegas Strip resorts also compete, in part, with each other. According to the Las Vegas Convention and Visitors Authority, there were approximately 141,000149,000 guestrooms in Las Vegas at December 31, 2008, up 6% from approximately 133,000 rooms at2010 and December 31, 2007.2009. At December 31, 2010, we operated approximately 28% of the guestrooms in Las Vegas. Las Vegas visitor volume was 37.537.3 million in 2008,2010, a decrease of 4%3% increase from the 39.236.4 million reported for 2007.2009.
 
The principal segments of the Las Vegas gaming market are leisure travel; premium gaming customers; conventions, including small meetings, trade associations, and corporate incentive programs; and tour and travel. Our high-endluxury wholly-owned properties, which includeincluding Bellagio, MGM Grand Las Vegas, Mandalay Bay, and The Mirage, appeal to the upper end of each market segment, balancing their business by using the convention and tour and travel segments to fill the mid-week and off-peak periods. Our marketing strategy for TI, New York-New York, Luxor and Monte Carlo is aimed at attracting middle- to upper-middle-income wagerers,customers, largely from the leisure travel and, to a lesser extent, the tour and travel segments. Excalibur and Circus Circus Las Vegas generally cater to the value-oriented and middle-income leisure travel and tour and travel segments.
 
Outside Las Vegas, our other wholly-owned Nevada operations compete with each other and with many other similarsimilarly sized and larger operations. Our Nevada resorts located outside of Las Vegas appeal primarily to the value-oriented leisure traveler and the value-oriented local customer. A significant portionnumber of our customers at these resorts come from California. We believe the expansion of Native American gaming in California has had a negative impact on all of our Nevada resorts not located


4

on the Las Vegas Strip, and additional expansion in California could have a further adverse effect on these resorts. Our Nevada resorts not located in Las Vegas appeal primarily to the value-oriented leisure traveler and the value-oriented local customer.
 
Outside Nevada, our wholly-owned resorts mainlyprimarily compete for customers in local and regional gaming markets, where location is a critical factor to success. InFor instance, in Tunica, Mississippi, one of our competitors is closer to Memphis, the area’s principal market. In addition, we compete with gaming operations in surrounding jurisdictions and other leisure destinations in each region. For instance,example, in Detroit, Michigan we also compete with a casino in nearby Windsor, Canada and with Native American casinos in Michigan. In Biloxi, Mississippi we also compete with regional riverboat and land-based casinos in Louisiana, Native American casinos in central Mississippi the Florida market, and with casinos in Florida and the Bahamas.
 
Aria, which we manage and of which we own 50% through the CityCenter joint venture (“CityCenter”), appeals to the upper end of each segment in the Las Vegas market and competes with our wholly-owned luxury casino resorts. Our other unconsolidated affiliates mainly compete for customers against casino resorts in their respective markets. Much like our wholly-owned resorts, our unconsolidated affiliates compete through the quality of amenities, the value of the experience offered to guests, and the location of their resorts.
 
Our casino resorts also compete for customers with hotel-casinohotel casino operations located in other areas of the United States and other parts of the world, and for leisure and business travelers with non-gaming tourist destinations such as Hawaii, Florida and cruise ships.California. Our gaming operations compete to a lesser extent with state-sponsored lotteries, off-track wagering, card parlors, and other forms of legalized gaming in the United States.
 
Marketing
 
We advertise on the radio, television, internet and billboards and in newspapers and magazines in selected cities throughout the United States and overseas, as well as on the Internet and by direct mail.mail and through the use of social media. We also advertise through our regional marketing offices located in major United StatesU.S. and foreign cities. A key element of marketing to premium gaming customers is personal contact by our marketing personnel. Direct marketing is also important in the convention segment. We maintain Internetinternet websites whichto inform customers about our resorts and allow our customers to reserve hotel rooms, make restaurant reservations and purchase show tickets. We actively utilize several social media sites to promote our brands, unique events, and special deals. We also operate call centers to allow customer contact by phone to make hotel and restaurant reservations and purchase show tickets.


4

We recently introduced a new players club loyalty program (“M life”). M life was introduced at our regional resorts in the third quarter of 2010, and to the remaining participating wholly-owned casino resorts and Aria on January 11, 2011. M life is our new player loyalty program that provides access to rewards, privileges, and members-only events. M life is a tiered system and allows customers to qualify for benefits across our participating resorts, regardless of where they play, encouraging customers to keep their total gaming spend within our casino resorts.
M life combines slots and table games play into one account and customers earn tiered rewards on both types of play. Customers earn “express comps,” which can be redeemed at restaurants, box offices, the M life players club, or kiosks at participating properties. Players can also redeem their express comps for M life “Moments,” which allow members to take advantage of unique andonce-in-a-lifetime experiences such as picking the Bellagio Fountain songs for a day, being a trainer for a day with the dolphins at The Mirage andmeet-and-greets with performers and celebrity chefs across our resort portfolio. Members of M life also continue to earn points redeemable for free play.
M life is currently a casino centered program but will expand to a broad-based program recognizing and rewarding customer spending across most channels focusing on wallet share capture, loyalty and frequency of visits. Advanced analytic techniques and new information technology will better identify customer preferences and predict future behavior allowing us to make customers more relevant offers, influence incremental visits and help build lasting customer relationships.
In addition to the loyalty program, we have re-branded our company magazine and developed an in-room M life television channel to highlight customers’ experiences and showcase “Moments” customers can earn through the accumulation of express comps. We believe that M life will enable us to more effectively market to our customers, as well as allow us to personalize customers’ experiences.
 
We also utilize our world-class golf courses in marketing programs at our Las Vegas Strip resorts. Our major Las Vegas resorts offer luxury suite packages that include golf privileges at Shadow Creek.Creek in North Las Vegas. In connection with our marketing activities, we also invite our premium gaming customers to play Shadow Creek on a complimentary basis. We also use Primm Valley Golf Club for marketing purposes at our Las Vegas Strip resorts. Additionally, marketing efforts at Beau Rivage benefit from the Fallen Oak golf course just 20 minutes north of Beau Rivage.
 
Employees and Management
 
We believe that knowledgeable, friendly and dedicated employees are a key success factor in the casino resort industry. Therefore, we invest heavily in recruiting, training and retaining ourexceptional highly motivated employees, as well as seeking to hire and promote the strongest management team possible. We have numerous programs, both at the corporate and business unit level, designed to achieve these objectives. For example, our diversity programinitiative extends throughout our Company,company, and focuses on the unique strengths of our individuals combined with a culture of working togethercollaborative teamwork to achieve greater performance. Our diversity program has been widely recognized including the honor of “Top 50 Best Companies for Diversity” given by DiversityInc magazine.and has received numerous awards. We have also invested heavily in training, and we believe our internal development programs, such as the MGM GrandResorts University and various leadership and management training programs, arebest-in-class best in class among our industry peers.
 
Technology
 
We utilize various types of technology to maximize revenue and efficiency in our operations. Our Players Club program linksWe continue to move forward on standardizing the technology platforms for our majorhotel and point of sale systems, along with several other key operational systems. The standardization of these systems provides us with one consistent operating platform, allowing us efficiencies in training, reducing complexity in system integration and interfaces, standardizing processes across our casino resorts, and consolidates all slots and table games activity forproviding our customers with a Players Club account. Customers qualify for benefits across allbetter information in connection with the implementation of the participating resorts, regardless of where they play. We believe that our Players Club enables us to more effectively market to our customers. A large number of the slot machines at our


5

resorts operate with International Game Technology’s EZ-Paytm cashless gaming system. We believe that this system enhances the customer experience and increases the revenue potential of our slot machines.M life.
 
Technology is also an important part of our strategy in non-gaming and administrative operations as well.operations. Our hotel systems include yield management modules which allowsoftware programs at many of our resorts that help us to maximize occupancy and room rates. Additionally, these systems capture charges made by our customers during their stay, including allowing customers of our resorts to charge meals and services at certainour other MGM MIRAGE resorts to their hotel accounts.


5

Corporate Sustainability
We implementedcontinue to gain recognition for our comprehensive company-wide environmental responsibility initiatives. During 2010, we were the first resorts in Nevada and Michigan to earn certification from Green Key, the largest international program evaluating sustainable hotel operations. We received certifications at 12 resorts, including “Five Green Key” (the highest possible) ratings at Aria, Vdara and Mandalay Bay. Many major travel service providers recognize the Green Key designation and identify our resorts for their continued commitment to sustainable hotel operations. We believe that our sustainability efforts are particularly beneficial in meeting and convention bookings, as corporations and associations seek to extend their environmentally responsible practices by doing business with like-minded, environmentally friendly companies.
In addition, we believe that incorporating the tenets of sustainability in our business decisions provides a platform for innovation. CityCenter is one of the world’s largest private green developments. Aria, Vdara, Crystals, Mandarin Oriental, Veer, and the Aria Convention Center all have received LEED® Gold certification by the U.S. Green Building Council. This marks the highest LEED achievement for any hotel, retail district or residential development in Las Vegas. With this accomplishment, CityCenter created a new hotel management system at most of our major resorts in 2007, which has enhanced our guest servicestandard for combining luxury and improved our yield management capabilities across our portfolio of resorts.environmental responsibility within the large-scale hospitality industry.
 
Internal Controls
 
We have a strong culture of compliance, driven by our history in the highly regulated gaming industry and our belief that compliance is a value-added activity. Our system of internal controls and procedures —- including internal control over financial reporting —– is designed to ensurepromote reliable and accurate financial records, transparent disclosures, compliance with laws and regulations, and protection of our assets. Our internal controls start at the source of business transactions, and we have rigorous enforcement through controllership at both the business unit and corporate level.
Our corporate management also reviewreviews each of our businesses on a regular basis and we have a corporate internal audit function that performs regular reviews aroundregarding gaming compliance, internal controls over financial reporting, and operational areas.operations.
In addition, we maintain a compliance committee that administers our company-wide compliance plan. The compliance plan is in place to promote compliance with gaming and other laws applicable to our operations in all jurisdictions, including performing background investigations on our current and potential employees, directors and vendors as well as thorough review of proposed transactions and associations.
 
In connection with the supervision of gaming activities at our casinos, we maintain stringent controls on the recording of all receipts and disbursements and other activities, such asincluding cash transaction reporting. Thesereporting which is essential in our industry. Our controls include:surrounding cash transactions include locked cash boxes on the casino floor, daily cash counts performed by employees who are independent of casino operations, constant observation and supervision of the gaming area, observation and recording of gaming and other areas by closed-circuit television, constant computer monitoring of our slot machines, and timely analysis of deviations from expected performance.
• Locked cash boxes on the casino floor;
• Daily cash counts performed by employees who are independent of casino operations;
• Constant observation and supervision of the gaming area;
• Observation and recording of gaming and other areas by closed-circuit television;
• Constant computer monitoring of our slot machines; and
• Timely analysis of deviations from expected performance.
 
Marker play represents a significant portion of the table games volume at Aria, Bellagio, MGM Grand Las Vegas, Mandalay Bay and The Mirage. Our other facilities do not emphasize marker play to the same extent, although we offer markers to customers at certain of those casinos as well. We maintain strict controls over the issuance of markers and aggressively pursue collection from those customers who fail to timely pay their marker balances timely.balances. These collection efforts are similar to those used by most large corporations when dealing with overdue customer accounts, including the mailing of statements and delinquency notices, direct personal contacts,contact and the use of outside collection agencies and civil litigation.
 
In Nevada, Mississippi, Michigan, and Illinois,our U.S. jurisdictions, amounts owed for markers which are not timely paid are enforceable under state laws. Alllaws and all other states are required to enforce a judgment for amounts owed, for markers entered into in Nevada, Mississippi, Illinois or Michigan which are not timely paid, pursuant to the Full Faith and Credit Clause of the United StatesU.S. Constitution. Amounts owed for markers whichthat are not timely paid are not legally enforceable in some foreign countries, but the United StatesU.S. assets of foreign customers may be reached to satisfy judgments entered in the United States.


6

Risks Associated With Our Operating Strategy
 
TheCertain principal risk factors relating to our operating strategy are:
 
 •  Our guestroom, dining and entertainment prices are often higher than those of most of our competitors in each market, although we believe that the quality of our facilities and services is also higher;


6

 •  Our hotel-casinosresort casinos compete to some extent with each other for customers. Aria, Bellagio, MGM Grand Las Vegas, Mandalay Bay and The Mirage, in particular, compete for some of the same premium gaming customers; MGM Grand Las Vegas and Mandalay Bay also compete to some extent against each other in the large-scale conferenceconvention business and convention business;for large entertainment events; and
 
 •  Additional new hotel-casinoshotel casinos and expansion projects at existing Las Vegas hotel-casinos are under construction orhotel casinos have been proposed.recently opened and new resorts could open in future periods. We are unable to determine the extent to what extentwhich increased competition will affect our future operating results.
 
See “Item 1A. Risk Factors” for a more detailed discussion of these and other risk factors.
Sustainable Growth and Leveraging Our Brand and Management Assets
 
In allocating capital,resources, our financial strategy is focused on managing a proper mix of investing in existing resorts, spending on new resorts or initiatives and repaying long-term debt, and returning capital to shareholders. We have actively allocated capital to each of these areas historically.debt. We believe there are reasonable investments for us to make in new initiatives and at our current resorts that will provide profitable returns, in excess of the other options, though the pace and extent of such investmentsalthough these decisions have been impactedsignificantly affected by economic conditions over the past several years, as well as by the current state of credit markets.recent financial crisis, which limited our access to capital.
 
The following sections discuss certain of our current and potential development opportunities. We regularly evaluate possible expansion and acquisition opportunities in both the domestic and international markets, but cannot at this time determine the likelihood of proceeding with specific development opportunities. Opportunities we evaluate may include the ownership, management and operation of gaming and other entertainment facilities in Nevada or in states other than Nevada or outside of the United States. We may undertake these opportunities either alone or in cooperation with one or more third parties.
 
CityCenter
We own 50% of CityCenter, currently under development on a67-acre site on the Las Vegas Strip, between Bellagio and Monte Carlo. Infinity World Development Corp. (“Infinity World”), a wholly-owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity, owns the other 50% of CityCenter. CityCenter will feature a 4,000-room casino resort designed by world-famous architect Cesar Pelli; two 400-room non-gaming boutique hotels, one of which will be managed by luxury hotelier Mandarin Oriental; approximately 425,000 square feet of retail shops, dining and entertainment venues; and approximately 2.1 million square feet of residential space in approximately 2,400 luxury condominium and condominium-hotel units in multiple towers. CityCenter is expected to open in late 2009, except CityCenter postponed the opening of The Harmon Hotel & Spa until late 2010 and cancelled the development of approximately 200 residential units originally planned. We are serving as the developer of CityCenter and, upon completion of construction, we will manage CityCenter for a fee.
Atlantic City, New Jersey
We own approximately 130 acres on Renaissance Pointe in Atlantic City, New Jersey. We lease ten acres to Borgata under long-term leases for use in its current operations and for its expansion. Of the remaining 120 acres, approximately 72 acres are suitable for development. We lease nine of these developable acres to Borgata on a short-term basis for surface parking and a portion of the remaining acres consists of common roads, landscaping and master plan improvements which we designed and developed as required by our agreement with Boyd. We own an additional 14 acres in the Marina District near Renaissance Pointe.
In October 2007, we announced plans for a multi-billion dollar resort complex on our72-acre site in Atlantic City. Since making that announcement, we have made extensive progress in design and other pre-development activities. However, current economic conditions, including limited access to capital markets for projects of this scale, have caused us to reassess timing for this project. Accordingly, we have postponed current development activities.
Kerzner/Istithmar Joint Venture
In September 2007, we entered into a definitive agreement with Kerzner International and Istithmar forming a joint venture to develop a multi-billion dollar integrated resort to be located on the southwest corner of Las Vegas


7

Boulevard and Sahara Avenue. In September 2008, we and our partners agreed to defer additional design and pre-construction activities and amended our joint venture agreement accordingly. In the event the joint venture partners agree that the resort will be developed, we will contribute 40 acres of land, at an agreed value of $20 million per acre, for fifty percent of the equity in the joint venture. Kerzner International and Istithmar will contribute cash totaling $600 million, of which $200 million will be distributed to us, for the other 50% of the equity.
Risks Associated With Our Growth Strategy
The principal risk factors relating to our growth strategy are:
• Development and operation of gaming facilities in new or existing jurisdictions are subject to many contingencies. Several of these contingencies are outside of our control and may include the passage of appropriate gaming legislation, the issuance of necessary permits, licenses and approvals, the availability of appropriate financing and the satisfaction of other conditions;
• Expansion projects involve risks and uncertainties. For instance, the design, timing and costs of the projects may change and are subject to risks attendant to large-scale projects.
Leveraging Our Brand and Management Assets
We also seek to leverage our management expertise and well-recognized brands through strategic partnerships and international expansion opportunities. We feel that several of our brands, particularly the “MGM Grand” brand,Grand,” “Bellagio,” and “Skylofts” brands, are well suited to new projects in both gaming and non-gaming developments. The recently opened MGM Grand Macau and MGM Grand at Foxwoods, and the recently announced MGM Grand Abu Dhabi are all part of our brand expansion strategy.
In 2007, weWe formed MGM MIRAGE Hospitality, LLC (“MGM Hospitality”). The purpose of this entity is to sourcefocus on strategic resort development and management opportunities, both gaming and non-gaming. Hospitality will have a particular focuswith an emphasis on international opportunities wherewhich we feelbelieve offer the greatest opportunity for future growth opportunities are greatest.growth. We have hired senior personnel with established backgrounds in the development and management of international hospitality operations to maximize the profit potential of MGM Hospitality’s operations. In 2008,MGM Hospitality announcedcurrently has management agreements for hotels in the formation of MGM MIRAGE Global Gaming Development, a new subsidiary principally focused on international gaming expansion.Middle East, North Africa, India and China.
 
Mubadala Development CompanyMGM Grand Abu Dhabi
 
In November 2007, we announced plans to develop MGM Grand Abu Dhabi, a multi-billion dollar, large-scale, mixed-use development that will serve as an incoming gateway to Abu Dhabi, a United Arab Emirate, located at a prominent downtown waterfront site on Abu Dhabi Island. The project will be wholly owned entirely by Mubadala;Mubadala Development Company (“Mubadala”); we will servenot have a capital investment in this project. Mubadala has informed us that they do not intend to proceed with the project on the same time frame and scope as developeroriginally contemplated. As a result, we are currently engaged in discussions with Mubadala regarding the restructuring of the projectproject.
China
We have formed a joint venture with the Diaoyutai State Guesthouse in Beijing, People’s Republic of China, to develop luxury non-gaming hotels and manageresorts in China, initially targeting prime locations, including Beijing, in the developmentPeople’s Republic of China. Our first resort, under the “MGM Grand” brand, is currently scheduled to open in late


7

2011 in Sanya, China. We have signed multiple technical and management services agreements for a fee. The initial phase will utilize 50 acresresorts that are expected to open over the next four years. We have minimal capital investments in these projects.
Vietnam
In November 2008, we and consist of anAsian Coast Development Ltd. announced plans to develop MGM Grand hotel, two additionalHo Tram, which is expected to open in 2013. MGM branded luxury hotels,Grand Ho Tram will anchor a multi-property complex on the Ho Tram Strip in the Ba Ria Vung Tau Province in southwest Vietnam. MGM Grand Ho Tram will be owned and a variety of luxury residential offerings. Additionally,financed by Asian Coast Development Ltd. and we will provide technical assistance and operate the developmentluxury-integrated resort upon completion. We will feature a major entertainment facility, high-end retail shops, and world-class dining and convention facilities.have no capital investment in this project.
 
Mashantucket Pequot Tribal Nation
 
We entered into a series of agreements to implement a strategic alliancehave an agreement with the Mashantucket Pequot Tribal Nation (“MPTN”), which owns and operates Foxwoods Casino Resort in Ledyard, Connecticut. UnderMashantucket, Connecticut for the strategic alliance, we consulted withcasino resort owned and operated by MPTN in the development of a new $700 million casino resortlocated adjacent to the existing Foxwoods casino resort. The new resort utilizesCasino Resort to carry the “MGM Grand” brand name and opened in May 2008.name. We andearn a fee for MPTN have also formed a jointly owned company — Unity Gaming, LLC — to acquire or develop future gaming and non-gaming enterprises.


8

China
We have formed a joint venture withuse the Diaoyutai State Guesthouse in Beijing, People’s Republic of China, to develop luxury non-gaming hotels and resorts globally, initially targeting prime locations, including Beijing, in the People’s Republic of China.
Vietnam
In November 2008, we and Asian Coast Development Ltd.  announced plans to develop MGM Grand Ho Tram, which is expected to open in 2011. MGM Grand Ho Tram will anchor a multi-property complex on the Ho Tram Strip in the Ba Ria Vung Tau Province in southwest Vietnam. MGM Grand Ho Tram will be owned and financed by Asian Coast Development Ltd. and we will provide development assistance and operate the five-star integrated resort upon completion.“MGM Grand” name.
 
Risks Associated With Our Growth and Brand and Management StrategyStrategies
 
Certain principal risk factors relating to our growth strategy are:
•  Development and operation of gaming facilities in new or existing jurisdictions are subject to many contingencies, some of which are outside of our control and may include the passage of appropriate gaming legislation, the issuance of necessary permits, licenses and approvals, the availability of appropriate financing and the satisfaction of other conditions;
•  Operations in which we may engage in foreign territories are subject to risks pertaining to international operations that may include financial risks such as foreign currency, adverse tax consequences, inability to adequately enforce our rights; and regulatory and political risks such as foreign government regulations, general geopolitical risks including political and economic instability, hostilities with neighboring countries, and changes in diplomatic and trade relationships; and
•  Expansion projects involve risks and uncertainties. For example, the design, timing and costs of the projects may change and are subject to risks attendant to large-scale projects to the extent we are responsible for financing such projects.
See “Item 1A. Risk Factors” for a more detailed discussion of these and other risk factors.
Intellectual Property
Our principal intellectual property consists of, among others, Bellagio, The Mirage, Mandalay Bay, MGM Grand, Luxor, Excalibur, New York-New York, Circus Circus and Beau Rivage trademarks, all of which have been registered or allowed in various classes in the U.S. We are currently undergoing the application process for the MGM Resorts International trademark. In addition, we have also registered or applied to register numerous other trademarks in connection with our properties, facilities and development projects in the U.S. We have also registeredand/or applied to register many of our trademarks in various other foreign jurisdictions. These trademarks are brand names under which we may engage in foreign territoriesmarket our properties and services. We consider these brand names to be important to our business since they have the effect of developing brand identification. We believe that the name recognition, reputation and image that we have developed attract customers to our facilities. Once granted, our trademark registrations are subjectof perpetual duration so long as they are used and periodically renewed. It is our intent to risk pertaining to international operations. These may include financial risks: foreign currency, adverse tax consequences, inability to adequately enforcepursue and maintain our rights; or regulatorytrademark registrations consistent with our goals for brand development and political risks: foreign government regulations, general geopolitical risks such as politicalidentification, and economic instability, hostilities with neighboring countries, and changes in diplomatic and trade relationships.
In addition, to the extent we become involved with development projects as an owner or investor, we are subject to similar risks as described in the “Sustainable Growth” section.enforcement of our trademark rights.
 
Employees and Labor Relations
 
As of December 31, 2008,2010, we had approximately 46,00045,000 full-time and 15,00016,000 part-time employees.employees of which 5,700 and 2,800, respectively, relate to CityCenter. At that date, we had collective bargaining contracts with unions


8

covering approximately 30,000 of our employees. We consider our employee relations to be good. In August 2007, we entered a new five-year collective bargaining agreement covering approximately 21,000 of our Las Vegas Strip employees, not including MGM Grand Las Vegas. The collective bargaining agreementagreements covering approximately 4,000most of our union employees at MGM Grand Las Vegas expiredare subject to renegotiation in 2008. We have signed an extension of such agreement and are currently negotiating a new agreement. In addition, in October 2007 we entered into a new four-year agreement covering approximately 2,900 employees at MGM Grand Detroit.2012.
 
Regulation and Licensing
 
The gaming industry is highly regulated, and we must maintain our licenses and pay gaming taxes to continue our operations. Each of our casinos is subject to extensive regulation under the laws, rules and regulations of the jurisdiction wherein which it is located. These laws, rules and regulations generally concern the responsibility, financial stability and character of the owners, managers, and persons with financial interest in the gaming operations. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions.
A more detailed description of the regulations to which we are subject is contained in Exhibit 99.2 to this Annual Report onForm 10-K, which Exhibit is incorporated herein by reference.
 
Our businesses are subject to various federal, state and local laws and regulations in addition to gaming regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our operating results.


9

Cautionary Statement Concerning Forward-Looking Statements
(Cautionary Statements Under the Private Securities Litigation Reform Act of 1995)
 
ThisForm 10-K and our 20082010 Annual Report to Stockholders contain some forward-looking statements.“forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements givecan be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “will,” “may” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make regarding our ability to generate significant cash flow; and amounts that we expect to receive in federal tax refunds, amounts we will invest in capital expenditures, amounts we will pay under the CityCenter completion guarantee, and amounts we may receive from the sale of residential units at CityCenter. The foregoing is not a complete list of all forward-looking statements we make.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees or forecastsassurances of future events. You can identifyperformance. Therefore, we caution you against relying on any of these statements byforward-looking statements. Important factors that could cause actual results to differ materially from those in the fact that they do not relate strictly to historical or current facts. They contain words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “could,” “might,” and other words or phrases of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, new projects, future performance, the outcome of contingencies such as legal proceedings, and future financial results. From time to time, we also provide oral or written forward-looking statements in ourForms 10-Qinclude, but are not limited to, regional, national or global political, economic, business, competitive, market, and8-K, as well as press releases regulatory conditions and other materials we release to the public. following:
•  our substantial indebtedness and significant financial commitments and our ability to satisfy our obligations;
•  current and future economic and credit market conditions and our ability to service or refinance our indebtedness and to make planned expenditures;
•  restrictions and limitations in the agreements governing our senior credit facility and other senior indebtedness;
•  significant competition with respect to destination travel locations generally and with respect to our peers in the industries in which we compete;
•  the fact that we are subject to extensive regulation and the related cost of compliance or failure to comply with such regulations;
•  economic and market conditions in the markets in which we operate and in the locations in which our customers reside;
•  extreme weather conditions or climate change may cause property damage or interrupt business;
•  the concentration of our major gaming resorts on the Las Vegas Strip;


9

•  investing through partnerships or joint ventures including CityCenter and MGM Macau decreases our ability to manage risk;
•  our business is particularly sensitive to energy prices and a rise in energy prices;
•  leisure and business travel, especially travel by air, are particularly susceptible to global geopolitical events, such as terrorist attacks or acts of war or hostility;
•  we extend credit to a significant portion of our customers and we may not be able to collect gaming receivables from our credit players;
•  our insurance coverage may not be adequate to cover all possible losses that our properties could suffer. In addition, our insurance costs may increase and we may not be able to obtain similar insurance coverage in the future;
•  plans for future construction can be affected by a number of factors, including timing delays and legal challenges;
•  the outcome of pending and potential future litigation claims against us;
•  the fact that Tracinda Corporation (“Tracinda”) owns a significant amount of our common stock and may have interests that differ from the interests of other holders of our stock;
•  a significant portion of our labor force is covered by collective bargaining agreements; and
•  risks associated with doing business outside of the United States.
Any or all of our forward-looking statementsstatement made by us in thisForm 10-K inor our 20082010 Annual Report speaks only as of the date on which it is made. Factors or events that could cause our actual results to Stockholdersdiffer may emerge from time to time, and in any other public statements we make may turn outit is not possible for us to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in thisForm 10-K — for example, government regulation and the competitive environment — will be important in determining our future results. Consequently, no forward-looking statement can be guaranteed. Our actual future results may differ materially.
predict all of them. We undertake no obligation to publicly update any forward-looking statements,statement, whether as a result of new information, future eventsdevelopments or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in ourForms 10-K,10-Q and8-K reports to the Securities and Exchange Commission (“SEC”). Also note that we provide a discussion of risks, uncertainties and possible inaccurate assumptions relevant to our business in Item 1A, “Risk Factors.” This discussion is providedotherwise, except as permittedmay be required by the Private Securities Litigation Reform Act of 1995.law.
 
You should also be aware that while we from time to time communicate with securities analysts, we do not disclose to them any material non-public information, internal forecasts or other confidential business information. Therefore, you should not assume that we agree with any statement or report issued by any analyst, irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain projections, forecasts or opinions, those reports are not our responsibility.responsibility and are not endorsed by us.
 
Executive Officers of the Registrant
 
The following table sets forth, as of February 15, 2009,28, 2011, the name, age and position of each of our executive officers. Executive officers are elected by and serve at the pleasure of the Board of Directors.
 
       
Name Age Position
 
James J. Murren  4749  Chairman, Chief Executive Officer, President and Director
Robert H. Baldwin  5860  Chief Design and Construction Officer and Director
Gary N. JacobsWilliam J. Hornbuckle  6353Chief Marketing Officer
Corey I. Sanders47Chief Operating Officer
Daniel J. D’Arrigo42  Executive Vice President, General Counsel, SecretaryChief Financial Officer and DirectorTreasurer
Phyllis A. James58Executive Vice President & Special Counsel—Litigation and Chief Diversity Officer
Aldo Manzini  4547  Executive Vice President and Chief Administrative Officer
Daniel J. D’ArrigoJohn McManus  4043  Executive Vice President, General Counsel and Chief Financial OfficerSecretary
William M. Scott IV50Executive Vice President—Corporate Strategy and Special Counsel
Robert C. Selwood  5355  Executive Vice President and Chief Accounting Officer
Alan FeldmanRick Arpin  5038  Senior Vice President — Public AffairsPresident—Corporate Controller
Phyllis A. JamesAlan Feldman  5652  Senior Vice President and Senior CounselPresident—Public Affairs
Punam MathurJames A. Freeman  4842  Senior Vice President — Corporate DiversityPresident—Capital Markets and Community Affairs
John McManus41Senior Vice President, Assistant General Counsel and Assistant SecretaryStrategy
Shawn T. Sani  4345  Senior Vice President — President—Taxes
Cathryn Santoro40Senior Vice President and Treasurer


10

Mr. Murren has served as Chairman and Chief Executive Officer of the Company since December 2008 and as President since December 1999. He has served as Chief Operating Officer sincefrom August 2007.2007 through December 2008. He was Chief Financial Officer from January 1998 to August 2007 and Treasurer from November 2001 to August 2007.


10

Mr. Baldwin has served as Chief Design and Construction Officer since August 2007. He served as Chief Executive Officer of Mirage Resorts from June 2000 to August 2007 and President and Chief Executive Officer of Bellagio, LLC from June 1996 to March 2005.
 
Mr. JacobsHornbuckle has served as Chief Marketing Officer since August 2009. He served as President and Chief Operating Officer of Mandalay Bay Resort & Casino from April 2005 to August 2009. He served as President and Chief Operating Officer of MGM MIRAGE—Europe from July 2001 to April 2005. He served as President and Chief Operating Officer of MGM Grand Las Vegas from October 1998 to July 2001.
Mr. Sanders has served as Chief Operating Officer since September 2010. He served as Chief Operating Officer for the Company’s Core Brand and Regional Properties from August 2009 to September 2010, as Executive Vice President—Operations from August 2007 to August 2009, as Executive Vice President and General Counsel of the Company since June 2000Chief Financial Officer for MGM Grand Resorts from April 2005 to August 2007 and as Secretary since January 2002. Prior thereto, he was a partner with the law firm of Glaser, Weil, Fink, Jacobs, & Shapiro, LLP.
Mr. Manzini has served as Executive Vice President and Chief AdministrativeFinancial Officer since March 2007. Prior thereto, he served as Senior Vice President of Strategic Planning for the Walt Disney Company and in various senior management positions throughout his tenureMGM Grand from August 1997 to April 1990 to January 2007.2005.
 
Mr. D’Arrigo has served as Executive Vice President and Chief Financial Officer since August 2007.2007 and Treasurer since September 2009. He served as Senior Vice President — President—Finance of the Company from February 2005 to August 2007 and as Vice President — President—Finance of the Company from December 2000 to February 2005.
 
Mr. SelwoodMs. James has served as Executive Vice President and Chief Accounting OfficerSpecial Counsel—Litigation since August 2007. HeJuly 2010. She served as Senior Vice President, — AccountingDeputy General Counsel of the Company from February 2005March 2002 to August 2007 and as Vice President — Accounting of the Company from December 2000 to February 2005.
Mr. Feldman has served as Senior Vice President — Public Affairs of the Company since September 2001. He served as Vice President — Public Affairs of the Company from June 2000 to September 2001.
Ms. James has served as Senior Vice President and Senior Counsel of the Company since March 2002.July 2010. From 1994 to 2001 she served as Corporation (General) Counsel and Law Department Director for the City of Detroit. In that capacity she also served on various public and quasi-public boards and commissions on behalf of the City, including the Election Commission, the Detroit Building Authority and the Board of Ethics.
 
Ms. MathurMr. Manzini has served as Executive Vice President and Chief Administrative Officer since March 2007. Prior thereto, he served as Senior Vice President — Corporate Diversityof Strategic Planning for the Walt Disney Company and Community Affairs of the Company since May 2004. Shein various senior management positions throughout his tenure from April 1990 to January 2007.
Mr. McManus has served as Executive Vice President, — Corporate DiversityGeneral Counsel and Community AffairsSecretary since July 2010. He served as Senior Vice President, Acting General Counsel and Secretary of the Company from December 20012009 to May 2004. SheJuly 2010. He served as Senior Vice President, — Community Affairs of the CompanyDeputy General Counsel and Assistant Secretary from November 2000September 2009 to December 2001.
Mr. McManus has2009. He served as Senior Vice President, Assistant General Counsel and Assistant Secretary of the Company sincefrom July 2008.2008 to September 2009. He served as Vice President and General Counsel for CityCenter’s residential and retail divisions from January 2006 to July 2008. Prior thereto, he served as General Counsel or Assistant General Counsel for various of the Company’s operating subsidiaries from May 2001 to January 2006.
 
Mr. Scott has served as Executive Vice President—Corporate Strategy and Special Counsel since July 2010. He served as Senior Vice President and Deputy General Counsel of the Company from August 2009 to July 2010. Previously, he was a partner in the Los Angeles office of Sheppard, Mullin, Richter & Hampton LLP, specializing in financing transactions, having joined that firm in 1986.
Mr. Selwood has served as Executive Vice President and Chief Accounting Officer since August 2007. He served as Senior Vice President—Accounting of the Company from February 2005 to August 2007 and as Vice President—Accounting of the Company from December 2000 to February 2005.
Mr. Arpin has served as Senior Vice President—Corporate Controller of the Company since August 2009. He served as Vice President of Financial Accounting of the Company from January 2007 to August 2009. He served as Assistant Vice President of Financial Reporting from January 2005 to January 2007, and as Director of Financial Reporting from May 2002 to January 2005.
Mr. Feldman has served as Senior Vice President—Public Affairs of the Company since September 2001. He served as Vice President—Public Affairs of the Company from June 2000 to September 2001.
Mr. Freeman has served as Senior Vice President—Capital Markets and Strategy since March 2010. Previously, he was the Senior Vice President and Chief Financial Officer of Fontainebleau Resorts, having joined that company in 2006. Prior thereto, he held various investment banking positions with Banc of America Securities from 1998 to 2006.


11

Mr. Sani has served as Senior Vice President — President—Taxes of the Company since July 2005. He served as Vice President — President—Taxes of the Company from June 2002 to July 2005. Prior thereto he was a partner in the Transaction Advisory Services practice of Arthur Andersen LLP, having served that firm in various other capacities since 1988.
 
Ms. Santoro has served as Senior Vice President and Treasurer since August 2007. She served as Vice President — Treasury of the Company from August 2004 to August 2007. Prior thereto she was a Vice President for Wells Fargo Bank, serving in the gaming division.
Available Information
 
We maintain a website www.mgmmirage.com, whichatwww.mgmresorts.com that includes financial and other information for investors. We provide access to our SEC filings, including our annual report onForm 10-K and quarterly reports onForm 10-Q (including related filings in XBRL format), filed and furnished current reports onForm 8-K, and amendments to those reports on our website, free of charge, through a link to the SEC’s EDGAR database. Through that link, our filings are available as soon as reasonably practical after we file the documents.
 
These filings are also available on the SEC’s website atwww.sec.gov. In addition, the public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E.,


11

NE, Washington, D.C. 20549 and may obtain information on the operation of the Public Reference Room by calling the SEC at1-800-SEC-0330.
 
Our Corporate Governance Policies, the charter of our Audit Committee and our Code of Business Conduct and Ethics and Conflict of Interest Policy, along with any amendments or waivers to the Code, are available on our website under the “Investor Relations” link. We will provide a copy of these documents without charge to any stockholder upon receipt of a written request addressed to MGM MIRAGE, Attn: Corporate Secretary, 3600 Las Vegas Boulevard South, Las Vegas, Nevada 89109.
Reference in this document to our website address does not constitute incorporation by reference of the information contained on the website.


12

 
ITEM 1A.  RISK FACTORS
 
You should be aware that the occurrence of any of the events described in this section and elsewhere in this report or in any other of our filings with the SEC could have a material adverse effect on our business, financial position, results of operations and cash flows. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial positions, results of operations or cash flows. In evaluating us, you should consider carefully, among other things, the risks described below.
 
Risks Related to our Substantial Indebtedness
• Our substantial indebtedness and significant financial commitments could adversely affect our operations and financial results and impact our ability to satisfy our obligations.As of December 31, 2008,2010, we had approximately $13.5$12.3 billion of indebtedness. In late February 2009, we borrowed $842 millionindebtedness, including $2.3 billion of borrowings outstanding under our senior credit facility, which amount represented — after giving effect to $93 million in outstanding lettersand had approximately $1.2 billion of credit — the total amount of unusedavailable borrowing capacity available under our $7.0 billion senior credit facility. In connection with the waiver and amendment described below, on March 17, 2009 we repaid $300 million under the senior credit facility, which amount is not available for reborrowing without the consent of the lenders.facility. We have no other existing sources of borrowing availability, except to the extent we pay down further amounts outstanding under the senior credit facility. We have approximately $455 million of 2011 note maturities and estimated interest payments of $969 million in 2011 based on outstanding debt as of December 31, 2010. Any increase in the interest rates applicable to our existing or future borrowings would increase the cost of our indebtedness and reduce the cash flow available to fund our other liquidity needs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion of our liquidity and financial position. In addition, our substantial indebtedness and significant financial commitments could have important negative consequences, including:
As of December 31, 2008, we had approximately $2.8 billion of financial commitments and estimated capital expenditures in 2009, excluding commitments under employment, entertainment and other operational agreements. Furthermore, the interest rate applicable to our borrowings under the senior credit facility is based on variable reference rates and our leverage ratio. Any increase in the interest rates applicable to our existing or future borrowings would increase the cost of our indebtedness and reduce the cash flow available to fund our other liquidity needs. Our substantial indebtedness and significant financial commitments could have important negative consequences, including:
 
 —-       increasing our exposure to general adverse economic and industry conditions;
 
—-       limiting our flexibility in planningto plan for, or reactingreact to, changes in our business and industry;
 
—-       limiting our ability to borrow additional funds;
-       making it more difficult for us to make payments on our indebtedness; and
 
—-       placing us at a competitive disadvantage compared to other less leveraged competitors.
 
• Our senior credit facility contains financial covenants,
Moreover, our businesses are capital intensive. For our owned and managed properties to remain attractive and competitive we must periodically invest significant capital to keep the properties well-maintained, modernized and refurbished, which requires an ongoing supply of cash and, we do not expect to be in compliance with such financial covenants in 2009.  While we were in compliance with the financial covenants under our senior credit facility at December 31, 2008, if the recent adverse conditions in the economy in general — and the gaming industry in particular — continue, we believe that we will not be in compliance with those financial covenants during 2009. In fact, given these conditions and the recent borrowing under the senior credit facility, we do not expect to be in compliance with those financial covenants at March 31, 2009. As a result, on March 17, 2009 we obtained from the lenders under the senior credit facility a waiver of the requirement that we comply with such financial covenants through May 15, 2009. Additionally, we entered into an amendment of our senior credit facility which provides for, among other terms, the following:
— We agreed to repay $300 million of the outstanding borrowings under the senior credit facility, which amount is not available for reborrowing without the consent of the lenders;
— We are prohibited from prepaying or repurchasing our outstanding long-term debt or disposing of material assets; and other restrictive covenants were added that limit our ability to make investments and incur indebtedness;


12

— The interest rate on outstanding borrowings under the senior credit facility was increased by 100 basis points; and
— Our required equity contributions in CityCenter are limited through May 15, 2009 such that we can only make contributions if Infinity World makes its required contributions; our equity contributions do not exceed specified amounts (though we believe the limitation is in excess of the amounts expected to be required through May 15, 2009); and the CityCenter senior secured credit facility has not been accelerated.
Following expiration of the waiver on May 15, 2009, we will be subject to an event of default related to the expected noncompliance with financial covenants under the senior credit facility at March 31, 2009. We intend to work with our lenders to obtain additional waivers or amendments prior to May 15, 2009 to address future noncompliance with the senior credit facility; however, we can provide no assuranceextent that we willcannot fund expenditures from cash generated by operations, funds must be able to secure such waiversborrowed or amendments. The lenders holding at least a majorityotherwise obtained. Similarly, future development projects and acquisitions could require significant capital commitments, the incurrence of additional debt, guarantees of third-party debt, or the principal amount underincurrence of contingent liabilities, which could have an adverse effect on our senior credit facility could, among other actions, acceleratebusiness, financial condition and results of operations. Events over the obligation to repay borrowings under our senior credit facility in such an eventpast several years, including the failures and near failures of default. As a result of such event of default, under certain circumstances, cross defaults could occur under our indenturesfinancial services companies and the CityCenter $1.8 billion senior secured credit facility, which could acceleratedecrease in liquidity and available capital, have negatively affected the obligation to repay amounts outstanding under such indentures and the CityCenter credit facility and could result in termination of the unfunded commitments under the CityCenter credit facility. If the lenders exercise any or all such rights, we or CityCenter may determine to seek relief through a filing under the U.S. Bankruptcy Code.capital markets.
 
• There is substantial doubt about our ability to continue as a going concern.  The uncertainties described above regarding 1) our ability to meet our financial commitments, and 2) our potential noncompliance with financial covenants under our senior credit facility, raise a substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. As a result, the report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2008 contains an explanatory paragraph with respect to our ability to continue as a going concern. We can provide no assurance that we will be able to secure a waiver or amendment related to potential noncompliance under our senior credit facility or be able to address our 2009 financial commitments in such a way as to be able to continue as a going concern.
• Current and future economic and credit market conditions could adversely impactaffect our ability to service or refinance our indebtedness and to make planned expenditures.Our ability to make payments on, and to refinance, our indebtedness and to fund planned or committed capital expenditures and investments in joint ventures, such as CityCenter, depends on our ability to generate cash flow in the future and our ability to borrow under our senior credit facility to the extent of available borrowings. If adverse regional and national economic conditions persist, worsen, or fail to improve significantly, we could experience decreased revenues from our operations attributable to decreases in consumer spending levels and could fail to generate sufficient cash to fund our liquidity needs or fail to satisfy the financial and other restrictive covenants which we are subject to under our indebtedness. We cannot provide assuranceassure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our senior credit facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs.
We have a significant amount of indebtedness maturing in 2013 and 2014 and thereafter. Our ability to timely refinance and replace such indebtedness will depend upon the foregoing as well as on continued and sustained improvements in financial markets. If we are unable to refinance our indebtedness on a timely basis, we might


13

be forced to seek alternate forms of financing, dispose of certain assets or minimize capital expenditures and other investments. There is no assurance that any of these alternatives would be available to us, if at all, on satisfactory terms, on terms that would not be disadvantageous to note holders, or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements.
• The agreements governing our senior credit facility and other senior indebtedness contain restrictions and limitations that could significantly affect our ability to operate our business, as well as significantly affect our liquidity and therefore could adversely affect our results of operations. Covenants governing our senior credit facility and certain of our debt securities restrict, among other things, our ability to:
 -       pay dividends or distributions, repurchase or issue equity, prepay debt or make certain investments;
-       incur additional debt or issue certain disqualified stock and preferred stock;
-       incur liens on assets;
-       pledge or sell assets or consolidate with another company or sell all or substantially all assets;
-       enter into transactions with affiliates;
-       allow certain subsidiaries to transfer assets; and
-       enter into sale and lease-back transactions.
Our ability to comply with these provisions may be affected by events beyond our control. The breach of any such covenants or obligations not otherwise waived or cured could result in a default under the applicable debt obligations and could trigger acceleration of those obligations, which in turn could trigger cross defaults under other agreements governing our long-term indebtedness. Any default under the senior credit facility or the indentures governing our other debt could adversely affect our growth, our financial condition, our results of operations and our ability to make payments on our debt, and could force us to seek protection under the bankruptcy laws.
Risks Related to our Business
• Our casinos in Las Vegas and elsewhere are destination resorts that competeWe face significant competition with otherrespect to destination travel locations throughoutgenerally and with respect to our peers in the United Statesindustries in which we compete, and the world.failure to effectively compete could materially adversely affect our business, financial condition results of operations and cash flow. The hotel, resort and casino industries are highly competitive. We do not believe that our competition is limited to a particular geographic area, and hotel, resort and gaming operations in other states or countries could attract our customers. To the extent that new casinos enter our markets or hotel room capacity is expanded by others in major destination locations, competition will increase. Major competitors, including new entrants, have either recently expanded their hotel room capacity or are currently expanding their capacity or constructing new resorts in Las Vegas.Vegas and Macau. Also, the growth of gaming in areas outside Las Vegas, including California, has increased the competition faced by our operations in Las Vegas and elsewhere. In particular, as large scale gaming operations in Native American tribal lands has increased, particularly in California, competition has increased.


13

In addition, competition could increase if changes in gaming restrictions in the U.S. and elsewhere result in the addition of new gaming establishments located closer to our customers than our casinos, such as has happened in California. In addition to competition with other hotels, resorts, and casinos, we compete with destination travel locations outside of the markets in which we operate. Our failure to compete successfully in our various markets and to continue to attract customers could adversely affect our business, financial condition, results of operations and cash flow.
 
• TheOur businesses are subject to extensive regulation and the cost of compliance or failure to comply with such regulations may adversely affect our business and results of operations. Our ownership and operation of gaming facilities areis subject to extensive federal, state and local laws, regulations and ordinances, which are administeredregulation by the relevant regulatory agenciescountries, states, and provinces in each jurisdiction.which we operate. These laws, regulations and ordinances vary from jurisdiction to jurisdiction, but generally concern the responsibility, financial stability and character of the owners and managers of gaming operations as well as persons financially interested or involved in gaming operations. As such, our gaming regulators can require us to disassociate ourselves from suppliers or business partners found unsuitable by the regulators.regulators or, alternatively,


14

cease operations in that jurisdiction. In addition, unsuitable activity on our part or on the part of our domestic or foreign unconsolidated affiliates in any jurisdiction could have a negative impacteffect on our ability to continue operating in other jurisdictions. For a summary of gaming and other regulations that affect our business, see “Regulation and Licensing.” The regulatory environment in any particular jurisdiction may change in the future and any such change could have a material adverse effect on our results of operations. In addition, we are subject to various gaming taxes, which are subject to possible increase at any time. Increases in gaming taxation could also adversely affect our results.
Further, our directors, officers, key employees and joint venture partners must meet approval standards of certain state regulatory authorities. If state regulatory authorities were to find a person occupying any such position or a joint venture partner unsuitable, we would be required to sever our relationship with that person or the joint venture partner may be required to dispose of their interest in the joint venture. State regulatory agencies may conduct investigations into the conduct or associations of our directors, officers, key employees or joint venture partners to ensure compliance with applicable standards. For example, as a result of the New Jersey Division of Gaming Enforcement (the “DGE”) investigation of our relationship with our joint venture partner in Macau we entered into a settlement agreement with the DGE under which we were required to sell our 50% ownership interest in Borgata and related leased land in Atlantic City.
Certain public and private issuances of securities and other transactions that we are party to also require the approval of some state regulatory authorities.
In addition to gaming regulations, we are also subject to various federal, state and local laws and regulations affecting businesses in general. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, smoking, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. For example, Illinois has enacted a ban on smoking in nearly all public places, including bars, restaurants, work places, schools and casinos. The likelihood or outcome of similar legislation in other jurisdictions and referendums in the future cannot be predicted, though any smoking ban would be expected to negatively impact our financial performance.
• Our business is affected by economic and market conditions in the markets in which we operate and in the locations in which our customers reside. Our business is particularly sensitive to reductions in discretionary consumer spending and corporate spending on conventions and business development. Economic contraction, economic uncertainty or the perception by our customers of weak or weakening economic conditions may cause a decline in demand for hotel and casino resorts, trade shows and conventions, and for the type of luxury amenities we offer. In addition, changes in discretionary consumer spending or consumer preferences could be driven by factors such as the increased cost of travel, an unstable job market, perceived or actual disposable consumer income and wealth, or fears of war and future acts of terrorism. Aria, Bellagio, MGM Grand Las Vegas, Mandalay Bay and The Mirage are particularlyin particular may be affected by economic conditions in the Far East, and all of our Nevada resorts are affected by economic conditions in the United States, and California in particular. A recession, economic slowdown or any other significant economic issuescondition affecting consumers or corporations generally is likely to cause a reduction in visitation to our resorts, which would adversely affect our operating results.
For example, the recent recession and downturn in consumer and corporate spending and economic conditions that existed in 2008, and is expected to continue in 2009, has had a negative impact on our results of operations. In addition, the weak housing and real estate market — both generally and in Nevada particularly — has negatively impacted CityCenter’s ability to sell residential units.
 
• Extreme weather conditions or climate change may cause property damage or interrupt business, which could harm our business and results of operations.Certain of our casino properties are located in areas that may be subject to extreme weather conditions, including, but not limited to, hurricanes. Such extreme weather conditions may interrupt our operations, damage our properties, and reduce the number of customers who visit our facilities in such areas. Although we maintain both property and business interruption insurance coverage for certain extreme weather conditions, such coverage is subject to deductibles and limits on maximum benefits, including limitation on the coverage period for business interruption, and we cannot assure you that we will be able to fully insure such losses or fully collect, if at all, on claims resulting from such


15

extreme weather conditions. Furthermore, such extreme weather conditions may interrupt or impede access to our affected properties and may cause visits to our affected properties to decrease for an indefinite period.
• WeBecause our major gaming resorts are concentrated on the Las Vegas Strip, we are subject to greater risks than a large consumer of electricity and other energy.gaming company that is more geographically diversified. Accordingly, increases in energy costs, such as those experienced in 2007 and 2008,Given that our major resorts are concentrated on the Las Vegas Strip, our business may have a negative impact on our operating results. Additionally, higher energy and gasoline prices which affect our customers may result in reduced visitationbe significantly affected by risks common to our resorts and a reduction in our revenues.
• Many of our customers travel by air.  As a result,the Las Vegas tourism industry. For example, the cost and availability of air serviceservices and the impact of any events which disrupt air travel to and from Las Vegas can adversely affect our business. We cannot control the number or frequency of flights into or out of Las Vegas, but we rely on air traffic for a significant portion orof our visitors. Reductions in flights by major airlines such as those implemented in 2008 as a result of higher fuel prices and lower demand can impact the number of visitors to our resorts. Additionally, there is one principal interstate highway between Las Vegas and Southern California, where a large number of our customers reside. Capacity constraints of that highway or any other traffic disruptions may also affect the number of customers who visit our facilities.
 
• Investing through partnerships or joint ventures including CityCenter and MGM Macau decreases our ability to manage risk. In addition to acquiring or developing hotels and resorts or acquiring companies that complement our business directly, we have from time to time invested, and expect to continue to invest, as a co-venturer. Joint venturers often have shared control over the operation of the joint venture assets. Therefore, the operation of a joint venture is subject to inherent risk due to the shared nature of the enterprise and the need to reach agreements on material matters. In addition, joint venture investments may involve risks such as the possibility that the co-venturer in an investment might become bankrupt or not have the financial resources to meet its obligations, or have economic or business interests or goals that are inconsistent with our business interests or goals, or be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives. Consequently, actions by a co-venturer might subject hotels and resorts owned by the joint venture to additional risk. Further, we may be unable to take action without the approval of our joint venture partners. Alternatively, our joint venture partners could take actions binding on the joint venture without our consent. Additionally, should a joint venture partner become bankrupt, we could become liable for our partner’s or co-venturer’s share of joint venture liabilities.
For instance, CityCenter, which is 50% owned and managed by us, has a significant amount of indebtedness, which could adversely affect its business and its ability to meet its obligations. If CityCenter is unable to meet its financial commitments and we and our partners are unable to support future funding requirements, as necessary, such event could have adverse financial consequences to us. In addition, the agreements governing the indebtedness subject CityCenter and its subsidiaries to significant financial and other restrictive covenants, including restrictions on its ability to incur additional indebtedness, place liens upon assets, make distributions to us, make certain investments, consummate certain asset sales, enter into transactions with affiliates (including us) and merge or consolidate with any other person or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets. The CityCenter amended and restated credit facility also requires CityCenter to meet an interest coverage ratio test commencing on September 30, 2012. We cannot be sure that CityCenter will be able to meet this test or that the lenders will waive any failure to meet the test.
In addition, in accordance with our joint venture agreement and the CityCenter credit facility, we provided a cost overrun guarantee which is secured by our interests in the assets of Circus Circus Las Vegas and certain adjacent undeveloped land.
Also, the operation of MGM Macau, which is 50% owned by us, is subject to unique risks, including risks related to: (a) our ability to adapt to the different regulatory and gaming environment in Macau while remaining in compliance with the requirements of the gaming regulatory authorities in the jurisdictions in which we currently operate, as well as other applicable federal, state, or local laws in the United States and Macau; (b) potential political or economic instability; and (c) the extreme weather conditions in the region.
• Our business is particularly sensitive to energy prices and a rise in energy prices could harm our operating results. We are a large consumer of electricity and other energy and, therefore, higher energy prices may have an adverse effect on our results of operations. Accordingly, increases in energy costs may have a negative impact on our operating results. Additionally, higher electricity and gasoline prices which affect our customers may result in reduced visitation to our resorts and a reduction in our revenues.


16

• Leisure and business travel, especially travel by air, are particularly susceptible to global geopolitical events, such as terrorist attacks or acts of war or hostility. These events can create economicWe are dependent on the willingness of our customers to travel by air. Since most of our customers travel by air to our Las Vegas and political uncertainties thatMacau properties, any terrorist act, outbreak of hostilities, escalation of war, or any actual or perceived threat to the security of travel by air, could adversely impactaffect our business levels.financial condition, results of operations and cash flows. Furthermore, although we have been able to purchase some insurance coverage for certain types of terrorist acts, insurance coverage against loss or business interruption resulting from war and some forms of terrorism continues to be unavailable.


14

 
• Our City Center joint venture involvesWe extend credit to a large portion of our customers and we may not be able to collect gaming receivables from our credit players. We conduct our gaming activities on a credit and cash basis. Any such credit we extend is unsecured. Table games players typically are extended more credit than slot players, and high-stakes players typically are extended more credit than patrons who tend to wager lower amounts. High-end gaming is more volatile than other forms of gaming, and variances in win-loss results attributable to high-end gaming may have a significant risks.  The developmentpositive or negative impact on cash flow and ultimate operationearnings in a particular quarter. We extend credit to those customers whose level of CityCenterplay and financial resources warrant, in the opinion of management, an extension of credit. These large receivables could have a significant impact on our results of operations if deemed uncollectible. While gaming debts evidenced by a credit instrument, including what is subjectcommonly referred to unique risk givenas a “marker,” and judgments on gaming debts are enforceable under the scopecurrent laws of Nevada, and Nevada judgments on gaming debts are enforceable in all states under the Full Faith and Credit Clause of the developmentU.S. Constitution, other jurisdictions may determine that enforcement of gaming debts is against public policy. Although courts of some foreign nations will enforce gaming debts directly and financing requirements placedthe assets in the U.S. of foreign debtors may be reached to satisfy a judgment, judgments on us and our partner, Infinity World. If we or our partnergaming debts from U.S. courts are unable to meet our funding requirements or if City Center’s $1.8 billion senior secured credit facility is terminated — for instance, due to cross defaults atnot binding on the partner level — then this could cause the developmentcourts of CityCenter to be delayed or suspended indefinitely. Such an event could have adverse financial consequences to us.many foreign nations.
 
• Our joint venture in Macau S.A.R. involves significant risks.  The operation of MGM Grand Macau, 50% owned by us, is subjectinsurance coverage may not be adequate to unique risks, including risks related to: (a) Macau’s regulatory framework; (b)cover all possible losses that our abilityproperties could suffer. In addition, our insurance costs may increase and we may not be able to adapt to the different regulatory and gaming environment in Macau while remaining in compliance with the requirements of the gaming regulatory authoritiesobtain similar insurance coverage in the jurisdictionsfuture. Although we have “all risk” property insurance coverage for our operating properties, which covers damage caused by a casualty loss (such as fire, natural disasters, acts of war, or terrorism), each policy has certain exclusions. In addition, our property insurance coverage is in which we currently operate, as well as other applicable federal, state, or local lawsan amount that may be significantly less than the expected replacement cost of rebuilding the facilities if there was a total loss. Our level of insurance coverage also may not be adequate to cover all losses in the United Statesevent of a major casualty. In addition, certain casualty events, such as labor strikes, nuclear events, acts of war, loss of income due to cancellation of room reservations or conventions due to fear of terrorism, deterioration or corrosion, insect or animal damage and Macau; (c) potential political or economic instability; and (d) the extreme weather conditions in the region.pollution, may not be covered at all under our policies. Therefore, certain acts could expose us to substantial uninsured losses.
 
Furthermore, such operations in Macau or any future operations in whichIn addition to the damage caused to our properties by a casualty loss, we may engagesuffer business disruption as a result of these events or be subject to claims by third parties that may be injured or harmed. While we carry business interruption insurance and general liability insurance, this insurance may not be adequate to cover all losses in any other foreign territories are subjectsuch event.
We renew our insurance policies (other than our builder’s risk insurance) on an annual basis. The cost of coverage may become so high that we may need to risk pertainingfurther reduce our policy limits or agree to international operations. These may include financial risks, such as foreign economy, adverse tax consequences, and inability to adequately enforcecertain exclusions from our rights. These may also include regulatory and political risks, such as foreign government regulations, general geopolitical risks such as political and economic instability, hostilities with neighboring counties, and changes in diplomatic and trade relationships.coverage.
 
• Our plans forWe face risks related to pending claims that have been, or future construction canclaims that may be, affected by a number of factors, including time delays in obtaining necessary governmental permits and approvals and legal challenges.brought against us. We may make changes in project scope, budgets and schedules for competitive, aesthetic or other reasons, and these changes may also result from circumstances beyond our control. These circumstances include weather interference, shortages of materials and labor, work stoppages, labor disputes, unforeseen engineering, environmental or geological problems, and unanticipated cost increases. Any of these circumstances could give rise to delays or cost overruns. Major expansion projects at our existing resorts can also result in disruption of our business during the construction period.
• Claims have been brought against us and our subsidiaries in various legal proceedings, and additional legal and tax claims arise from time to time.  It is possible We may not be successful in the defense or prosecution of our current or future legal proceedings, which could result in settlements or damages that could significantly impact our cash flowsbusiness, financial condition and results of operations could be affected by the resolution of these claims.operations. Please see the further discussion in Item 3. “Legal Proceedings.”
 
• Tracinda Corporationowns a significant amount of our common stock and may have interests that differ from the interests of other holders of our stock. As of December 31, 2010, Tracinda beneficially owned approximately 54%27% of our outstanding common stock. Should Tracinda and its affiliates collectively cease to own more than 15% of our outstanding common stock, assuch an event will constitute a “change of December 31, 2008.  As a result, Tracinda Corporation hascontrol” under the ability to elect our entire Board of Directors and determine the outcome of other matters submitted to our stockholders, such as the approval of significant transactions.indentures governing


17

certain of our outstanding secured notes. In that event, we would be required to offer to purchase those notes at 101% of the outstanding principal amount of those notes.
In addition, Tracinda may be able to exercise significant influence over us as a result of its significant ownership of our outstanding common stock. As a result, actions requiring stockholder approval that may be supported by other stockholders could be effectively blocked by Tracinda.
• A significant portion of our labor force is covered by collective bargaining agreements. Work stoppages and other labor problems could negatively affect our business and results of operations. Approximately 30,000 of our 61,000 employees are covered by collective bargaining agreements. A prolonged dispute with the covered employees could have an adverse impact on our operations. In addition, wage and or benefit increases resulting from new labor agreements may be significant and could also have an adverse impact on our results of operations.operations and to the extent that our non-union employees join unions, we would have greater exposure to risks associated with labor problems. The majority of our collective bargaining agreement covering approximately 4,000 employees atagreements expire in 2012.
• We are subject to risks associated with doing business outside of the United States. Our operations outside the United States are subject to risks that are inherent in conducting business undernon-United States laws, regulations and customs. In particular, the risks associated with the operation of MGM Grand Las Vegas expiredMacau, which is 50% owned by us, or any future operations in 2008. We have signed an extensionwhich we may engage in any other foreign territories, include:
-     changes in laws and policies that govern operations of companies in Macau;
-     changes innon-United States government programs;
-     possible failure to comply with anti-bribery laws such agreementas the United States Foreign Corrupt Practices Act and are currently negotiating a new agreement.similar anti-bribery laws in other jurisdictions;
-     general economic conditions and policies in China, including restrictions on travel and currency movements;
-     difficulty in establishing, staffing and managingnon-United States operations;
-     different labor regulations;
-     changes in environmental, health and safety laws;
-     potentially negative consequences from changes in or interpretations of tax laws;
-     political instability and actual or anticipated military or political conflicts;
-     economic instability and inflation, recession or interest rate fluctuations; and
-     uncertainties regarding judicial systems and procedures.
These risks, individually or in the aggregate, could have an adverse effect on our results of operations and financial condition. For example, we are subject to compliance with the United States Foreign Corrupt Practices Act and similar anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business. While our employees and agents are required to comply with these laws, we cannot be sure that our internal policies and procedures will always protect us from violations of these laws, despite our commitment to legal compliance and corporate ethics. We also deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering regulations. Any violation of anti-money laundering laws or regulations by any of our properties could have an adverse effect on our financial condition, results of operations or cash flows. The occurrence or allegation of these types of risks may adversely affect our business, performance, prospects, value, financial condition, and results of operations.
We are also exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates. If the United States dollar strengthens in relation to the currencies of other countries, our United States dollar reported income from sources where revenue is dominated in the currencies of other such countries will decrease.
 
ITEM 1B.  UNRESOLVED STAFF COMMENTS
 
None.


1518

 
ITEM 2.  PROPERTIES
 
Our principal executive offices are located at Bellagio. The following table lists our significant land holdings; unless otherwise indicated, all properties are wholly-owned. We also own or lease various other improved and unimproved property in Las Vegas and other locations in the United States and certain foreign countries.
 
     
  Approximate
  
Name and Location Acres Notes
Las Vegas, Nevada operations:
    
Bellagio 76 Two acres of the site are subject to two ground leases that expire (giving effect to our renewal options) in 2019 and 2073.
MGM Grand Las Vegas 102  
Mandalay Bay 100  
The Mirage 10284  Site is shared with TI. Approximately 21 acres will be transferred upon the close of the TI sale.
Luxor 60  
TINASee The Mirage.
New York-New York 20  
Excalibur 53  
Monte Carlo 28  
Circus Circus Las Vegas 69  Includes Slots-A-Fun.
Shadow Creek Golf Course 240240
   
Other Nevada operations:
    
Circus Circus Reno 10 A portion of the site is subject to two ground leases, which expire in 2032 and 2033, respectively.
Primm Valley Golf Club 448 Located inat the California state line, four miles from the Primm, Valley Resorts.Nevada.
Gold Strike, Jean, Nevada 51  
Railroad Pass, Henderson, Nevada 99
   
Other domestic operations:
    
MGM Grand Detroit 27  
Beau Rivage, Biloxi, Mississippi 41 Includes 10 acres of tidelands leased from the State of Mississippi under a lease that expires (giving effect to our renewal options) in 2066.
Fallen Oak Golf Course,

Saucier, Mississippi		 
508		  
Gold Strike, Tunica, Mississippi 2424
   
Other land:
    
CityCenter — Support Services 12 Includes approximately 10 acres behind New York-New York being used for project administration offices and approximately two acres adjacent to New York-New York, being used for the residential sales pavilion. We own this land and these facilities, and we are leasing them to CityCenter on a rent-free basis.York- New York.
Las Vegas Strip —Strip- south 20 Located immediately south of Mandalay Bay.
  15 Located across the Las Vegas Strip from Luxor.
Las Vegas Strip —Strip- north 34 Located north of Circus Circus.
North Las Vegas, Nevada 66 Located adjacent to Shadow Creek.
Henderson, Nevada 47 Adjacent to Railroad Pass.
Jean, Nevada 116 Located adjacent to, and across I-15 from, Gold Strike.
Sloan, Nevada 89  
Stateline, California at Primm 125 Adjacent to the Primm Valley Golf Club.
Detroit, Michigan8Site of former temporary casino.
Tunica, Mississippi 388 We own an undivided 50% interest in this site with another, unaffiliated, gaming company.
Atlantic City, New Jersey 152141 Approximately 19eight acres are leased to Borgata including nine acres under a short-term lease. Of the remaining land, approximately 74 acres are suitable for development.


16

The land underlying New York-New York, along with substantially all of the assets of that resort, serveserves as collateral for our 13% Senior Secured Notessenior secured notes due 2013 issued in 2008.


19

Borgata occupies approximately 46 acres at Renaissance Pointe, including 19 acres we lease to Borgata. Borgata owns approximately 27 acres which are usedThe land underlying Bellagio and The Mirage, along with substantially all of the assets of those resorts, serves as collateral for bank credit facilitiesour 10.375% senior secured notes due 2014 and our 11.125% senior secured notes due 2017 issued in 2009. Upon the amountissuance of upsuch notes, the holders of our 13% senior secured notes due 2013 obtained an equal and ratable lien in all collateral securing these notes.
The land underlying MGM Grand, along with substantially all of the assets of that resort, serves as collateral for our 9.00% senior secured notes due 2020 issued in 2010. Upon the issuance of such notes, the holders of our 13% senior secured notes due 2013 obtained an equal and ratable lien in all collateral securing these notes.
The land underlying Circus Circus Las Vegas, along with substantially all of the assets of that resort, as well as certain undeveloped land adjacent to $850 million. Asthe property, secures our completion guarantee related to CityCenter.
The land underlying MGM Grand Detroit, along with substantially all of December 31, 2008, $741the assets of that resort, serves as collateral to secure its $450 million wasobligation outstanding as a co-borrower under the bankour senior credit facility.
 
The land underlying Gold Strike Tunica, along with substantially all of the assets of that resort and the 15 acres across from the Luxor, serve as collateral to secure up to $300 million of obligations outstanding under our senior credit facility.
Joint Ventures
MGM Grand Macau occupies an approximately 10 acre site which it possesses under a 25 year land use right agreement with the Macau government. MGM Grand Paradise Limited’s interest in the land use right agreement is used as collateral for MGM Grand Paradise Limited’s bank credit facility. As of December 31, 2008,2010, approximately $818$743 million was outstanding under the bank credit facility. At December 31, 2008, MGM Grand Paradise Limited obtained a waiver of its financial covenants under the bank credit facility.
 
Silver Legacy occupies approximately five acres in Reno, Nevada, adjacent to Circus Circus Reno. The siteland, along with substantially all of the assets of that resort, is used as collateral for Silver Legacy’s senior credit facility and 10.125% mortgage notes. As of December 31, 2008, $1602010, $143 million of principal of the 10.125% mortgage notes were outstanding.
 
CityCenter occupies approximately 67 acres of land between Bellagio and Monte Carlo. The site is usedalong with substantially all of the assets of that resort, serves as collateral for CityCenter’s bank credit facility. As of December 31, 2008,2010, there is $1.0was $1.8 billion outstanding under the CityCenter bank credit facility, though such borrowings are held as restricted cash by the venture.facility. In January 2011, CityCenter completed a series of debt restructuring transactions. See “Management’s Discussion and Analysis – Other Factors Affecting Liquidity” for additional information about these transactions.
 
All of the borrowings by our unconsolidated affiliates described above are non-recourse to MGM MIRAGE.Resorts International. Other than as described above, none of our other assets serve as collateral.
 
ITEM 3.  LEGAL PROCEEDINGS
 
Mandalay Bay Ticket Processing Fee Litigation
On July 14, 2008,CityCenter construction litigation. In March 2010, Perini Building Company, Inc., general contractor for the CityCenter development project (the “Project”), filed a lawsuit in the Eighth Judicial District Court for Clark County, State of Nevada, against MGM MIRAGE Design Group (a wholly-owned subsidiary of the Company which was served with a putative class action lawsuit filed in Los Angeles Superior Court in California (Jeff Feld v. Mandalay Corp. d/b/a Mandalay Bay Resort & Casino). The action purports to be brought pursuant to California’s Consumer Legal Remedies Act on behalf of all California residents who during the previous six years purchased event tickets from our subsidiary, paid a separate processing fee in additionoriginal party to the ticket price,Perini construction agreement) and did not receivecertain direct or received inaccurate noticeindirect subsidiaries of CityCenter Holdings, LLC (the “CityCenter Owners”). Perini asserts that the Project was substantially completed, but the defendants failed to pay Perini approximately $490 million allegedly due and owing under the construction agreement for labor, equipment and materials expended on the Project. The complaint further charges the defendants with failure to provide timely and complete design documents, late delivery to Perini of design changes, mismanagement of the processing fee when they purchasedchange order process, obstruction of Perini’s ability to complete the ticket.Harmon Hotel & Spa component, and fraudulent inducement of Perini to compromise significantly amounts due for its general conditions. The plaintiff alleges that our subsidiary advertised event tickets at a specified price and then charged purchasers undisclosed additional fees, specifically a $5 processing fee, and that the foregoing was unlawful, acomplaint advances claims for breach of contract, an unfair business practice,breach of the implied covenant of good faith and a violationfair dealing, tortious breach of California’s Civil Codethe implied covenant of good faith and Business & Professions Code. The plaintiff was seeking unspecified monetaryfair dealing, unjust enrichment and promissory estoppel, and fraud and intentional misrepresentation. Perini seeks compensatory damages, including restitution, injunctive relief,punitive damages, attorneys’ fees and costs.


20

In FebruaryApril 2010, Perini served an amended complaint in this case which joins as defendants many owners of CityCenter residential condominium units (the “Condo Owner Defendants”), adds a count for foreclosure of Perini’s recorded master mechanic’s lien against the CityCenter property in the amount of approximately $491 million, and asserts the priority of this mechanic’s lien over the interests of the CityCenter Owners, the Condo Owner Defendants and the Project lenders in the CityCenter property.
The CityCenter Owners and the other defendants dispute Perini’s allegations, and contend that the defendants are entitled to substantial amounts from Perini, including offsets against amounts claimed to be owed to Perini and its subcontractors and damages based on breach of their contractual and other duties to CityCenter, duplicative payment requests, non-conforming work, lack of proof of alleged work performance, defective work related to the Harmon Hotel & Spa component, property damage and Perini’s failure to perform its obligations to pay Project subcontractors and to prevent filing of liens against the Project. Parallel to the court litigation CityCenter management conducted an extra-judicial program for settlement of Project subcontractor claims. CityCenter has resolved the claims of the majority of the 223 first-tier subcontractors, with only several remaining for further proceedings along with trial of Perini’s claims and CityCenter’s Harmon-related counterclaim and other claims by CityCenter against Perini and its parent guarantor, Tutor Perini. In December 2010, Perini recorded an amended notice of lien reducing its lien to approximately $313 million.
The CityCenter Owners and the other defendants will continue to vigorously assert and protect their interests in the lawsuit. The range of loss beyond the claims asserted to date by Perini or any gain the joint venture may realize related to the defendants’ counterclaims cannot be reasonably estimated at this time.
Securities and derivative litigation. In 2009 Mandalay Bay reachedvarious shareholders filed six lawsuits in Nevada federal and state court against the Company and various of its former and current directors and officers alleging federal securities laws violationsand/or related breaches of fiduciary duties in connection with statements allegedly made by the defendants during the period August 2007 through the date of such lawsuit filings. In general, the lawsuits assert the same or similar allegations, including that during the relevant period defendants artificially inflated the Company’s common stock price by knowingly making materially false and misleading statements and omissions to the investing public about the Company’s financial statements and condition, operations, CityCenter, and the intrinsic value of the Company’s common stock; that these alleged misstatements and omissions thereby enabled certain Company insiders to derive personal profit from the sale of Company common stock to the public; that defendants caused plaintiffs and other shareholders to purchase Company common stock at artificially inflated prices; and that defendants imprudently implemented a satisfactory settlementshare repurchase program to the detriment of the Company. The lawsuits seek unspecified compensatory damages, restitution and disgorgement of alleged profits, injunctive relief related to corporate governanceand/or attorneys’ fees and costs.
The lawsuits are:
In re MGM MIRAGE Securities Litigation, CaseNo. 2:09-cv-01558-GMN-LRL. In November 2009, the U.S. District Court for Nevada consolidated the Robert Lowinger v. MGM MIRAGE, et al. (CaseNo. 2:09-cv-01558-RCL-LRL, filed August 19, 2009) and Khachatur Hovhannisyan v. MGM MIRAGE, et al. (CaseNo. 2:09-cv-02011-LRH-RJJ, filed October 19, 2009) putative class actions under the caption “In re MGM MIRAGE Securities Litigation.” The cases name the Company and certain former and current directors and officers as defendants and allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 andRule 10b-5 promulgated thereunder. These cases were transferred in July 2010 to the Honorable Gloria M. Navarro. In October 2010 the court appointed several employee retirement benefits funds as co-lead plaintiffs and their counsel as co-lead and co-liaison counsel. In January 2011, lead plaintiffs filed a consolidated amended complaint, alleging that between August 2, 2007 and March 5, 2009, the Company, its directors and certain of its officers artificially inflated the market price of the Company’s securities by knowingly making materially false and misleading public statements and omissions concerning the Company’s financial condition, its liquidity, its access to credit, and the costs and progress of construction of the CityCenter development. The consolidated amended complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 andRule 10b-5 thereunder. These cases remain pending before the court. The Company and the other defendants have yet to answer and plan to file motions to dismiss the cases.


21

Mario Guerrero v. James J. Murren, et al. (CaseNo. 2:09-cv-01815-KJD-RJJ, filed September 14, 2009, U.S. District Court for the District of Nevada). This purported shareholder derivative action against certain of the Company’s former and current directors and officers alleges, among other things, breach of fiduciary duty by defendants’ asserted improper financial reporting, insider selling and misappropriation of information; and unjust enrichment. The Company is named as a nominal defendant. Plaintiff’s joint motion with the individualShamberger plaintiff (see below), filed in October 2009 and renewed in June 2010, to consolidate this action. The settlementcase with theShamberger case and dismissalto appoint lead plaintiffs and lead counsel remains pending. This case otherwise remains pending before the court.
Regina Shamberger v. J. Terrence Lanni, et al. (CaseNo. 2:09-cv-01817-PMP-GWF, filed September 14, 2009, U.S. District Court for the District of Nevada). This purported shareholder derivative action against certain of the Company’s former and current directors and officers alleges, among other things, breach of fiduciary duty by defendants’ asserted insider selling and misappropriation of information; waste of corporate assets; and unjust enrichment. The Company is named as a nominal defendant. SeeGuerrero immediately above. This case otherwise remains pending before the court.
Charles Kim v. James J. Murren, et al. (CaseNo. A-09-599937-C, filed September 23, 2009, Eighth Judicial District Court, Clark County, Nevada). This purported shareholder derivative action against Mandalay Baycertain of the Company’s former and current directors and officers alleges, among other things, breach of fiduciary duty by defendants’ asserted dissemination of false and misleading statements to the public, failure to maintain internal controls, and failure to properly oversee and manage the Company; unjust enrichment; abuse of control; gross mismanagement; and waste of corporate assets. The Company is named as a nominal defendant. This case remains pending before the court. See below.
Sanjay Israni v. Robert H. Baldwin, et al. (CaseNo. CV-09-02914, filed September 25, 2009, Second Judicial District Court, Washoe County, Nevada). This purported shareholder derivative action against certain of the Company’s former and current directors and a Company officer alleges, among other things, breach of fiduciary duty by defendants’ asserted insider selling and misappropriation of information; abuse of control; gross mismanagement; waste of corporate assets; unjust enrichment; and contribution and indemnification. The Company is named as a nominal defendant. In May 2010, plaintiffs amended the complaint to, among other things, allege as additional bases for their claims defendants’ approval of the Company’s joint venture with Pansy Ho at MGM Macau. In May 2010 the Second Judicial District Court in Washoe County transferred this case to the Eighth Judicial District Court in Clark County, Nevada (Case No. A-10-619411-C), and in September 2010 the latter court consolidated this action with the Charles Kim v. James J. Murren, et al. shareholder derivative action, CaseNo. A-09-599937-C. In December 2010 and January 2011 the Company are subjectand its directors filed motions with the court to court approval. No class has been certifieddismiss the derivative complaints in this case.the Israni and Kim cases. The motion is scheduled for hearing in April 2011.
The Company will continue to vigorously defend itself against these claims.
 
Other
 
We and our subsidiaries are also defendants in various other lawsuits, most of which relate to routine matters incidental to our business. We do not believe that the outcome of this othersuch pending litigation, considered in the aggregate, will have a material adverse effect on the Company.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS(REMOVED AND RESERVED)
There were no matters submitted to a vote of our security holders during the fourth quarter of 2008.


1722

 
PART II
 
ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Common Stock Information
 
Our common stock is traded on the New York Stock Exchange under the symbol “MGM” — formerly our stock trading symbol was “MGG.“MGM.” The following table sets forth, for the calendar quarters indicated, the high and low sale prices of our common stock on the New York Stock Exchange Composite Tape.
 
                                
 2008 2007  2010 2009
 High Low High Low  High Low High Low
First quarter $84.92  $57.26  $75.28  $56.40  $12.87  $9.31  $16.89  $1.81 
Second quarter  62.90   33.00   87.38   61.17   16.66   9.59   14.01   2.34 
Third quarter  38.49   21.65   91.15   63.33   11.56   8.92   14.25   5.34 
Fourth quarter  27.70   8.00   100.50   80.50   15.10   10.70   12.72   8.54 
 
There were approximately 4,1984,436 record holders of our common stock as of March 9, 2009.February 18, 2011.
 
We have not paid dividends on our common stock in the last two fiscal years. As a holding company with no independent operations, our ability to pay dividends will depend upon the receipt of dividends and other payments from our subsidiaries. Furthermore, our senior credit facility contains financial covenants that could restrict our ability to pay dividends.dividends and our senior credit facility and secured notes indentures contain restrictive covenants that limit our ability to pay dividends, subject to certain exceptions. Our Board of Directors periodically reviews our policy with respect to dividends, and any determination to pay dividends in the future will be at the sole discretion ofdepend on our financial position, future capital requirements and financial debt covenants and any other factors deemed necessary by the Board of Directors. Moreover, should we pay any dividends in the future, there can be no assurance that we will continue to pay such dividends.
 
Share Repurchases
 
Our share repurchases are only conducted under repurchase programs approved by our Board of Directors and publicly announced. We did not repurchase shares of our common stock during the quarter and year ended December 31, 2008.2010. The maximum number of shares available for repurchase under our May 2008 repurchase program was 20 million as of December 31, 2008.
Equity Compensation Plan Information
The following table includes information about our equity compensation plans at December 31, 2008:
             
  Number of Securities
     Number of Securities
 
  to be Issued Upon
  Weighted Average per
  Remaining Available
 
  Exercise of
  Share Exercise Price of
  for Future Issuance
 
  Outstanding Options,
  Outstanding Options,
  Under Equity
 
  Warrants and Rights  Warrants and Rights  Compensation Plans 
  (In thousands, except per share data) 
 
Equity compensation plans approved by security holders  26,264  $26.98   17,648 
2010.


1823

 
ITEM 6.  SELECTED FINANCIAL DATA
 
                                        
 For The Years Ended December 31,  For the Years Ended December 31,
 2008 2007 2006 2005 2004  2010 2009 2008 2007 2006
 (In thousands, except per share data)  (In thousands, except per share data)
Net revenues $7,208,767  $7,691,637  $7,175,956  $6,128,843  $4,001,804  $6,019,233  $5,978,589  $7,208,767  $7,691,637  $7,175,956 
Operating income (loss)  (129,603)  2,863,930   1,758,248   1,330,065   932,613   (1,158,931)  (963,876)  (129,603)  2,863,930   1,758,248 
Income (loss) from continuing operations  (855,286)  1,400,545   635,996   435,366   345,209   (1,437,397)  (1,291,682)  (855,286)  1,400,545   635,996 
Net income (loss)  (855,286)  1,584,419   648,264   443,256   412,332   (1,437,397)  (1,291,682)  (855,286)  1,584,419   648,264 
 
Basic earnings per share:                                   
Income (loss) from continuing operations $(3.06) $4.88  $2.25  $1.53  $1.24  $(3.19) $(3.41) $(3.06) $4.88  $2.25 
Net income (loss) per share  (3.06)  5.52   2.29   1.56   1.48  $(3.19) $(3.41) $(3.06) $5.52  $2.29 
Weighted average number of shares  279,815   286,809   283,140   284,943   279,325   450,449   378,513   279,815   286,809   283,140 
 
Diluted earnings per share:                                   
Income (loss) from continuing operations $(3.06) $4.70  $2.18  $1.47  $1.19  $(3.19) $(3.41) $(3.06) $4.70  $2.18 
Net income (loss) per share  (3.06)  5.31   2.22   1.50   1.43  $(3.19) $(3.41) $(3.06) $5.31  $2.22 
Weighted average number of shares  279,815   298,284   291,747   296,334   289,333   450,449   378,513   279,815   298,284   291,747 
 
At year-end:                                   
Total assets $23,274,716  $22,727,686  $22,146,238  $20,699,420  $11,115,029  $  18,896,266  $  22,518,210  $  23,274,716  $  22,727,686  $  22,146,238 
Total debt, including capital leases  13,470,618   11,182,003   12,997,927   12,358,829   5,463,619   12,050,542   14,060,270   13,470,618   11,182,003   12,997,927 
Stockholders’ equity  3,974,361   6,060,703   3,849,549   3,235,072   2,771,704   2,998,545   3,870,432   3,974,361   6,060,703   3,849,549 
Stockholders’ equity per share $14.37  $20.63  $13.56  $11.35  $9.87  $6.14  $8.77  $14.37  $20.63  $13.56 
Number of shares outstanding  276,507   293,769   283,909   285,070   280,740   488,513   441,222   276,507   293,769   283,909 
 
The following events/transactions affect theyear-to-year comparability of the selected financial data presented above:
 
Discontinued OperationsAcquisitions and Dispositions
• In January 2004, we sold the Golden Nugget Las Vegas and the Golden Nugget Laughlin including substantially all of the assets and liabilities of those resorts (the “Golden Nugget Subsidiaries”).
• In July 2004, we sold the subsidiaries that owned and operated MGM Grand Australia.
• In April 2007, we sold the Primm Valley Resorts.
• In June 2007, we sold the Colorado Belle and Edgewater resorts in Laughlin, Nevada (the “Laughlin Properties”).
• In 2007, we recognized a $1.03 billion pre-tax gain on the contribution of CityCenter to a joint venture.
• In March 2009, we sold the Treasure Island casino resort (“TI”) in Las Vegas, Nevada and recorded a gain on the sale of $187 million.
 
The results of the above operationsPrimm Valley Resorts and the Laughlin Properties are classified as discontinued operations for all applicable periods presented.presented, including the gain on sales of such assets. The results of TI are not recorded as discontinued operations, as we believe significant customer migration occurred between TI and our other Las Vegas Strip resorts.
 
AcquisitionsOther
• The Mandalay acquisition closed on April 25, 2005.
Other
• Beau Rivage was closed from August 2005 to August 2006 due to Hurricane Katrina.
• Beginning January 1, 2006, we began to recognize stock-based compensation in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”). For the years ended December 31, 2008, 2007 and 2006, incremental expense, before tax, resulting from the adoption of SFAS 123(R) was $36 million, $46 million and $70 million, respectively.
• During 2007 and 2006, we recognized our share of profits from the sale of condominium units at The Signature at MGM Grand. We recognized $93 million and $117 million (pre-tax) of such income in 2007 and 2006, respectively.
• During 2007 and 2006, we recognized $284 million and $86 million, respectively, of pre-tax income for insurance recoveries related to Hurricane Katrina.
• During 2007, we recognized a $1.03 billion pre-tax gain on the contribution of CityCenter to a joint venture.
• During 2008, we recognized $19 million of pre-tax income for insurance recoveries related to the Monte Carlo fire.
• In the fourth quarter of 2008, we recognized a $1.2 billion non-cash impairment charge related to goodwill and indefinite-lived intangible assets recognized in the Mandalay acquisition.
• In 2009, we recorded non-cash impairment charges of $176 million related to our M Resort note, $956 million related to our investment in CityCenter, $203 million related to our share of the CityCenter residential impairment, and $548 million related to our land holdings on Renaissance Pointe in Atlantic City and capitalized development costs related to our MGM Grand Atlantic City Project.
• In 2010, we recorded non-cash impairment charges of $1.3 billion related to our investment in CityCenter, $166 million related to our share of the CityCenter residential real estate impairment, and $128 million related to our Borgata investment.


1924

 
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following narrative provides information about our liquidity, financial position, results of operations and other factors affecting our current and future operating results.
Executive Overview
 
Liquidity and Financial Position
We have significant indebtedness and significant financial commitments in 2009. As of December 31, 2008, we had approximately $13.5 billion of total long-term debt. In late February 2009, we borrowed $842 million under our senior credit facility, which amount represented — after giving effect to $93 million in outstanding letters of credit — the total amount of unused borrowing capacity available under our $7.0 billion senior credit facility In connection with the waiver and amendment described below, on March 17, 2009 we repaid $300 million under the senior credit facility, which amount is not available for reborrowing without the consent of the lenders. We have no other existing sources of borrowing availability, except to the extent we pay down further amounts outstanding under the senior credit facility.
In addition to commitments under employment, entertainment and other operational agreements, our financial commitments and estimated capital expenditures in 2009, as of December 31, 2008, totaled approximately $2.8 billion — see “Liquidity and Capital Resources — Commitments and Contractual Obligations” — and consisted of:
• Contractual maturities of long-term debt totaling approximately $1.0 billion;
• Interest payments on long-term debt, estimated at $0.8 billion;
• CityCenter required equity contributions of approximately $0.7 billion;
• Other commitments of approximately $0.3 billion, including $0.2 billion of estimated capital expenditures;
To fund our anticipated 2009 financial commitments, we have the following sources of funds in 2009:
• Available borrowings under our senior credit facility of $1.2 billion as of December 31, 2008;
• Expected proceeds in 2009 from the sale of TI of approximately $0.6 billion;
• Operating cash flow:  Our current expectations for 2009 indicate that operating cash flow will be lower than in 2008. In 2008, we generated approximately $1.8 billion of cash flow from operations before deducting a) cash paid for interest, which commitments are included in the list above, and b) the tax payment on the 2007 CityCenter transaction.
We are uncertain as to whether the sources listed above will be sufficient to fund our 2009 financial commitments and we cannot provide any assurances that we will be able to raise additional capital to fund our anticipated expenditures in 2009 if the sources listed above are not adequate.
While we were in compliance with the financial covenants under our senior credit facility at December 31, 2008, if the recent adverse conditions in the economy in general — and the gaming industry in particular — continue, we believe that we will not be in compliance with those financial covenants during 2009. In fact, given these conditions and the recent borrowing under the senior credit facility, we do not believe we will be in compliance with those financial covenants at March 31, 2009. As a result, on March 17, 2009 we obtained from the lenders under the senior credit facility a waiver of the requirement that we comply with such financial covenants through May 15, 2009. Additionally, we entered into an amendment of our senior credit facility which provides for, among other terms, the following:
• We agreed to repay $300 million of the outstanding borrowings under the senior credit facility, which amount is not available for reborrowing without the consent of the lenders;
• We are prohibited from prepaying or repurchasing our outstanding long-term debt or disposing of material assets; and other restrictive covenants were added that limit our ability to make investments and incur indebtedness;
• The interest rate on outstanding borrowings under the senior credit facility was increased by 100 basis points; and
• Our required equity contributions in CityCenter are limited through May 15, 2009 such that we can only make contributions if Infinity World makes its required contributions; our equity contributions do not exceed


20

specified amounts (though we believe the limitation is in excess of the amounts expected to be required through May 15, 2009); and the CityCenter senior secured credit facility has not been accelerated.
Following expiration of the waiver on May 15, 2009, we will be subject to an event of default related to the expected noncompliance with financial covenants under the senior credit facility at March 31, 2009. Under the terms of the senior credit facility, noncompliance with financial covenants is an event of default, under which the lenders (with a vote of more than 50% of the lenders) may exercise any or all of the following remedies:
• Terminate their commitments to fund additional borrowings;
• Require cash collateral for outstanding letters of credit;
• Demand immediate repayment of all outstanding borrowings under the senior credit facility: and
• Decline to release subsidiary guarantees which would impact our ability to execute asset dispositions.
In addition, there are provisions in certain of the indentures governing our senior and senior subordinated notes under which a) the event of default under the senior secured credit facility, or b) the remedies under an event of default under the senior credit facility, would cause an event of default under the relevant senior and senior subordinated notes, which would also allow holders of our senior and senior subordinated notes to demand immediate repayment and decline to release subsidiary guarantees. Also, under the terms of the CityCenter senior secured credit facility, if an event of default has occurred under our borrowings and a) such event of default is certified to in writing by the relevant lenders, and b) such default allows the relevant lenders to demand immediate repayment, then an event of default has occurred relative to the CityCenter senior secured credit facility. Under such event of default, one of the remedies is the termination of the CityCenter senior secured credit facility. If the lenders exercise any or all such rights, we or CityCenter may determine to seek relief through a filing under the U.S. Bankruptcy Code.
The conditions and events described above raise a substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.
We intend to work with the lenders to obtain additional waivers or amendments prior to May 15, 2009 to address future noncompliance with our senior credit facility; however, we can provide no assurance that we will be able to secure such waivers or amendments.
We have also retained the services of outside advisors to assist us in instituting and implementing any required programs to accomplish management’s objectives. We are evaluating the possibility of a) disposing of certain assets, b) raising additional debtand/or equity capital, and c) modifying or extending our long-term debt. However, there can be no assurance that we will be successful in achieving our objectives.
Current Operations
 
At December 31, 2008,2010, our operations primarily consisted of 1715 wholly-owned casino resorts and 50% investments in four other casino resorts, including:resorts.
 
     
    
 Las Vegas, Nevada:  CityCenter (50% owned and managed by us), Bellagio, MGM Grand Las
Vegas (including The Signature), Mandalay Bay, The Mirage, Luxor, TI, New York-New
York, Excalibur, Monte Carlo and Circus Circus Las Vegas and Slots-A-Fun.		Vegas.
    
 Other:  Circus Circus Reno and Silver Legacy (50% owned) in Reno, Nevada;
Gold Strike in
Jean, Nevada; Railroad Pass in Henderson, Nevada; MGM
Grand Detroit;Detroit in Detroit, Michigan; Beau Rivage in
Biloxi, Mississippi and
Gold Strike Tunica in Tunica, Mississippi; Borgata (50% owned) in
Atlantic City, New Jersey; Grand Victoria (50% owned) in
Elgin, Illinois; and MGM Grand
Macau (50% owned).
 
Other operations include the Shadow Creek golf course in North Las Vegas;Vegas and Fallen Oak golf course in Saucier, Mississippi. We also own the Primm Valley Golf Club at the California state line; and Fallen Oak golf course in Saucier, Mississippi. In December 2008, we entered into an agreement to sell TI for $775 million; the saleline, which is expected to closecurrently operated by June 30, 2009.a third party under a lease agreement.


21

We ownThe other 50% of CityCenter currently under development on a67-acre site on the Las Vegas Strip, between Bellagio and Monte Carlo.is owned by Infinity World Development Corp.Corp (“Infinity World”), a wholly-owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity,entity. CityCenter consists of Aria, a 4,004-room casino resort; Mandarin Oriental Las Vegas, a 392-room non-gaming boutique hotel; Crystals, a retail district with 334,000 of currently leaseable square feet; and Vdara, a 1,495-room luxury condominium-hotel. In addition, CityCenter features residential units in the Residences at Mandarin Oriental – 225 units and Veer – 669 units. Aria, Vdara, Mandarin Oriental and Crystals all opened in December 2009 and the sales of residential units within CityCenter began closing in early 2010. We receive a management fee of 2% of revenues for the management of Aria and Vdara, and 5% of EBITDA (as defined in the agreements governing our management of Aria and Vdara). In addition, we receive an annual fee of $3 million for the management of Crystals.
Liquidity and Financial Position
We completed a series of capital markets transactions during 2010 and extended our senior credit facility. As a result of these transactions, we believe we will have sufficient liquidity from expected future cash flows and availability under our senior credit facility to meet our financial obligations through 2012. We have significant indebtedness and continue to evaluate opportunities to improve our financial condition, but we can provide no assurance that we will be able to repay or effectively refinance our indebtedness in future periods.
Capital Markets Transactions. We completed the following transactions during 2010:
•  In March 2010, we issued $845 million of 9% senior secured notes due 2020 for net proceeds to us of approximately $826 million;
•  In April 2010, we issued $1.15 billion of 4.25% convertible senior notes due 2015 for net proceeds to us of $1.12 billion;
•  In October 2010, we issued 40.9 million shares of our common stock for total net proceeds to us of approximately $512 million. The underwriter exercised their overallotment option to purchase an additional 6.1 million shares from us in November 2010 and we received an additional approximately $76 million of net proceeds; and
•  In October 2010, we issued $500 million of 10% senior notes due 2016, issued at a discount to yield 10.25%, for net proceeds to us of approximately $486 million.


25

Senior Credit Facility. Our senior credit facility was amended and restated in March 2010, and consisted of approximately $2.7 billion in term loans (of which approximately $874 million was required to be repaid by October 3, 2011) and a $2.0 billion revolving loan (of which approximately $302 million was required to be repaid by October 3, 2011). As discussed below, in November 2010 we repaid the outstanding balance of the loans maturing in 2011. As of December 31, 2010, our senior credit facility consisted of approximately $1.8 billion in term loans and $1.7 billion in revolving loans, and had approximately $1.2 billion of available revolving borrowing capacity.
We accounted for the modification related to extending the term loans as an extinguishment of debt because the applicable cash flows under the extended term loans are more than 10% different from the applicable cash flows under the previous loans. Therefore, the extended term loans were recorded at fair value resulting in a $181 million gain and a discount of $181 million to be amortized to interest expense over the term of the extended term loans. For the twelve months ended December 31, 2010, we recorded $31 million of interest related to the amortization of this discount. Fair value of the estimated term loans was based on trading prices immediately after the transaction. In addition, we wrote off $15 million of existing debt issuance costs related to the previous term loans and had expense of $22 million for new debt issuance costs incurred related to amounts paid to extending term loan lenders in connection with the modification. We also wrote off $2 million of existing debt issuance costs related to the reduction in capacity under the non-extending revolving portion of the senior credit facility. In total, we recognized a net pre-tax gain on extinguishment of debt of $142 million in “Other, net” non-operating income in the first quarter of 2010.
Because net proceeds from our October 2010 common stock offering were in excess of $500 million, we were required to ratably repay indebtedness under the senior credit facility of $6 million, which equaled 50% of such excess. We used the net proceeds from our October 2010 senior notes offering discussed above and a portion of the net proceeds from our October 2010 common stock offering to repay the remaining amounts owed to non-extending lenders under our senior credit facility. Loans and revolving commitments aggregating approximately $3.6 billion were extended to February 21, 2014. In November 2010, the underwriters of our common stock offering exercised their overallotment option and purchased an additional 6.1 million shares for net proceeds to us of $76 million, 50% of which was used to ratably repay indebtedness under the senior credit facility. As a result of these transactions we recorded a pre-tax loss on retirement of debt related to unamortized debt issuance costs and discounts of $9 million recorded in “Other, net” non-operating income in the fourth quarter of 2010.
The restated senior credit facility allows us to refinance indebtedness maturing prior to February 21, 2014, but limits our ability to prepay later maturing indebtedness until the extended facilities are paid in full. We may issue unsecured debt, equity-linked and equity securities to refinance our outstanding indebtedness; however, we are required to use net proceeds (a) from indebtedness issued in amounts in excess of $250 million over amounts used to refinance indebtedness and (b) from equity issued, other than in exchange for our indebtedness, in amounts in excess of $500 million (which limit we reached with our October 2010 stock offering) to ratably prepay the credit facilities, in each case, in an amount equal to 50% of the net cash proceeds of such excess.
Borgata
In its June 2005 report to the New Jersey Casino Control Commission (the “CCC”), on the application of Borgata for renewal of its casino license, the New Jersey Division of Gaming Enforcement (the “DGE”) stated that it was conducting an investigation of our relationship with our joint venture partner in Macau and that the DGE would report to the CCC any material information it deemed appropriate.
On May 18, 2009, the DGE issued a report to the CCC on its investigation. In the report, the DGE recommended, among other things, that: (i) our Macau joint venture partner be found to be unsuitable; (ii) we be directed to disengage ourselves from any business association with our Macau joint venture partner; (iii) our due diligence/compliance efforts were found to be deficient; and (iv) the CCC hold a hearing to address the report. In March 2010, the CCC approved our settlement agreement with the DGE pursuant to which we placed our 50% ownership interest in the Borgata Hotel Casino & Spa (“Borgata”) and related leased land in Atlantic City into a divestiture trust. Following the transfer of these interests into trust, we ceased to be regulated by the CCC or the DGE, except as otherwise provided by the trust agreement and the settlement agreement. Boyd Gaming Corporation (“Boyd”), who owns the other 50% interest, is not affected by the settlement.


26

The terms of CityCenter. CityCenterthe settlement mandate the sale of the trust property within a30-month period ending in September 2012. During the 18 months ending in September 2011, we have the right to direct the trustee to sell the trust property, subject to approval of the CCC. If a sale is not concluded by that time, the trustee is responsible for selling the trust property during the following12-month period. Prior to the consummation of the sale, the divestiture trust will featureretain any cash flows received in respect of the trust property, but will pay property taxes and other costs attributable to the trust property. We are the sole economic beneficiary of the trust and will be permitted to reapply for a 4,000-room casino resort designed by world-famous architect Cesar Pelli; two 400-room non-gaming boutique hotels, oneNew Jersey gaming license beginning 30 months after the completion of the sale of the trust assets. As of December 31, 2010, the trust has $188 million of cash and investments of which $150 million is held in treasury securities with maturities greater than 90 days and is recorded within “Prepaid expenses and other.”
As a result of our ownership interest in Borgata being placed into a trust we no longer have significant influence over Borgata; therefore, we discontinued the equity method of accounting for Borgata at the point the assets were placed in the trust, and account for our rights under the trust agreement under the cost method of accounting. We also reclassified the carrying value of our investment related to Borgata to “Other long-term assets, net.” Earnings and losses that relate to the investment that were previously accrued remain as a part of the carrying amount of the investment. Distributions received by the trust that do not exceed our share of earnings are recognized currently in earnings. However, distributions to the trust that exceed our share of earnings for such periods are applied to reduce the carrying amount of our investment. The trust received net distributions from the joint venture of $113 million for the year ended December 31, 2010. We recorded $94 million as a reduction of the carrying value and $19 million was recorded as “Other, net” non-operating income for the year ended December 31, 2010.
In connection with the settlement agreement discussed above, we entered into an amendment to our joint venture agreement with Boyd to permit the transfer of our 50% ownership interest into trust in connection with our settlement agreement with the DGE. In accordance with such agreement, Boyd received a priority partnership distribution of approximately $31 million (equal to the excess prior capital contributions by Boyd) upon successful refinancing of the Borgata credit facility in August 2010.
In July 2010, we entered into an agreement to sell four long-term ground leases and their respective underlying real property parcels, approximately 11 acres, underlying the Borgata. The transaction closed in November 2010; the trust received net proceeds of $71 million and we recorded a gain of $3 million related to the sale in “Property transactions, net.”
In October 2010, we received an offer for our 50% economic interest in the Borgata based on an enterprise value of $1.35 billion for the entire asset and in October, 2010, our Board of Directors authorized submission of this offer to Boyd in accordance with the right of first refusal provisions included in the joint venture agreement. Subsequently, Boyd announced that it does not intend to exercise its right of refusal in connection with such offer. Based on Borgata’s September debt balances, the offer equated to approximately $250 million for our 50% interest. This was less than the carrying value of our investment in Borgata; therefore, we recorded an impairment charge of approximately $128 million at September 30, 2010, recorded in “Property transactions, net.” Since October 2010, we have continued to negotiate with the prospective purchaser as well as other parties that have expressed interest in the asset. There can be no assurance that the transaction will be managedcompleted as proposed or at all, and the final terms of any sale may differ materially from the ones disclosed above.
Effect of Economic Factors on Results of Operations
The state of the U.S. economy has negatively affected our results of operations over the past several years, and we expect to continue to be sensitive to certain aspects of the current economic conditions, including, for example, high unemployment and the weak housing market. The decrease in liquidity in the credit markets which began in late 2007 and accelerated in late 2008 also significantly affected our results of operations and financial condition.
Uncertain economic conditions continue to affect our operating results, as businesses and consumers have altered their spending patterns which led to decreases in visitor volumes and customer spending. Businesses responded to the difficult economic conditions by luxury hotelier Mandarin Oriental;reducing travel budgets. This factor, along with negative perceptions surrounding certain types of business travel, caused decreases in convention attendance in Las Vegas in 2009 and 2010. Convention and catering customers cancelled or postponed a significant number of events occurring


27

during 2009. Other conditions currently or recently present in the economic environment which tend to negatively affect our operating results include:
•  Weaknesses in employment and increases in unemployment;
•  Weak consumer confidence;
•  Weak housing market and significant declines in housing prices and related home equity; and
•  Decreases in airline capacity to Las Vegas.
Because of these economic conditions, we have increasingly focused on managing costs and continue to review all areas of operations for efficiencies. We continually manage staffing levels across all our resorts and have reduced our salaried management positions. We suspended company contributions to our 401(k) plan and our nonqualified deferred compensation plans in 2009, which remained suspended in 2009 and 2010. We reinstated a more limited 401(k) company contribution in 2011 and will continue to monitor the plan contributions as the economy changes.
Our results of operations are also affected by decisions we make related to our capital allocation, our access to capital, and our cost of capital – all of which are affected by the uncertain state of the global economy and the continued instability in the capital markets. For example, we will incur higher interest costs in connection with the amendments to our senior credit facility in 2009 and 2010. Also, our general cost of debt has increased over the past few years. These factors may affect our ability to access future capital and cause future borrowings to carry higher interest rates.
Impairment Charges
Investment in Borgata. As previously noted, in October 2010 we received an offer equating to approximately 425,000 square feet$250 million for our 50% interest in the Borgata and our Board of retail shops, diningDirectors authorized submission of this offer to Boyd Gaming Corporation, who subsequently announced it did not intend to exercise its right of refusal. The proposed offer submitted was less than the carrying value of our investment in Borgata; therefore, we recorded an impairment charge of approximately $128 million in the third quarter of 2010 included in “Property transactions, net.”
Investment in CityCenter. At September 30, 2009, we reviewed our CityCenter investment for impairment using revised operating forecasts developed by CityCenter management late in the third quarter. In addition, the impairment charge related to CityCenter’s residential real estate under development discussed below further indicated that our investment may have experienced an“other-than-temporary” decline in value. Our discounted cash flow analysis for CityCenter included estimated future cash outflows for construction and entertainment venues;maintenance expenditures and approximately 2.1future cash inflows from operations, including residential sales. Based on our analysis, we determined the carrying value of our investment exceeded its fair value and we determined that the impairment was“other-than-temporary.” As a result, we recorded an impairment charge of $956 million square feetincluded in “Property transactions, net.”
At June 30, 2010, we reviewed our CityCenter investment for impairment using revised operating forecasts developed by CityCenter management. Based on current and forecasted market conditions and because CityCenter’s results of residential spaceoperations through June 30, 2010 were below previous forecasts, and the revised operating forecasts were lower than previous forecasts, we concluded that we should review the carrying value of our investment. We determined that the carrying value of our investment exceeded our fair value determined using a discounted cash flow analysis and therefore an impairment was indicated. We intend to and believe we will be able to retain our investment in approximately 2,400 luxury condominiumCityCenter; however, due to the extent of the shortfall and condominium-hotel unitsour assessment of the uncertainty of fully recovering our investment, we determined that the impairment was“other-than-temporary” and recorded an impairment charge of $1.12 billion included in multiple towers.“Property transactions, net.”
At September 30, 2010, we recognized an increase of $232 million in our total net obligation under our CityCenter completion guarantee, and a corresponding increase in our investment in CityCenter. The increase primarily reflected a revision to prior estimates based on our assessment of the most current information derived from our close-out and litigation processes and does not reflect certain potential recoveries that CityCenter is expectedpursuing as part of the litigation process. We completed an impairment review as of September 30, 2010 and as a


28

result recorded an additional impairment of $191 million in the third quarter of 2010 included in “Property transactions, net.”
The discounted cash flow analyses for our investment in CityCenter included estimated future cash inflows from operations, including residential sales, and estimated future cash outflows for capital expenditures. The June 2010 and September 2010 analyses used an 11% discount rate and a long term growth rate of 4% related to openforecasted cash flows for CityCenter’s operating assets.
CityCenter Residential Inventory. Included in lateloss from unconsolidated affiliates for the year ended December 31, 2009 exceptis our share of an impairment charge relating to CityCenter postponedresidential real estate under development (“REUD”). CityCenter was required to review its REUD for impairment as of September 30, 2009, mainly due to CityCenter’s September 2009 decision to discount the openingprices of its residential inventory by 30%. This decision and related market conditions led to CityCenter management’s conclusion that the carrying value of the REUD was not recoverable based on estimates of undiscounted cash flows. As a result, CityCenter was required to compare the fair value of its REUD to its carrying value and record an impairment charge for the shortfall. Fair value of the REUD was determined using a discounted cash flow analysis based on management’s expectations of future cash flows. The key inputs in the discounted cash flow analysis included estimated sales prices of units currently under contract and new unit sales, the absorption rate over the estimated sell-out period, and the discount rate. This analysis resulted in an impairment charge of approximately $348 million of the REUD. We recognized our 50% share of such impairment charge, adjusted by certain basis differences, resulting in a pre-tax charge of $203 million.
Due to the completion of construction of the Mandarin Oriental residential inventory in the first quarter of 2010 and completion of the Veer residential inventory in the second quarter of 2010, CityCenter is required to carry its residential inventory at the lower of its carrying value or fair value less costs to sell. CityCenter determines fair value of its residential inventory using a discounted cash flow analysis based on management’s current expectations of future cash flows. The key inputs in the discounted cash flow analysis include estimated sales prices of units currently under contract and new unit sales, the absorption rate over the sell-out period, and the discount rate. These estimates are subject to management’s judgment and are highly sensitive to changes in the market and economic conditions, including the estimated absorption period. In the event current sales forecasts are not met, additional impairment charges may be recognized in future periods.
As a result of its impairment analyses of its residential inventory, CityCenter recorded impairment charges for the Mandarin Oriental residential inventory of $171 million and $20 million in the first and third quarter of 2010 and impairment charges for the Veer residential inventory of $57 million, $55 million and $27 million, in the second, third and fourth quarters of 2010, respectively. Impairment charges in the third quarter primarily related to an increase in final cost estimates for the residential inventory. We recognized our 50% share of such impairment charges, resulting in pre-tax charges of $166 million for the year ended December 31, 2010, respectively, included in “Income (loss) from unconsolidated affiliates.”
CityCenter Harmon Impairment. The Harmon Hotel & Spa until late 2010 and cancelled the development of approximately(“Harmon”) was originally planned to include over 200 residential units originally planned. We are servingand a 400-room non-gaming lifestyle hotel. In 2009, we announced that the opening of the Harmon hotel component would be delayed until we and our joint venture partner, Infinity World, mutually agreed to its completion, and that the residential component had been canceled.
During the third quarter of 2010, CityCenter management determined that it is unlikely that the Harmon will be completed using the building as it now stands. As a result, CityCenter recorded an impairment charge of $279 million in the third quarter of 2010 related to construction in progress assets. The impairment of Harmon did not affect our loss from unconsolidated affiliates, because we had previously recognized our 50% share of the impairment charge in connection with prior impairments of our investment balance.
M Resort Note. At June 30, 2009, we reviewed our M Resort Note for impairment. Based on our review of the operating results of M Resort, as well as the developerM Resort’s management’s revised cash flow projections post-opening, which were significantly lower than original predictions due to market and general economic conditions, we determined that the fair value of CityCenterthe M Resort Note was $0, that the decline in value was“other-than-temporary,” and upon completionthat the entire amount of construction,the indicated impairment related to a credit loss. Based on these conclusions, we will manage CityCenter


29

recorded a pre-tax impairment of $176 million in the second quarter of 2009 within “Other, net.” Of that amount, $82 million was reclassified from accumulated other comprehensive loss, which amount was $54 million net of tax. We stopped recording accrued“paid-in-kind” interest as of May 31, 2009, and no longer hold this note.
Atlantic City Renaissance Pointe Land. We reviewed the carrying value of our Renaissance Pointe land holdings for impairment at December 31, 2009 as we did not intend to pursue development of our MGM Grand Atlantic City project for the foreseeable future. Our Board of Directors subsequently terminated this project. Our Renaissance Pointe land holdings included a72-acre development site and included 11 acres of land subject to a fee.long-term lease with the Borgata joint venture. The fair value of the development land was determined based on a market approach, and the fair value of land subject to the long-term lease with Borgata was determined using a discounted cash flow analysis using expected contractual cash flows under the lease discounted at a market capitalization rate. As a result of our review, we recorded a non-cash impairment charge of $548 million in the 2009 fourth quarter, which was included in “Property transactions, net” related to our land holdings on Renaissance Pointe and capitalized development costs.
Goodwill and Intangible Assets Impairment. We perform our annual impairment test related to goodwill and indefinite-lived intangible assets during the fourth quarter of each year. As a result of our 2008 analysis, we recognized a non-cash impairment charge of $1.2 billion. The impairment charge related solely to the goodwill and other indefinite-lived intangible assets recognized in the 2005 acquisition of Mandalay Resort Group, and represented substantially all of the goodwill recognized at the time of the Mandalay acquisition and a minor portion of the value of trade names related to the Mandalay resorts. The impairment charge resulted from factors affected by economic conditions at the time, including: 1) lower market valuation multiples for gaming assets; 2) higher discount rates resulting from turmoil in the credit and equity markets; and 3) cash flow forecasts for the Mandalay resorts. No impairment charges were required as a result of our 2010 and 2009 analyses.
Monte Carlo Fire
We maintain insurance for both property damage and business interruption relating to catastrophic events, such as the rooftop fire at Monte Carlo in January 2008. Business interruption coverage covers lost profits and other costs incurred during the closure period and up to six months following re-opening.
We reached final settlement agreements for the Monte Carlo Fire in early 2009. In total, we received $74 million of proceeds from our insurance carriers. We recognized the $41 million of excess insurance recoveries in income in 2009 and 2008, with recoveries offsetting a write-down of $4 million related to the net book value of damaged assets, demolition costs of $7 million, and operating costs of $21 million. In 2009, $15 million and $7 million of such excess insurance recoveries were recognized as offsets to “General and administrative” expense and “Property transactions, net,” respectively. In 2008, $9 million and $10 million of such excess insurance recoveries were recognized as offsets to “General and administrative” expense and “Property transactions, net,” respectively.
 
Key Performance Indicators
 
Our primary business is the ownership and operation of casino resorts, which includes offering gaming, hotel, dining, entertainment, retail and other resort amenities. Over half of our net revenue is derived from non-gaming activities a higher percentage than many of our competitors, as our operating philosophy is to provide a complete resort experience for our guests, including non-gaming amenities for which command above market prices based on their quality.our guests are willing to pay a premium. Our significant convention and meeting facilities allow us to maximize hotel occupancy and customer volumes during off-peak times such as mid-week or during traditionally slower leisure travel periods, which also leads to better labor utilization. We believe that we own several of the premier casino resorts in the world and have continually reinvested in our resorts to maintain our competitive advantage.
 
As a resort-based company, our operating results are highly dependent on the volume of customers at our resorts, which in turn impactsaffects the price we can charge for our hotel rooms and other amenities. We also generate a significant portion of our operating income from the high-end gaming customers,segment, which can be a cause for variability in our results. Key performance indicators related to revenue are:
 
 •  Gaming revenue indicators —– table games drop and slots handle (volume indicators); “win” or “hold” percentage, which is not fully controllable by us. Our normal table games winhold percentage is in the range of 18%


30

19% to 22%23% of table games drop and our normal slots winhold percentage is in the range of 6.5%7.5% to 7.5%8.5% of slots handle;
 •  Hotel revenue indicators —– hotel occupancy (volume(a volume indicator); average daily rate (“ADR”,ADR,” a price indicator); revenue per available room (“REVPAR”),REVPAR,” a summary measure of hotel results, combining ADR and occupancy rate.rate).
 
Most of our revenue is essentially cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit cards. Our resorts, like many in the industry, generate significant operating cash flow. Our industry is capital intensive and we rely heavily on the ability of our resorts to generate operating cash flow to repay debt financing, fund maintenance capital expenditures and provide excess cash for future development.
 
We generate a majority of our net revenues and operating income from our resorts in Las Vegas, Nevada, which exposes us to certain risks, outside of our control, such as increased competition from new or expanded Las Vegas resorts, and from the impact from expansion of gaming in California. We are also exposed to risks related to tourism and the general economy, including national and global economic conditions and terrorist attacks or other global events.
 
Our results of operations do not tend to be seasonal in nature, though a variety of factors may affect the results of any interim period, including the timing of major Las Vegas conventions, the amount and timing of marketing and special events for our high-end customers, and the level of play during major holidays, including New Year and Chinese New Year. We market to different customer segments to manage our hotel occupancy, such as targeting large conventions to ensureincrease mid-week occupancy. Our results do not depend on key individual customers, thoughalthough our success in marketing to customer groups, such as convention customers, or the financial health of customer segments, such as business travelers or high-end gaming customers from a particular country or region, can impactaffect our results.


22

Impact of Current Economic Conditions and Credit Markets on Results of Operations
 
The current state of the United States economy has negatively impacted our results of operations during 2008 and we expect these impacts to continue in 2009. The decrease in liquidity in the credit markets which began in late 2007 and accelerated in late 2008 has significantly impacted our Company.
We believe recent economic conditions and our customers’ inability to access near-term credit has led to a shift in spending from discretionary items to fundamental costs like housing, as witnessed in broader indications of consumer behavior such as the declining sales trends in automobile and other retail sales and other discretionary spending in sectors like restaurants. We believe these factors have impacted our customers’ willingness to plan vacations and conventions and their level of spending while at our resorts. Other conditions currently or recently present in the economic environment are conditions which tend to negatively impact our results, such as:
• Weak housing market and significant declines in housing prices and related home equity;
• Higher oil and gas prices which impact travel costs;
• Weaknesses in employment and increases in unemployment;
• Decreases in air capacity to Las Vegas; and
• Decreases in equity market value, which impacted many of our customers.
See “Goodwill Impairment” and “Operating Results — Detailed Revenue Information” for specific impacts of these conditions on our results of operations. Beyond the impact on our operating results, these factors have led to a significant decrease in equity market value in general and in our market capitalization specifically.
Given the uncertainty in the economy and the unprecedented nature of the situation with the financial and credit markets, forecasting future results has become very difficult. In addition, leading indicators such as forward room bookings are difficult to assess, as our booking window has shortened significantly due to consumer uncertainty. Businesses and consumers appear to have altered their spending patterns which may lead to further decreases in visitor volumes and customer spending including convention and conference customers cancelling or postponing their events.
Because of these economic conditions, we have increasingly focused on managing costs. For example, we have reduced our salaried management positions; we did not pay discretionary bonuses in 2008 due to not meeting our internal profit targets; we suspended Company contributions to certain nonqualified deferred compensation plans; and we have been managing staffing levels across all our resorts. For the full year of 2008, the average number of full-time equivalents at our resorts decreased 7%. We continue to review costs at the corporate and operating levels to identify further opportunities for cost reductions.
Additionally, our results of operations are impacted by decisions we make related to our capital allocation, our access to capital, and our cost of capital; all of which are impacted by the uncertain state of the global economy and the continued instability in the capital markets. For example:
• We postponed development on MGM Grand Atlantic City and our joint venture with Kerzner and Istithmar for a Las Vegas Strip project;
• We have significantly reduced our estimated capital expenditures for 2009;
• We entered into an agreement in December 2008 to sell TI for $775 million;
• The ability of CityCenter to obtain project financing was negatively impacted by credit market conditions, leading to a longer process than anticipated, with more funding from the venture partners required than anticipated;
• In connection with the September 2008 amendment to our bank credit facility to increase the maximum leverage covenant, we will incur higher interest costs;
• Our recent senior secured notes offering was completed at a higher interest rate than our existing fixed-rate indebtedness;
• As discussed above, in February 2009, we borrowed $842 million, the remaining amount of available funds (other than outstanding letters of credit) under our senior credit facility, which will increase our interest costs;


23

• In February 2009, all of the major credit rating agencies — Moody’s, Standard & Poors, and Fitch — downgraded the rating on our long-term debt and in March 2009, Moody’s downgraded our rating again. These rating downgrades may make it more difficult to obtain debt financing or may increase the cost of our future debt financing; and
• Based on our current financial situation, we may be required to alter our working capital management practices to, for instance, post cash collateral for purchases or pay vendors on different terms than we have in the past.
Goodwill Impairment
With respect to our goodwill and indefinite-lived intangible assets, we performed our annual test during the fourth quarter of 2008. As a result of this analysis, we recognized a non-cash impairment charge of $1.18 billion related to goodwill and certain indefinite-lived intangible assets in the fourth quarter. The impairment charge relates solely to the goodwill and other indefinite-lived intangible assets recognized in the 2005 acquisition of Mandalay Resort Group, and represents substantially all of the goodwill recognized at the time of the Mandalay acquisition and a minor portion of the value of trade names related to the Mandalay resorts. The impairment charge resulted from factors impacted by current economic conditions, including: 1) lower market valuation multiples for gaming assets; 2) higher discount rates resulting from turmoil in the credit and equity markets; and 3) current cash flow forecasts for the Mandalay resorts.
Other Items Affecting Future Operating Results
Our Las Vegas Strip resorts require ongoing capital investment to maintain their competitive advantages. We believe the investments we have made in the past several years in additional non-gaming amenities relative to our competitors enhances our ability to maintain visitor volume and allows us to charge higher prices for our amenities relative to our competitors. In 2008, we completed many improvements at our Las Vegas strip resorts, including:
• A remodel of approximately 2,700 standard rooms at The Mirage, approximately 2,700 standard rooms at TI, approximately 1,100 rooms at Gold Strike Tunica, and approximately 900 rooms at Excalibur.
• A new Cirque du Soleil production show,Believe featuring Criss Angel, at Luxor.
• New restaurants and bars such as BLT Burger at The Mirage, RokVegas at New York-New York, Brand Steakhouse at Monte Carlo, and Yellowtail at Bellagio.
• A complete re-design and refurbishment of the casino floor at New York-New York.
In addition, the following items are relevant to our overall outlook:
• In August 2007, we entered into a new five-year collective bargaining agreement covering approximately 21,000 of our Las Vegas Strip employees. The new agreement provides for increases in wages and benefits of approximately 4% annually. This does not include the collective bargaining agreement covering employees at MGM Grand Las Vegas, which expired in 2008. A new agreement for MGM Grand Las Vegas is currently being negotiated. In addition, in October 2007 we entered into a new four-year labor agreement covering approximately 2,900 employees at MGM Grand Detroit which provides for average annual increases in wages and benefits of approximately 6%.
• We expect to recognize a substantial gain from the sale of TI during 2009.
Financial Statement Impact of Hurricane Katrina and the Monte Carlo Fire
We maintain insurance covering both property damage and business interruption relating to catastrophic events, such as Hurricane Katrina affecting Beau Rivage in August 2005 and the rooftop fire at Monte Carlo in January 2008. Business interruption coverage covered lost profits and other costs incurred during the construction period and up to six months following the reopening of the facility.
Non-refundable insurance recoveries received in excess of the net book value of damaged assets,clean-up and demolition costs, and post-event costs are recognized as income in the period received or committed based on our estimate of the total claim for property damage (recorded as “Property transactions, net”) and business interruption (recorded as a reduction of “General and administrative” expenses) compared to the recoveries received at that time. All post-event costs and expected recoveries are recorded net within “General and administrative” expenses, except for depreciation of non-damaged assets, which is classified as “Depreciation and amortization.”


24

Insurance recoveries are classified in the statement of cash flows based on the coverage to which they relate. Recoveries related to business interruption are classified as operating cash flows and recoveries related to property damage are classified as investing cash flows. We classify insurance recoveries as being related to property damage until the full amount of damaged assets and demolition costs are recovered, and classify additional recoveries up to the amount of post-event costs incurred as being related to business interruption. Insurance recoveries beyond that amount are classified as operating or investing cash flows based on our estimated allocation of the total claim.
Hurricane Katrina.  By December 31, 2007, we had reached final settlement agreements with our insurance carriers and received insurance recoveries of $635 million which exceeded the $265 million of net book value of damaged assets and post-storm costs incurred. During the year ended December 31, 2007, we recognized $284 million of insurance recoveries in income, of which $217 million was recorded within “Property transactions, net” and $67 million was recorded within “General and administrative expense.” The remaining $86 million previously recognized in income was recorded within “Property transactions, net” in 2006.
During 2007, we received $280 million in insurance recoveries, of which $207 million was classified as investing cash flows and $73 million was classified as operating cash flows. During 2006, we received $309 million in insurance recoveries related to Hurricane Katrina, of which $210 million was classified as investing cash flows and $99 million was classified as operating cash flows.
Monte Carlo.  As of December 31, 2008, we had received $50 million of proceeds from our insurance carriers related to the Monte Carlo fire and recognized $19 million of insurance recoveries in income, of which $10 million was recorded within “Property transactions, net” and $9 million was recorded within “General and administrative expenses.” Also, in 2008, we recorded a write-down of $4 million related to the net book value of damaged assets, demolition costs of $7 million, and operating costs of $21 million related to the fire.
Results of Operations
 
Summary Financial ResultsThe following discussion is based on our consolidated financial statements for the years ended December 31, 2010, 2009 and 2008. Certain results in this section are discussed on a “same store” basis excluding the results of TI, which was sold in March 2009.
 
The following table summarizes our financial results:
 
                 
  Year Ended December 31, 
     Percentage
    Percentage
   
  2008  Change 2007  Change 2006 
  (In thousands, except per share data) 
 
Net revenues $7,208,767  (6)% $7,691,637  7% $7,175,956 
Operating expenses:                
Casino and hotel operations  4,034,374  0%  4,027,558  8%  3,715,057 
General and administrative  1,278,501  2%  1,251,952  7%  1,169,271 
Corporate expense  109,279  (44)%  193,893  20%  161,507 
Preopening and restructuring  23,502  (74)%  92,105  146%  37,397 
Property transactions, net  1,210,749  NM  (186,313) NM  (40,980)
CityCenter gain  —  NM  (1,029,660) NM  — 
Depreciation and amortization  778,236  11%  700,334  11%  629,627 
                 
   7,434,641  47%  5,049,869  (11)%  5,671,879 
                 
Income from unconsolidated affiliates  96,271  (57)%  222,162  (13)%  254,171 
                 
Operating income (loss) $(129,603) (104)% $2,863,930  63% $1,758,248 
                 
Income (loss) from continuing operations $(855,286) (161)% $1,400,545  120% $635,996 
Net income (loss)  (855,286) (154)%  1,584,419  144%  648,264 
Diluted income (loss) from continuing operations per share $(3.06) (165)% $4.70  116% $2.18 
Diluted net income (loss) per share  (3.06) (158)%  5.31  139%  2.22 
                     
  Year Ended December 31, 
     Percentage
     Percentage
    
  2010  Change  2009  Change  2008 
  (In thousands, except per share data) 
 
Net revenues $6,019,233   1%  $5,978,589   (17%)  $7,208,767 
Operating expenses:                    
Casino and hotel operations  3,398,072   (1%)   3,439,927   (14%)   3,986,970 
Reimbursed costs  359,470   262%   99,379   110%   47,404 
General and administrative  1,128,803   3%   1,100,193   (14%)   1,278,944 
Corporate expense  124,241   (14%)   143,764   32%   109,279 
Preopening andstart-up expenses
  4,247   (92%)   53,013   130%   23,059 
Property transactions, net  1,451,474   9%   1,328,689   10%   1,210,749 
Depreciation and amortization  633,423   (8%)   689,273   (11%)   778,236 
                     
   7,099,730   4%   6,854,238   (8%)   7,434,641 
                     
Income (loss) from unconsolidated affiliates  (78,434)  11%   (88,227)  (192%)   96,271 
                     
Operating loss $ (1,158,931)  (20%)  $(963,876)  (644%)  $(129,603)
                     
Net loss $(1,437,397)  (11%)  $(1,291,682)  (51%)  $(855,286)
Net loss per share $(3.19)  6%  $(3.41)  (11%)  $(3.06)
Net revenues including reimbursed costs increased 1% from 2009. Excluding reimbursed costs, net revenues decreased 3% in 2010 and 18% in 2009 largely due to the economic factors discussed in “Effect of Economic Factors on Results of Operations.” As discussed further in “Operating Results – Detailed Revenue Information,”


2531

On a consolidated basis, therevenues have decreased across most significant events and trends contributinglines of business. In response to this decrease in revenues, we have implemented cost savings efforts to reduce departmental operating expenses, but due to our performance overleveraged business model a significant portion of the last three years have been:decline in revenue affected operating results.
 
• The economic factors discussed in “Impact of Current Economic Conditions and Credit Markets on Results of Operations.”
• The rooftop fire at Monte Carlo in January 2008, which caused the closure of the resort for several weeks and reduced the number of rooms available at Monte Carlo for the remainder of 2008.
• Recognition of a $1.2 billion impairment charge in the fourth quarter of 2008 related to goodwill and indefinite-lived intangible assets recognized in the Mandalay acquisition in 2005. This non-cash charge is recorded in “Property transactions, net” in the accompanying consolidated statement of operations.
• Recognition of a $1.03 billion gain in 2007 related to the contribution of the CityCenter assets to a joint venture.
• The closure of Beau Rivage in August 2005 after Hurricane Katrina and subsequent reopening in August 2006, and income related to insurance recoveries. Operating income at Beau Rivage includes income from insurance recoveries of $284 million in 2007 and $86 million in 2006.
• Recognition of our share of profits from the closings of condominium units of The Signature at MGM Grand, which were complete as of December 31, 2007. The venture recorded revenue and cost of sales as units closed. In 2007, we recognized income of approximately $84 million related to our share of the venture’s profits and $8 million of deferred profit on land contributed to the venture. In 2006, we recognized income of approximately $102 million related to our share of the venture’s profits and $15 million of deferred profit on land contributed to the venture. These amounts are classified in “Income from unconsolidated affiliates” in the accompanying consolidated statements of operations.
• Recognition of an $88 million pre-tax gain on the repurchase of certain of our outstanding senior notes and redemption of our 7% debentures in the fourth quarter of 2008, which was recorded within “Other, net” in the accompanying consolidated statement of operations.
Net revenuesCorporate expense decreased 6%14% in 20082010 primarily as a result of higher legal and advisory costs associated with our activities to improve our financial position in 2009. Corporate expense in 2009 increased 32% compared to 20072008 due to the market conditions described above. On a comparable basis, operating income decreased 30% in 2008 compared to 2007, excludinglegal and advisory costs as well as the goodwill and indefinite-lived intangible impairment charge, the CityCenter gain, insurance recoveries, property transactions, preopening andstart-up expenses, and profits from The Signature. Our operating margin decreased to 15% from 22% in the prior year on a comparable basis. The 44% decrease in corporateaccrual of bonus expense in 20082009; there was mainly attributable to cost reduction efforts implemented throughout the year, including the elimination of annual bonusesno bonus accrual in 2008 due to not meeting internal profit targets. Also, corporate expense in the prior year included severance costs, costs associated with our CityCenter joint venture transaction, and development costs associated with our planned MGM Grand Atlantic City project.
Depreciation and amortization expense increased 11% in 2008 on top of an 11% increase in 20072010 decreased 8% due to the significant capital investments in our resorts over the past few years.
Excluding Beau Rivage, net revenues in 2007 increased 4% over 2006, largely due to strength in hotel room rates and other non-gaming revenues. Operating income in 2007 compared to 2006 decreased 5% on a comparable basis, excluding the CityCenter gain, Hurricane Katrina insurance recoveries, operations at Beau Rivage, profits from The Signature at MGM Grand, preopening andstart-up expenses, and property transactions. The decrease in operating income in 2007 on a comparable basis mainly related to higher depreciationcertain assets being fully depreciated. Depreciation and amortization expense decreased in 2009 due to certain assets becoming fully depreciated and higher corporate expense.the sale of TI. In addition, other transactions, events, and impairment charges had a significant impact on our earnings performance, the most significant of which are discussed in the “Executive Overview” section above.


26

Operating Results —– Detailed Revenue Information
 
The following table presents detail of our net revenues:
 
                                    
 Year Ended December 31,  Year Ended December 31, 
   Percentage
   Percentage
      Percentage
   Percentage
   
 2008 Change 2007 Change 2006  2010 Change 2009 Change 2008 
 (In thousands)  (In thousands) 
Casino revenue, net:                                    
Table games $1,078,897  (12)% $1,228,296  (2)% $1,251,304  $827,274   (13%)  $955,238   (11%)  $1,078,897 
Slots  1,795,226  (5)%  1,897,610  7%  1,770,176   1,540,738   (2%)   1,579,038   (12%)   1,795,226 
Other  101,557  (10)%  113,148  4%  108,958   74,915   (11%)   83,784   (18%)   101,557 
              
Casino revenue, net  2,975,680  (8)%  3,239,054  3%  3,130,438   2,442,927   (7%)   2,618,060   (12%)   2,975,680 
              
Non-casino revenue:                                    
Rooms  1,907,093  (10)%  2,130,542  7%  1,991,477   1,300,287   (5%)   1,370,135   (28%)   1,907,093 
Food and beverage  1,582,367  (4)%  1,651,655  11%  1,483,914   1,339,174   (2%)   1,362,325   (14%)   1,582,367 
Entertainment, retail and other  1,419,055  3%  1,376,417  16%  1,190,904   1,210,903   1%   1,194,383   (13%)   1,371,651 
Reimbursed costs  359,470   262%   99,379   110%   47,404 
              
Non-casino revenue  4,908,515  (5)%  5,158,614  11%  4,666,295   4,209,834   5%   4,026,222   (18%)   4,908,515 
              
  7,884,195  (6)%  8,397,668  8%  7,796,733   6,652,761   0%   6,644,282   (16%)   7,884,195 
Less: Promotional allowances  (675,428) (4)%  (706,031) 14%  (620,777)  (633,528)  5%   (665,693)  1%   (675,428)
              
 $7,208,767  (6)% $7,691,637  7% $7,175,956  $6,019,233   1%  $5,978,589   (17%)  $7,208,767 
              
 
Table games revenue in 2010 decreased 12%13% in 20082010 on a same store basis, mainly as a result of lower overall table games volumes which decreased 6%, and lower hold percentage. Table games revenue in 2009 decreased 11%, or 9% on a same store basis, due to a decrease in volumes. Theoverall table games volume, despite an increase of 33% for baccarat volume. Table games hold percentage was below the mid-point of our normal range in 2010 and near the mid-point of the range for both years. In 2007, table games2009 and 2008.
Slots revenue decreased 7% excluding Beau Rivage, with volumes essentially flat and2% in 2010, or 1% on a slightly lower hold percentagesame store basis, as a result of a decrease in 2007.
Volume decreases mainlyvolume at our Las Vegas Strip resorts. Decreases at our Las Vegas Strip resorts in 2008 led towere partially offset by a 5% increase in revenue at MGM Grand Detroit and a 3% increase in revenue at Gold Strike Tunica. Slots revenue decreased 12% in 2009, or 9% on a same store basis, driven by a decrease in slots revenue. Slots revenuevolume at Bellagio and Mandalay Bay decreased 4% while the majorityour Las Vegas Strip resorts. In 2009, most of our other Las Vegas Strip resorts experienced year-over-yeardecreases in the high single digits, while MGM Grand Detroit and Gold Strike Tunica experienced decreases in the low doublesingle digits. Slots revenue increased 7% at MGM Grand Detroit and 5% at Gold Strike Tunica. In 2007, slots revenue was flat, excluding Beau Rivage. Slots revenue was strong in 2007 at many of our Las Vegas Strip Resorts, including Bellagio and MGM Grand Las Vegas — each up 8% over 2006 — and The Mirage and Mandalay Bay — each up 5% over 2006.


32

HotelRooms revenue decreased 10%4% on a same store basis in 2008 due to decreased2010 and 24% on a same store basis in 2009 as a result of a decrease in occupancy and lower average room rates leading to a 10% decrease in REVPAR. Average room rates decreased 7% atrates. The following table shows key hotel statistics for our Las Vegas Strip resorts with a decrease in occupancy from 96% to 93%. In 2007, hotel revenue increased 5% excluding Beau Rivage, with a 7% increase in company-wide REVPAR. Strength in demand and room pricing in 2007 on the Las Vegas Strip led to a 5% increase in ADR.resorts:
             
  Year Ended December 31,
  2010 2009 2008
 
Occupancy  89%   91%   92% 
Average Daily Rate (ADR) $108  $111  $148 
Revenue per Available Room (REVPAR) $96  $100  $137 
 
Food and beverage, entertainment, and retail revenues in 20082010 and 2009 were all impactednegatively affected by lower customer spending and decreased occupancy at our resorts. In 2007, increases in food and beverage revenue were a result of investments in new restaurants and nightclubs. In 2008,2009, entertainment revenues benefited from the addition ofBelieveTerry Fatorat Luxor. In 2007, entertainment revenues benefited fromLove, the Beatles-themed Cirque du Soleil show at The Mirage andThe Lion Kingat Mandalay Bay.
Reimbursed costs revenue represents reimbursement of costs, primarily payroll-related, incurred by us in connection with the provision of management services. We recognize costs reimbursed pursuant to management services as revenue in the period we incur the costs. Reimbursed costs, which opened July 2006. Other revenues from continuing operations inare related mainly to our management of CityCenter, were $359 million, $99 million and $47 million for 2010, 2009, and 2008, increased 18% mainly due to reimbursed cost from CityCenter recognized as other revenue with corresponding amounts recognized as other expense.respectively.
 
Operating Results —– Details of Certain Charges
 
Stock compensation expense is recorded within the department of the recipient of the stock compensation award. The following table shows the amount of compensation expense related to employee stock-based awards:
 


27

                        
 Year Ended December 31,  Year Ended December 31, 
 2008 2007 2006  2010 2009 2008 
 (In thousands)  (In thousands) 
Casino $   10,828  $    11,513  $   13,659  $7,592  $10,080  $10,828 
Other operating departments  3,344   3,180   5,319   3,092   4,287   3,344 
General and administrative  9,485   12,143   20,937   9,974   9,584   9,485 
Corporate expense and other  12,620   19,707   32,444   14,330   12,620   12,620 
Discontinued operations  —   (865)  1,267 
              
 $36,277  $45,678  $73,626  $34,988  $36,571  $36,277 
              
 
Preopening andstart-up expenses consisted of the following:
 
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
CityCenter $   17,270  $   24,169  $9,429 
MGM Grand Macau  —   36,853   5,057 
MGM Grand Detroit  135   26,257   3,313 
The Signature at MGM Grand  —   1,130   8,379 
Other  5,654   3,696   10,184 
             
  $23,059  $92,105  $   36,362 
             
             
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands) 
 
CityCenter $3,494  $52,010  $17,270 
Other  753   1,003   5,789 
             
  $4,247  $53,013  $23,059 
             


33

Preopening andstart-up expenses for CityCenter will continue to increase as the project nears its expected completion in late 2009. Subsequent to the CityCenter joint venture transaction in November 2007 we only recognize our 50% share of these preopening costs. MGM Grand Macau preopening andstart-up expenses in 2007 and 2006 related to our share of that venture’s preopening costs.
Property transactions, net consisted of the following:
 
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
Goodwill and other indefinite-lived intangible assets impairment charge $1,179,788  $—  $— 
Other write-downs and impairments  52,170   33,624   40,865 
Demolition costs  9,160   5,665   348 
Insurance recoveries  (9,639)  (217,290)  (86,016)
Other net (gains) losses on asset sales or disposals  (20,730)  (8,312)  3,823 
             
  $1,210,749  $ (186,313) $  (40,980)
             
             
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands) 
 
CityCenter investment impairment $1,313,219  $955,898  $- 
Borgata impairment  128,395   -   - 
Atlantic City Renaissance Point land impairment  -   548,347   - 
Goodwill and other indefinite-lived intangible assets impairment  -   -   1,179,788 
Gain on sale of TI  -   (187,442)  - 
Other property transactions, net  9,860   11,886   30,961 
             
  $1,451,474  $1,328,689  $1,210,749 
             
 
See discussion of goodwillour impairment charges under “Executive Overview.” Other property transactions during 2010 related primarily to write-downs of various discontinued capital projects. Other property transactions in 2009 primarily related to write-downs of various discontinued capital projects and other indefinite-lived intangible assets impairment charge andoffset by $7 million in insurance recoveries inrelated to the “Executive overview” section.Monte Carlo fire. Other write-downs and impairmentsproperty transactions in 2008 included $30 million related to the write-down of land and building assets of Primm Valley Golf Club. The 2008 period also includesincluded approximately $9 million of demolition costs associated with various room remodel projects andas well as the write-down of approximately $27 million of various discontinued capital projects. These amounts were offset by a gain on the sale of an aircraft of $25 million. Insurancemillion and $10 million of insurance recoveries relaterelated to the Monte Carlo fire in 2008 and Hurricane Katrina in 2007 and 2006. See further discussion in “Executive Overview” section.fire.
 
Write-downsOperating Results – Income (Loss) from Unconsolidated Affiliates
The following table summarizes information related to our income (loss) from unconsolidated affiliates:
             
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands) 
 
CityCenter $(250,482) $(208,633) $(19,552)
MGM Macau  129,575   24,615   11,898 
Borgata  6,971   72,602   59,268 
Other  35,502   23,189   44,657 
             
  $(78,434) $(88,227) $96,271 
             
Operating results for CityCenter included $166 million and $203 million of residential real estate impairments in 20072010 and 2009, respectively. As a result of the transfer of Borgata assets into trust in 2010, we no longer record Borgata income in income from unconsolidated affiliates. The 2009 results also included write-offsa $12 million charge related to discontinued construction projectsdevelopment costs for our postponed joint venture project on the North Las Vegas Strip and a write-off of the carrying value of the Nevada Landing building assets due to its closure in March 2007. The 2007 period also includes demolition costs primarily related to the Mandalay Bay room remodel.
Write-downs and impairments in 2006 included $22$14 million related to the write-off of the tram connecting Bellagio and Monte Carlo, including the stationsinsurance proceeds recognized at both resorts, in preparation for construction of CityCenter. Other impairments related to assets being replaced in connection with several capital projects.Borgata.

28
34

Non-operating Results
 
The following table summarizes information related to interest on our long-term debt:
 
                        
 Year Ended December 31,  Year Ended December 31, 
 2008 2007 2006  2010 2009 2008 
 (In thousands)  (In thousands) 
Total interest incurred $773,662  $930,138  $900,661  $1,113,580  $997,897  $773,662 
Interest capitalized  (164,376)  (215,951)  (122,140)  -   (222,466)  (164,376)
Interest allocated to discontinued operations  —   (5,844)  (18,160)
              
 $609,286  $708,343  $760,361  $1,113,580  $775,431  $609,286 
              
Cash paid for interest, net of amounts capitalized $622,297  $731,618  $778,590  $1,020,040  $807,523  $622,297 
Weighted average total debt balance $12.8 billion  $13.0 billion  $12.7 billion  $12.7 billion  $13.2 billion  $12.8 billion 
End-of-year ratio of fixed-to-floating debt  58/42   71/29   66/34   81/19   61/39   58/42 
Weighted average interest rate  6.0%   7.1%   7.1%   8.0%   7.6%   6.0% 
 
In 2008,2010, gross interest costs decreased compared to 2007 mainlyincreased due to lowerhigher interest rates on our variablesenior credit facility and newly issued fixed rate borrowings. CapitalizedIncluded in interest decreasedexpense in 2010 is $31 million of amortization of debt discount associated with the amendment of our senior credit facility during 2010. In 2009, gross interest costs increased compared to 2008 mainly due to lesshigher average debt balances during 2009, higher interest rates for borrowings under our senior credit facility in 2009, higher interest rates for newly issued fixed rate borrowings, as well as breakage fees for voluntary repayments of our revolving credit facility.
We did not have any capitalized interest in 2010, as we ceased capitalization of interest related to CityCenter in December 2009 and cessationwe have no other qualifying capital projects ongoing. Capitalized interest increased in 2009 compared to 2008 due to higher CityCenter investment balances and higher weighted average cost of capitalized interest related to our investment in MGM Grand Macau upon opening in November 2007.debt. The amounts presented above exclude non-cash gross interest and corresponding capitalized interest for 2008 and 2009 related to our CityCenter delayed equity contribution — see Note 8 to the accompanying consolidated financial statements for further discussion.
Gross interest costs increased in 2007 compared to 2006 due to higher average debt balances during the year up until the significant reduction in debt in the fourth quarter resulting from the $2.47 billion received upon the close of the CityCenter joint venture transaction and the $1.2 billion received from our sale of common stock to Infinity World Investments, a wholly-owned subsidiary of Dubai World. Higher capitalized interest in 2007 resulted from the ongoing construction of CityCenter, MGM Grand Detroit, and MGM Grand Macau.contribution.
 
The following table summarizes information related to our income taxes:
 
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
Income (loss) from continuing operations before income tax $(668,988) $2,158,428  $977,926 
Income tax provision  186,298   757,883   341,930 
Effective income tax rate  NM   35.1%   35.0% 
Cash paid for income taxes $437,874  $391,042  $369,450 
             
  Year Ended December 31,
  2010 2009 2008
  (In thousands)
 
Loss before income tax $(2,216,025) $(2,012,593) $(668,988)
Income tax benefit (provision)  778,628   720,911   (186,298)
Effective income tax rate  (35.1%)  (35.8%)  NM 
Cash (received from) paid for income taxes, net of refunds $(330,218) $(53,863) $437,874 
 
The income tax benefit on pre-tax loss in 2010 was provided essentially at the federal statutory rate of 35%. The income tax benefit provided on pre-tax loss in 2009 was greater than 35% primarily as a result of state tax benefit provided on the write-down of land in Atlantic City. The write-down of goodwill in 2008, which iswas treated as a permanently non-deductible item in our federal income tax provision, caused us to incur a provision for income tax expense in 2008 even though our pre-tax result was a loss for thethat year. Excluding the impacteffect of the goodwill write-down, the effective tax rate from continuing operations for 2008 was 37.3%. This is higher than the 2007 rate
The net refund of cash taxes in 2010 was due primarily to the impactcarryback to prior years of the CityCenter transaction on the 2007 rate, which greatly minimized the impact of permanent and other tax items, and due to the deduction taken in 2007 for domestic production activities resulting primarily from the CityCenter transaction. The effectiveU.S. federal income tax ratenet operating losses incurred in 2006 benefited from a reversal2009. The net refund of tax reservescash taxes in 2009 was due primarily to refunds of taxes that were no longer required, primarily due to guidance issued by the Internal Revenue Service related to the deductibility of certain complimentaries.
paid in 2008. Cash taxes were paid in 2008 despite the pre-tax operating loss due to the non-deductible goodwill write-down and cash taxes paid on the gain from the CityCenter gainjoint venture transaction that occurred in 2008.2007. Since the CityCenter gain was realized in the fourth quarter of 2007, the associated income taxes were paid in 2008. Absent the cash
Non-GAAP Measures
“Adjusted EBITDA” is earnings before interest and other non-operating income (expense), taxes, paid on the CityCenter gain, cash taxes were approximately $250 million less in 2008 than in 2007. In addition, cash taxes for 2007 were only slightly higher than 2006 despite significantly higher pre-tax income due to the deferral of taxes on the CityCenter gain into 2008.depreciation and amortization, preopening andstart-up expenses, and property transactions, net. “Adjusted Property EBITDA” is Adjusted EBITDA before corporate expense and stock compensation expense. Adjusted EBITDA and Adjusted


2935

Property EBITDA information is presented solely as a supplemental disclosure to reported GAAP measures because we believe that these measures are: 1) widely used measures of operating performance in the gaming industry, and 2) a principal basis for valuation of gaming companies.
We believe that while items excluded from Adjusted EBITDA and Adjusted Property EBITDA may be recurring in nature and should not be disregarded in evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods because these items can vary significantly depending on specific underlying transactions or events that may not be comparable between the periods being presented. Also, we believe excluded items may not relate specifically to current operating trends or be indicative of future results. For example, preopening andstart-up expenses will be significantly different in periods when we are developing and constructing a major expansion project and dependent on where the current period lies within the development cycle, as well as the size and scope of the project(s). “Property transactions, net” includes normal recurring disposals and gains and losses on sales of assets related to specific assets within our resorts, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period. In addition, capital allocation, tax planning, financing and stock compensation awards are all managed at the corporate level. Therefore, we use Adjusted Property EBITDA as the primary measure of our operating resorts’ performance.
Adjusted EBITDA or Adjusted Property EBITDA should not be construed as an alternative to operating income or net income, as an indicator of our performance; or as an alternative to cash flows from operating activities, as a measure of liquidity; or as any other measure determined in accordance with generally accepted accounting principles. We have significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in Adjusted EBITDA. Also, other companies in the gaming and hospitality industries that report Adjusted EBITDA information may calculate Adjusted EBITDA in a different manner.
The following table presents a reconciliation of Adjusted EBITDA to net income (loss):
             
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands) 
 
Adjusted EBITDA $930,213  $1,107,099  $1,882,441 
Preopening andstart-up expenses
  (4,247)  (53,013)  (23,059)
Property transactions, net  (1,451,474)  (1,328,689)  (1,210,749)
Depreciation and amortization  (633,423)  (689,273)  (778,236)
             
Operating loss  (1,158,931)  (963,876)  (129,603)
             
             
Non-operating income (expense):            
Interest expense, net  (1,113,580)  (775,431)  (609,286)
Other, net  56,486   (273,286)  69,901 
             
   (1,057,094)  (1,048,717)  (539,385)
             
             
Loss before income taxes  (2,216,025)  (2,012,593)  (668,988)
Benefit (provision) for income taxes  778,628   720,911   (186,298)
             
Net loss $(1,437,397) $(1,291,682) $(855,286)
             
On a same store basis, Adjusted EBITDA decreased 15% in 2010. Excluding the $166 million impact from the residential real estate impairment charges at CityCenter and $58 million of forfeited residential deposits at CityCenter in 2010, and a $203 million impairment charge related to CityCenter real estate under development, $15 million of Monte Carlo insurance recoveries and $12 million of impairment related to our proposed North Las Vegas Strip joint venture project in 2009, Adjusted EBITDA decreased 20%. Adjusted EBITDA on a same store basis decreased 38% in 2009, mainly as a result of the factors previously discussed in “Operating Results – Detailed Revenue Information.” Excluding the real estate under development impairment, North Las Vegas Strip impairment and Monte Carlo insurance recoveries, Adjusted EBITDA decreased 27% in 2009.


36

On a same store basis, Adjusted Property EBITDA from wholly-owned operations decreased to $1.2 billion in 2010 from $1.3 billion in 2009 as a result of previously discussed operating trends. Adjusted Property EBITDA from wholly-owned operations decreased 26% in 2009 compared to 2008.
The following tables present reconciliations of operating income (loss) to Adjusted Property EBITDA and Adjusted EBITDA:
                     
  Year Ended December 31, 2010 
     Preopening
  Property
  Depreciation
    
  Operating
  and Start-up
  Transactions,
  and
  Adjusted
 
  Income (Loss)  Expenses  Net  Amortization  EBITDA 
  (In thousands) 
 
Bellagio $174,355  $-  $(17) $96,290  $270,628 
MGM Grand Las Vegas  84,359   -   127   78,607   163,093 
Mandalay Bay  29,859   -   2,892   91,634   124,385 
The Mirage  36,189   -   (207)  66,124   102,106 
Luxor  18,822   -   257   42,117   61,196 
New York-New York  41,845   -   6,880   27,529   76,254 
Excalibur  39,534   -   803   22,899   63,236 
Monte Carlo  5,020   185   3,923   24,427   33,555 
Circus Circus Las Vegas  (5,366)  -   230   20,741   15,605 
MGM Grand Detroit  115,040   -   (327)  40,460   155,173 
Beau Rivage  21,564   -   349   39,374   61,287 
Gold Strike Tunica  26,115   -   (540)  14,278   39,853 
Management operations  (27,429)  -   -   13,761   (13,668)
Other operations  (6,046)  568   20   6,583   1,125 
                     
Wholly-owned operations  553,861   753   14,390   584,824    1,153,828 
CityCenter (50%)  (253,976)  3,494   -   -   (250,482)
Macau (50%)  129,575   -   -   -   129,575 
Other unconsolidated resorts  42,764   -   -   -   42,764 
                     
   472,224   4,247   14,390   584,824   1,075,685 
Stock compensation  (34,988)  -   -   -   (34,988)
Corporate  (1,596,167)  -   1,437,084   48,599   (110,484)
                     
  $ (1,158,931) $     4,247  $  1,451,474  $  633,423  $930,213 
                     


37

                     
  Year Ended December 31, 2009 
     Preopening
  Property
  Depreciation
    
  Operating
  and Start-up
  Transactions,
  and
  Adjusted
 
  Income (Loss)  Expenses  Net  Amortization  EBITDA 
  (In thousands) 
 
Bellagio $157,079  $-  $2,326  $115,267  $274,672 
MGM Grand Las Vegas  123,378   -   30   90,961   214,369 
Mandalay Bay  65,841   948   (73)  93,148   159,864 
The Mirage  74,756   -   313   66,049   141,118 
Luxor  37,527   (759)  181   39,218   76,167 
Treasure Island  12,730   -   (1)  -   12,729 
New York-New York  45,445   -   1,631   31,479   78,555 
Excalibur  47,973   -   (16)  24,173   72,130 
Monte Carlo  16,439   -   (4,740)  24,895   36,594 
Circus Circus Las Vegas  4,015   -   (9)  23,116   27,122 
MGM Grand Detroit  90,183   -   7,336   40,491   138,010 
Beau Rivage  16,234   -   157   49,031   65,422 
Gold Strike Tunica  29,010   -   (209)  16,250   45,051 
Management operations  7,285   -   2,473   8,564   18,322 
Other operations  (4,172)  -   (57)  5,988   1,759 
                     
Wholly-owned operations  723,723   189   9,342   628,630   1,361,884 
CityCenter (50%)  (260,643)  52,009   -   -   (208,634)
Macau (50%)  24,615   -   -   -   24,615 
Other unconsolidated resorts  96,132   815   -   -   96,947 
                     
   583,827   53,013   9,342   628,630   1,274,812 
Stock compensation  (36,571)  -   -   -   (36,571)
Corporate  (1,511,132)  -   1,319,347   60,643   (131,142)
                     
  $(963,876) $     53,013  $  1,328,689  $689,273  $  1,107,099 
                     
                     
  Year Ended December 31, 2008 
     Preopening
  Property
  Depreciation
    
  Operating
  and Start-up
  Transactions,
  and
  Adjusted
 
  Income (Loss)  Expenses  Net  Amortization  EBITDA 
  (In thousands) 
 
Bellagio $257,415  $-  $1,130  $133,755  $392,300 
MGM Grand Las Vegas  170,049   443   2,639   97,661   270,792 
Mandalay Bay  145,005   11   1,554   101,925   248,495 
The Mirage  99,061   242   6,080   62,968   168,351 
Luxor  84,948   1,116   2,999   43,110   132,173 
Treasure Island  63,454   -   1,828   37,729   103,011 
New York-New York  74,276   726   3,627   32,830   111,459 
Excalibur  83,953   -   961   25,235   110,149 
Monte Carlo  46,788   -   (7,544)  25,380   64,624 
Circus Circus Las Vegas  33,745   -   5   22,401   56,151 
MGM Grand Detroit  77,671   135   6,028   53,674   137,508 
Beau Rivage  22,797   -   76   48,150   71,023 
Gold Strike Tunica  15,093   -   2,326   13,981   31,400 
Management operations  6,609   -   -   10,285   16,894 
Other operations  (5,367)  -   2,718   6,244   3,595 
                     
Wholly-owned operations  1,175,497   2,673   24,427   715,328   1,917,925 
CityCenter (50%)  (36,821)  17,270   -   -   (19,551)
Macau (50%)  11,898   -   -   -   11,898 
Other unconsolidated resorts  101,297   3,011   -   -   104,308 
                     
   1,251,871   22,954   24,427   715,328   2,014,580 
Stock compensation  (36,277)  -   -   -   (36,277)
Corporate   (1,345,197)  105   1,186,322   62,908   (95,862)
                     
  $(129,603) $     23,059  $     1,210,749  $     778,236  $  1,882,441 
                     

38

Liquidity and Capital Resources
 
Cash Flows —– Summary
 
Our cash flows consisted of the following:
 
                        
 Year Ended December 31,  Year Ended December 31, 
 2008 2007 2006  2010 2009 2008 
 (In thousands)  (In thousands) 
Net cash provided by operating activities $753,032  $994,416  $1,231,952  $504,014  $587,914  $753,032 
              
Investing cash flows:                        
Purchases of property and equipment  (781,754)  (2,917,409)  (1,758,795)
Proceeds from contribution of CityCenter  —   2,468,652   — 
Proceeds from disposals of discontinued operations, net  —   578,873   — 
Purchase of convertible note  —   (160,000)  — 
Capital expenditures, net of construction payable  (207,491)  (136,850)  (781,754)
Proceeds from sale of Treasure Island, net  -   746,266   - 
Investments in and advances to unconsolidated affiliates  (1,279,462)  (31,420)  (103,288)  (553,000)  (963,685)  (1,279,462)
Distributions from unconsolidated affiliates in excess of earnings  135,058   -   - 
Distributions from cost method investments  113,422   -   - 
Property damage insurance recoveries  21,109   207,289   209,963   -   7,186   21,109 
Investments in treasury securities- maturities longer than 90 days  (149,999)  -   - 
Other  58,667   63,316   9,693   75,931   16,828   58,667 
              
Net cash provided by (used in) investing activities  (1,981,440)  209,301   (1,642,427)
Net cash used in investing activities  (586,079)  (330,255)  (1,981,440)
              
Financing cash flows:                        
Net borrowings (repayments) under bank credit facilities  2,480,450   (1,152,300)  (393,150)  (3,207,716)  (198,156)  2,480,450 
Issuance of long-term debt  698,490   750,000   1,500,000 
Repayment of long-term debt  (789,146)  (1,402,233)  (444,500)
Issuance of common stock  —   1,192,758   — 
Issuance of common stock upon exercise of stock awards  14,116   97,792   89,113 
Issuance of senior notes  2,489,485   1,921,751   698,490 
Retirement of senior notes  (1,154,479)  (1,176,452)  (789,146)
Issuance of common stock in public offering, net  588,456   1,104,418   - 
Purchases of common stock  (1,240,857)  (826,765)  (246,892)  -   -   (1,240,856)
Other  (40,971)  100,211   5,453   (190,924)  (162,811)  (26,856)
              
Net cash provided by (used in) financing activities  1,122,082   (1,240,537)  510,024   (1,475,178)  1,488,750   1,122,082 
              
Net increase (decrease) in cash and cash equivalents $(106,326) $(36,820) $99,549  $ (1,557,243) $  1,746,409  $  (106,326)
              
 
Cash Flows —– Operating Activities
 
Trends in our operating cash flows tend to follow trends in our operating income, excluding gainsnon-cash charges, but can be affected by the timing of significant tax payments or refunds and lossesdistributions from investing activities and net property transactions, since our business is primarily cash-based.unconsolidated affiliates. Cash flow from operationsoperating activities decreased 26%14% in 2008 partially2010 due to a decrease in operating income.income excluding non-cash charges, partially offset by net tax refunds of $330 million during 2010. Cash flow from operating activities decreased 22% in 2009 primarily due to a decrease in operating income and the sale of TI. Operating cash flows also decreased due to a $47 million increase in our receivable from CityCenter, partially offset by increased distributions from unconsolidated affiliates. The 2008 period also included a significant tax payment, approximately $300 million, relating to the 2007 CityCenter joint venture transaction. Cash flow from operations decreased 19% in 2007 over 2006, due in part to an additional $135 million of net cash outflows related to real estate under development expenditures partially offset by residential sales deposits when CityCenter was wholly owned.
 
At December 31, 20082010 and 2007,2009, we held cash and cash equivalents of $296$499 million and $416 million,$2.1 billion, respectively. On December 30, 2009, we borrowed the remaining availability of $1.6 billion under our senior credit facility and repaid such borrowings immediately after year end.


39

We require a certain amount of cash on hand to operate our resorts. Beyond our cash on hand, we utilize a company-wide cash management systemprocedures to minimize the amount of cash held in banks. Funds are swept from accounts at our resorts daily into central bank accounts, and excess funds are invested overnight or are used to repay borrowings under our bank credit facilities.


30

Cash Flows —– Investing Activities
 
Capital expenditures consistedA significant portion of our investing activities over the following:
             
  Year Ended December 31, 
  2008  2007  2006 
  (In millions) 
 
Development and expansion projects:            
CityCenter $58  $962  $520 
MGM Grand Detroit  19   336   262 
Beau Rivage  —   63   446 
Las Vegas Strip land  —   584   — 
MGM Grand Atlantic City  24   —   — 
Capitalized interest on development and expansion projects  43   191   101 
             
   144   2,136   1,329 
             
Other:            
Room remodel projects  230   205   39 
Corporate aircraft  —   102   48 
Other  408   474   343 
             
   638   781   430 
             
  $782  $2,917  $1,759 
             
past three years related to our CityCenter joint venture. In 2010, we made contributions of $553 million to CityCenter related to the completion guarantee, of which $124 million is payable to us from CityCenter from future condominium sales proceeds. In 2009, we made equity contributions of $731 million to CityCenter. In 2008, we made loans and equity contributions totaling $1.15 billion.
 
In 2008,2010, we recognized $135 million of distributions from unconsolidated affiliates within investing activities as a return of our investments, which primarily related to MGM Macau. We received a total of $192 million from MGM Macau in 2010, $59 million of which was recognized as cash flows from operating activities. In addition, our New Jersey trust account received $113 million of net distributions from Borgata and Dubai World each made loansreceived $71 million from the sale of ground leases and underlying land. All amounts in the trust account, including the proceeds from the sale of our Borgata interest, will be distributed to CityCenterus upon consummation of $500the sale of our Borgata interest. $150 million and equity contributions of $653 million.the assets held in trust has been invested in treasury securities with maturities greater than 90 days.
We received $746 million in net proceeds related to the sale of TI in 2009. The insurance recoveries classified as investing cash flows relate to the Monte Carlo fire in 20082009 and Hurricane Katrina2008.
Capital expenditures of $207 million in 20072010 mainly relate to maintenance capital expenditures at various resorts and 2006 as discussed earlierthe purchase of an airplane.
Capital expenditures of $137 million in the “Executive Overview” section.2009 consisted primarily of room remodel projects and various property enhancements, including capitalized interest.
 
In 2007, we received net proceeds2008, capital expenditures of $579$782 million fromrelated to the sale of the Primm Valley Resorts and the Laughlin Properties. Also in 2007, we purchased a $160 million convertible note issued by The M Resort LLC, which is developing a casino resort on Las Vegas Boulevard, 10 miles south of Bellagio. The note is convertible, with certain restrictions, into a 50% equity position in The M Resort LLC. Investments in unconsolidated affiliates in 2006 primarily represented investments in MGM Grand Macau.following, including related capitalized interest:
•  $64 million for CityCenter people mover and related assets;
•  $19 million related to construction costs for MGM Grand Detroit;
•  $61 million of development costs related to MGM Grand Atlantic City;
•  $230 million related to room remodel projects; and
•  $408 million for various other property enhancements and amenities.
 
Cash Flows —– Financing Activities
 
In 2010, excluding the $1.6 billion we repaid in early January on our senior credit facility, we repaid net debt of $290 million. We issued the following senior secured, convertible senior and senior notes during 2010:
•  $1.15 billion of 4.25% convertible senior notes due 2015 and paid $81 million for capped call transactions entered into in connection with the issuance;
•  $845 million of 9% senior secured notes due 2020; and
•  $500 million of 10% senior notes due 2016.
In the fourth quarter of 2010, we issued approximately 47 million shares of our common stock for total net proceeds to us of approximately $588 million. Concurrently with our stock issuance, Tracinda sold approximately 32 million shares of our common stock. We did not receive any proceeds from the sale of such common stock by Tracinda.
We repaid the following principal amounts of senior and senior subordinated notes during 2010:
•  $75 million 8.375% senior subordinated notes (redeemed prior to maturity essentially at par);
•  $297 million 9.375% senior notes (repaid at maturity); and
•  $782 million of our 8.5% senior notes (redeemed $136 million prior to maturity essentially at par and repaid $646 million at maturity).


40

Excluding the $1.6 billion borrowed under the senior credit facility in late December 2009 and repaid in early January 2010, we repaid net debt of $1.1 billion in 2009. In addition, pursuant to our development agreement, we repaid $50 million of bonds issued by the Economic Development Corporation of the City of Detroit. In May 2009, we issued approximately 164.5 million shares of our common stock at $7 per share, for total net proceeds to us of $1.2 billion.
We issued the following senior secured and senior notes during 2009:
•  $650 million of 10.375% senior secured notes due 2014;
•  $850 million of 11.125% senior secured notes due 2017; and
•  $475 million of 11.375% senior notes due 2018.
We repaid the following principal amounts of senior and senior subordinated notes during 2009:
•  $226.3 million 6.5% senior notes (redeemed $122.3 million prior to maturity essentially at par);
•  $820 million 6% senior notes (redeemed $762.6 million prior to maturity essentially at par and the remaining $57.4 million was repaid at maturity); and
•  $100 million 7.25% senior debentures (redeemed prior to maturity for $127 million).
In 2008, we borrowed net debt of $2.4 billion in 2008, including $2.5 billion under our senior credit facility. Also in 2008, we issued $750 million of 13% senior secured notes due 2013 at a discount to yield 15%. The senior secured notes require that upon consummation of an asset sale, such as the proposed sale of TI, we either a) reinvest the net after-tax proceeds, which can include committed capital expenditures; or b) make an offer to repurchase a corresponding amount of senior secured notes at par plus accrued interest. 2013.
We repaid the following senior and senior subordinated notes at maturity during 2008:
 
 •  $180.4 million of 6.75% senior notes; and
 
•  $196.2 million of 9.5% senior notes.
 
In October 2008, our Board of Directors authorized the purchase of up to $500 million of our public debt securities. InAlso in 2008, we repurchased $345 million of principal amounts of various series of our outstanding senior notes at a purchase price of $263 million in open market repurchases as follows:
• $230 million of our 6% senior notes due 2009;
• $43 million of our 8.5% senior notes due 2010;
• $3.7 million of our 6.375% senior notes due 2011;
• $5.4 million of our 6.75% senior notes due 2012;
• $15.8 million of our 6.75% senior notes due 2013;
• $16.1 million of our 5.875% senior notes due 2014;


31

• $7.1 million of our 6.875% senior notes due 2016;
• $17.3 million of our 7.5% senior notes due 2016; and
• $7 million of our 7.625% senior notes due 2017.
Also in the fourth quarterpart of 2008, wea repurchase program authorized by our Board of Directors. We redeemed at par $149.4 million of the principal amount of our 7% debentures due 2036 pursuant to a one-time put option by the holders of such debentures.
We repaid net debt of $1.8 billion in 2007, including $1.2 billion under our senior credit facility. In 2007, we issued $750 million of 7.5% senior notes maturing in 2016 and we repaid the following senior and senior subordinated notes at their scheduled maturity: $710 million of 9.75% senior subordinated notes; $200 million of 6.75% senior notes; and $492.2 million of 10.25% senior subordinated notes.
In 2007, we received approximately $1.2 billion from the sale of 14.2 million shares of our common stock to Infinity World Investments at a price of $84 per share. We received $14 million, $98 million and $89 million in proceeds from the exercise of employee stock options in the years ended December 31, 2008, 2007 and 2006, respectively.
In 2006, we borrowed net debt of $662 million, due to the level of capital expenditures, share repurchases and investments in unconsolidated affiliates. We repaid at their scheduled maturity our $200 million 6.45% senior notes and our $245 million 7.25% senior notes, and we issued $1.5 billion of senior notes at various times throughout the year, with interest rates ranging from 6.75% to 7.625% and maturities ranging from 2013 to 2017.
 
Our share repurchases are only conducted under repurchase programs approved by our Board of Directors and publicly announced. In May 2008, our Board of Directors approved a 20 million share authorization which isrepurchase plan that was still fully available at December 31, 2008. Our share2010, subject to limitations under our agreements governing our long-term indebtedness. We did not repurchase activity was as follows:
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
July 2004 authorization (8 million and 6.5 million shares purchased) $—  $659,592  $246,892 
December 2007 authorization (18.1 million and 1.9 million shares purchased)  1,240,856   167,173   — 
             
  $1,240,856  $826,765  $246,892 
             
Average price of shares repurchased $68.36  $83.92  $37.98 
any shares of common stock during 2010 and 2009. In 2008, we repurchased 18.1 million shares at an average price of $68.36.
 
Principal Debt Arrangements
Our long-term debt consists of publicly held senior, senior secured, and senior subordinated notes and our senior credit facility. We pay fixed rates of interest ranging from 5.875% to 13% on the senior, senior secured, and subordinated notes. We pay variable interest based on LIBOR or a base rate on our senior credit facility. Our current senior credit facility has a total capacity of $7.0 billion, matures in 2011, and consists of a $4.5 billion revolving credit facility and a $2.5 billion term loan facility. As of December 31, 2008, we had approximately $1.2 billion of available liquidity under our senior credit facility. After giving effect to our February 2009 borrowing, we have borrowed the entire amount of available borrowings under the senior credit facility.
All of our principal debt arrangements are guaranteed by each of our material subsidiaries, excluding MGM Grand Detroit, LLC and our foreign subsidiaries. MGM Grand Detroit is a guarantor under the senior credit facility, but only to the extent that MGM Grand Detroit, LLC borrows under such facilities. At December 31, 2008, the outstanding amount of borrowings related to MGM Grand Detroit, LLC was $404 million. Substantially all of the assets of New York-New York serve as collateral for the 13% senior secured notes issued in 2008; otherwise, none of our assets serve as collateral for our principal debt arrangements.


32

Other Factors Affecting Liquidity
 
AmendmentMGM Macau. In September 2010, MGM China Holdings Limited, a Cayman Islands company formed by us and Ms. Pansy Ho, that would own the entity that operates MGM Macau, filed a proposed listing application on Form A1 with The Stock Exchange of Hong Kong Limited (“Hong Kong Exchange”) in connection with a possible listing of its shares on the main board of the Hong Kong Exchange. There have not been any decisions made regarding the timing or terms of any such listing, whether MGM China Holdings Limited will ultimately proceed with this transaction, or whether the application will be approved by the Hong Kong Exchange.
We received approximately $192 million from MGM Macau during 2010, which represents a full repayment of our interest and non-interest bearing notes to that entity.
Tax refunds. We expect to receive tax refunds of approximately $175 million during 2011.
Borgata settlement. As discussed in “Executive Overview — Borgata,” we entered into a settlement agreement with the DGE under which we will sell our 50% ownership interest in Borgata and related leased land in Atlantic City. Prior to the consummation of the sale, the divestiture trust will retain any cash flows received in respect of the trust property, but will pay property taxes and other costs attributable to the trust property. We have received significant distributions from Borgata in the past few years, and not having access to such distributions until the ultimate sale could negatively affect our liquidity in interim periods.


41

CityCenter July 2010 capital call. We and Infinity World each made capital contributions to CityCenter of $32.5 million in July 2010. Our contribution was made through a reduction in our receivable from CityCenter. A portion of Infinity World’s cash contribution was used to repay an additional portion of the amounts owed to us for costs paid by us on behalf of the joint venture. If CityCenter is unable to generate sufficient cash flows to fund its future obligations, the joint venture may request additional capital contributions from its partners.
CityCenter January 2011 debt restructuring transactions. In January 2011, CityCenter completed a series of transactions including issuance of $900 million in aggregate principal amount of 7.625% senior secured first lien notes due 2016 and $600 million in aggregate principal amount of 10.75%/11.50% senior secured second lien PIK toggle notes due 2017 in a private placement. The interest rate on the second lien notes is 11.50% if CityCenter pays interest in the form of additional debt. CityCenter received net proceeds from the offering of the notes of $1.46 billion after initial purchaser’s discounts and commissions but before other offering expenses.
Effective concurrently with the notes offering, CityCenter’s senior credit facility.facility was amended and restated which extended the maturity of $500 million of the $1.85 billion outstanding loans until January 21, 2015. The restated senior credit facility does not include a revolving loan component. All borrowings under the senior credit facility in excess of $500 million were repaid using the proceeds of the first lien notes and the second lien notes. In addition, net proceeds from the note offerings, together with equity contributions of $73 million from the members were used to fund the interest escrow account of $159 million for the benefit of the holders of the first lien notes and the lenders under the restated senior credit facility. The restated senior credit facility is secured, on a pari passu basis with the first lien notes, by a first priority lien on substantially all of CityCenter’s assets and those of its subsidiaries, except that any proceeds generated by the sale of Crystals outside of bankruptcy or foreclosure proceedings will be paid first to the lenders under the restated senior credit facility.
The restated senior credit facility also contains certain covenants, including financial covenants, which require CityCenter to maintain a minimum interest coverage ratio (EBITDA to interest charges as defined in the agreement) of (i) 1.10 to 1.0 for the quarter ending September 2008,30, 2012; (ii) 1.15 to 1.0 for the quarter ending December 31, 2012; (iii) 1.25 to 1.0 for the quarters ending March 31, 2013 and June 30, 2013; and (iv) 1.50 to 1.0 for all quarters thereafter. In addition, the restated senior credit facility limits CityCenter’s capital expenditures to no more than $50 million per year (with unused amounts in any fiscal year rolling over to the next fiscal year, but not any fiscal year thereafter).
Principal Debt Arrangements
Our long-term debt consists of publicly held senior, senior secured, senior subordinated and convertible senior notes and our senior credit facility. We pay fixed rates of interest ranging from 4.25% to 13% on our senior, senior secured, convertible senior and subordinated notes. At December 31, 2010, our senior credit facility had a capacity of $3.5 billion consisting of a term loan facility of $1.8 billion and a revolving credit facility of $1.7 billion and interest was based on a LIBOR margin of 5.00%, with a LIBOR floor of 2.00%, and a base margin of 4.00%, with a base rate floor of 4.00%. See “Executive Overview” for more information related to the amendment and extension of our senior credit facility.
Our senior credit facility contains certain financial and non-financial covenants, including a quarterly minimum EBITDA test, based on a rolling12-month EBITDA and a covenant limiting annual capital expenditures. Further, our senior credit facility and certain of our debt securities contain restrictive covenants that, among other things, limit our ability to pay dividends or distributions, repurchase or issue equity, prepay debt or make certain investments; incur additional debt or issue certain disqualified stock and preferred stock; incur liens on assets; pledge or sell assets or consolidate with another company or sell all or substantially all assets; enter into transactions with affiliates; allow certain subsidiaries to transfer assets; and enter into sale and lease-back transactions. We are in compliance with all covenants, including financial covenants under our senior credit facilities as of December 31, 2010.
At December 31, 2010, we amendedwere required under our senior credit facility to increasemaintain a minimum trailing annual EBITDA (as defined) of $1.0 billion, which increases to $1.1 billion as of March 31, 2011, $1.15 billion as of September 30, 2011, and $1.2 billion as of December 31, 2011, with additional periodic increases thereafter. As of December 31, 2010, we had annual EBITDA calculated in accordance with the terms of the agreement of


42

approximately $1.14 billion and were in compliance with the minimum EBITDA covenant. Additionally, we are limited to $400 million of annual capital expenditures (as defined) during 2010 and are limited to $500 million of annual capital expenditures in 2011. At December 31, 2010, we were in compliance with the maximum total leverage ratio (debt to EBITDA, as defined) to 7.5:1.0 beginning with the fiscal quarter ending December 31, 2008, which will remain in effect through December 31, 2009, with step downs thereafter. The amendment modified drawn and undrawn pricing levels as well as revised certain definitions and limitations on secured indebtedness. Our drawn pricing levels over LIBOR remain unchanged when the maximum total leverage ratio is less than 5.0:1. When the maximum total leverage ratio exceeds that level, the drawn pricing levels over LIBOR range from 1.25% to 2.00%.capital expenditures covenant.
 
Request to borrow remaining available fundsAll of our principal debt arrangements are guaranteed by each of our material subsidiaries, other than MGM Grand Detroit, LLC, our foreign subsidiaries and their U.S. holding companies, and our insurance subsidiaries. MGM Grand Detroit is a guarantor under the senior credit facility,.  In February 2009, we submitted a borrowing request for $842 million, but only to the remainingextent that MGM Grand Detroit, LLC borrows under such facility. At December 31, 2010, the outstanding amount of available funds (other than outstanding lettersborrowings related to MGM Grand Detroit, LLC was $450 million. In connection with our May 2009 senior credit facility amendment, MGM Grand Detroit granted lenders a security interest in its assets to secure its obligations under the senior credit facility.
Also in connection with our May 2009 senior credit facility amendment, we granted a security interest in Gold Strike Tunica and certain undeveloped land on the Las Vegas Strip to secure up to $300 million of credit)obligations under ourthe senior credit facility. The borrowing request was fully funded asIn addition, substantially all of February 26, 2009. For further discussion of this event and its impact on our liquidity and financial position, see “Executive Overview — Liquidity and Financial Position.”
Long-term debt payable in 2009.  We have $226 million of principal of senior notes due in July 2009 and $820 million of principal of senior notes due in October 2009.
Sale of TI.  In December 2008, we entered into a purchase agreement pursuant to which we have agreed to sell TI to Ruffin Acquisition, LLC (“Ruffin Acquisition”) for a purchase price of $775 million. The purchase price is to be paid at closing as follows: $500 million in cash and $275 million in secured notes bearing interest at 10%, with $100 million payable not later than 175 days after closing and $175 million payable not later than 24 months after closing. The notes, to be issued by Ruffin Acquisition, will be secured by the assets of TI and will beNew York-New York serve as collateral for the 13% senior to any other financing. In March 2009, we entered into an amendment to the purchase agreement which a) extends the maturitysecured notes issued in 2008, substantially all of the $175 million note to 36 months,assets of Bellagio and b) offers Ruffin Acquisition a $20 million discount onThe Mirage serve as collateral for the purchase price effected through a reduction10.375% and 11.125% senior secured notes issued in principal2009, and substantially all of the assets of the MGM Grand serve as collateral for the 9.00% senior secured notes if they are paidissued in full by April 30, 2009. The transaction is subject to customary closing conditions contained in2010. Upon the purchase agreement, including receiptissuance of all gamingthe 10.375%, 11.125%, and other regulatory approvals. In addition,9.00% senior secured notes, the ability of Ruffin Acquisition to obtain financing is not a closing condition. We anticipate that the transaction will be completed by March 31, 2009, and we expect to report a substantial gain on the sale. Under the termsholders of our 13% senior secured notes within 360 days of the receipt of the proceeds from the TI sale we must either invest such proceedsdue 2013 obtained an equal and ratable lien in qualifying investments, which includes capital expenditures, or offer to repurchase the senior notes at par.all collateral securing these notes. No other assets serve as collateral for our principal debt arrangements.
 
MGM Grand Atlantic City development.  In October 2007, we announced plans for a multi-billion dollar resort complex on our72-acre site in Atlantic City. Since making that announcement, we have made extensive progress in design and other pre-development activities. However, current economic conditions, including limited access to capital markets for projects of this scale have caused us to reassess timing for this project. Accordingly, we have postponed current development activities.
Mashantucket Pequot Tribal Nation.  We have entered into a series of agreements to implement a strategic alliance with the Mashantucket Pequot Tribal Nation (“MPTN”), which owns and operates Foxwoods Casino Resort in Mashantucket, Connecticut. Under the strategic alliance, a new casino resort owned and operated by MPTN located adjacent to the existing Foxwoods casino resort carries the “MGM Grand” brand name. The resort opened in May 2008. We are receiving a brand licensing and consulting fee in connection with this agreement. We have also formed a jointly owned company with MPTN — Unity Gaming, LLC — to acquire or develop future gaming and non-gaming enterprises. Under certain circumstances, we will provide a loan of up to $200 million to finance a portion of MPTN’s investment in joint projects.
Kerzner/Istithmar joint venture.  In September 2007, we entered into a definitive agreement with Kerzner International and Istithmar forming a joint venture to develop a multi-billion dollar integrated resort to be located on the southwest corner of Las Vegas Boulevard and Sahara Avenue. In September 2008, we and our partners agreed to defer additional design and pre-construction activities and amended the joint venture agreement accordingly. In the event the joint venture partners agree that the resort will be developed, we will contribute 40 acres of land, valued at $20 million per acre, for fifty percent of the equity in the joint venture. Kerzner International and Istithmar will contribute cash totaling $600 million, of which $200 million will be distributed to us, for the other 50% of the equity.


33

Off Balance Sheet Arrangements
 
Investments in unconsolidated affiliates. Our off balance sheet arrangements consist primarily of investments in unconsolidated affiliates, which currently consist primarily of our investments in CityCenter, Borgata, Grand Victoria, Silver Legacy, and MGM Grand Macau. We have not entered into any transactions with special purpose entities, nor have we engaged in any derivative transactions. Our unconsolidated affiliate investments allow us to realize the proportionate benefits of owning a full-scale resort in a manner that minimizes our initial investment. We have not historically guaranteed financing obtained by our investees, and there are no other provisions of the venture agreements which we believe are unusual or subject us to risks to which we would not be subjected if we had full ownership of the resort.
 
CityCenter.  In October 2008, CityCenter closed on a $1.8 billion senior secured bank credit facility. The credit facility can be increased upcompletion guarantee. We entered into an unlimited completion and cost overrun guarantee with respect to $3 billion and consists of a $250 million revolver with the remaining amount being in the form of term loans. The credit facility matures in April 2013 and isCityCenter, secured by substantially all ofour interests in the assets of CityCenter.Circus Circus Las Vegas and certain adjacent undeveloped land. The terms of the completion guarantee provide that up to $250 million of net residential proceeds from the sale of condominium properties at CityCenter would be permitted by CityCenter’s lenders and our joint venture partner to fund construction costs that we will otherwise be obligated to pay under the completion guarantee, or to reimburse us for construction costs previously expended; however, the timing of receipt of such proceeds is uncertain.
As of December 31, 2010, we had funded $553 million under the completion guarantee. We have recorded a receivable from CityCenter of $124 million related to these amounts, which represents amounts reimbursable to us from CityCenter from future residential proceeds. At December 31, 2010 our remaining estimated net obligation under the completion guarantee was approximately $80 million which includes estimated litigation costs related to the resolution of disputes with contractors as to the final construction costs and reflects certain estimated offsets to the amounts claimed by the contractors. CityCenter has reached, or expects to reach, settlement agreements with most of these construction subcontractors; however, significant disputes remain with the general contractor and certain subcontractors. Amounts claimed by such parties exceed amounts included in our completion guarantee accrual by approximately $200 million. Moreover, we have not accrued for any contingent payments to CityCenter related to the Harmon Hotel & Spa component, which is unlikely to be completed using the building as it now stands. We do not believe we would be responsible for funding any additional remediation efforts that might be required with respect to the Harmon; however, our view is based on a number of developing factors, including with respect to ongoing litigation with CityCenter’s contractors, actions by local officials and other developments related to the CityCenter venture, that are subject to change. See “Legal Proceedings” for the discussion of Perini litigation.


43

In January 2011, we entered into an amended completion and cost overrun guarantee in connection with CityCenter’s restated senior credit facility is initially priced at LIBOR plus 3.75% throughagreement and issuance of $1.5 billion of senior secured first lien notes and senior secured second lien notes. Consistent with the construction period.
Through December 31, 2008, we and Infinity World had each made loans of $925 million to CityCenter, which are subordinate to the credit facility. During the fourth quarter of 2008, $425 million of each partner’s loan funding was converted to equity and each partner provided equity contributions of $228 million. Underprevious completion guarantee, the terms of the credit facility, we and Infinity World were each required to fund future construction costs through equity commitmentsamended completion guarantee provide for the application of up to $731 million as of December 31, 2008, which requirement would be reduced by future qualifying financing obtained by CityCenter. Subsequent to December 31, 2008, each partner made an additional $237$124 million of required equity contributions. Thenet residential proceeds from the subordinated loans and equity contributions will be usedsales of condominium properties at CityCenter to fund construction costs, prioror to accessing borrowings underreimburse us for construction costs previously expended; however, the credit facility.timing of receipt of such proceeds is uncertain.
 
In conjunction with the CityCenter credit facility, we and Infinity World have entered into partial completion guarantees on a several basis. The partial completion guarantees provide for additional funding of construction costs in the event such funding is necessary to complete the project, up to a maximum amount of $600 million each.
Letters of credit. At December 31, 2008,2010, we had outstanding letters of credit totaling $92 million, of which $50 million support bonds issued by the Economic Development Corporation of the City of Detroit and maturing in 2009. These bonds are recorded as a liability in our consolidated balance sheets. This obligation was undertaken to secure our right to develop a permanent casino in Detroit.$37 million.
 
Commitments and Contractual Obligations
 
The following table summarizes our scheduled contractual obligations as of December 31, 2008:2010:
 
                         
  2009  2010  2011  2012  2013  Thereafter 
  (In millions) 
 
Long-term debt $1,048  $1,081  $6,240  $545  $1,384  $3,216 
Estimated interest payments on long-term debt(1)  783   666   653   409   302   520 
Capital leases  2   2   2   1   —   — 
Operating leases  14   11   9   8   6   44 
Tax liabilities(2)  1   —   —   —   —   — 
Long-term liabilities(3)  77   18   1   1   —   6 
CityCenter funding commitments(4)  731   319   —   —   —   — 
Other purchase obligations:                        
Construction commitments  54   3   1   —   —   — 
Employment agreements  113   65   21   3   —   — 
Entertainment agreements(5)  127   26   4   —   —   — 
Other(6)  86   16   15   9   1   — 
                         
  $3,036  $2,207  $6,946  $  976  $1,693  $3,786 
                         
                         
  2011  2012  2013  2014  2015  Thereafter 
    
        (In millions)       
 
Long-term debt $455  $546  $1,384  $3,463  $2,025  $4,402 
Estimated interest payments on long-term debt (1)  969   947   894   582   486   861 
Capital leases  2   1   -   -   -   - 
Operating leases  14   12   8   6   5   37 
Tax liabilities (2)  16   -   -   -   -   - 
Long-term liabilities  4   4   3   3   2   29 
CityCenter funding commitments (3)  80   -   -   -   -   - 
Other Purchase obligations                        
Construction commitments  2   -   -   -   -   - 
Employment agreements  85   44   15   2   -   - 
Entertainment agreements (4)  87   -   -   -   -   - 
Other(5)  74   41   -   -   -   - 
                         
  $  1,788  $  1,595  $  2,304  $  4,056  $    2,518  $     5,329 
                         
 
(1)Estimated interest payments on long-term debt are based on principal amounts and expected maturities of debt outstanding at December 31, 20082010, and management’s forecasted LIBOR rates for our bank credit facility.


34

(2)Approximately $118$144 million of tax liabilities related to unrecognizeduncertain tax benefitspositions and other tax liabilities are excluded from the table as we cannot reasonably estimate when examination and other activity related to these amounts will conclude.
(3)IncludesUnder our obligation to support $50 million of bonds issued by the Economic Development Corporation of the City of Detroit as part of our development agreement with the City. The bonds mature in 2009.
(4)As of December 31, 2008 we were committed to fund equity contributions of $731 million tocompletion guarantee for CityCenter, during 2009. In addition, we are committed to fund up to $600 million under a partial completion guarantee.amounts in excess of currently funded project costs. Based on current forecasted expenditures, we estimate that we will be required to fund $319approximately $80 million for such guarantee during 2010, excluding the benefit offuture proceeds to be received from residential closing.closings of $124 million.
(5)(4)Our largest entertainment commitments consist of minimum contractual payments to Cirque du Soleil, which performs shows at several of our resorts. We are generally contractually committed for a period of 12 months based on our ability to exercise certain termination rights; however, we expect these shows to continue for longer periods.
(6)(5)The amount for 20092011 includes approximately $58$46 million of open purchase orders. Other commitments are for various contracts, including advertising, maintenance and other service agreements.
 
See “Executive Overview — Liquidity and Financial Position”Overview” for discussion of the impacts of the above contractual obligations on our liquidity and financial position.position and ability to meet known obligations.
 
Critical Accounting Policies and Estimates
 
Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements. To prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, we must make estimates and assumptions that affect the amounts reported in the consolidated financial statements. We regularly evaluate these estimates and assumptions, particularly in areas we consider to be critical accounting estimates, where changes in the estimates and assumptions could have a material impacteffect on our results of operations, financial position or cash flows. Senior management and the Audit Committee of the Board of Directors have reviewed the disclosures included herein about our critical accounting estimates, and have reviewed the processes to determine those estimates.


44

Allowance for Doubtful Casino Accounts Receivable
 
Marker play represents a significant portion of the table games volume at Bellagio, MGM Grand Las Vegas, Mandalay Bay and The Mirage. Our other facilities do not emphasize marker play to the same extent, although we offer markers to customers at those casinos as well. We maintain strict controls over the issuance of markers and aggressively pursue collection from those customers who fail to pay their marker balances timely. These collection efforts are similar to those used by most large corporations when dealing with overdue customer accounts, including the mailing of statements and delinquency notices, personal contacts, the use of outside collection agencies and civil litigation. Markers are generally legally enforceable instruments in the United States. At December 31, 20082010 and 2007,2009, approximately 52%36% and 47%40%, respectively, of our casino accounts receivable was owed by customers from the United States. Markers are not legally enforceable instruments in some foreign countries, but the United States assets of foreign customers may be reached to satisfy judgments entered in the United States. At December 31, 20082010 and 2007,2009, approximately 34%51% and 38%46%, respectively, of our casino accounts receivable was owed by customers from the Far East.
 
We maintain an allowance, or reserve, for doubtful casino accounts at all of our operating casino resorts. The provision for doubtful accounts, an operating expense, increases the allowance for doubtful accounts. We regularly evaluate the allowance for doubtful casino accounts. At resorts where marker play is not significant, the allowance is generally established by applying standard reserve percentages to aged account balances. At resorts where marker play is significant, we apply standard reserve percentages to aged account balances under a specified dollar amount and specifically analyze the collectibility of each account with a balance over the specified dollar amount, based on the age of the account, the customer’s financial condition, collection history and any other known information. We also monitor regional and global economic conditions and forecasts to determine if reserve levels are adequate.


35

The collectibility of unpaid markers is affected by a number of factors, including changes in currency exchange rates and economic conditions in the customers’ home countries. Because individual customer account balances can be significant, the allowance and the provision can change significantly between periods, as information about a certain customer becomes known or as changes in a region’s economy occur.
 
The following table shows key statistics related to our casino receivables:
 
                        
 At December 31,  Year Ended December 31, 
 2008 2007 2006  2010 2009 2008 
   (In thousands)    (In thousands) 
Casino accounts receivable $243,600  $266,059  $248,044 
Casino receivables $229,318  $261,025  $243,600 
Allowance for doubtful casino accounts receivable  92,278   76,718   83,327   85,547   88,557   92,278 
Allowance as a percentage of casino accounts receivable  38%   29%   34%   37%   34%   38% 
Median age of casino accounts receivable  36 days   28 days   46 days 
Percentage of casino accounts outstanding over 180 days  21%   18%   21%   28%   24%   21% 
 
The allowance for doubtful accounts as a percentage of casino accounts receivable has increased in the current year due to an increase in aginga larger percentage of accounts.receivables over 180 days. At December 31, 2008,2010, a 100 basis-point change in the allowance for doubtful accounts as a percentage of casino accounts receivable would change net income by $2 million, or less than $0.01 per share.
 
Fixed Asset Capitalization and Depreciation Policies
 
Property and equipment are stated at cost. For the majority of our property and equipment, cost has been determined based on estimated fair values in connection with the April 2005 Mandalay acquisition and the May 2000 Mirage Resorts acquisition. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets. We account for construction projects in accordance with Statement of Financial Accounting Standards No. 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects.” When we construct assets, we capitalize direct costs of the project, including fees paid to architects and contractors, property taxes, and certain costs of our design and construction subsidiaries. In addition, interest cost associated with major development and construction projects is capitalized as part of the cost of the project. Interest is typically capitalized on amounts expended on the project


45

using the weighted-average cost of our outstanding borrowings, since we typically do not borrow funds directly related to a development project. Capitalization of interest starts when construction activities begin and ceases when construction is substantially complete or development activity is suspended for more than a brief period.
 
We must make estimates and assumptions when accounting for capital expenditures. Whether an expenditure is considered a maintenance expense or a capital asset is a matter of judgment. When constructing or purchasing assets, we must determine whether existing assets are being replaced or otherwise impaired, which also may be a matter of judgment. Our depreciation expense is highly dependent on the assumptions we make about our assets’ estimated useful lives. We determine the estimated useful lives based on our experience with similar assets, engineering studies, and our estimate of the usage of the asset. Whenever events or circumstances occur which change the estimated useful life of an asset, we account for the change prospectively.
 
In accordance with Statement of Financial Accounting Standards No. 34, “Capitalization of Interest Cost” (“SFAS 34”), interest cost associated with major development and construction projects is capitalized as part of the cost of the project. Interest is typically capitalized on amounts expended on the project using the weighted-average cost of our outstanding borrowings, since we typically do not borrow funds directly related to a development project. Capitalization of interest starts when construction activities, as defined in SFAS 34, begin and ceases when construction is substantially complete or development activity is suspended for more than a brief period.
Impairment of Long-lived Assets, Goodwill and Indefinite-lived Intangible Assets
 
We evaluate our property and equipment and other long-lived assets for impairment based on our classification as a) held for sale or b) to be held and used. Several criteria must be met before an asset is classified as held for sale, including that management with the appropriate authority commits to a plan to sell the asset at a reasonable price in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”relation to its fair value and is actively seeking a buyer. For assets to be disposed of,classified as held for sale, we recognize the asset at the lower of carrying value or fair market value less costs of disposal, as estimated based on comparable asset sales, offers received, or a discounted cash flow model. For assets to be held and used, we review for impairment whenever indicators of impairment exist. We then compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is recorded based on the fair value of the asset, typically


36

measured using a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs. All recognized impairment losses, whether for assets to be disposed ofheld for sale or assets to be held and used, are recorded as operating expenses.
 
There are several estimates, assumptions and decisions in measuring impairments of long-lived assets. First, management must determine the usage of the asset. To the extent management decides that an asset will be sold, it is more likely that an impairment may be recognized. Assets must be tested at the lowest level for which identifiable cash flows exist. This means that some assets must be grouped, and management has some discretion in the grouping of assets. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates.
 
On a quarterly basis, we review our major long-lived assets to determine if events have occurred or circumstances exist that indicate a potential impairment. Potential factors which could trigger an impairment include underperformance compared to historical or projected operating results, negative industry or economic factors, or significant changes to our operating environment. We estimate future cash flows using our internal budgets. When appropriate, we discount future cash flows using oura weighted-average cost of capital, developed using a standard capital asset pricing model.model, based on guideline companies in our industry.
 
We review goodwill and indefinite-lived intangible assets for impairment in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” Goodwill represents the excess of purchase price over fair market value of net assets acquired in business combinations. GoodwillWe review goodwill and indefinite-lived intangible assets must be reviewed for impairment at least annually and between annual test dates in certain circumstances. We perform our annual impairment test for goodwill and indefinite-lived intangible assets in the fourth quarter of each fiscal year. Goodwill for relevant reporting units is tested for impairment using a discounted cash flow analysis based on our budgeted future results discounted using oura weighted average cost of capital, developed using a standard capital asset pricing model based on guideline companies in our industry, and market indicators of terminal year capitalization rates. As of the date we completed our 2010 goodwill impairment analysis, the estimated fair values of our reporting units with associated goodwill were substantially in excess of their carrying values. Indefinite-lived intangible assets consist primarily of license rights, which are tested for impairment using a discounted cash flow approach, and trademarks;trademarks, which are tested for impairment using the relief-from-royalty method. See Note 3 and Note 9 to the accompanying consolidated financial statements for further discussion related to goodwill and indefinite-lived intangible assets.
 
There are several estimates inherent in evaluating these assets for impairment. In particular, future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates. In addition, the


46

determination of capitalization rates and the discount rates used in the goodwill impairment testtests are highly judgmental and dependent in large part on expectations of future market conditions.
 
See “Executive Overview” and “Results of Operations” for discussion of write-downs and impairments of long-lived assets, recorded in 2008, 2007goodwill and 2006. In 2006, we entered into agreements to sell Primm Valley Resorts and Laughlin Properties. The fair value less costs to sell exceeded the carrying value, therefore no impairment was indicated. See “Goodwill Impairment” for discussion of impairment of goodwill recorded in 2008.intangible assets. Other than the above items,mentioned therein, we are not aware of events or circumstances through December 31, 20082010 that would cause us to review any material long-lived assets, goodwill or indefinite-lived intangible assets for impairment.
 
Impairment of Investments in Unconsolidated Affiliates
We evaluate our investments in unconsolidated affiliates for impairment whenever events or changes in circumstances indicate that the carrying value of our investment may have experienced an“other-than-temporary” decline in value. If such conditions exist, we compare the estimated fair value of the investment to its carrying value to determine whether an impairment is indicated and determine whether the impairment is“other-than-temporary” based on our assessment of relevant factors, including consideration of our intent and ability to retain our investment. We estimate fair value using a discounted cash flow analysis based on estimates of future cash flows and market indicators of discount rates and terminal year capitalization rates. See “Executive Overview” for discussion of impairment charges recorded in 2010 and 2009 related to our investment in CityCenter.
Income Taxes
 
We account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”). SFAS 109 requires the recognition ofrecognize deferred tax assets, net of applicable reserves, related to net operating loss carryforwards and certain temporary differences. The standard requires recognition ofdifferences with a future tax benefit to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied. Except for certain New Jersey state net operating losses, certain other New Jersey state deferred tax assets and a foreign tax credit carryforward, and certain foreign deferred tax assets, we believe that it is more likely than not that our deferred tax assets are fully realizable because of the future reversal of existing taxable temporary differences. Given the negative impact of the U.S. economy on the results of our operations in the past several years and our expectations that we will continue to be adversely affected by certain aspects of the current economic conditions, we no longer rely on future operating income in assessing the realizability of our deferred tax assets and now rely only on the future reversal of existing taxable temporary differences. Accordingly, we concluded during 2010 that realization of certain of our state deferred tax assets was no longer more likely than not and we provided a valuation allowance in the amount of $32 million, net of federal effect, with a corresponding reduction in income tax benefit. Since the future reversal of existing U.S. federal taxable temporary differences andcurrently exceed the future projectedreversal of existing U.S. federal deductible temporary differences, we continue to conclude that it is more likely than not that our U.S. federal deferred tax assets, other than the foreign tax credit carryforward, are realizable. Should we continue to experience operating losses of the same magnitude we have experienced in the past several years, it is reasonably possible in the near term that the future reversal of our U.S. federal deductible temporary differences could exceed the future reversal of our U.S. federal taxable income.temporary differences, in which case we would record a valuation allowance for such excess with a corresponding reduction of federal income tax benefit on our statement of operations.
 
Our income tax returns are subject to examination by the Internal Revenue Service (“IRS”) and other tax authorities. Positions taken in tax returns are sometimes subject to uncertainty in the tax laws and may not ultimately be accepted by the IRS or other tax authorities.
 
Effective January 1, 2007, we adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 requires


37

thatWe assess our tax positions be assessed using a two-step process. A tax position is recognized if it meets a “more likely than not” threshold, and is measured at the largest amount of benefit that is greater than 50 percent likely of being realized. As required by the standard, weWe review uncertain tax positions at each balance sheet date. Liabilities we record as a result of this analysis are recorded separately from any current or deferred income tax accounts, and are classified as current (“Other accrued liabilities”) or long-term (“Other long-term liabilities”) based on the time until expected payment. Additionally, we recognize accrued interest and penalties, if any, related to unrecognized tax benefits in income tax expense, a policy that did not change as a result of the adoption of FIN 48.expense.
 
We file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and foreign jurisdictions, although the taxes paid in foreign jurisdictions are not material.
As of December 31, 2008,2010, we were no longer subject to examination of our U.S. consolidated federal income


47

tax returns filed for years ended prior to 2003. While the2005. The IRS completed its examination of the 2001 and 2002 tax years closed during the first quarter of 2007, the statute of limitations for assessing tax for such years has been extended in order for us to appeal issues related to a land sale transaction that were not agreed upon at the closure of the examination. The appeals discussions continue, and the Company has requested to enter into appeals mediation procedures with the IRS. Consequently, we believe that it is reasonably possible to settle these issues within the next twelve months. The IRS is currently examining our consolidated federal income tax returns for the 2003 and 2004 tax years during 2010 and onewe paid $12 million in tax and $4 million in associated interest with respect to adjustments to which we agreed. In addition, we submitted a protest to IRS Appeals of certain adjustments to which we do not agree. The opening Appeals conference has been scheduled to occur in the first quarter of 2011. It is reasonably possible that the issues subject to Appeal may be settled within the next 12 months. During the fourth quarter of 2010, the IRS opened an examination of our subsidiariesconsolidated federal income tax returns for the 2005 through 2009 tax years.
The IRS informed us during the fourth quarter of 2010 that they would initiate an audit of the 2007 through 2009 tax years of CityCenter Holdings LLC, an unconsolidated affiliate treated as a partnership for income tax purposes. The IRS also informed us that they would initiate an audit of the 2008 through 2009 tax years of MGM Grand Detroit LLC, a subsidiary treated as a partnership for income tax purposes. Neither of these audits was initiated in 2010 but we anticipate that both will be initiated in early 2011.
We reached settlement during 2010 with IRS Appeals with respect to the audit of the 2004 through 2006 tax years. Tax returns for subsequent years are also subjectof MGM Grand Detroit, LLC. At issue was the tax treatment of payments made under an agreement to examination. In addition, duringdevelop, own and operate a hotel casino in the firstCity of Detroit. We will owe $1 million in tax as a result of this settlement.
During the fourth quarter of 2009,2010, a tentative settlement was reached with IRS Appeals with respect to the audit of the 2003 and 2004 tax years of a cost method investee of ours that is treated as a partnership for income tax purposes. The adjustments to which we agreed in such settlement will be included in any settlement that we may reach with respect to the 2003 and 2004 examination of our consolidated federal income tax return.
The IRS initiated anclosed during 2010 its examination of the federal income tax return of Mandalay Resort Group for the pre-acquisition year ended April 25, 2005.2005 and issued a “No-Change Letter.” The statutestatutes of limitations for assessing tax for theall Mandalay Resort Group federal income tax return for the year ended January 31, 2005 has been extended but such return is not currently under examination by the IRS.pre-acquisition years are now closed.
 
As of December 31, 2008,2010, other than the exceptions noted below, we arewere no longer subject to examination forof our various state and local tax returns filed for years ended prior to 2003. A2006. The state of Illinois during 2010 initiated an audit of our Illinois combined returns for the 2006 and 2007 tax years. It is reasonably possible that this audit will close and all issues will be settled in the next 12 months. The state of New Jersey began audit procedures during 2010 of a cost method investee of ours for the 2003 through 2006 tax years. The City of Detroit previously indicated that it would audit a Mandalay Resort Group subsidiary return for the pre-acquisition year ended April 25 2005 is under examination bybut no audit was initiated and the Citystatute of Detroit. During the first quarter of 2008, the state of Mississippi settled an examination of returns filed by subsidiaries of MGM MIRAGE and Mandalay Resort Grouplimitations for the 2004 through 2006assessing tax years. This settlement resultedexpired in a payment of additional taxes and interest of less than $1 million.2010. No other state or local income tax returns of ours are currently under exam.
 
Stock-based Compensation
 
We account for stock-based compensation in accordance with SFAS 123(R). For stock options and stock appreciation rights (“SARs”) we measuremeasuring fair value using theBlack-Scholes model. For restricted stock units, compensation expense is calculated based on the fair market value of our stock on the date of grant. There are several management assumptions required to determine the inputs into the Black-Scholes model. Our volatility and expected term assumptions can significantly impactaffect the fair value of stock options and SARs. The extent of the impact will depend, in part, on the extent of awards in any given year. In 2010, we granted 3.8 million SARs with a total fair value of $27 million. In 2009, we granted 6.8 million SARs with a total fair value of $37 million. In 2008, we granted 4.9 million SARs with a total fair value of $72 million. In 2007, we granted 2.6 million SARs with a total fair value of $68 million. In 2006, we granted 1.9 million stock options and SARs with a total fair value of $28 million.
 
For 20082010 awards, a 10% change in the volatility assumption (50%(71% for 2008;2010; for sensitivity analysis, volatility was assumed to be 45%64% and 55%78%) would have resulted in a $5.5$2 million, or 8%, change in fair value. A 10% change in the expected term assumption (4.6(4.8 years for 2008;2010; for sensitivity analysis, expected term was assumed to be 4.14.3 years and 5.15.3 years) would have resulted in a $3.3$1 million, or 5%4%, change in fair value. These changes in fair value would have been recognized over the four to five-year vesting period of such awards. It should be noted that a change in the expected term would cause other changes, since the risk-free rate and volatility assumptions are specific to the term; we did not attempt to adjust those assumptions in performing the sensitivity analysis above.


3848

Recently Issued Accounting Standards
Accounting for Business Combinations and Non-Controlling Interests
 
In December 2007, the FinancialCertain amendments to Accounting Standards BoardCodification (“FASB”ASC”) issued SFAS No. 141(R), “Business Combinations,Topic 810, “Consolidation,” (“SFAS 141R”) and SFAS No. 160 “Non-controlling interests in Consolidated Financial Statements — an amendment of ARB No. 51,” (“SFAS 160”). These standards amend the requirements for accounting for business combinations, including the recognition and measurement of additional assets and liabilities at their fair value, expensing of acquisition-related costs which are currently capitalizable under existing rules, treatment of adjustments to deferred taxes and liabilities subsequent to the measurement period, and the measurement of non-controlling interests, previously commonly referred to as minority interests, at fair value. SFAS 141R also includes additional disclosure requirements with respect to the methodologies and techniques used to determine the fair value of assets and liabilities recognized in a business combination. SFAS 141R and SFAS 160 apply prospectively to fiscal years beginning on or after December 15, 2008, except for the treatment of deferred tax adjustments which apply to deferred taxes recognized in previous business combinations. These standards became effective for us onbeginning January 1, 2009. We do not believe2010. Such amendments include changes to the quantitative approach to determine the primary beneficiary of a variable interest entity (“VIE”). An enterprise must determine if its variable interest or interests give it a controlling financial interest in a VIE by evaluating whether 1) the enterprise has the power to direct activities of the VIE that have a significant effect on economic performance, and 2) the enterprise has an obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The amendments to ASC 810 also require ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE. The adoption of SFAS 141R and SFAS 160 willthese amendments did not have a material impacteffect on our consolidated financial statements.
 
Transfers of Financial Assets and Interests in Variable Entities
In December 2008, the FASB issued FSPFAS 140-4 and FIN 46(R)-8 “Disclosures by Public Entities (Enterprises) About Transfers of Financial Assets and Interests in Variable Interest Entities.” The FSP enhances disclosures required by FIN 46(R) to include a discussion of significant judgments made in determining whether a variable interest entity (“VIE”) should be consolidated, as well as the nature of the risks and how its involvement with a VIE affects the financial position of the entity. The FSP is effective for us for the fiscal year ended December 31, 2008. The adoption of the FSP did not have a material impact on our consolidated financial statements.
Equity Method Investment Accounting Considerations
In November 2008, the Emerging Issues Task Force (“EITF”) of the FASB ratified its consensus on EITFNo. 08-6”). The EITF reached a consensus on the following four issues addressed: a) the initial carrying value of an equity method investment is determined in accordance with SFAS 141(R); b) equity method investors should not separately test an investee’s underlying assets for impairment, but rather recognize other than temporary impairments of an equity method investment in accordance with APB Opinion 18; c) exceptions to recognizing gains from an investee’s issuance of shares in earnings in accordance with the SEC’s Staff Accounting Bulletin 51 were removed to achieve consistency with SFAS 160; and d) the guidance in APB Opinion 18 to account for a change in the investor’s accounting from the equity method to the cost method should still be applied.EITF 08-6 became effective for us on January 1, 2009. We do not believe the adoption ofEITF 08-6 will have a material impact on our consolidated financial statements.
Market Risk
 
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rates and commodity prices.rates. Our primary exposure to market risk is interest rate risk associated with our variable rate long-term debt. We attempt to limit our exposure to interest rate risk by managing the mix of our long-term fixed rate borrowings and short-term borrowings under our bank credit facilities. A change in interest rates generally does not have an impact upon our future earnings and cash flow for fixed-rate debt instruments. As fixed-rate debt matures, however, and if additional debt is acquired to fund the debt repayment, future earnings and cash flow may be affected by changes in interest rates. This effect would be realized in the periods subsequent to the periods when the debt matures.
 
As of December 31, 2008,2010, long-term fixedvariable rate borrowings represented approximately 58%19% of our total borrowings. Based on December 31, 2008 debt levels, an assumedAssuming a 100 basis-point changeincrease in LIBOR would causeover the 2% floor specified in our senior credit facility, our annual interest cost towould change by approximately $57 million.$23 million based on gross amounts outstanding at December 31, 2010. The following table provides additional information about our gross long-term debt subject to changes in interest rates:


39

                                 
                       Fair Value
 
  Debt maturing in,  December 31,
 
  2011  2012  2013  2014  2015  Thereafter  Total  2010 
  (In millions) 
 
Fixed rate $455  $546  $1,384  $1,159  $2,025  $4,402  $9,971  $10,226 
Average interest rate  7.8%   6.8%   10.2%   8.4%   5.3%   9.2%   8.2%     
Variable rate $-  $-  $-  $2,304  $-  $-  $2,304  $2,156 
Average interest rate  N/A   N/A   N/A   7.0%   N/A   N/A   7.0%     

 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
We incorporate by reference the information appearing under “Market Risk” in Item 7 of thisForm 10-K.
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
Our Consolidated Financial Statements and Notes to Consolidated Financial Statements, including the Independent Registered Public Accounting Firm’s Report thereon, referred to in Item 15(a)(1) of thisForm 10-K, are included at pages 5264 to 88105 of thisForm 10-K.
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None.


49

 
ITEM 9A.  CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have concluded that the design and operation of our disclosure controls and procedures are effective as of December 31, 2008.2010 to provide reasonable assurance that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and regulations and to provide that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures. This conclusion is based on an evaluation as required byRule 13a- 15(e) under the Exchange Act conducted under the supervision and participation of the principal executive officer and principal financial officer along with company management. Disclosure controls and procedures
Changes in Internal Control over Financial Reporting
During the quarter ended December 31, 2010, there were no changes in our internal control over financial reporting that materially affected, or are those controls and procedures which ensure that information requiredreasonably likely to be disclosed in this filing is accumulated and communicated to management and is recorded, processed, summarized and reported in a timely manner and in accordance with Securities and Exchange Commission rules and regulations.affect, our internal control over financial reporting.
 
Management’s Annual Report on Internal Control Overover Financial Reporting
 
Management’s Annual Report on Internal Control Over Financial Reporting, referred to in Item 15(a)(1) of thisForm 10-K, is included at page 5062 of thisForm 10-K.
 
Attestation Report of the Independent Registered Public Accounting Firm
 
The Independent Registered Public Accounting Firm’s Attestation Report on our internal control over financial reporting referred to in Item 15(a)(1) of thisForm 10-K, is included at page 5163 of thisForm10-K.
Changes in Internal Control Over Financial Reporting
During the quarter ended December 31, 2008, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to affect, our internal control over financial reporting.
 
ITEM 9B.  OTHER INFORMATION
 
None.


40

 
PART III
 
ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
We incorporate by reference the information appearing under “Executive Officers of the Registrant” in Item 1 of thisForm 10-K and under “Election of Directors” and “Corporate Governance” in our definitive Proxy Statement for our 20092011 Annual Meeting of Stockholders, which we expect to file with the Securities and Exchange Commission on or aboutbefore April 3, 200930, 2011 (the “Proxy Statement”).
 
ITEM 11.  EXECUTIVE COMPENSATION
 
We incorporate by reference the information appearing under “Executive and Director Compensation and Other Information” and “Corporate Governance — Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” in the Proxy Statement.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
We incorporate by reference the information appearing under “Equity Compensation Plan Information” in Item 5 of thisForm 10-K, and under “Principal Stockholders” and “Election of Directors” in the Proxy Statement.


50

Equity Compensation Plan Information
The following table includes information about our equity compensation plans at December 31, 2010:
             
  Securities to be issued
 Weighted average
 Securities available for
  upon exercise of
 exercise price of
 future issuance under
  outstanding options,
 outstanding options,
 equity compensation
  warrants and rights warrants and rights plans
   
  (In thousands, except per share data)
 
Equity compensation plans approved by security holders(1)  29,273  $21.73   10,714 
Equity compensation plans not approved by security holders  -   -   - 
(1) As of December 31, 2010 we had 1 million restricted stock units outstanding that do not have an exercise price; therefore, the weighted average per share exercise price only relates to outstanding stock options and stock appreciation rights. Securities available for future issuance are limited to 3.3 million shares as a result of our fourth quarter 2010 common stock offering.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
We incorporate by reference the information appearing under “Transactions with Related Persons” and “Corporate Governance” in the Proxy Statement.
 
ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
We incorporate by reference the information appearing under “Selection of Independent Registered Public Accounting Firm” in the Proxy Statement.
PART IV
 
ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
 
(a)(1). Financial Statements.
Included in Part II of this Report:
Management’s Annual Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
Consolidated Balance Sheets — December 31, 2008 and 2007
Years Ended December 31, 2008, 2007 and 2006
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Consolidated Statements of Stockholders’ Equity
Notes to Consolidated Financial Statements
(a)(2). Financial Statement Schedule.
Years Ended December 31, 2008, 2007 and 2006
(a)(1).  Financial Statements
Included in Part II of this Report:
Management’s Annual Report on Internal Control over Financial Reporting
62
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

63
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
64
Consolidated Balance Sheets — December 31, 2010 and 2009
65
Years Ended December 31, 2010, 2009 and 2008
Consolidated Statements of Operations
66
Consolidated Statements of Cash Flows
67
Consolidated Statements of Stockholders’ Equity
68
Notes to Consolidated Financial Statements
69
(a)(2).  Financial Statement Schedule
Years Ended December 31, 2010, 2009 and 2008
Schedule II — Valuation and Qualifying Accounts
107
 
We have omitted schedules other than the one listed above because they are not required or are not applicable, or the required information is shown in the financial statements or notes to the financial statements.
(a)(3).Exhibits.


4151

(a)(3).Exhibits.
   
Exhibit
  
Number 
Description
 
3(1) Amended and Restated Certificate of Incorporation of the Company, as amended through 1997 (incorporated by reference to Exhibit 3(1) to Registration StatementNo. 33-3305 and to Exhibit 3(a) to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 1997).
3(2)Certificate of Amendment to Certificate of Incorporation of the Company, dated January 7, 2000, relating to an increase in the authorized shares of common stock (incorporated by reference to Exhibit 3(2) to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 1999 (the “199910-K”)).
3(3)Certificate of Amendment to Certificate of Incorporation of the Company, dated January 7, 2000, relating to a2-for-1 stock split (incorporated by reference to Exhibit 3(3) to the 199910-K).
3(4)Certificate of Amendment to Certificate of Incorporation of the Company, dated August 1, 2000, relating to a change in name of the Company (incorporated by reference to Exhibit 3(i).4 to the Company’s Quarterly Report onForm 10-Q for the fiscal quarter ended September 30, 2000 (the “September 200010-Q”)).
3(5)Certificate of Amendment to Certificate of Incorporation of the Company, dated June 3, 2003, relating to compliance with provisions of the New Jersey Casino Control Act relating to holders of Company securities15, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report onForm 10-Q for the fiscal quarter ended June 30, 2003 (the “June 200310-Q”)) dated August 9, 2010).
3(6) Certificate of Amendment to Certificate of Incorporation of the Company, dated May 3, 2005, relating to an increase in the authorized shares of common stock (incorporated by reference to Exhibit 3.10 to Amendment No. 1 to the Company’sForm 8-A filed with the Commission on May 11, 2005).
3(7)3(2) Amended and Restated Bylaws of the Company, effectiveas of December 4, 200714, 2010 (incorporated by reference to Exhibit 33.1 to the Company’s Current Report onForm 8-K dated filed on December 4, 2007)20, 2010).
4(1)
4.1(1) Indenture dated July 21, 1993, by and between Mandalay Resort Group (“Mandalay”) and First Interstate Bank of Nevada, N.A., as Trustee with respect to $150 million aggregate principal amount of 7.625% Senior Subordinated Debentures due 2013 (incorporated by reference to Exhibit 4(a) to Mandalay’sCircus Circus Enterprises, Inc.’s Current Report onForm 8-K dated July 21, 1993).
4(2)
4.1(2) Indenture, dated February 1, 1996, by and between Mandalay and First Interstate Bank of Nevada, N.A., as Trustee (the “Mandalay February 1996 Indenture”) (incorporated by reference to Exhibit 4(b) to Mandalay’s Current Report onForm 8-K dated January 29, 1996 (the “Mandalay January 19968-K”)) filed on February 13, 1996).
4(3)
4.1(3) Supplemental Indenture, dated as of November 15, 1996, by and between Mandalay and Wells Fargo Bank (Colorado), N.A., (successor to First Interstate Bank of Nevada, N.A.), as Trustee, to the Mandalay February 1996 Indenture, with respect to $150 million aggregate principal amount of 6.70% Senior Notes due 2096 (incorporated by reference to Exhibit 4(c) to Mandalay’s Quarterly Report onForm 10-Q for the fiscal quarter ended October 31, 1996 (the “Mandalay October 199610-Q”)).
4(4)
4.1(4) 6.70% Senior Notes due February 15, 2096 in the principal amount of $150,000,000 (incorporated by reference to Exhibit 4(d) to the Mandalay October 199610-Q).
4(5)
4.1(5) Indenture, dated November 15, 1996, by and between Mandalay and Wells Fargo Bank (Colorado), N.A., as Trustee (the “Mandalay November 1996 Indenture”) (incorporated by reference to Exhibit 4(e) to the Mandalay October 199610-Q).
4(6)
4.1(6) Supplemental Indenture, dated as of November 15, 1996, to the Mandalay November 1996 Indenture, with respect to $150 million aggregate principal amount of 7.0% Senior Notes due 2036 (incorporated by reference to Exhibit 4(f) to the Mandalay October 199610-Q).
4(7)
4.1(7) 7.0% Senior Notes due February 15, 2036, in the principal amount of $150,000,000 (incorporated by reference to Exhibit 4(g) to the Mandalay October 199610-Q).
4(8)Indenture, dated as of August 1, 1997, between MRI and First Security Bank, National Association, as trustee (the “MRI 1997 Indenture”) (incorporated by reference to Exhibit 4.1 to the Quarterly Report onForm 10-Q of MRI for the fiscal quarter ended June 30, 1997 (the “MRI June 199710-Q”)).


42

   
Exhibit
Number
Description
4(9)Supplemental Indenture, dated as of August 1, 1997, to the MRI 1997 Indenture, with respect to $100 million aggregate principal amount of 7.25% Debentures due 2017 (incorporated by reference to Exhibit 4.2 to the MRI June 199710-Q).
4(10)Second Supplemental Indenture, dated as of October 10, 2000, to the MRI 1997 Indenture (incorporated by reference to Exhibit 4(14) to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2000 (the “200010-K”)).
4(11)Indenture, dated as of February 4, 1998, between MRI and PNC Bank, National Association, as trustee (the “MRI 1998 Indenture”) (incorporated by reference to Exhibit 4(e) to the Annual Report onForm 10-K of MRI for the fiscal year ended December 31, 1997 (the “MRI 199710-K”)).
4(12)Second Supplemental Indenture, dated as of October 10, 2000, to the MRI 1998 Indenture (incorporated by reference to Exhibit 4(15) to the 200010-K).
4(13)Indenture, dated as of September 15, 2000, among the Company, as issuer, the Subsidiary Guarantors parties thereto, as guarantors, and U.S. Trust Company, National Association, as trustee, with respect to $850 million aggregate principal amount of 8.5% Senior Notes due 2010 (incorporated by reference to Exhibit 4 to the Company’s Amended Current Report onForm 8-K/A dated September 12, 2000).
4(14)First Supplemental Indenture, dated as of September 15, 2000, among the Company, Bellagio Merger Sub, LLC and U.S. Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4(11) to the 200010-K).
4(15)Second Supplemental Indenture, dated as of December 31, 2000, among the Company, MGM Grand Hotel & Casino Merger Sub, LLC and U.S. Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4(17) to the 200010-K).
4(16)4.1(8) Indenture, dated as of January 23, 2001, among the Company, as issuer, the Subsidiary Guarantors parties thereto, as guarantors, and United States Trust Company of New York, as trustee, with respect to $400 million aggregate principal amount of 8.375% Senior Subordinated Notes due 2011 (incorporated by reference to Exhibit 4 to the Company’s Current Report onForm 8-K dated filed on January 18,23, 2001).
4(17) Indenture dated as of December 20, 2001 by and among Mandalay and The Bank of New York, with respect to $300 million aggregate principal amount of 9.375% Senior Subordinated Notes due 2010 (incorporated by reference to Exhibit 4.1 to Mandalay’sForm S-4 Registration StatementNo. 333-82936).
4(18)4.1(9) Indenture dated as of March 21, 2003 by and among Mandalay and The Bank of New York with respect to $400 million aggregate principal amount of Floating Rate Convertible Senior Debentures due 2033 (incorporated by reference to Exhibit 4.44 to Mandalay’s Annual Report onForm 10-K for the fiscal year ended January 31, 2003).
4(19)
4.1(10) First Supplemental Indenture dated as of July 26, 2004, relating to Mandalay’s Floating Rate Senior Convertible Debentures due 2033 (incorporated by reference to Exhibit 4 to Mandalay’s Current Report onForm 8-K dated filed on July 26, 2004).

52

4(20) Indenture, dated as of July 31, 2003, by and between Mandalay and The Bank of New York with respect to $250 million aggregate principal amount of 6.5% Senior Notes due 2009 (incorporated by reference to Exhibit 4.1 to Mandalay’s Quarterly Report onForm 10-Q for the fiscal quarter ended July 31, 2003).
4(21)Exhibit
 Indenture, dated as of September 17, 2003, among the Company, as issuer, the Subsidiary Guarantors parties thereto, as guarantors, and U.S. Bank National Association, as trustee, with respect to $1,050 million 6% Senior Notes due 2009 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated September 11, 2003).
4(22)NumberDescription
4.1(11) Indenture, dated as of November 25, 2003, by and between Mandalay and The Bank of New York with respect to $250 million aggregate principal amount of 6.375% Senior Notes due 2011 (incorporated by reference to Exhibit 4.1 to Mandalay’s Quarterly Report onForm 10-Q for the fiscal quarter ended October 31, 2003).
4(23)
4.1(12) Indenture dated as of February 27, 2004, among the Company, as issuer, the Subsidiary Guarantors, as guarantors, and U.S. Bank National Association, as trustee, with respect to $525 million 5.875% Senior Notes due 2014 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated filed on February 27, 2004).

43

   
4.1(13)Indenture dated as of March 23, 2004, among the Company, as issuer, the Subsidiary Guarantors, as guarantors, and U.S. Bank National Association, as trustee, with respect to the $300 million 5.875% Notes due 2014 (incorporated by reference to Exhibit
4.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2004).
  
Number
Description
4(24)4.1(14) Indenture dated as of August 25, 2004, among the Company, as issuer, certain subsidiaries of the Company, as guarantors, and U.S. Bank National Association, as trustee, with respect to $550 million 6.75% Senior Notes due 2012 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated filed on August 25, 2004).
4(25)
4.1(15) Indenture, dated June 20, 2005, among MGM MIRAGE,the Company, certain subsidiaries of MGM MIRAGE,the Company, and U.S. Bank National Association, with respect to $500 million aggregate principal amount of 6.625% Senior Notes due 2015 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report onForm 8-K dated filed on June 20,22, 2005).
4(26)
4.1(16) Supplemental Indenture, dated September 9, 2005, among MGM MIRAGE,the Company, certain subsidiaries of MGM MIRAGE,the Company, and U.S. Bank National Association, with respect to $375 million aggregate principal amount of 6.625% Senior Notes due 2015 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated filed on September 9,13, 2005).
4(27)
4.1(17) Indenture, dated April 5, 2006, among MGM MIRAGE,the Company, certain subsidiaries of MGM MIRAGE,the Company, and U.S. Bank National Association, with respect to $500 million aggregate principal amount of 6.75% Senior Notes due 2013 and $250 million original principal amount of 6.875% Senior Notes due 2016 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated filed on April 5, 2006 (the “April 20068-K”))7, 2006).
4(28) Registration Rights Agreement, dated April 5, 2006, among MGM MIRAGE, certain subsidiaries of MGM MIRAGE, and certain initial purchases parties thereto (incorporated by reference to Exhibit 4.2 to the April 20068-K).
4(29)4.1(18) Indenture dated as of December 21, 2006, among MGM MIRAGE,the Company, certain subsidiaries of MGM MIRAGE,the Company, and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated filed on December 21, 2006 (the “December 20068-K”)).
4(30)
4.1(19) Supplemental Indenture dated as of December 21, 2006, by and among MGM MIRAGE,the Company, certain subsidiaries of MGM MIRAGE,the Company, and U.S. Bank National Association, with respect to $750 million aggregate principal amount of 7.625% Senior Notes due 2017 (incorporated by reference to Exhibit 4.2 to the December 20068-K).
4(31)
4.1(20) Second Supplemental Indenture dated as of May 17, 2007 among MGM MIRAGE,the Company, certain subsidiaries of MGM MIRAGE,the Company, and U.S. Bank National Association, with respect to $750 million aggregate principal amount of 7.5% Senior Notes due 2016 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report onForm 8-K dated filed on May 17, 2007).

53

4(32)
Exhibit
NumberDescription
4.1(21) Indenture dated as of November 14, 2008, among MGM MIRAGE,the Company, certain subsidiaries of MGM MIRAGE,the Company, and U.S. Bank National Association, with respect to $750 million aggregate principal amount of 13% Senior Secured Notes due 2013 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated filed on November 20, 2008).
4(33)
4.1(22) Security Agreement, dated as of November 14, 2008, between New York-New York Hotel & Casino, LLC, and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to the Company’s Current Report onForm 8-K dated filed on November 20, 2008).
4(34)
4.1(23) Pledge Agreement, Dateddated as of November 14, 2008, among MGM MIRAGE,the Company, New PRMA Las Vegas Inc., and U.S. Bank National Association (incorporated by reference to Exhibit 4.3 to the Company’s Current Report onForm 8-K dated filed on November 20, 2008).
10.1(1) Guarantee,
4.1(24)Indenture, dated as of May 31, 2000, by19, 2009, among the Company, certain subsidiaries of the Company, in favor of The Chase Manhattan Bank, as successor in interest to PNCand U.S. Bank National Association, as trustee for the benefitwith respect to $650 million aggregate principal amount of the holders10.375% Senior Secured Notes due May 2014 and $850 million aggregate principal amount of 11.125% Senior Secured Notes pursuant to the Indenture referred to thereindue November 2017 (incorporated by reference to Exhibit 10.44.1 to the Company’s Current Report on Form 8-K filed on May 20008-K)22, 2009).
10.1(2) Schedule setting forth material details of the Guarantee,
4.1(25)Security Agreement, dated as of May 31, 2000,19, 2009, among Bellagio, LLC, The Mirage Casino-Hotel and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on May 22, 2009).
4.1(26)Pledge Agreement, dated as of May 19, 2009, between Mirage Resorts, Incorporated and U.S. Bank National Association (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on May 22, 2009).
4.1(27)First Supplemental Indenture, dated as of June 15, 2009, by and among the Company, certain subsidiaries of the Company, in favor ofand U.S. Trust Company,Bank National Association, (formerly known as U.S. Trust Companywith respect to $750 million aggregate principal amount of California, N.A.), as trustee for the benefit of the holders of13% Senior Secured Notes pursuant to the Indenture referred to thereindue 2013 (incorporated by reference to Exhibit 10.510.1 to the May 2000Company’s Current Report onForm 8-K filed on June 19, 2009).
4.1(28)Indenture, dated as of September 22, 2009, among the Company, certain subsidiaries of the Company, and U.S. Bank National Association, with respect to $475 million aggregate principal amount of 11.375% Senior Notes due 2018 (incorporated by reference to Exhibit 4 to the Company’s Current Report on Form 8-K filed on September 25, 2009).
4.1(29)Indenture dated as of March 16, 2010, among the Company, the Subsidiary Guarantors party thereto, and U.S. Bank National Association as Trustee with respect to $845 million aggregate principal amount of 9% Senior Secured Notes due 2020 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on April 14, 2010 (the “April 14,2010 8-K”)).
4.1(30)Security Agreement, dated as of March 16, 2010, among MGM Grand Hotel, LLC, and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to the April 14, 2010 8-K).
4.1(31)Pledge Agreement, dated as of March 16, 2010, between the Company and U.S. Bank National Association (incorporated by reference to Exhibit 4.3 to the April 14, 20108-K).

4454

   
Exhibit
  
Number 
Description
 
10.1(3) Schedule setting forth material details of the Guarantee (Mirage Resorts, Incorporated 6.75% Notes Due February 1, 2008),
4.1(32)Registration Rights Agreement, dated as of May 31, 2000, byMarch 16, 2010, between the Company and certainthe guarantors named therein, Banc of its subsidiaries, in favor of The Chase Manhattan Bank, as trustee forAmerica Securities LLC and the benefit of the holders of the Notes pursuantinitial purchasers named therein with respect to the Indenture referred to therein9% Senior Secured Notes due 2020 (incorporated by reference to Exhibit 10.74.4 to the May 2000April 14, 2010 8-K).
10.1(4) Schedule setting forth material details of the Guarantee (Mirage Resorts, Incorporated 6.75% Notes Due August 1, 2007 and 7.25% Debentures Due August 1, 2017),
4.1(33)Indenture dated as of May 31, 2000, byApril 10, 2010, among the Company, as issuer, the subsidiary guarantors party thereto, and certain of its subsidiaries, in favor of First SecurityU.S. Bank National Association as trustee for the benefitTrustee with respect to $1.15 billion aggregate principal amount of the holders of the4.25% Convertible Senior Notes pursuant to the Indenture referred to thereindue 2015 (incorporated by reference to Exhibit 10.84.1 to the May 20008-K)Company’s Current Report on Form 8-K filed on April 22, 2010 (the “April 22, 2010 8-K”)).
10.1(5) Instrument of Joinder,
4.1(34)Indenture dated as of May 31, 2000, by MRIOctober 28, 2010, among the Company, as issuer, the subsidiary guarantors party thereto, and certainU.S. Bank National Association as Trustee with respect to $500 million aggregate principal amount of its wholly owned subsidiaries, in favor of the beneficiaries of the Guarantees referred to therein10% Senior Notes due 2016 (incorporated by reference to Exhibit 10.94.1 to the May 20008-K)Company’s Current Report on Form 8-K filed on October 29, 2010).
10.1(6) Guarantee (MGM MIRAGE 8.5%
4.1(35)Registration Rights Agreement, dated October 28, 2010, among the Company, the guarantors named therein, Banc of America Securities LLC and the initial purchasers named therein with respect to the 10% Senior Notes due 2010), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York N.A., as successor to U.S. Trust Company, National Association, for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated2016(incorporated by reference to Exhibit 10.74.2 to the September 200510-Q)Company’s Current Report on Form 8-K filed on October 29, 2010).
10.1(7)
4.2(1) Guarantee (Mandalay Resort Group 7.625% Senior Subordinated Notes due 2013), dated as of April 25, 2005, by the Company and certain subsidiaries of MGM MIRAGE,the Company, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.910.7 to the September 200510-Q).
10.1(8)Guarantee (MGM MIRAGE 8.375% Senior Subordinated Notes due 2011), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York N.A., successor to the United States Trust Company of New York, as trusteeCompany’s Quarterly Report on Form 10-Q for the benefit of holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.11 to thefiscal quarter ended September 30, 200510-Q) (the “September 2005 10-Q”)).
10.1(9)Guarantee (MGM MIRAGE 6.0% Senior Notes due 2009), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of U.S. Bank National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.12 to the September 200510-Q).
10.1(10)Guarantee (MGM MIRAGE 6.0% Senior Notes due 2009 (Exchange Notes)), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of U.S. Bank National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.13 to the September 200510-Q).
10.1(11)Guarantee (MGM MIRAGE 5.875% Senior Notes due 2014), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of U.S. Bank National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.14 to the September 200510-Q).
10.1(12)Guarantee (MGM MIRAGE 5.875% Senior Notes due 2014 (Exchange Notes)), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of U.S. Bank National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.15 to the September 200510-Q).
10.1(13)Guarantee (MGM MIRAGE 6.75% Senior Notes due 2012), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of U.S. Bank National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.16 to the September 200510-Q).
10.1(14)Guarantee (Mirage Resorts, Incorporated 7.25% Debentures due 2017), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of Wells Fargo Bank Northwest, National Association, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.17 to the September 200510-Q).

45

   
Exhibit
Number
Description
10.1(15)Guarantee (Mandalay Resort Group 9.375% Senior Subordinated Notes due 2010), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.20 to the September 200510-Q).
10.1(16)4.2(2) Guarantee (Mandalay Resort Group 6.70% Senior Notes due 2096), dated as of April 25, 2005, by the Company certain subsidiaries of MGM MIRAGE,the Company, in favor of The Bank of New York, as successor in interest to First Interstate Bank of Nevada, N.A., as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.21 to the September 200510-Q).
10.1(17)
4.2(3) Guarantee (Mandalay Resort Group 7.0% Senior Notes due 2036), dated as of April 25, 2005, by the Company and certain subsidiaries of MGM MIRAGE,the Company, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.22 to the September 200510-Q).
10.1(18)
4.2(4) Guarantee (Mandalay Resort Group Floating Rate Convertible Senior Debentures due 2033), dated as of April 25, 2005, by the Company and certain subsidiaries of MGM MIRAGE,the Company, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.24 to the September 200510-Q).
10.1(19) Guarantee (Mandalay Resort Group 6.5% Senior Notes due 2009), dated as of April 25, 2005, by certain subsidiaries of MGM MIRAGE, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.25 to the September 200510-Q).
10.1(20)4.2(5) Guarantee (Mandalay Resort Group 6.375% Senior Notes due 2011), dated as of April 25, 2005, by the Company and certain subsidiaries of MGM MIRAGE,the Company, in favor of The Bank of New York, as trustee for the benefit of the holders of the Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.26 to the September 200510-Q).

55

10.1(21) Fifth
Exhibit
NumberDescription
10.1(1)Sixth Amended and Restated Loan Agreement, dated as of October 3, 2006,March 16, 2010, by and among MGM MIRAGE,the Company, as borrower;borrower, MGM Grand Detroit, LLC, as co-borrower;co-borrower, the Lenders and Co-Documentation Agents named therein;therein, Bank of America, N.A., as Administrative Agent; the Royal Bank of Scotland PLC, as Syndication Agent; BankAgent and Banc of America Securities LLC, and The Royal Bank of Scotland PLC, as Joint Lead Arrangers; and Bank of AmericaRBS Securities, LLC, The Royal Bank of Scotland PLC,Inc., J.P. Morgan Securities Inc., Barclays Capital, BNP Paribas Securities Corp., Deutsche Bank Securities Inc., Citibank North America, Inc., Sumitomo Mitsui Banking Corporation, Bank of Scotland PLC, Commerzbank, Wachovia Bank, National Association, Morgan Stanley Senior Funding, Inc. and Deutsche BankUBS Securities Inc.LLC, as Joint Book ManagersLead Arrangers (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated October 3, 2006) filed on March 22, 2010).
10.1(22) Amendment No. 1 to the Fifth Amended and Restated Loan Agreement dated as of October 3, 2006, by and among MGM MIRAGE, as borrower; MGM Grand Detroit, LLC, as co-borrower; the Lenders and Co-Documentation Agents named therein; Bank of America, N.A., as Administrative Agent; the Royal Bank of Scotland PLC, as Syndication Agent; Bank of America Securities LLC and The Royal Bank of Scotland PLC, as Joint Lead Arrangers; and Bank of America Securities LLC, The Royal Bank of Scotland PLC, J.P. Morgan Securities Inc., Citibank North America, Inc. and Deutsche Bank Securities Inc. as Joint Book Managers (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated October 6, 2008).
10.1(23)10.1(2) Sponsor Contribution Agreement, dated October 31, 2008, by and among MGM MIRAGE,the Company, as sponsor, CityCenter Holdings, LLC, as borrower, and Bank of America, N.A., as Collateral Agent (incorporated by reference to Exhibit 1010.1 to the Company’s Current Report on Form 8-K filed on November 6, 2008).
10.1(3)Amendment No. 1 to Sponsor Contribution Agreement, dated April 29, 2009, among the Company, CityCenter Holdings, LLC and Bank of America, N.A. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 5, 2009).
10.1(4)Amended and Restated Sponsor Completion Guarantee, dated April 29, 2009, among the Company and Bank of America, N.A. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on May 5, 2009).
10.1(5)Second Amended and Restated Sponsor Completion Guarantee, dated January 21, 2011, among the Company, Bank of America, N.A. and U.S. Bank National Association (incorporated by reference to Exhibit 10.3 to the Company’s Current Report onForm 8-K dated November 6, 2008)filed on January 21, 2010).
10.1(24) Sponsor Completion Guarantee,
10.1(6)Confirmation for Base Capped Call Transaction, dated October 31, 2008, by and among MGM MIRAGE, as completion guarantor, CityCenter Holdings, LLC, as borrower,of April 15, 2010, between the Company and Bank of America N.A., as Collateral Agent (incorporated by reference to Exhibit 1010.1 to the Company’s Current Report onForm 8-KApril 22, 2010 8-K).
10.1(7)Confirmation for Base Capped Call Transaction, dated November 6, 2008)as of April 15, 2010, between the Company and Barclays Bank PLC (incorporated by reference to Exhibit 10.2 to the April 22, 2010 8-K).
10.1(8)Confirmation for Base Capped Call Transaction, dated as of April 15, 2010, between the Company and JPMorgan Chase Bank, National Association, London Branch (incorporated by reference to Exhibit 10.3 to the April 22, 2010 8-K).
10.1(9)Confirmation for Base Capped Call Transaction, dated as of April 15, 2010, between the Company and Deutsche Bank AG, London Branch (incorporated by reference to Exhibit 10.4 to the April 22, 2010 8-K).
10.1(10)Confirmation for Additional Capped Call Transaction, dated as of April 16, 2010, between the Company and Bank of America N.A. (incorporated by reference to Exhibit 10.5 to the April 22, 2010 8-K).
10.1(11)Confirmation for Additional Capped Call Transaction, dated as of April 16, 2010, between the Company and Barclays Bank PLC (incorporated by reference to Exhibit 10.6 to the April 22, 2010 8-K).

56

Exhibit
NumberDescription
10.1(12)Confirmation for Additional Capped Call Transaction, dated as of April 16, 2010, between the Company and JPMorgan Chase Bank, National Association, London Branch (incorporated by reference to Exhibit 10.7 to the April 22, 2010 8-K).
10.1(13)Confirmation for Additional Capped Call Transaction, dated as of April 16, 2010, between the Company and Deutsche Bank AG, London Branch (incorporated by reference to Exhibit 10.8 to the April 22, 2010 8-K).
10.2(1) Lease, dated August 3, 1977, by and between B&D Properties, Inc., as lessor, and Mandalay, as lessee; Amendment of Lease, dated May 6, 1983 (incorporated by reference to Exhibit 10(h) to Mandalay’s Registration Statement(No. (No. 2-85794) onForm S-1).

46

  
Exhibit
Number
Description
 
10.2(2) Lease by and between Robert Lewis Uccelli, guardian, as lessor, and Nevada Greens, a limited partnership, William N. Pennington, as trustee, and William G. Bennett, as trustee, and related Assignment of Lease (incorporated by reference to Exhibit 10(p) to Mandalay’s Registration Statement(No. (No. 33-4475) onForm S-1).
10.2(3) Public Trust Tidelands Lease, dated February 4, 1999, between the State of Mississippi and Beau Rivage Resorts, Inc. (without exhibits) (incorporated by reference to Exhibit 10.73 to the Annual Report onForm 10-K of MRI for the fiscal year ended December 31, 1999).
*10.3(1) Nonqualified Stock Option Plan (incorporated by reference to Exhibit 10(1) to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 1996).
*10.3(2) 1997 Nonqualified Stock Option Plan, Amended and Restated February 2, 2004 (incorporated by reference to Exhibit 10.1 ofto the Company’s Quarter report on Form 10-Q for the fiscal quarter ended June 200410-Q)30, 2004).
*10.3(3) Amendment to the MGM MIRAGECompany’s 1997 Nonqualified Stock Option Plan (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated filed on July 9,13, 2007).
*10.3(4) MGM MIRAGEAmended and Restated 2005 Omnibus Incentive Plan (incorporated by reference to Exhibit 10 to the Company’s Registration StatementCurrent Report onForm S-88-K filed May 12, 2005)on April 6, 2009).
*10.3(5) Amended and Restated Annual Performance-Based Incentive Plan for Executive Officers, giving effect to amendment approved by the Company’s shareholders on May 9, 2006 (incorporated by reference to Appendix A to the Company’s 2006 Proxy Statement).
*10.3(6) Deferred Compensation Plan II, dated as of December 30, 2004 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report onForm 8-K dated filed on January 10, 2005 (the “January 20058-K”).
*10.3(7) Supplemental Executive Retirement Plan II, dated as of December 30, 2004 (incorporated by reference to Exhibit 10.1 to the January 20058-K).
*10.3(8) Amendment to Deferred Compensation Plan II, dated as of December 21, 2005 (incorporated by reference to Exhibit 10.3(9) to the 200510-K)Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005).
*10.3(9) Amendment No. 1 to the Deferred Compensation Plan II, dated as of July 10, 2007 (incorporated by reference to Exhibit 10.3(11) to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2007 (the“2007 “2007 10-K”)).

57

Exhibit
NumberDescription
*10.3(10) Amendment No. 1 to the Supplemental Executive Retirement Plan II, dated as of July 10, 2007 (incorporated by reference to Exhibit 10.3(12) to the 200710-K).
*10.3(11) Amendment No. 2 to the Deferred Compensation Plan II, dated as of October 15, 2007 (incorporated by reference to Exhibit 10.3(13) to the 200710-K).
*10.3(12) Amendment No. 2 to the Supplemental Executive Retirement Plan II, dated as of October 15, 2007 (incorporated by reference to Exhibit 10.3(14) to the 200710-K).
*10.3(13) Amendment No. 31 to the Deferred Compensation Plan II, dated as of November 4, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K datedfiled on November 7, 2008).
*10.3(14) Amendment No. 31 to the Supplemental Executive Retirement Plan II, dated as of November 4, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated filed on November 7, 2008).
*10.3(15) MGM MIRAGE Freestanding Stock Appreciation Right Agreement.Agreement of the Company (incorporated by reference to Exhibit 10.3(15) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008).
*10.3(16) MGM MIRAGE Restricted Stock Units Agreement of the Company (performance vesting) (incorporated by reference to Exhibit 10.3(16) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008).
*10.3(17) MGM MIRAGE Restricted Stock Units Agreement of the Company (time vesting) (incorporated by reference to Exhibit 10.3(17) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008).
*10.3(18) Employment Agreement, dated September 16, 2005,December 13, 2010, between the Company and J. Terrence LanniRobert H. Baldwin (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated September 16, 2005 (the “September 16, 20058-K”)). filed on December 20, 2010.
*10.3(19)Employment Agreement, dated September 16, 2005, between the Company and Robert H. Baldwin (incorporated by reference to Exhibit 10.2 to the September 16, 20058-K).
*10.3(20)Employment Agreement, dated September 16, 2005, between the Company and John Redmond (incorporated by reference to Exhibit 10.3 to the September 16, 20058-K).

47

   
Exhibit
Number
Description
*10.3(21)10.3(19) Employment Agreement, dated September 16, 2005, between the Company and James J. Murren (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on September 16,22, 20058-K) (the “September 22, 2005 8-K”)).
*10.3(22)10.3(20) Employment Agreement, dated September 16, 2005, between the Company and Gary N. Jacobs (incorporated by reference to Exhibit 10.5 to the September 16,22, 20058-K).
*10.3(23)10.3(21) Employment Agreement, dated March 1, 2007, between the Company and Aldo Manzini (incorporated by reference to Exhibit 10.3(20) to the 2007 10-K).
*10.3(24)10.3(22) Letter Agreement dated June 19, 2007, between the Company and Aldo Manzini (incorporated by reference to Exhibit 10.3(21) to the 2007 10-K).
*10.3(25)10.3(23) Employment Agreement, dated December 3, 2007, between the Company and Dan D’Arrigo (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated December 3,7, 2007).
*10.3(24)Amendment No. 1 to Employment Agreement, dated December 31, 2008, between the Company and James J. Murren (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 7, 2009).

58

Exhibit
NumberDescription
*10.3(25)Amendment No. 1 to Employment Agreement, dated December 31, 2008, between the Company and Gary N. Jacobs (incorporated by reference to Exhibit 4.3 to the January 7, 2009 8-K).
*10.3(26) Amendment No. 1 to Employment Agreement, dated December 31, 2008, between MGM MIRAGEthe Company and JamesDaniel J. MurrenD’Arrigo (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated January 7, 2009)20098-K).
*10.3(27) Amendment No. 1 to Employment Agreement, dated December 31, 2008, between MGM MIRAGEthe Company and Robert H. BaldwinAldo Manzini (incorporated by reference to Exhibit 4.14.5 to the January 7, 2009 8-K).
*10.3(28)Employment Agreement, effective as of April 6, 2009, between the Company and James J. Murren (incorporated by reference to Exhibit 10 to the Company’s Amendment No. 1 to Current Report on Form 8-K filed on April 6, 2009).
*10.3(29)Employment Agreement, effective as of August 3, 2009, between the Company and Gary N. Jacobs (incorporated by reference to Exhibit 10 to the Company’s Amendment No. 1 to Current Report on Form 8-K filed on August 8, 2009).
*10.3(30)Employment Agreement, effective as of August 3, 2009, between the Company and Corey Sanders (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated January 7, 2009) filed on September 17, 2010).
*10.3(28)10.3(31)Employment Agreement, dated as of September 10, 2007, between the Company and Robert Selwood.
*10.3(32) Amendment No. 1 to Employment Agreement, dated December 31, 2008, between MGM MIRAGEthe Company and Gary N. Jacobs (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated January 7, 2009).Robert Selwood.
*10.3(29)10.3(33) Amendment No. 1 to Employment Agreement, dated December 31, 2008,as of August 13, 2009, between MGM MIRAGEthe Company and Daniel J. D’Arrigo (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K dated January 7, 2009).William M. Scott.
10.4(1) Second Amended and Restated Joint Venture Agreement of Marina District Development Company, dated as of August 31, 2000, between MAC, CORP. and Boyd Atlantic City, Inc. (without exhibits) (incorporated by reference to Exhibit 10.2 to the September 200010-Q).
10.4(2) Contribution and Adoption Agreement, dated as of December 13, 2000, among Marina District Development Holding Co., LLC, MAC, CORP. and Boyd Atlantic City, Inc. (incorporated by reference to Exhibit 10.4(15) to the 200010-K).
10.4(3) Amended and Restated Agreement of Joint Venture of Circus and Eldorado Joint Venture by and between Eldorado Limited Liability Company and Galleon, Inc. (incorporated by reference to Exhibit 3.3 to theForm S-4 Registration Statement of Circus and Eldorado Joint Venture and Silver Legacy Capital Corp. — Commission FileNo. 333-87202).
10.4(4) Amended and Restated Joint Venture Agreement, dated as of June 25, 2002, between Nevada Landing Partnership and RBG, L.P. (incorporated by reference to Exhibit 10.1 to Mandalay’s Quarterly Report onForm 10-Q for the fiscal quarter ended July 31, 2004.)
10.4(5) Amendment No. 1 to Amended and Restated Joint Venture Agreement, dated as of April 25, 2005, by and among Nevada Landing Partnership, an Illinois general partnership, and RBG, L.P., an Illinois limited partnership (incorporated by reference to Exhibit 10.4(5) to the 2005Company’s Annual Report of Form 10-K for the fiscal year ended December 31, 2005).

59

10-K).Exhibit
NumberDescription
10.4(6) Amended and Restated Subscription and Shareholders Agreement, dated June 19, 2004, among Pansy Ho, Grand Paradise Macau Limited, MGMM Macau, Ltd., MGM MIRAGE Macau, Ltd., MGM MIRAGEthe Company and MGM Grand Paradise Limited (formerly N.V. Limited) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated filed on April 19,25, 2005).
10.4(7) Amendment Agreement to the Subscription and Shareholders Agreement, dated January 20, 2007, among Pansy Ho, Grand Paradise Macau Limited, MGMM Macau, Ltd., MGM MIRAGE Macau, Ltd., MGM MIRAGEthe Company and MGM Grand Paradise Limited (formerly N.V. Limited) (incorporated by reference to Exhibit 10.4(7) to the 20072006 10-K).
10.4(8)Loan Agreement with the M Resort LLC dated April 24, 2007 (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated April 24, 2007).

48

   
Exhibit
10.4(8)		 
Number
Description
10.4(9)Amended and Restated Limited Liability Company Agreement of CityCenter Holdings, LLC, dated August 21, 2007April 29, 2009 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated August 21, 2007 (the “August 20078-K”)) filed May 5, 2009).
10.4(10) Amendment No 1, dated November 15, 2007, to the Limited Liability Company Agreement of CityCenter Holdings, LLC, dated August 21, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated November 15, 2007).
10.4(11)Amendment No 2, dated December 31, 2007, to the Limited Liability Company Agreement of CityCenter Holdings, LLC, dated August 21, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated December 31, 2007).
10.4(12)10.4(9) Limited Liability Company Operating Agreement of IKM JV, LLC, dated September 10, 2007 (incorporated by reference to Exhibit 10 to the Company’s Current Report onForm 8-K dated filed on September 10,13, 2007).
10.5(1) Revised Development Agreement among the City of Detroit, The Economic Development Corporation of the City of Detroit and MGM Grand Detroit, LLC (incorporated by reference to Exhibit 10.10 to Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 200210-Q)30, 2002).
10.5(2) Revised Development Agreement effective August 2, 2002, by and among the City of Detroit, The Economic Development Corporation of the City of Detroit and Detroit Entertainment, L.L.C. (incorporated by reference to Exhibit 10.61 of Mandalay’s Annual Report onForm 10-K for the year ended January 31, 2005).
10.5(3)Stipulation of Settlement in the Matter of the Reopened 2005 Casino License Hearing of Marina District Development Company, LLC (“MDDC”) dated March 11, 2010, by and among the State of New Jersey - Department of Law and Public Safety - Division of Gaming Enforcement, the Company, Boyd Gaming Corporation, Boyd Atlantic City, Inc., Marina District Development Holding Co., LLC and MDDC (incorporated by reference to Exhibit 10.2 to Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010).
10.6(1) Company Stock Purchase and Support Agreement, dated August 21, 2007, by and between MGM MIRAGEthe Company and Infinity World Investments, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed August 20078-K)27, 2007).
10.6(2) Amendment No. 1, dated October 17, 2007, to the Company Stock Purchase and Support Agreement by and between MGM MIRAGEthe Company and Infinity World Investments, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K datedfiled on October 17,23, 2007).
10.6(3) Purchase Agreement dated December 13, 2008, by and among The Mirage Casino-Hotel, as seller, and Ruffin Acquisition, LLC, as purchaser (incorporated by reference to Exhibit 10 to the Company’s Amendment No. 1 to Current Report onForm 8-K/A dated filed on January 9, 2009).
10.6(4)First Amendment to Purchase Agreement, dated March 12, 2009, by and among The Mirage Casino-Hotel, as seller, and Ruffin Acquisition, LLC, as purchaser (incorporated by reference to the Company’s to Current Report on Form 8-K filed on Mach 17, 2009).

60

Exhibit
NumberDescription
21 List of subsidiaries of the Company.
23 Consent of Deloitte & Touche LLP.
31.1 Certification of Chief Executive Officer of Periodic Report Pursuant to Rule 13a — 14(a) and Rule 15d — 14(a).
31.2 Certification of Chief Financial Officer of Periodic Report Pursuant to Rule 13a — 14(a) and Rule 15d — 14(a).
**32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
**32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
99.1 Description of our Operating Resorts.
99.2 Description of Regulation and Licensing.
101***The following information from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets at December 31, 2010 and December 31, 2009; (ii) Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 2008; (iii) Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008; (iv) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2010, 2009 and 2008; (v) Notes to the Consolidated Financial Statements (tagged as blocks of text); and (vi) Schedule II — Valuation and Qualifying Accounts (tagged as block of text).
 
*Management contract or compensatory plan or arrangement.
 
**Exhibits 32.1 and 32.2 shall not be deemed filed with the Securities and Exchange Commission, nor shall they be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Securities Exchange Act of 1934 or the Securities Act of 1933, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
***This exhibit is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

4961

MANAGEMENT’S ANNUAL REPORT
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
Management’s Responsibilities
 
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined inSections 13a- 15(f) and15d- 15(f) of the Exchange Act) for MGM MIRAGEResorts International and subsidiaries (the “Company”).
 
Objective of Internal Control Overover Financial Reporting
 
In establishing adequate internal control over financial reporting, management has developed and maintained a system of internal control, policies and procedures designed to provide reasonable assurance that information contained in the accompanying consolidated financial statements and other information presented in this annual report is reliable, does not contain any untrue statement of a material fact or omit to state a material fact, and fairly presents in all material respects the financial condition, results of operations and cash flows of the Company as of and for the periods presented in this annual report. These include controls and procedures designed to ensure that this information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to all timely decisions regarding required disclosure. Significant elements of the Company’s internal control over financial reporting include, for example:
 
 •      Hiring skilled accounting personnel and training them appropriately;
 
•      Written accounting policies;
 •      Written documentation of accounting systems and procedures;
 
•      Segregation of incompatible duties;
 •      Internal audit function to monitor the effectiveness of the system of internal control;
 •      Oversight by an independent Audit Committee of the Board of Directors.
 
Management’s Evaluation
 
Management, with the participation of the Company’s principal executive officer and principal financial officer, has evaluated the Company’s internal control over financial reporting using the criteria established in Internal Control — Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation as of December 31, 2008,2010, management believes that the Company’s internal control over financial reporting is effective in achieving the objectives described above.
 
Report of Independent Registered Public Accounting Firm
 
Deloitte & Touche LLP audited the Company’s consolidated financial statements as of and for the year ended December 31, 20082010 and issued their report thereon, which is included in this annual report. Deloitte & Touche LLP has also issued an attestation report on the effectiveness of the Company’s internal control over financial reporting and such report is also included in this annual report.


5062

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders
of MGM MIRAGEResorts International
 
We have audited the internal control over financial reporting of MGM MIRAGEResorts International and subsidiaries (the “Company”) as of December 31, 2008,2010, based on criteria established inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control overOver Financial Reporting. Our responsibility is to express an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008,2010, based on the criteria established inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2008.2010. Our report dated March 17, 2009February 28, 2011 expressed an unqualified opinion on those financial statements and financial statement schedule and included (a) an explanatory paragraph expressing substantial doubt about the Company’s ability to continue as a going concern; and (b) an explanatory paragraph regarding the adoption of Financial Accounting Standards Board Interpretation No. 48,Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109.schedule.
 
/s/ DELOITTE & TOUCHE LLP
 
Las Vegas, Nevada
March 17, 2009February 28, 2011


5163

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders
of MGM MIRAGEResorts International
 
We have audited the accompanying consolidated balance sheets of MGM MIRAGEResorts International and subsidiaries (the “Company”) as of December 31, 20082010 and 2007,2009, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008.2010. Our audits also included the financial statement schedule of Valuation and Qualifying Accounts included in Item 15(a)(2). These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of MGM MIRAGEResorts International and subsidiaries as of December 31, 20082010 and 2007,2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008,2010, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
 
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company believes it will not be in compliance with the financial covenants under its senior credit facility during 2009 and there is uncertainty regarding the Company’s ability to fulfill its financial commitments as they become due. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are also discussed in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As discussed in Note 12 to the consolidated financial statements, on January 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board Interpretation No. 48,Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2008,2010, based on the criteria established inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 17, 2009February 28, 2011, expressed an unqualified opinion on the Company’s internal control over financial reporting.
 
/s/ DELOITTE & TOUCHE LLP
 
Las Vegas, Nevada
March 17, 2009February 28, 2011


5264

MGM MIRAGE AND SUBSIDIARIES
 
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)data)
 
                
 At December 31,  At December 31, 
 2008 2007  2010 2009 
ASSETS
ASSETS
ASSETS
Current assets
                
Cash and cash equivalents $295,644  $416,124  $498,964  $2,056,207 
Accounts receivable, net  303,416   412,933   321,894   368,474 
Inventories  111,505   126,941   96,392   101,809 
Income tax receivable  64,685   —   175,982   384,555 
Deferred income taxes  63,153   63,453   110,092   38,487 
Prepaid expenses and other  155,652   106,364   252,321   103,969 
Assets held for sale  538,975   — 
          
Total current assets  1,533,030   1,125,815   1,455,645   3,053,501 
          
  
Property and equipment, net
  16,289,154   16,870,898   14,554,350   15,069,952 
  
Other assets
                
Investments in and advances to unconsolidated affiliates  4,642,865   2,482,727   1,923,155   3,611,799 
Goodwill  86,353   1,262,922   86,353   86,353 
Other intangible assets, net  347,209   362,098   342,804   344,253 
Deposits and other assets, net  376,105   623,226 
Other long-term assets, net  598,738   352,352 
          
Total other assets  5,452,532   4,730,973   2,951,050   4,394,757 
          
 $23,274,716  $22,727,686  $18,961,045  $22,518,210 
          
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
                
Accounts payable $142,693  $220,495  $167,084  $173,719 
Construction payable  45,103   76,524 
Income taxes payable  —   284,075 
Current portion of long-term debt  1,047,614   —   -   1,079,824 
Accrued interest on long-term debt  187,597   211,228   211,914   206,357 
Other accrued liabilities  1,549,296   932,365   867,223   923,701 
Liabilities related to assets held for sale  30,273   — 
          
Total current liabilities  3,002,576   1,724,687   1,246,221   2,383,601 
     
             
Deferred income taxes
  3,441,198   3,416,660   2,469,333   3,031,303 
Long-term debt
  12,416,552   11,175,229   12,047,698   12,976,037 
Other long-term obligations
  440,029   350,407   199,248   256,837 
  
Commitments and contingencies (Note 13)
        
Commitments and contingencies (Note 10)
        
        
Stockholders’ equity
                
Common stock, $.01 par value: authorized 600,000,000 shares; issued 369,283,995 and 368,395,926 shares; outstanding 276,506,968 and 293,768,899 shares  3,693   3,684 
Common stock, $.01 par value: authorized 600,000,000 shares;
Issued and outstanding 488,513,351 and 441,222,251 shares		  4,885   4,412 
Capital in excess of par value  4,018,410   3,951,162   4,060,826   3,497,425 
Treasury stock, at cost (92,777,027 and 74,627,027 shares)  (3,355,963)  (2,115,107)
Retained earnings  3,365,122   4,220,408 
Accumulated other comprehensive income (loss)  (56,901)  556 
Retained earnings (accumulated deficit)  (1,066,865)  370,532 
Accumulated other comprehensive loss  (301)  (1,937)
          
Total stockholders’ equity  3,974,361   6,060,703   2,998,545   3,870,432 
          
 $23,274,716  $22,727,686  $ 18,961,045  $ 22,518,210 
          
 
The accompanying notes are an integral part of these consolidated financial statements.


5365

MGM MIRAGE AND SUBSIDIARIES
 
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)data)
 
                        
 Year Ended December 31,  Year Ended December 31, 
 2008 2007 2006  2010 2009 2008 
Revenues
                        
Casino $2,975,680  $3,239,054  $3,130,438  $2,442,927  $2,618,060  $2,975,680 
Rooms  1,907,093   2,130,542   1,991,477   1,300,287   1,370,135   1,907,093 
Food and beverage  1,582,367   1,651,655   1,483,914   1,339,174   1,362,325   1,582,367 
Entertainment  546,310   560,909   459,540   486,319   493,799   546,310 
Retail  261,053   296,148   278,695   194,891   207,260   261,053 
Other  611,692   519,360   452,669   529,693   493,324   564,288 
Reimbursed costs  359,470   99,379   47,404 
              
  7,884,195   8,397,668   7,796,733   6,652,761   6,644,282   7,884,195 
Less: Promotional allowances  (675,428)  (706,031)  (620,777)  (633,528)  (665,693)  (675,428)
              
  7,208,767   7,691,637   7,175,956   6,019,233   5,978,589   7,208,767 
              
Expenses
                        
Casino  1,618,914   1,646,883   1,586,448   1,385,763   1,459,944   1,618,914 
Rooms  533,559   542,289   513,522   423,073   427,169   533,559 
Food and beverage  930,716   947,475   870,683   774,443   775,018   930,716 
Entertainment  384,822   395,611   330,439   360,383   358,026   384,822 
Retail  168,859   187,386   177,479   120,593   134,851   168,859 
Other  397,504   307,914   236,486   333,817   284,919   350,100 
Reimbursed costs  359,470   99,379   47,404 
General and administrative  1,278,501   1,251,952   1,169,271   1,128,803   1,100,193   1,278,944 
Corporate expense  109,279   193,893   161,507   124,241   143,764   109,279 
Preopening andstart-up expenses
  23,059   92,105   36,362   4,247   53,013   23,059 
Restructuring costs  443   —   1,035 
Property transactions, net  1,210,749   (186,313)  (40,980)  1,451,474   1,328,689   1,210,749 
Gain on CityCenter transaction  —   (1,029,660)  — 
Depreciation and amortization  778,236   700,334   629,627   633,423   689,273   778,236 
              
  7,434,641   5,049,869   5,671,879   7,099,730   6,854,238   7,434,641 
              
Income from unconsolidated affiliates
  96,271   222,162   254,171 
Income (loss) from unconsolidated affiliates
  (78,434)  (88,227)  96,271 
              
Operating income (loss)
  (129,603)  2,863,930   1,758,248 
Operating loss
   (1,158,931)  (963,876)  (129,603)
       
                   
Non-operating income (expense)
                        
Interest income  16,520   17,210   11,192 
Interest expense, net  (609,286)  (708,343)  (760,361)  (1,113,580)  (775,431)  (609,286)
Non-operating items from unconsolidated affiliates  (34,559)  (18,805)  (16,063)  (108,731)  (47,127)  (34,559)
Other, net  87,940   4,436   (15,090)  165,217   (226,159)  104,460 
              
  (539,385)  (705,502)  (780,322)  (1,057,094)  (1,048,717)  (539,385)
              
Income (loss) from continuing operations before income taxes
  (668,988)  2,158,428   977,926 
Provision for income taxes  (186,298)  (757,883)  (341,930)
Loss before income taxes
  (2,216,025)  (2,012,593)  (668,988)
Benefit (provision) for income taxes  778,628   720,911   (186,298)
              
Income (loss) from continuing operations
  (855,286)  1,400,545   635,996 
       
Discontinued operations
            
Income from discontinued operations  —   10,461   18,473 
Gain on disposal of discontinued operations  —   265,813   — 
Provision for income taxes  —   (92,400)  (6,205)
Net loss
 $ (1,437,397) $ (1,291,682) $  (855,286)
              
  —   183,874   12,268  
Loss per share of common stock
            
Basic $(3.19) $(3.41) $(3.06)
              
Net income (loss)
 $(855,286) $1,584,419  $648,264 
Diluted $(3.19) $(3.41) $(3.06)
              
Basic income (loss) per share of common stock
            
Income (loss) from continuing operations $(3.06) $4.88  $2.25 
Discontinued operations  —   0.64   0.04 
       
Net income (loss) per share $(3.06) $5.52  $2.29 
       
Diluted income (loss) per share of common stock
            
Income (loss) from continuing operations $(3.06) $4.70  $2.18 
Discontinued operations  —   0.61   0.04 
       
Net income (loss) per share $(3.06) $5.31  $2.22 
       
 
The accompanying notes are an integral part of these consolidated financial statements.


5466

MGM MIRAGE AND SUBSIDIARIES
 
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
             
  Year Ended December 31, 
  2008  2007  2006 
 
Cash flows from operating activities
            
Net income (loss) $(855,286) $1,584,419  $648,264 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:            
Depreciation and amortization  778,236   700,334   653,919 
Amortization of debt discounts, premiums and issuance costs  10,620   4,298   (3,096)
Provision for doubtful accounts  80,293   32,910   47,950 
Stock-based compensation  36,277   45,678   73,626 
Business interruption insurance — lost profits  (9,146)  (66,748)  — 
Business interruption insurance — cost recovery  (27,883)  (5,962)  (46,581)
Property transactions, net  1,210,749   (186,313)  (41,135)
Gain on early retirements of long-term debt  (87,457)  —   — 
Gain on CityCenter transaction  —   (1,029,660)  — 
Gain on disposal of discontinued operations  —   (265,813)  — 
Income from unconsolidated affiliates  (40,752)  (162,217)  (229,295)
Distributions from unconsolidated affiliates  70,546   211,062   212,477 
Deferred income taxes  79,516   32,813   59,764 
Changes in current assets and liabilities:            
Accounts receivable  20,500   (82,666)  (65,467)
Inventories  12,366   (8,511)  (10,431)
Income taxes receivable and payable  (346,878)  315,877   (129,929)
Prepaid expenses and other  14,983   10,937   (21,921)
Accounts payable and accrued liabilities  (187,858)  32,720   111,559 
Real estate under development  —   (458,165)  (89,724)
Residential sales deposits  —   247,046   13,970 
Business interruption insurance recoveries  28,891   72,711   98,786 
Other  (34,685)  (30,334)  (50,784)
             
Net cash provided by operating activities  753,032   994,416   1,231,952 
             
Cash flows from investing activities
            
Capital expenditures, net of construction payable  (781,754)  (2,917,409)  (1,758,795)
Proceeds from contribution of CityCenter  —   2,468,652   — 
Proceeds from disposals of discontinued operations, net  —   578,873   — 
Purchase of convertible note  —   (160,000)  — 
Investments in and advances to unconsolidated affiliates  (1,279,462)  (31,420)  (103,288)
Property damage insurance recoveries  21,109   207,289   209,963 
Dispositions of property and equipment  85,968   47,571   11,375 
Other  (27,301)  15,745   (1,682)
             
Net cash provided by (used in) investing activities  (1,981,440)  209,301   (1,642,427)
             
Cash flows from financing activities
            
Net borrowings (repayments) under bank credit facilities — maturities of 90 days or less  2,760,450   (402,300)  756,850 
Borrowings under bank credit facilities — maturities longer than 90 days  8,170,000   6,750,000   7,000,000 
Repayments under bank credit facilities — maturities longer than 90 days  (8,450,000)  (7,500,000)  (8,150,000)
Issuance of long-term debt  698,490   750,000   1,500,000 
Retirement of senior notes  (789,146)  (1,402,233)  (444,500)
Debt issuance costs  (48,700)  (5,983)  (28,383)
Issuance of common stock  —   1,192,758   — 
Issuance of common stock upon exercise of stock awards  14,116   97,792   89,113 
Purchases of common stock  (1,240,856)  (826,765)  (246,892)
Excess tax benefits from stock-based compensation  9,509   102,479   47,330 
Other  (1,781)  3,715   (13,494)
             
Net cash provided by (used in) financing activities  1,122,082   (1,240,537)  510,024 
             
Cash and cash equivalents
            
Net increase (decrease) for the year  (106,326)  (36,820)  99,549 
Cash related to assets held for sale  (14,154)  —   (24,538)
Balance, beginning of year  416,124   452,944   377,933 
             
Balance, end of year $295,644  $416,124  $452,944 
             
Supplemental cash flow disclosures
            
Interest paid, net of amounts capitalized $622,297  $731,618  $778,590 
State, federal and foreign income taxes paid, net of refunds  437,874   391,042   369,450 
Non-cash investing and financing activities
            
Carrying value of net assets contributed to joint venture $—  $2,773,612  $— 
CityCenter partial completion guarantee and delayed equity contributions  1,111,837   —   — 
             
  Year Ended December 31, 
  2010  2009  2008 
 
Cash flows from operating activities
            
Net loss $  (1,437,397) $(1,291,682) $(855,286)
Adjustments to reconcile net loss to net cash provided by operating activities:            
Depreciation and amortization  633,423   689,273   778,236 
Amortization of debt discounts, premiums and issuance costs  87,983   50,852   10,620 
(Gain) loss on retirement of long-term debt  (132,126)  61,563   (87,457)
Provision for doubtful accounts  29,832   54,074   80,293 
Stock-based compensation  34,988   36,571   36,277 
Business interruption insurance – lost profits  -   (15,115)  (9,146)
Business interruption insurance – cost recovery  -   -   (27,883)
Property transactions, net  1,451,474   1,328,689   1,210,749 
Convertible note investment impairment  -   175,690   - 
Loss (income) from unconsolidated affiliates  190,659   188,178   (40,752)
Distributions from unconsolidated affiliates  92,706   93,886   70,546 
Change in deferred income taxes  (634,082)  (344,690)  79,516 
Change in current assets and liabilities:            
Accounts receivable  (17,376)  (121,088)  20,500 
Inventories  5,418   6,571   12,366 
Income taxes receivable and payable, net  197,986   (334,522)  (346,878)
Prepaid expenses and other  1,647   (17,427)  14,983 
Accounts payable and accrued liabilities  11,208   37,158   (187,858)
Business interruption insurance recoveries  -   16,391   28,891 
Other  (12,329)  (26,458)  (34,685)
             
Net cash provided by operating activities  504,014   587,914   753,032 
             
Cash flows from investing activities
            
Capital expenditures, net of construction payable  (207,491)  (136,850)  (781,754)
Proceeds from sale of Treasure Island, net  -   746,266   - 
Dispositions of property and equipment  77,601   22,291   85,968 
Investments in and advances to unconsolidated affiliates  (553,000)  (963,685)  (1,279,462)
Distributions from unconsolidated affiliates in excess of earnings  135,058   -   - 
Distributions from cost method investments  113,422   -   - 
Property damage insurance recoveries  -   7,186   21,109 
Investments in treasury securities- maturities longer than 90 days  (149,999)  -   - 
Other  (1,670)  (5,463)  (27,301)
             
Net cash used in investing activities  (586,079)  (330,255)  (1,981,440)
             
Cash flows from financing activities
            
Net borrowings (repayments) under bank credit facilities –
maturities of 90 days or less		  (1,886,079)  (1,027,193)  2,760,450 
Borrowings under bank credit facilities – maturities longer than 90 days  9,486,223   6,771,492   8,170,000 
Repayments under bank credit facilities – maturities longer than 90 days  (10,807,860)  (5,942,455)   (8,450,000)
Issuance of senior notes  2,489,485   1,921,751   698,490 
Retirement of senior notes  (1,154,479)  (1,176,452)  (789,146)
Debt issuance costs  (106,831)  (112,055)  (48,700)
Issuance of common stock in public offering, net  588,456   1,104,418   - 
Purchases of common stock  -   -   (1,240,856)
Capped call transactions  (81,478)  -   - 
Repayment of Detroit Economic Development Corporation bonds  -   (49,393)  - 
Other  (2,615)  (1,363)  21,844 
             
Net cash provided by (used in) financing activities  (1,475,178)  1,488,750   1,122,082 
             
Cash and cash equivalents
            
Net increase (decrease) for the period  (1,557,243)  1,746,409   (106,326)
Change in cash related to assets held for sale  -   14,154   (14,154)
Balance, beginning of period  2,056,207   295,644   416,124 
             
Balance, end of period $498,964  $  2,056,207  $295,644 
             
Supplemental cash flow disclosures
            
Interest paid, net of amounts capitalized $1,020,040  $807,523  $622,297 
Federal, state and foreign income taxes paid, net of refunds  (330,218)  (53,863)  437,874 
Non-cash investing and financing activities
            
Increase (decrease) in investment in CityCenter related to change in completion guarantee liability (including delayed equity contribution in 2008) $358,708  $(55,000) $1,111,837 
 
The accompanying notes are an integral part of these consolidated financial statements.


5567

MGM MIRAGE AND SUBSIDIARIES
 
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
For the Years Endedended December 31, 2008, 20072010, 2009 and 20062008
(In thousands)
 
                                                            
             Accumulated Other
            Retained
 Accumulated
   
 Common Stock Capital in
       Comprehensive
 Total
  Common Stock Capital in
   Earnings
 Other
 Total
 
 Shares
 Par
 Excess of
 Deferred
 Treasury
 Retained
 Income
 Stockholders’
  Shares
 Par
 Excess of
 Treasury
 (Accumulated
 Comprehensive
 Stockholders’
 
 Outstanding Value Par Value Compensation Stock Earnings (Loss) Equity  Outstanding Value Par Value Stock Deficit) Income (Loss) Equity 
Balances, January 1, 2006
  285,070  $3,573  $2,586,587  $(3,618) $(1,338,394) $1,987,725  $(801) $3,235,072 
Balances, January 1, 2008
  293,769  $3,684  $3,951,162  $ (2,115,107) $4,220,408  $556  $6,060,703 
Net income  —   —   —   —   —   648,264   —   648,264   -   -   -   -   (855,286)  -   (855,286)
Currency translation adjustment  —   —   —   —   —   —   1,213   1,213 
Other comprehensive income from unconsolidated affiliate, net  —   —   —   —   —   —   3   3 
   
Total comprehensive income                              649,480 
Stock-based compensation  —   —   71,186   3,238   —   —   —   74,424 
Tax benefit from stock-based compensation  —   —   60,033   —   —   —   —   60,033 
Cancellation of restricted stock  (4)  —   —   70   (70)  —   —   — 
Issuance of common stock upon exercise of stock options  5,623   56   89,057   —   —   —   —   89,113 
Purchases of treasury stock  (6,500)  —   —   —   (246,892)  —   —   (246,892)
Restricted shares turned in for tax withholding  (280)  —   —   —   (11,764)  —   —   (11,764)
Other  —   —   (227)  310   —   —   —   83 
                 
Balances, December 31, 2006
  283,909   3,629   2,806,636   —   (1,597,120)  2,635,989   415   3,849,549 
Net income  —   —   —   —   —   1,584,419   —   1,584,419 
Currency translation adjustment  —   —   —   —   —   —   583   583 
Other comprehensive loss from unconsolidated affiliate, net  —   —   —   —   —   —   (442)  (442)
   
Total comprehensive income                              1,584,560 
Stock-based compensation  —   —   48,063   —   —   —   —   48,063 
Tax benefit from stock-based compensation  —   —   115,439   —   —   —   —   115,439 
Issuance of common stock  14,200   —   883,980   —   308,778   —   —   1,192,758 
Issuance of common stock upon exercise of stock options and stock appreciation rights  5,510   55   96,691   —   —   —   —   96,746 
Purchases of treasury stock  (9,850)  —   —   —   (826,765)  —   —   (826,765)
Other  —   —   353   —   —   —   —   353 
                 
Balances, December 31, 2007
  293,769   3,684   3,951,162   —   (2,115,107)  4,220,408   556   6,060,703 
Net income (loss)  —   —   —   —   —   (855,286)  —   (855,286)
Currency translation adjustment  —   —   —   —   —   —   (3,190)  (3,190)  -   -   -   -   -   (3,190)  (3,190)
Valuation adjustment to M Resort convertible note, net of taxes  —   —   —   —   —   —   (54,267)  (54,267)  -   -   -   -   -   (54,267)  (54,267)
      
Total comprehensive income (loss)                              (912,743)
Total comprehensive loss                          (912,743)
Stock-based compensation  —   —   42,418   —   —   —   —   42,418   -   -   42,418   -   -   -   42,418 
Tax benefit from stock-based compensation  —   —   10,494   —   —   —   —   10,494 
Issuance of common stock upon exercise of stock options and stock appreciation rights  888   9   14,107   —   —   —   —   14,116 
Change in excess tax benefit from stock-based compensation  -   -   10,494   -   -   -   10,494 
Issuance of common stock pursuant to stock-based compensation awards  888   9   14,107   -   -   -   14,116 
Purchases of treasury stock  (18,150)  —   —   —   (1,240,856)  —   —   (1,240,856)  (18,150)  -   -   (1,240,856)  -   -   (1,240,856)
Other  —   —   229   —   —   —   —   229   -   -   229   -   -   -   229 
                                
Balances, December 31, 2008
  276,507  $3,693  $4,018,410  $—  $(3,355,963) $3,365,122  $(56,901) $3,974,361   276,507   3,693   4,018,410   (3,355,963)  3,365,122   (56,901)  3,974,361 
Net loss  -   -   -   -   (1,291,682)  -   (1,291,682)
Currency translation adjustment  -   -   -   -   -   532   532 
Reclass M resort convertible note valuation adjustment to current earnings  -   -   -   -   -   54,267   54,267 
Other comprehensive income from unconsolidated affiliate, net  -   -   -   -   -   165   165 
                    
Total comprehensive loss                          (1,236,718)
Stock-based compensation  -   -   43,050   -   -   -   43,050 
Change in excess tax benefit from stock-based compensation  -   -   (14,854)  -   -   -   (14,854)
Issuance of common stock  164,450   717   (549,354)  3,355,963   (1,702,908)  -   1,104,418 
Issuance of common stock pursuant to stock-based compensation awards  265   2   (29)  -   -   -   (27)
Other  -   -   202   -   -   -   202 
               
Balances, December 31, 2009
  441,222   4,412   3,497,425   -   370,532   (1,937)  3,870,432 
Net loss  -   -   -   -   (1,437,397)  -   (1,437,397)
Currency translation adjustment  -   -   -   -   -   1,706   1,706 
Other comprehensive loss from unconsolidated affiliate, net  -   -   -   -   -   (70)  (70)
   
Total comprehensive loss                          (1,435,761)
Stock-based compensation  -   -   40,247   -   -   -   40,247 
Change in excess tax benefit from stock-based compensation  -   -   (10,840)  -   -   -   (10,840)
Issuance of common stock  47,035   470   587,986   -   -   -   588,456 
Issuance of common stock pursuant to stock-based compensation awards  256   3   (1,248)  -   -   -   (1,245)
Capped call transactions  -   -   (52,961)  -   -   -   (52,961)
Other  -   -   217   -   -   -   217 
               
Balances, December 31, 2010
    488,513  $      4,885  $ 4,060,826  $     -  $ (1,066,865) $         (301) $  2,998,545 
               
 
The accompanying notes are an integral part of these consolidated financial statements.


5668

MGM MIRAGERESORTS INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1 —ORGANIZATION
 
MGM MIRAGEResorts International (the “Company”) is a Delaware corporation, incorporated on January 29, 1986.formerly named MGM MIRAGE. As of December 31, 2008,2010, approximately 54%27% of the outstanding shares of the Company’s common stock were owned by Tracinda Corporation, a Nevada corporation wholly ownedwholly-owned by Kirk Kerkorian. As a result,Kerkorian (“Tracinda”). Tracinda Corporation has significant influence with respect to the ability to elect the Company’s entire Boardelection of Directorsdirectors and determine the outcome of other matters, submittedbut it does not have the power to the Company’s stockholders, such as the approval of significant transactions.solely determine these matters. MGM MIRAGEResorts International acts largely as a holding company and, through wholly-owned subsidiaries, ownsand/or operates casino resorts.
 
The Company owns and operates the following casino resorts in Las Vegas, Nevada: Bellagio, MGM Grand Las Vegas, The Mirage, Mandalay Bay, The Mirage, Luxor, Treasure Island (“TI”), New York-New York, Excalibur, Monte Carlo, Excalibur, and Circus Circus Las Vegas andSlots-A-Fun.Vegas. Operations at MGM Grand Las Vegas include management of The Signature at MGM Grand Las Vegas, a condominium-hotel consisting of three towers. Other Nevada operations include Circus Circus Reno, Gold Strike in Jean, and Railroad Pass in Henderson. The Company has a 50% investmentand its local partners own and operate MGM Grand Detroit in Silver LegacyDetroit, Michigan. The Company also owns and operates two resorts in Reno, which is adjacent to Circus Circus Reno.Mississippi: Beau Rivage in Biloxi and Gold Strike Tunica. The Company also owns Shadow Creek, an exclusive world-class golf course located approximately ten miles north of its Las Vegas Strip resorts, and Primm Valley Golf Club at the California/Nevada state line.
In December 2008, the Company entered into an agreement to sell TI for $775 million; the sale is expected to close by March 31, 2009. In April 2007, the Company completed the sale of Buffalo Bill’s, Primm Valley,line and Whiskey Pete’s casino resorts (the “Primm Valley Resorts”), not including the Primm Valley Golf Club, with net proceeds to the Company of approximately $398 million. In June 2007, the Company completed the sale of the Colorado Belle and EdgewaterFallen Oak golf course in Laughlin (the “Laughlin Properties”), with net proceeds to the Company of approximately $199 million.Saucier, Mississippi.
 
The Company is aowns 50% owner of CityCenter, a mixed-use development on the Las Vegas Strip,located between Bellagio and Monte Carlo. CityCenter will feature a 4,000-room casino resort designed by world-famous architect Cesar Pelli; two 400-room non-gaming boutique hotels, one of which will be managed by luxury hotelier Mandarin Oriental; approximately 425,000 square feet of retail shops, dining and entertainment venues; and approximately 2.1 million square feet of residential space in approximately 2,400 luxury condominium and condominium-hotel units in multiple towers. CityCenter is expected to open in late 2009, except CityCenter postponed the opening of The Harmon Hotel & Spa until late 2010 and cancelled the development of approximately 200 residential units originally planned. The other 50% of CityCenter is owned by Infinity World Development Corp.Corp (“Infinity World”), a wholly-owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity. CityCenter consists of Aria, a 4,004-room casino resort; Mandarin Oriental Las Vegas, a 392-room non-gaming boutique hotel; Crystals, a retail district with 334,000 of currently leaseable square feet; and Vdara, a 1,495-room luxury condominium-hotel. In addition, CityCenter features residential units in the Residences at Mandarin Oriental – 225 units and Veer – 669 units. Aria, Vdara, Mandarin Oriental and Crystals all opened in December 2009 and the residential units within CityCenter began closing in early 2010. The Company is managing the developmentreceives a management fee of CityCenter and, upon completion2% of construction, will manage the operations of CityCenter for a fee. Construction costsrevenues for the major componentsmanagement of CityCenter are covered by guaranteed maximum price contracts (“GMPs”) totaling $6.9 billion, which have been fully executed. IncludingAria and Vdara, and 5% of EBITDA (as defined in the cancellationagreements governing the Company’s management of The Harmon residential component,Aria and Vdara). In addition, the Company anticipates total cost savingsreceives an annual fee of approximately $0.5 billion which would reduce$3 million for the $6.9 billion in GMP construction costs. In addition, by postponing The Harmon Hotel & Spa by one year the Company expects to defer $0.2 billionmanagement of construction costs necessary to complete the interior fit out. Additional budgeted cash expenditures include $1.8 billion of construction costs not included in the GMPs, $0.2 billion of preopening costs, and $0.3 billion of financing costs.
The Company and its local partners own and operate MGM Grand Detroit in Detroit, Michigan. The resort’s interim facility closed on September 30, 2007 and the new casino resort opened on October 2, 2007. The Company also owns and operates two resorts in Mississippi — Beau Rivage in Biloxi and Gold Strike Tunica. Beau Rivage reopened in August 2006, after having been closed due to damage sustained as a result of Hurricane Katrina in August 2005.Crystals.
 
The Company has 50% interests in three resorts outside of Nevada — MGM Grand Macau, Grand Victoria and Borgata. MGM Grand Macau is a casino resort that opened on December 18, 2007.Silver Legacy. Pansy Ho Chiu-King owns the


57

other 50% of MGM Grand Macau. Grand Victoria is a riverboat casino in Elgin, Illinois —Illinois; an affiliate of Hyatt Gaming owns the other 50% of Grand Victoria and also operates the resort. Silver Legacy is located in Reno, adjacent to Circus Circus Reno, and the other 50% is owned by Eldorado LLC.
The Company also has a 50% economic interest in Borgata is a casino resortHotel Casino & Spa (“Borgata”) located on Renaissance Pointe in the Marina area of Atlantic City, New Jersey.Jersey; the Company’s interest is held in trust and currently offered for sale. Boyd Gaming Corporation (“Boyd”) owns the other 50% of Borgata and also operates the resort. See Note 5 for further discussion of Borgata.
 
The Company owns additional land adjacent to Borgata, a portion of which consists of common roads, landscaping and master plan improvements, a portion of which is being utilized for an expansion of Borgata, and a portion of which iswas planned for a wholly-owned development, MGM Grand Atlantic City. As part of the settlement discussed in Note 5, the Company has agreed that an affiliate of the Company would withdraw its license application for this development.
MGM Hospitality seeks to leverage the Company’s management expertise and well-recognized brands through strategic partnerships and international expansion opportunities. The Company has made extensive progress in design and other pre-development activities. However, current economic conditions and the impact of the credit market environment have caused the Company to reassess timingentered into management agreements for this project. Accordingly, the Company has postponed additional development activities. The Company has also postponed further design and pre-construction activities for its planned North Las Vegas Strip project with Kerzner International and Istithmar — see Note 13 for further discussion.
NOTE 2 — LIQUIDITY AND FINANCIAL POSITION
The Company has significant indebtedness and significant financial commitments in 2009. As of December 31, 2008, the Company had approximately $13.5 billion of total long-term debt. In late February 2009, the Company borrowed $842 million under the senior credit facility, which amount represented — after giving effect to $93 million in outstanding letters of credit — the total amount of unused borrowing capacity available under its $7.0 billion senior credit facility. In connection with the waiver and amendment described below, on March 17, 2009 the Company repaid $300 million under the senior credit facility, which amount is not available for reborrowing without the consent of the lenders. The Company has no other existing sources of borrowing availability, except to the extent it pays down further amounts outstanding under the senior credit facility.
In addition to commitments under employment, entertainment and other operational agreements, the Company’s financial commitments and estimated capital expenditures in 2009, as of December 31, 2008, totaled approximately $2.8 billion and consisted of:
• Contractual maturities of long-term debt totaling approximately $1.0 billion;
• Interest payments on long-term debt, estimated at $0.8 billion;
• CityCenter required equity contributions of approximately $0.7 billion;
• Other commitments of approximately $0.3 billion, including $0.2 billion of estimated capital expenditures;
To fund its anticipated 2009 financial commitments, the Company has the following sources of funds in 2009:
• Available borrowings under its senior credit facility of $1.2 billion as of December 31, 2008;
• Expected proceeds in 2009 from the sale of TI of approximately $0.6 billion;
• Operating cash flow: The Company’s current expectations for 2009 indicate that operating cash flow will be lower than in 2008. In 2008, the Company generated approximately $1.8 billion of cash flow from operations before deducting a) cash paid for interest, which commitments are included in the list above, and b) the tax payment on the 2007 CityCenter transaction.
The Company is uncertain as to whether the sources listed above will be sufficient to fund our 2009 financial commitments and cannot provide any assurances that it will be able to raise additional capital to fund its anticipated expenditures in 2009 if the sources listed above are not adequate.
While the Company was in compliance with the financial covenants under its senior credit facility at December 31, 2008, if the recent adverse conditionshotels in the economy in general —Middle East, North Africa, India and the gaming industry in particular — continue, the Company believes that it will not be in compliance with those financial covenants during 2009. In fact, given these conditions and the recent borrowing under the senior credit facility, the Company does not believe it will be in compliance with those financial covenants at March 31, 2009. As a result, on March 17, 2009 the Company obtained from the lenders under the senior credit facility a waiver of the requirement that the Company comply with such financial covenants through May 15, 2009. Additionally, the Company entered into an amendment of its senior credit facility which provides for, among other terms, the following:
• The Company agreed to repay $300 million of the outstanding borrowings under the senior credit facility, which amount is not available for reborrowing without the consent of the lenders;


58

• The Company is prohibited from prepaying or repurchasing its outstanding long-term debt or disposing of material assets; and other restrictive covenants were added that limit the Company’s ability to make investments and incur indebtedness;
• The interest rate on outstanding borrowings under the senior credit facility was increased by 100 basis points; and
• The Company’s required equity contributions in CityCenter are limited through May 15, 2009 such that it can only make contributions if Infinity World makes its required contributions; the Company’s equity contributions do not exceed specified amounts (though the Company believes the limitation is in excess of the amounts expected to be required through May 15, 2009); and the CityCenter senior secured credit facility has not been accelerated.
Following expiration of the waiver on May 15, 2009, the Company will be subject to an event of default related to the expected noncompliance with financial covenants under the senior credit facility at March 31, 2009. Under the terms of the senior credit facility, noncompliance with such financial covenants is an event of default, under which the lenders (with a vote of more than 50% of the lenders) may exercise any or all of the following remedies:
• Terminate their commitments to fund additional borrowings;
• Require cash collateral for outstanding letters of credit;
• Demand immediate repayment of all outstanding borrowings under the senior credit facility.
• Decline to release subsidiary guarantees, which would impact the Company’s ability to execute asset dispositions.
In addition, there are provisions in certain of the Company’s indentures governing its senior and senior subordinated notes under which a) the event of default under the senior secured credit facility, or b) the remedies under an event of default under the senior credit facility, would cause an event of default under the relevant senior and senior subordinated notes, which would allow holders of the Company’s senior and senior subordinated notes to demand immediate repayment and decline to release subsidiary guarantees. Also, under the terms of the CityCenter senior secured credit facility, if an event of default has occurred under the Company’s borrowings and a) such event of default is certified to in writing by the relevant lenders, and b) such default allows the relevant lenders to demand immediate repayment, then an event of default has occurred relative to the CityCenter senior secured credit facility. Under such event of default, one of the remedies is the termination of the CityCenter senior secured credit facility. If the lenders exercise any or all such rights, the Company or CityCenter may determine to seek relief through a filing under the U.S. Bankruptcy Code.
The conditions and events described above raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. Management’s plans in regard to these matters are described below.
The Company intends to work with its lenders to obtain additional waivers or amendments prior to May 15, 2009 to address future noncompliance with the senior credit facility; however, the Company can provide no assurance that it will be able to secure such waivers or amendments.
The Company has also retained the services of outside advisors to assist the Company in instituting and implementing any required programs to accomplish management’s objectives. The Company is evaluating the possibility of a) disposing of certain assets, b) raising additional debtand/or equity capital, and c) modifying or extending its long-term debt. However, there can be no assurance that the Company will be successful in achieving its objectives.
China.
 
NOTE 32 —SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
 
Principles of consolidation. The consolidated financial statements include the accounts of the Company and its subsidiaries. InvestmentsThe Company’s investments in unconsolidated affiliates which are 50% or less owned and do not meet the consolidation criteria of Financial Accounting Standards Board Interpretation No. 46(R) (as amended), “Consolidation of Variable Interest Entities — an Interpretation of ARB No. 51” (“FIN 46(R)”), are accounted for under the equity method. The Company does not have a variable interest in any variable interest entities. All


5969

equity method. All significant
intercompany balances and transactions have been eliminated in consolidation. The Company’s operations are primarily in one segment —segment: the operation of casino resorts. Other operations and foreign operations are not material.
 
Management’s use of estimates. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. ThoseThese principles require the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
Financial statement impact of Hurricane Katrina and Monte Carlo fire.Reclassifications. The Company maintains insuranceconsolidated financial statements for both property damageprior years reflect certain reclassifications, which have no effect on previously reported net income, to conform to the current year presentation. The prior year reclassifications relate to the classification of reimbursed costs as separate financial statement line items, while in past periods these costs were recorded to “Other” revenues and business interruption relatingexpenses. The total amounts reclassified to catastrophic events, such as Hurricane Katrina affecting Beau Rivage in August 2005reimbursed costs revenue and expense for the rooftop fire at Monte Carlo in January 2008. Business interruption coverage covers lost profitsyears ended 2009 and other costs incurred during the closure period2008 were $99 million and up to six months following re-opening.$47 million, respectively.
 
Non-refundable insurance recoveries received in excess of the net bookFair value of damaged assets,clean-up and demolition costs, and post-event costs are recognized as income in the period received or committed based onmeasurements. Fair value measurements affect the Company’s estimateaccounting and impairment assessments of the total claim for property damage (recorded as “Property transactions, net”)its long-lived assets, investments in unconsolidated affiliates, cost method investments, goodwill, and business interruption (recorded as a reduction of “General and administrative” expenses) compared to the recoveries received at that time. All post-event costs and expected recoveries are recorded net within “General and administrative” expenses, except for depreciation of non-damaged assets, which is classified as “Depreciation and amortization.”
Insurance recoveries are classified in the statement of cash flows based on the coverage to which they relate. Recoveries related to business interruption are classified as operating cash flows and recoveries related to property damage are classified as investing cash flows. However,other intangibles. Fair value measurements also affect the Company’s insurance policy includes undifferentiated coverageaccounting for both property damage and business interruption. Therefore, the Company classifies insurance recoveries as being related to property damage until the full amountcertain of damagedits financial assets and demolition costsliabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy that includes: “Level 1” inputs, such as quoted prices in an active market; “Level 2” inputs, which are recovered, and classifies additional recoveries up to the amount of post-event costs incurred as being related to business interruption. Insurance recoveries beyond that amountobservable inputs for similar assets; or “Level 3” inputs, which are classified as operating or investing cash flows based on the Company’s estimated allocation of the total claim.unobservable inputs.
 
The following table showsCompany uses fair value measurements when assessing impairment of its investments in unconsolidated affiliates. The Company estimates such fair value using a discounted cash flow analysis utilizing “Level 3” inputs, including market indicators of discount rates and terminal year capitalization rates. See Note 5 for further discussion.
In connection with its accounting for the net pre-tax impact onMarch 2010 amended and restated credit facility as discussed in Note 8, the statementsCompany estimated fair value of operationsits senior credit facility using “Level 1” inputs. The Company also uses “Level 1” inputs for insurance recoveries from Hurricane Katrina and the Monte Carlo fire:
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
Reduction of general and administrative expenses:            
Hurricane Katrina $—  $66,748  $— 
Monte Carlo fire  9,146   —   — 
             
  $  9,146  $66,748  $— 
             
Reduction of property transactions, net:            
Hurricane Katrina $—  $217,290  $ 86,016 
Monte Carlo fire  9,639   —   — 
             
  $9,639  $217,290  $86,016 
             
its long-term debt fair value disclosures.
 
The following table showsCompany used fair value measurements in the cash flow statement impactaccounting for its investment in The M Resort LLC 6% convertible note and embedded call option (the “M Resort Note”). As of insurance proceeds from Hurricane Katrina andJune 30, 2009, the Monte Carlo fire:
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
Cash flows from operating activities:            
Hurricane Katrina $—  $72,711  $98,786 
Monte Carlo fire  28,891   —   — 
             
  $ 28,891  $72,711  $98,786 
             
Cash flows from investing activities:            
Hurricane Katrina $—  $207,289  $209,963 
Monte Carlo fire  21,109   —   — 
             
  $21,109  $207,289  $209,963 
             


60

Hurricane Katrina.  The Company reached final settlement agreements with its insurance carriers related to Hurricane Katrina in late 2007. In total, the Company received insurance recoveries of $635 million, which exceeded the $265 million net bookfair value of damaged assetsthe convertible note and post-storm costs incurred.embedded call option was measured using “Level 3” inputs. See below under “Investment in The Company recognizedM Resort LLC convertible note” for further discussion of the $370 millionvaluation of excess insurance recoveries in income in 2007 and 2008.the M Resort Note.
 
Monte Carlo fire.  AsAt December 31, 2009, the fair value of December 31,the Company’s carrying value of its Renaissance Pointe land holdings was measured using “Level 2” and “Level 3” inputs. See below under “Property and Equipment” for further discussion of the Renaissance Pointe impairment.
During 2008, the Company received $50 million of proceeds from its insurance carriers relatedused “Level 2” inputs to evaluate the Monte Carlo fire. Through December 31, 2008, the Company recorded a write-down of $4 million related to the net bookfair value of damaged assets, demolition costsits Primm Valley Golf Club (“PVGC”). See below under “Property and Equipment” for further discussion of $7 million, and operating costs of $21 million. As of December 31, 2008, the Company had a receivable of approximately $1 million from its insurance carriers.PVGC impairment.
 
Cash and cash equivalents. Cash and cash equivalents include investments and interest bearing instruments with maturities of three months90 days or less at the date of acquisition. Such investments are carried at cost, which approximates market value. Book overdraft balances resulting from the Company’s cash management program are recorded as accounts payable, construction payable, or other accrued liabilities, as applicable.
 
Accounts receivable and credit risk. Financial instruments that potentially subject the Company to concentrations of credit risk consist principallyprimarily of casino accounts receivable. The Company issues markers to approved casino customers following background checks and investigations of creditworthiness. At December 31, 2008,2010, a substantial portion of the Company’s receivables werewas due from customers residing in foreign countries. Business or economic conditions or other significant events in these countries could affect the collectibility of such receivables.
 
Trade receivables, including casino and hotel receivables,Accounts receivable are typically non-interest bearing and are initially recorded at cost. Accounts are written off when management deems the account to be uncollectible. Recoveries of accounts previously written off are


70

recorded when received. An estimated allowance for doubtful accounts is maintained to reduce the Company’s receivables to their net carrying amount, which approximates fair value. The allowance is estimated based on specific review of customer accounts as well as historical collection experience and current economic and business conditions. Management believes that as of December 31, 2008,2010, no significant concentrations of credit risk existed for which an allowance had not already been recorded.
 
Real estate under development.  Until November 2007, the Company capitalized costs of wholly-owned real estate projects to be sold, which consisted entirely of condominium and condominium-hotel developments at CityCenter. Subsequent to the contribution of CityCenter to a joint venture — See Note 5 — the Company no longer has real estate under development.
Inventories. Inventories consist primarily of food and beverage, retail merchandise and operating supplies, and are stated at the lower of cost or market. Cost is determined primarily byusing the average cost method for food and beverage and supplies andoperating supplies. Cost for retail merchandise is determined using the retail inventory method or specific identification methods for retail merchandise.method.
 
Property and equipment. Property and equipment are stated at cost. Gains or losses on dispositions of property and equipment are included in the determination of income. Maintenance costs are expensed as incurred. Property and equipment are generally depreciated over the following estimated useful lives on a straight-line basis:
 
     
Buildings and improvements  3020 to 4540 years 
Land improvements  10 to 20 years 
Furniture and fixtures  3 to 1020 years 
Equipment  3 to 20 years 
 
The Company evaluates its property and equipment and other long-lived assets for impairment in accordancebased on its classification as a) held for sale or b) to be held and used. Several criteria must be met before an asset is classified as held for sale, including that management with the Financial Accounting Standards Board’s Statement of Financial Accounting Standards No. 144, “Accounting forappropriate authority commits to a plan to sell the Impairment or Disposal of Long-Lived Assets.”asset at a reasonable price in relation to its fair value and is actively seeking a buyer. For assets to be disposed of,held for sale, the Company recognizes the asset to be sold at the lower of carrying value or estimated fair market value less costs of disposal. Fair value for assets to be disposed of issell, as estimated based on comparable asset sales, offers received, or a discounted cash flow model.
For assets to be held and used, the Company reviews fixed assets for impairment whenever indicators of impairment exist. If an indicator of impairment exists, theThe Company then compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying


61

value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is measuredrecorded based on estimatedthe fair value compared to carrying value, with fair valueof the asset, typically based onmeasured using a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs. All recognized impairment losses, whether for assets held for sale or assets to be held and used, are recorded as operating expenses.
The Company reviewed the carrying value of its Renaissance Pointe land holdings for impairment at December 31, 2009 as management did not intend to pursue its MGM Grand Atlantic City project for the foreseeable future. The Company’s Board of Directors subsequently terminated this project. The Company’s Renaissance Pointe land holdings include a72-acre development site and included 11 acres of land subject to a long-term lease with the Borgata joint venture. The fair value of the development land was determined based on a market approach and the fair value of land subject to the long-term lease with Borgata was determined using a discounted cash flow analysis using expected contractual cash flows under the lease discounted at a market capitalization rate. As a result, the Company recorded a non-cash impairment charge of $548 million in the 2009 fourth quarter, which was included in “Property transactions, net,” related to its land holdings on Renaissance Pointe and capitalized development costs.
 
During the third quarter of 2008, the Company concluded that the Primm Valley Golf Club (“PVGC”) should be reviewed for impairment due to its recent operating losses and the Company’s expectation that such operating losses will continue. The estimated future undiscounted cash flows of PVGC dodid not exceed its carrying value. The Company determined the estimated fair value of PVGC to be approximately $14 million based on the comparable sales approach. The carrying value of PVGC exceeds its estimated fair value and as a result, the Company recorded an impairment charge of $30 million which is included in “Property transactions, net” in the accompanying consolidated statements of operations for the year ended December 31, 2008. For a discussion of recognized impairment losses, see Note 17.
 
Capitalized interest. The interest cost associated with major development and construction projects is capitalized and included in the cost of the project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using the weighted-average cost of the Company’s outstanding


71

borrowings. Capitalization of interest ceases when the project is substantially complete or development activity is suspended for more than a brief period.
 
Investment in The M Resort LLC convertible note. InAt June 2007,30, 2009, the Company purchased a $160 million convertible note issued by The M Resort LLC, which is developing a casino resort on Las Vegas Boulevard, 10 miles south of Bellagio. The convertible note matures in June 2015, contains certain optional and mandatory redemption provisions, and is convertible into a 50% equity interest in The M Resort LLC beginning in December 2008. The convertible note earns interest at 6% which may be paid in cash or accrued “in kind” fordetermined that the first five years; thereafter interest must be paid in cash. There are no scheduled principal payments before maturity.
The convertible note is accounted for as a hybrid financial instrument consisting of a host debt instrument and an embedded call option on The M Resort LLC’s equity. The debt component is accounted for separately as an available-for-sale marketable security, with changes in value recorded in other comprehensive income. The call option is treated as a derivative with changes in value recorded in earnings. The initial value of the call option was $0 and the initial value of the debt was $155 million, with the discount accreted to earnings over the term of the note. The fair value of the call optionM Resort Note was $0, at December 31, 2008that the decline in value was“other-than-temporary,” and 2007. Thethat the entire carrying valueamount of the convertible note is includedindicated impairment related to a credit loss. The conclusion that the decline in “Depositsvalue was“other-than-temporary” was based on the Company’s assessment of actual results since the opening of the M Resort and other assets, net”M Resort’s management’s revised cash flow projections since its opening, which were significantly lower than original predictions due to market and general economic conditions. Based on the conclusions above, the Company recorded a pre-tax impairment charge of $176 million – the accreted value as of May 31, 2009 – in the accompanying consolidated balance sheets.second quarter of 2009 within “Other, net” non-operating expense. Of that amount, $82 million was reclassified from accumulated other comprehensive loss, which amount was $54 million net of tax. The Company stopped recording accrued“paid-in-kind” interest as of May 31, 2009, and no longer holds this note.
 
Investments in and advances to unconsolidated affiliates. The Company has investments in unconsolidated affiliates accounted for under the equity method. Under the equity method, carrying value is adjusted for the Company’s share of the investees’ earnings and losses, as well as capital contributions to and distributions from these companies. Distributions in excess of equity method earnings are recognized as a return of investment and recorded as investing cash inflows in the accompanying consolidated statement of cash flows.
 
The Company evaluates its investments in unconsolidated affiliates for impairment whenwhenever events or changes in circumstances indicate that the carrying value of suchits investment may have experienced an other-than-temporary“other-than-temporary” decline in value. If such conditions exist, the Company compares the estimated fair value of the investment to its carrying value to determine if an impairment is indicated and determines whether suchthe impairment is other-than-temporary“other-than-temporary” based on its assessment of all relevant factors. Estimatedfactors, including consideration of the Company’s intent and ability to retain its investment. The Company estimates fair value is determined using a discounted cash flow analysis based on estimated future results of the investee and market indicators of terminal year capitalization rates. See Note 5 for results of the Company’s review of its investment in certain of its unconsolidated affiliates.
 
Goodwill and other intangible assets. Goodwill represents the excess of purchase price over fair market value of net assets acquired in business combinations. Goodwill and indefinite-lived intangible assets must be reviewed for impairment at least annually and between annual test dates in certain circumstances. The Company performs its annual impairment tests in the fourth quarter of each fiscal year. No impairments were indicated as a result of the annual impairment review for goodwill and indefinite-lived intangible assets in 20072010 and 2006.2009. See Note 96 for results of ourthe Company’s 2008 annual impairment tests.
 
Goodwill for relevant reporting units is tested for impairment using a discounted cash flow analysis based on the estimated future results of the Company’s reporting units discounted using the Company’s weighted average


62

cost of capital and market indicators of terminal year capitalization rates. The implied fair value of a reporting unitsunit’s goodwill is compared to the carrying value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to its assets and liabilities and the amount remaining, if any, is the implied fair value of goodwill. If the implied fair value of the goodwill is less than its carrying value then it must be written down to its implied fair value. License rights are tested for impairment using a discounted cash flow approach, and trademarks are tested for impairment using the relief-from-royalty method. If the fair value of an indefinite-lived intangible asset is less than its carrying amount, an impairment loss must be recognized equal to the difference.
 
Revenue recognition and promotional allowances. Casino revenue is the aggregate net difference between gaming wins and losses, with liabilities recognized for funds deposited by customers before gaming play occurs (“casino front money”) and for chips in the customers’ possession (“outstanding chip liability”). Hotel, food and beverage, entertainment and other operating revenues are recognized as services are performed. Advance deposits on rooms and advance ticket sales are recorded as accrued liabilities until services are provided to the customer.


72

 
Gaming revenues are recognized net of certain sales incentives, including discounts and points earned in point-loyalty programs. The retail value of accommodations, food and beverage, and other services furnished to guests without charge is included in gross revenue and then deducted as promotional allowances. The estimated cost of providing such promotional allowances is primarily included in casino expenses as follows:
 
                        
 Year Ended December 31,  Year Ended December 31, 
 2008 2007 2006  2010 2009 2008 
 (In thousands)  (In thousands) 
Rooms $91,292  $96,183  $91,799  $104,264  $105,821  $91,292 
Food and beverage  288,522   303,900   296,866   249,111   261,647   288,522 
Other  30,742   33,457   34,439   30,683   32,450   30,742 
              
 $410,556  $433,540  $423,104  $384,058  $399,918  $410,556 
              
 
Reimbursed expenses. The Company recognizes costs reimbursed pursuant to management services as revenue in the period it incurs the costs. Reimbursed costs related mainly to the Company’s management of CityCenter and totaled $359 million for 2010, $99 million for 2009 and $47 million for 2008 and $5 million for 2007, and are classified as other revenue and other operating expenses in the accompanying consolidated statements of operations.2008.
 
Point-loyaltyLoyalty programs. TheIn 2010, the Company’s primary point-loyalty program in operation at most of its majorwholly-owned resorts isand Aria was Players Club. In Players Club, customers earn points based on their slots play, which can be redeemed for cash or free play at any of the Company’s participating resorts. The Company records a liability based on the points earned timesmultiplied by the redemption value less an estimate for points not expected to be redeemed and records a corresponding reduction in casino revenue. The expiration of unused points results in a reduction of the liability. Customers’ overall level of table games and slots play is also tracked and used by management in awarding discretionary complimentaries – free rooms, food and beverage and other services – for which no accrual is recorded. Other loyalty programs at the Company’s resorts generallytypically operate in a similar manner, though they generally are available only to customers at the individual resorts. At both December 31, 20082010 and 2007,2009, the total company-wide liability for point-loyalty programs was $52 million$47 million.
The Company implemented a new loyalty program (“M life”) at MGM Grand Detroit, Beau Rivage, and $56 million, respectively,Gold Strike Tunica during the third quarter of 2010 and at its participating Las Vegas resorts in January 2011. Customers continue to earn points based on their slots play, which can be redeemed for free play at any of the Company’s participating resorts. Under the new program, customers also earn credits (“express comps”) based on their slots play and table games play, which can be redeemed for complimentary services, including amounts classified as liabilities relatedhotel rooms, food and beverage, and entertainment. The Company records a liability for the estimated costs of providing services for express comps based on the express comps earned multiplied by a cost margin less an estimate for express comps not expected to assets held for sale.be redeemed and records a corresponding expense in the casino department.
 
Advertising. The Company expenses advertising costs the first time the advertising takes place. Advertising expense, of continuing operations, which is generally included in general and administrative expenses, was $123 million, $118 million, and $122 million $141 millionfor 2010, 2009 and $119 million for 2008, 2007 and 2006, respectively.
 
Corporate expense. Corporate expense represents unallocated payroll and aircraft costs, professional fees and various other expenses not directly related to the Company’s casino resort operations. In addition, corporate expense includes the costs associated with the Company’s evaluation and pursuit of new business opportunities, which are expensed as incurred until development of a specific project has become probable.
 
Preopening andstart-up expenses. The Company accounts for costs incurred during the preopening andstart-up phases of operations in accordance with the American Institute of Certified Public Accountants’ (“AICPA”) Statement of Position98-5, “Reporting on the Costs ofStart-up Activities.” Preopening andstart-up costs, including


63

organizational costs, are expensed as incurred. Costs classified as preopening andstart-up expenses include payroll, outside services, advertising, and other expenses related to new orstart-up operations and new customer initiatives.
 
Property transactions, net. The Company classifies transactions related to long-lived assets – such as write-downs and impairments, demolition costs, and normal gains and losses on the sale of fixed assets – as “Property transactions, net” in the accompanying consolidated statements of operations.net.” See Note 1714 for a detailed discussion of these amounts.


73

 
Income per share of common stock. The weighted-average number of common and common equivalent shares used in the calculation of basic and diluted earnings per share consisted of the following:
 
                        
 Year Ended December 31,  Year Ended December 31, 
 2008 2007 2006  2010 2009 2008 
 (In thousands)  (In thousands) 
Weighted-average common shares outstanding used in the calculation of basic earnings per share  279,815   286,809   283,140   450,449   378,513   279,815 
Potential dilution from stock options, stock appreciation rights and restricted stock  —   11,475   8,607 
Potential dilution from stock options, stock appreciation rights, restricted stock and convertible debt  -   -   - 
              
Weighted-average common and common equivalent shares used in the calculation of diluted earnings per share  279,815   298,284   291,747   450,449   378,513   279,815 
              
 
The Company had a loss from continuing operations infor the years ended December 31, 2010, 2009 and 2008. Therefore, the approximately 28 million, 29 million and 26 million shares, respectively, underlying outstanding stock-based awards were excluded from the computation of diluted earnings per share for these periods because inclusionto include these awards would be anti-dilutive. In 2007 and 2006, shares underlying outstanding stock-based awards excluded fromaddition, the diluted share calculation were not material.effect of an assumed conversion of the Company’s convertible senior notes due 2015 would be anti-dilutive.
 
Currency translation. The Company accounts for currency translationtranslates the financial statements of foreign subsidiaries which are not denominated in accordance with Statement of Financial Accounting Standards No. 52, “Foreign Currency Translation.”US dollars. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date. Income statement accounts are translated at the average rate of exchange prevailing during the period. Translation adjustments resulting from this process are charged or credited to other comprehensive income.
 
Comprehensive income. Comprehensive income includes net income (loss) and all other non-stockholder changes in equity, or other comprehensive income. Elements of the Company’s other accumulated comprehensive incomeloss are reported in the accompanying consolidated statements of stockholders’ equity, and the cumulative balance of these elements consisted of the following:
 
         
  At December 31, 
  2008  2007 
  (In thousands) 
 
Other comprehensive income (loss) from unconsolidated affiliates $—  $    (305)
Valuation adjustment to M Resort convertible note, net of taxes  (54,267)  — 
Currency translation adjustments  (2,634)  861 
         
  $(56,901) $556 
         
         
  At December 31, 
  2010  2009 
  (In thousands) 
 
Other comprehensive income from unconsolidated affiliates $95  $165 
Currency translation adjustments  (396)  (2,102)
         
  $(301) $(1,937)
         
 
Reclassifications. Financial statement impact of Monte Carlo fire. The consolidated financial statementsCompany maintains insurance for prior years reflect certain reclassifications, which have no effectboth property damage and business interruption relating to catastrophic events, such as the rooftop fire at Monte Carlo in January 2008. Business interruption insurance covers lost profits and other costs incurred during the closure period and up to six months following re-opening.
Non-refundable insurance recoveries received in excess of the net book value of damaged assets,clean-up and demolition costs, and post-event costs are recognized as income in the period received or committed based on previously reported net income, to conformthe Company’s estimate of the total claim for property damage and business interruption compared to the current year presentation. Substantially allrecoveries received at that time. Gains on insurance recoveries related to business interruption are recorded within “General and administrative” expenses and gains related to property damage are recorded within “Property transactions, net.” Insurance recoveries related to business interruption are classified as operating cash flows and recoveries related to property damage are classified as investing cash flows in the statement of the prior year reclassifications relatecash flows.
The Company settled its final claim with its insurance carriers related to the classificationMonte Carlo fire in 2009 for a total of meals provided free$74 million. The pre-tax impact on the Company’s statements of operations for the year ended December 31, 2009 related to employees assuch insurance recoveries included a $15 million reduction of “General and administrative” expense while in past periods the cost of these meals was chargedand a $7 million offset to each operating department. The total amount reclassified to general and administrative expenses for the years ending 2007 and 2006 was $112“Property transactions, net.” In 2008, $9 million and $98$10 million respectively.
Fair value measurement.  The Company adopted Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”) for financial assetssuch excess insurance recoveries were recognized as offsets to “General and liabilities on January 1, 2008. SFAS 157 establishes a framework for measuring the fair value of financial assetsadministrative” expense and liabilities and requires certain disclosures about fair value. The framework utilizes a fair value hierarchy consisting of the following: “Level 1” inputs, which are observable inputs for identical assets, such as quoted prices in an active market; “Level 2” inputs,“Property transactions, net,” respectively.


6474

Sale of TI. On March 20, 2009, the Company closed the sale of the Treasure Island casino resort (“TI”) to Ruffin Acquisition, LLC for net proceeds to the Company of approximately $746 million and recognized a pre-tax gain of $187 million related to the sale, which are observable inputs for similar assets;is included within “Property transactions, net.” In connection with the sale of TI, including the transfer of all of the membership interests of TI, TI was released as a guarantor of the outstanding indebtedness of the Company and “Level 3” inputs, which are unobservable inputs. The Company’s only significant assets and liabilities affected by the adoption of SFAS 157 are:its subsidiaries.
 
1) Marketable securities held in connection with the Company’s deferred compensation and supplemental executive retirement plans, and the plans’ corresponding liabilities. As of December 31, 2008, the assets and liabilities related to these plans each totaled $68 million, measured entirely using “Level 1” inputs.
2) The Company’s investment in The M Resort LLC convertible note and embedded call option. The fair value of the convertible note was measured using “Level 2” inputs. The fair value of the embedded call option was measured using “Level 3” inputs, consisting primarily of estimates of future cash flows. See “Comprehensive income” in Note 3 for valuation adjustment recognized during 2008.
3) The partial completion guarantee provided in connection with the CityCenter credit facility, discussed in Note 13, which fair value was measured using “Level 3” inputs, consisting of budgeted and historical construction costs.
As a result of the sale, the Company evaluated TI’s operations for potential treatment as discontinued operations. The Company concluded significant customer migration would occur because there was a shared customer base through the Company’s customer loyalty rewards program and because of the physical proximity of TI to the Company’s other Las Vegas Strip resorts. Most of the loyalty rewards program customers of TI were also customers of one or more of the Company’s other resorts. The Company retained the ability to market to these customers after the sale and believes the loyalty rewards program is an important factor in the migration of customer play to the Company’s other resorts. The Company expects the cash flow benefits of such migration to continue for an indefinite period. Therefore, the results of the TI operations through the time of sale have not been classified as discontinued operations.
 
Recently Issued Accounting Standards. The following accounting standards were issued in 2007 and 2008 but will impact the Company in future periods.
Accounting for Business Combinations and Non-Controlling Interests.  In December 2007, the FinancialCertain amendments to Accounting Standards BoardCodification (“FASB”ASC”) issued SFAS No. 141(R), “Business Combinations,Topic 810, “Consolidation,” (“SFAS 141R”) and SFAS No. 160 “Non-controlling interests in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS 160”). These standards amend the requirements for accounting for business combinations, including the recognition and measurement of additional assets and liabilities at their fair value, expensing of acquisition-related costs which are currently capitalizable under existing rules, treatment of adjustments to deferred taxes and liabilities subsequent to the measurement period, and the measurement of non-controlling interests, previously commonly referred to as minority interests, at fair value. SFAS 141R also includes additional disclosure requirements with respect to the methodologies and techniques used to determine the fair value of assets and liabilities recognized in a business combination. SFAS 141R and SFAS 160 apply prospectively to fiscal years beginning on or after December 15, 2008, except for the treatment of deferred tax adjustments which apply to deferred taxes recognized in previous business combinations. These standards became effective for the Company onbeginning January 1, 2009. The Company does not believe2010. Such amendments include changes to the adoptionquantitative approach to determine the primary beneficiary of SFAS 141R and SFAS 160 will have a material impact on its consolidated financial statements.
Transfers of Financial Assets and Interests in Variable Interest Entities.  In December 2008, the FASB issued FSPFAS 140-4 and FIN 46(R)-8 “Disclosures by Public Entities (Enterprises) About Transfers of Financial Assets and Interests in Variable Interest Entities.” The FSP amends SFAS 140 and FIN 46(R) to enhance the disclosures required by the standards. The FSP enhances disclosures required by FIN 46(R) to include a discussion of significant judgments made in determining whether a variable interest entity (“VIE”) should be consolidated, as well as. An enterprise must determine if its variable interest or interests give it a controlling financial interest in a VIE by evaluating whether 1) the natureenterprise has the power to direct activities of the risksVIE that have a significant effect on economic performance, and how2) the enterprise has an entity’s involvement withobligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The amendments to ASC 810 also require ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE effects the financial position of the entity. The FSP is effective for the Company for the fiscal year ended December 31, 2008.VIE. The adoption of the FSPthese amendments did not have a material impacteffect on the Company’s consolidated financial statements.
Equity Method Investment Accounting Considerations.  In November 2008, the Emerging Issues Task Force (“EITF”) of the FASB ratified its consensus on EITFNo. 08-6 “Equity Method Investment Accounting Considerations”(“EITF 08-6”). The EITF reached a consensus on the following four issues addressed: a) the initial carrying value of an equity method investment is determined in accordance with SFAS 141(R); b) equity method investors should not separately test an investee’s underlying assets for impairment, but rather recognize other than temporary impairments of an equity method investment in accordance with APB Opinion 18; c) exceptions to recognizing gains from an investee’s issuance of shares in earnings in accordance with the SEC’s Staff Accounting Bulletin 51 were removed to achieve consistency with SFAS 160; and d) the guidance in APB Opinion 18 to account for a change in the investor’s accounting from the equity method to the cost method should still be applied.EITF 08-6 is effective for the Company on January 1, 2009. The Company does not believe the adoption ofEITF 08-6 will have a material impact on its consolidated financial statements.


65

 
NOTE 4 —ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
The asset and liabilities of TI are classified as held for sale as of December 31, 2008. However, the results of its operations have not been classified as discontinued operations because the Company expects to continue to receive significant cash flows from customer migration.
The following table summarizes the assets held for sale and liabilities related to assets held for sale in the accompanying consolidated balance sheets:
     
  December 31,
 
  2008 
  (In thousands) 
 
Cash $14,154 
Accounts receivable, net  9,962 
Inventories  3,069 
Prepaid expenses and other  3,459 
     
Total current assets  30,644 
Property and equipment, net  494,807 
Goodwill  7,781 
Other assets, net  5,743 
     
Total assets  538,975 
     
Accounts payable  4,162 
Other current liabilities  26,111 
     
Total current liabilities  30,273 
Other long-term obligations  — 
     
Total liabilities  30,273 
     
Net assets $508,702 
     
The sale of the Primm Valley Resorts in April 2007 resulted in a pre-tax gain of $202 million and the sale of the Laughlin Properties in June 2007 resulted in a pre-tax gain of $64 million. The results of the Laughlin Properties and Primm Valley Resorts are classified as discontinued operations in the accompanying consolidated statements of operations for the years ended 2007 and 2006. The cash flows of discontinued operations are included with the cash flows of continuing operations in the accompanying consolidated statements of cash flows.
Other information related to discontinued operations is as follows:
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
Net revenues of discontinued operations $     —  $128,619  $412,032 
Interest allocated to discontinued operations (based on the ratio of net assets of discontinued operations to total consolidated net assets and debt)       —   5,844   18,160 
NOTE 5 —CITYCENTER TRANSACTION
In August 2007, the Company and Dubai World agreed to form a50/50 joint venture for the CityCenter development. The joint venture, CityCenter Holdings, LLC, is owned equally by the Company and Infinity World. In November 2007 the Company contributed the CityCenter assets which the parties valued at $5.4 billion, subject to certain adjustments. Infinity World contributed $2.96 billion in cash. At the close of the transaction, the Company received a cash distribution of $2.47 billion, of which $22 million was repaid in 2008 to CityCenter as a result of a post-closing adjustment. The Company will continue to serve as developer of CityCenter and, upon completion of construction, will manage CityCenter for a fee.
The initial contribution of the CityCenter assets was accounted for as a partial sale of real estate. As a partial sale, profit can be recognized when a seller retains an equity interest in the assets, but only to the extent of the outside equity interests, and only if the following criteria are met: 1) the buyer is independent of the seller;


66

2) collection of the sales price is reasonably assured; and 3) the seller will not be required to support the operations of the property to an extent greater than its proportionate retained interest.
The transaction met criteria 1 and 3 despite the Company’s equity interest and ongoing management of the project, because the Company does not control the venture and the management and other agreements between the Company and CityCenter have been assessed as being fair market value contracts. In addition, the Company assessed whether it had a prohibited form of continuing involvement based on the presence of certain contingent repurchase options, including an option to purchase Infinity World’s interest if Infinity World or Dubai World is denied required gaming approvals. The Company assessed the probability of such contingency as remote and, therefore, determined that a prohibited form of continuing involvement does not exist.
As described above, the Company did not receive the entire amount of the sales price, as a portion remained in the venture to fund near-term construction costs. Therefore, the Company believes that portion of the gain does not meet criteria 2 above and has been deferred. The Company recorded a gain of $1.03 billion based on the following (in millions):
     
Cash received:    
Initial distribution $2,468 
Post-closing adjustment  (22)
     
Net cash received  2,446 
Less: 50% of carrying value of assets contributed  (1,387)
Less: Liabilities resulting from the transaction  (29)
     
  $1,030 
     
The Company is accounting for its ongoing investment in CityCenter using the equity method, consistent with its other investments in unconsolidated affiliates. The Company assessed whether CityCenter should be consolidated under the provisions of FIN 46(R) and determined that CityCenter is not a variable interest entity, based on the following: 1) CityCenter does not meet the scope exceptions in FIN 46(R); 2) the equity at risk in CityCenter is sufficient, based on qualitative assessments; 3) the equity holders of CityCenter (the Company and Infinity World) have the ability to control CityCenter and the right/obligation to receive/absorb expected returns/losses of CityCenter; and 4) while the Company’s 50% voting rights in CityCenter may not be proportionate to its rights/obligations to receive/absorb expected returns/losses given the fact that the Company manages CityCenter, substantially all of the activities of CityCenter do not involve and are not conducted on behalf of the Company.
NOTE 6 —ACCOUNTS RECEIVABLE, NET
 
Accounts receivable consisted of the following:
 
                
 At December 31,  At December 31, 
 2008 2007  2010 2009 
 (In thousands)  (In thousands) 
Casino $243,600  $266,059  $229,318  $261,025 
Hotel  112,985   181,983   119,887   117,390 
Other  46,437   50,815   66,449   87,165 
          
  403,022   498,857   415,654   465,580 
Less: Allowance for doubtful accounts  (99,606)  (85,924)  (93,760)  (97,106)
          
 $303,416  $412,933  $321,894  $368,474 
          


67

 
NOTE 74 —PROPERTY AND EQUIPMENT, NET
 
Property and equipment consisted of the following:
 
                
 At December 31,  At December 31, 
 2008 2007  2010 2009 
 (In thousands)  (In thousands) 
Land $7,449,254  $7,728,488  $7,039,806  $7,121,002 
Buildings, building improvements and land improvements  8,806,135   8,724,339   8,504,655   8,428,766 
Furniture, fixtures and equipment  3,435,886   3,231,725   3,768,476   3,814,597 
Construction in progress  407,440   552,667   72,843   66,902 
          
  20,098,715   20,237,219   19,385,780   19,431,267 
Less: Accumulated depreciation and amortization  (3,809,561)  (3,366,321)  (4,831,430)  (4,361,315)
          
 $16,289,154  $16,870,898  $14,554,350  $15,069,952 
          


75

 
NOTE 85 —INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
 
. Investments in and advances to unconsolidated affiliates consisted of the following:
 
         
  At December 31, 
  2008  2007 
  (In thousands) 
 
CityCenter Holdings, LLC — CityCenter (50)% $ 3,581,188  $ 1,421,480 
Marina District Development Company — Borgata (50)%  474,171   453,277 
Elgin Riverboat Resort-Riverboat Casino — Grand Victoria (50)%  296,746   297,328 
MGM Grand Paradise Limited — Macau (50)%  252,060   258,298 
Circus and Eldorado Joint Venture — Silver Legacy (50)%  27,912   35,152 
Turnberry/MGM Grand Towers — The Signature at MGM Grand (50)%  3,309   5,651 
Other  7,479   11,541 
         
  $4,642,865  $2,482,727 
         
         
  At December 31, 
  2010  2009 
  (In thousands) 
 
CityCenter Holdings, LLC – CityCenter (50%) $1,417,843  $2,546,099 
Marina District Development Company – Borgata (50)%  -   466,774 
Elgin Riverboat Resort – Riverboat Casino – Grand Victoria (50%)  294,305   296,248 
MGM Grand Paradise Limited – Macau (50%)  173,030   258,465 
Circus and Eldorado Joint Venture – Silver Legacy (50%)  25,408   28,345 
Other  12,569   15,868 
         
  $1,923,155  $3,611,799 
         
 
ThroughThe Company recorded its share of the results of operations of unconsolidated affiliates as follows:
             
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands) 
 
Income (loss) from unconsolidated affiliates $(78,434) $(88,227) $96,271 
Preopening andstart-up expenses
  (3,494)  (52,824)  (20,960)
Non-operating items from unconsolidated affiliates  (108,731)  (47,127)  (34,559)
             
  $(190,659) $(188,178) $40,752 
             
CityCenter
Completion guarantee. In accordance with the CityCenter joint venture agreement, as amended, and the CityCenter bank credit facility, as amended, the Company has provided an unlimited completion and cost overrun guarantee – see Note 10 for further discussion. The terms of the completion guarantee provide up to $250 million of net residential proceeds from the sale of condominium properties at CityCenter would be permitted by CityCenter’s lenders and the Company’s joint venture partner to fund construction costs that the Company would otherwise be obligated to pay under the completion guarantee, or to reimburse the Company for construction costs previously expended; however, the timing of receipt of such proceeds is uncertain. As of December 31, 2008,2010, the Company has funded $553 million under the completion guarantee. The Company has recorded a receivable from CityCenter of $124 million related to these amounts, which represents amounts reimbursable to the Company from CityCenter from future residential proceeds. At December 31, 2010, the Company’s remaining estimated net obligation under the completion guarantee was $80 million.
Distributions. The joint venture agreement provides that the first $494 million of available distributions must be distributed on a priority basis to Infinity World, with the next $494 million of distributions made to the Company, and distributions shared equally thereafter.
Contributions. As of December 31, 2009 the Company and Infinity World had each made loansall required equity contributions. In July 2010, the Company and Infinity World made additional capital contributions of $925$32.5 million each. The Company’s contribution was made through a reduction in its receivable from CityCenter. A portion of Infinity World’s cash contribution was used to CityCenter, which are subordinaterepay an additional portion of the amounts owed to the credit facility, to fund construction costs. DuringCompany for costs paid by the fourth quarter of 2008, $425 million of each partner’s loan funding was converted to equity and each partner provided additional equity contributions of $228 million. Under the termsCompany on behalf of the credit facility describedjoint venture. In connection with the debt restructuring transactions discussed below, the Company and Infinity World weremade equity contributions of approximately $37 million each required to make additional equity commitments of up to $731 million as of December 31, 2008, which requirement would be reduced by future qualifying financing obtained by CityCenter. During the fourth quarter of 2008,in January 2011.
Investment impairments. At June 30, 2010 the Company recordedreviewed its CityCenter investment for impairment using revised operating forecasts developed by CityCenter management. Based on current and forecasted market conditions and because CityCenter’s results of operations through June 30, 2010 were below previous forecasts, and the revised operating forecasts were lower than previous forecasts, management concluded it should review the carrying value of its investment. The Company determined that the carrying value of its investment exceeded its fair


76

value determined using a liability equaldiscounted cash flow analysis and therefore an impairment was indicated. The Company intends to and believes it will be able to retain its investment in CityCenter; however, due to the present valueextent of the required future equity contributions, classified as “Other accrued liabilities”shortfall and the Company’s assessment of the uncertainty of fully recovering its investment, the Company determined that the impairment was“other-than-temporary” and recorded an impairment charge of $1.12 billion included in “Property transactions, net.”
At September 30, 2010, the accompanying consolidated balance sheet,Company recognized an increase of $232 million in its total net obligation under its CityCenter completion guarantee, and a corresponding increase toin its investment balance. Subsequentin CityCenter. The increase primarily reflects revisions to December 31, 2008, each partner madeprior estimates based on the Company’s assessment of the most current information derived from the CityCenter close-out and litigation processes and does not reflect certain potential recoveries that are being pursued as part of the litigation process. The Company completed an impairment review as of September 30, 2010 and as a result recorded an additional contributionsimpairment of $237$191 million each.in the third quarter of 2010, included in “Property transactions, net.”
 
In October 2008,The discounted cash flow analyses for the Company’s investment in CityCenter closed onincluded estimated future cash inflows from operations, including residential sales, and estimated future cash outflows for capital expenditures. The June 2010 and September 2010 analyses used an 11% discount rate and a $1.8 billion senior secured bank credit facility. The credit facility requireslong-term growth rate of 4% related to forecasted cash flows for CityCenter’s operating assets.
At September 30, 2009, the Company reviewed its CityCenter investment for impairment using revised operating forecasts developed by CityCenter management late in the third quarter. In addition, the impairment charge related to CityCenter’s residential real estate under development discussed below further indicated that the Company’s investment may have experienced an“other-than-temporary” decline in value. The Company’s discounted cash flow analysis for CityCenter included estimated future cash outflows for construction and Infinity World to provide subordinated loansmaintenance expenditures and equity contributions which will be used to fund construction costs prior to amounts being drawn under the credit facility. In conjunction with the CityCenter credit facility,future cash inflows from operations, including residential sales. Based on its analysis, the Company determined the carrying value of its investment exceeded its fair value and Infinity World have entered into partial completion guarantees on a several basis — see Note 13.determined that the impairment was“other-than-temporary.” The Company recorded an impairment charge of $956 million included in “Property transactions, net.”
 
DuringImpairments of residential inventory. Included in loss from unconsolidated affiliates for the year ended December 31, 20082010 is the Company’s share of impairment charges relating to completed CityCenter residential inventory. Due to the completion of construction of the Mandarin Oriental residential inventory in the first quarter of 2010 and 2007,completion of the Company incurred $46Veer residential inventory in the second quarter of 2010, CityCenter is required to carry its residential inventory at the lower of its carrying value or fair value less costs to sell. CityCenter determines fair value of its residential inventory using a discounted cash flow analysis based on management’s expectations of future cash flows. The key inputs in the discounted cash flow analysis include estimated sales prices of units currently under contract and new unit sales, the absorption rate over the sell-out period, and the discount rate. These estimates are subject to management’s judgment and are highly sensitive to changes in the market and economic conditions, including the estimated absorption period. In the event current sales forecasts are not met, additional impairment charges may be recognized in future periods.
As a result of its impairment analyses of residential inventory, CityCenter recorded impairment charges for the Mandarin Oriental residential inventory of $171 million and $5$20 million in the first and third quarter of 2010, respectively and impairment charges for the Veer residential inventory of costs reimbursable by CityCenter, which was comprised$57 million, $55 million and $27 million, in the second, third and fourth quarters of 2010, respectively. Impairment charges in the third quarter primarily of employee compensation,related to an increase in final cost estimates for the residential sales costs, and certain allocated costs. Such costs are recorded as “Other” operating expenses, and the reimbursementinventory. The Company recognized its 50% share of such costsimpairment charges, resulting in pre-tax charges of $166 million for the year ended December 31, 2010, respectively, included in “Income (loss) from unconsolidated affiliates.”
Included in loss from unconsolidated affiliates for the year ended December 31, 2009 is recordedthe Company’s share of an impairment charge relating to CityCenter residential real estate under development (“REUD”). CityCenter was required to review its REUD for impairment as “Other” revenue inof September 30, 2009, mainly due to CityCenter’s September 2009 decision to discount the accompanying consolidated statementsprices of operations.its residential inventory by 30%. This decision and related market conditions led to CityCenter management’s conclusion that the carrying value of the REUD was not recoverable based on estimates of undiscounted cash flows. As a result, CityCenter was required to compare the fair value of its REUD to its


6877

During 2007,
carrying value and record an impairment charge for the shortfall. Fair value of the REUD was determined using a discounted cash flow analysis based on management’s current expectations of future cash flows. The key inputs in the discounted cash flow analysis included estimated sales prices of units currently under contract and new unit sales, the absorption rate over the sell-out period, and the discount rate. This analysis resulted in an impairment charge of approximately $348 million of the REUD. The Company recognized its 50% share of such impairment charge, adjusted by certain basis differences, resulting in a pre-tax charge of $203 million.
Harmon impairment. The Harmon Hotel & Spa (“Harmon”) was originally planned to include over 200 residential units and a 400-room non-gaming lifestyle hotel. In 2009, the Company announced that the opening of the Harmon hotel component would be delayed until the Company and its joint venture partner, Infinity World, mutually agreed to its completion, and that the residential component had been canceled.
During the third quarter of 2010, CityCenter management determined that it is unlikely that the Harmon will be completed using the building as it now stands. As a result, CityCenter recorded an impairment charge of $279 million in the third quarter of 2010 related to construction in progress assets. The impairment of Harmon did not affect the Company’s loss from unconsolidated affiliates, because the Company’s 50% share of the impairment charge had previously been recognized by the Company in connection with prior impairments of its investment balance.
January 2011 debt restructuring transactions. In January 2011, CityCenter completed a series of transactions including issuance of $900 million in aggregate principal amount of 7.625% senior secured first lien notes due 2016 and $600 million in aggregate principal amount of 10.75%/11.50% senior secured second lien PIK toggle notes due 2017 in a private placement. The interest rate on the second lien notes is 11.50% if CityCenter pays interest in the form of additional debt. CityCenter received net proceeds from the offering of the notes (the “notes offering”) of $1.46 billion after initial purchaser’s discounts and commissions but before other offering expenses.
Effective concurrently with the notes offering, CityCenter’s senior credit facility was amended and restated which extended the maturity of $500 million of the $1.85 billion outstanding loans until January 21, 2015. The restated senior credit facility does not include a revolving loan component. All borrowings under the senior credit facility in excess of $500 million were repaid using the proceeds of the first lien notes and the second lien notes. In addition, net proceeds from the note offerings, together with equity contributions of $73 million from the members were used to fund the interest escrow account of $159 million for the benefit of the holders of the first lien notes and the lenders under the restated senior credit facility. The restated senior credit facility is secured, on a pari passu basis with the first lien notes, by a first priority lien on substantially all of CityCenter’s assets and those of its subsidiaries, except that any proceeds generated by the sale of Crystals outside of bankruptcy or foreclosure proceedings will be paid first to the lenders under the restated senior credit facility.
CityCenter summary financial information. Summarized balance sheet information of the CityCenter joint venture is as follows:
         
  At December 31, 
  2010  2009 
  (In thousands) 
 
Current assets $211,646  $234,383 
Property and other assets, net  9,430,171   10,499,278 
Current liabilities  381,314   983,419 
Long-term debt and other liabilities  2,752,196   2,620,869 
Equity  6,508,307   7,129,373 


78

Summarized income statement information of the CityCenter joint venture is as follows:
             
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands) 
 
Net revenues $1,330,057  $69,211  $- 
Operating expenses, except preopening expenses  (2,194,700)  (469,365)  (39,347)
Preopening andstart-up expenses
  (6,202)  (104,805)  (34,420)
             
Operating loss  (870,845)  (504,959)  (73,767)
Interest expense  (240,731)  (7,011)  - 
Other non-operating income (expense)  (3,614)  (10,360)  5,962 
             
Net loss $ (1,115,190) $(522,330) $(67,805)
             
Borgata
In its June 2005 report to the New Jersey Casino Control Commission (the “CCC”), on the application of Borgata for renewal of its casino license, the New Jersey Division of Gaming Enforcement (the “DGE”) stated that it was conducting an investigation of the Company’s relationship with its joint venture partner in Macau and that the DGE would report to the CCC any material information it deemed appropriate.
On May 18, 2009, the DGE issued a report to the CCC on its investigation. In the report, the DGE recommended, among other things, that: (i) the Company’s Macau joint venture partner be found to be unsuitable; (ii) the Company be directed to disengage itself from any business association with its Macau joint venture partner; (iii) the Company’s due diligence/compliance efforts be found to be deficient; and (iv) the CCC hold a hearing to address the report. In March 2010, the CCC approved the Company’s settlement agreement with the DGE pursuant to which the Company placed its 50% ownership interest in Borgata and related leased land in Atlantic City into a divestiture trust. Following the transfer of these interests into trust, the Company ceased to be regulated by the CCC or the DGE, except as otherwise provided by the trust agreement and the settlement agreement. Boyd Gaming Corporation’s (“Boyd”) 50% interest is not affected by the settlement.
The terms of the settlement mandate the sale of the trust property within a30-month period ending in September 2012. During the 18 months ending September 2011, the Company has the right to direct the trustee to sell the trust property, subject to approval of the CCC. If a sale is not concluded by that time, the trustee is responsible for selling the trust property during the following12-month period. Prior to the consummation of the sale, the divestiture trust will retain any cash flows received in respect of the trust property, but will pay property taxes and other costs attributable to the trust property. The Company is the sole economic beneficiary of the trust and will be permitted to reapply for a New Jersey gaming license beginning 30 months after the completion of the sale of the trust assets. As of December 31, 2010, the trust had $188 million of cash and investments of which $150 million is held in treasury securities with maturities greater than 90 days and is recorded within “Prepaid expenses and other.”
As a result of the Company’s ownership interest in Borgata being placed into a trust the Company no longer has significant influence over Borgata; therefore, the Company discontinued the equity method of accounting for Borgata at the point the assets were placed in the trust, and accounts for its rights under the trust agreement under the cost method of accounting. The Signature at MGM GrandCompany also reclassified the carrying value of its investment related to Borgata to “Other long-term assets, net.” Earnings and losses that relate to the investment that were completed andpreviously accrued remain as a part of the carrying amount of the investment. Distributions received by the trust that do not exceed the Company’s share of earnings are recognized currently in earnings. However, distributions to the trust that exceed the Company’s share of earnings for such periods are applied to reduce the carrying amount of its investment. The trust received net distributions from the joint venture essentially ceased sales operations. Duringof $113 million for the year ended December 31, 2010. The Company recorded $94 million as a reduction of the carrying value and $19 million was recorded as “Other, net” non-operating income in the year ended December 31, 2010.
In connection with the settlement agreement discussed above, the Company entered into an amendment to its joint venture agreement with Boyd to permit the transfer of its 50% ownership interest into trust in connection with the Company’s settlement agreement with the DGE. In accordance with such agreement, Boyd received a priority


79

partnership distribution of approximately $31 million (equal to the excess prior capital contributions by Boyd) upon successful refinancing of the Borgata credit facility in August 2010.
In July 2010, the Company entered into an agreement to sell four long-term ground leases and their respective underlying real property parcels, approximately 11 acres, underlying the Borgata. The transaction closed in November 2010 and the Company received net proceeds of $71 million and recorded a gain of $3 million related to the sale in “Property transactions, net.”
In October 2010, the Company received an offer for its 50% economic interest in the Borgata based on an enterprise value of $1.35 billion for the entire asset and on October 12, 2010, the Company’s Board of Directors authorized submission of this offer to Boyd in accordance with the right of first refusal provisions included in the joint venture agreement. Subsequently, Boyd announced that it does not intend to exercise its right of refusal in connection with such offer. Based on Borgata’s September debt balances, the offer equated to slightly in excess of $250 million for the Company’s 50% interest. This was less than the carrying value of the Company’s investment in Borgata; therefore, the Company recorded an impairment charge of approximately $128 million at September 30, 2010, recorded in “Property transactions, net.” Since October 2010, the Company has continued to negotiate with the prospective purchaser as well as other parties that have expressed interest in the asset. There can be no assurance that the transaction will be completed as proposed or at all, and the final terms of any sale may differ materially from the ones disclosed above.
Macau
In September, 2010, MGM China Holdings Limited, a Cayman Islands company formed by the Company and Ms. Pansy Ho, that would own the entity that operates MGM Macau, filed a proposed listing application on Form A1 with The Stock Exchange of Hong Kong Limited (“Hong Kong Exchange”) in connection with a possible listing of its shares on the main board of the Hong Kong Exchange. There have not been any decisions made regarding the timing or terms of any such listing, whether MGM China Holdings Limited will ultimately proceed with this transaction, or whether the application will be approved by the Hong Kong Exchange.
The Company received approximately $192 million from MGM Macau during the fourth quarter of 2007,2010, which represents a full repayment of its interest and non-interest bearing notes to that entity. The Company recognized $59 million (representing cumulative equity method earnings to date recognized by the Company purchased the remaining 88 units in Towers BCompany) of such distributions as a cash flow from operating activities and C$133 million as a cash flow from the joint venture for $39 million. These units have been recorded as property, plant and equipmentinvesting activities in the accompanying consolidated balance sheets.statement of cash flows.
 
The Company recognized the following related to its share of profit from condominium sales, based on when sales were closed in 2007 and 2006.
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
Income from joint venture $     —  $ 83,728  $102,785 
Gain on land previously deferred  —   8,003   14,524 
Other income (loss)  —   776   (108)
             
  $—  $92,507  $117,201 
             
Basis Differences
 
The Company’s investmentinvestments in unconsolidated affiliates doesdo not equal the venture-level equity due to various basis differences. Basis differences related to depreciable assets are being amortized based on the useful lives of the related assets and liabilities and basis differences related to non-depreciablenon – depreciable assets are not being amortized. Differences between the Company’s venture-level equity and investment balances are as follows:
 
         
  At December 31, 
  2008  2007 
  (In thousands) 
 
Venture-level equity $3,711,900  $2,874,157 
Fair value adjustments to investments acquired in business combinations(A)  321,814   321,814 
Capitalized interest(B)  236,810   99,055 
Adjustment to CityCenter equity upon contribution of net assets by MGM MIRAGE(C)  (662,492)  (662,492)
CityCenter delayed equity contribution and partial completion guarantee(D)  883,831   — 
Advances to CityCenter, net of discount(E)  323,950   — 
Other adjustments(F)  (172,948)  (149,807)
         
  $4,642,865  $2,482,727 
         
         
  At December 31, 
  2010  2009 
  (In thousands) 
 
Venture-level equity $3,433,966  $4,171,538 
Fair value adjustments to investments acquired in business combinations (A)  244,636   332,701 
Capitalized interest (B)  331,340   382,614 
Adjustment to CityCenter equity upon contribution of net assets by MGM Resorts International (C)  (600,122)  (605,513)
Completion guarantee (D)  292,575   150,000 
Advances to CityCenter, net of discount (E)  379,167   323,990 
Write-down of CityCenter investment (F)  (2,087,593)  (954,862)
Receivable from CityCenter(G)  123,878   - 
Other adjustments (H)  (194,692)  (188,669)
         
  $1,923,155  $3,611,799 
         


80

 
(A)Includes: a $90 million increase for Borgata, related to land;Includes a $267 million increase for Grand Victoria related to indefinite-lived gaming license rights;rights and a $35$23 million reduction for Silver Legacy related to long-term assets and long-term debt.
(B)Relates to interest capitalized on the Company’s investment balance during the unconsolidated affiliates’ development and construction stages.
Such amounts are being amortized over the life of the underlying assets.
(C)Relates to land, construction in progress,other fixed assets, real estate under development, and other assets — see Note 5.
assets.
(D)TheIn 2010, the Company recorded increases to its investment and corresponding liabilities for its partialfunded $553 million under the completion guarantee, and$429 million of which was recognized as equity contributions both as requiredby the joint venture to be split between the partners. In 2009, this basis difference related to estimated amounts to be paid under the CityCenter credit facility. These basis differences will be resolved as the Company makes the related payments or such liabilities are otherwise resolved.
completion guarantee.
(E)The advances to CityCenter are recognized as long-term debt by CityCenter; however, since such advances were provided at below market rates, CityCenter recorded the advances at a discount with a corresponding equity contribution. This basis difference will be resolved when the advances are repaid and upon accretion of the discount.
(F)The write-down of the Company’s CityCenter investment includes $426 million of write-downs allocated to land, which are not amortized. The remaining write-down is amortized over the average life of the underlying assets.
(G)The receivable from CityCenter will be resolved when the remaining condominium proceeds owed to the Company under the completion guarantee are repaid.
(F)(H)Other adjustments include the deferred gain on the CityCenter transaction. The deferred gain on the CityCenter transaction as discussed in Note 5.has been allocated to the underlying assets and is being amortized over the life of the underlying assets.


69

 
The Company recorded its share of the results of operations of the unconsolidated affiliates as follows:
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
Income from unconsolidated affiliates $96,271  $222,162  $254,171 
Preopening andstart-up expenses
  (20,960)  (41,140)  (8,813)
Non-operating items from unconsolidated affiliates  (34,559)  (18,805)  (16,063)
             
  $40,752  $162,217  $229,295 
             
Joint Venture Financial Information
 
Summarized balance sheet information of the unconsolidated affiliates is as follows:
 
                
 At December 31,  At December 31, 
 2008 2007  2010 2009 
 (In thousands)  (In thousands) 
Current assets $555,615  $676,746  $731,381  $807,343 
Property and other assets, net  11,546,361   7,797,343   10,634,691   13,206,662 
Current liabilities  945,412   817,208   799,630   1,508,056 
Long-term debt and other liabilities  3,908,088   2,015,631   3,645,762   4,322,204 
Equity  7,248,476   5,641,250   6,920,680   8,183,745 
 
Summarized results of operations of the unconsolidated affiliates are as follows:
 
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
Net revenues $2,445,835  $1,884,504  $2,020,523 
Operating expenses, except preopening expenses  (2,258,033)  (1,447,749)  (1,536,253)
Preopening andstart-up expenses
  (41,442)  (79,879)  (12,285)
             
Operating income  146,360   356,876   471,985 
Interest expense  (81,878)  (47,618)  (37,898)
Other non-operating income (expense)  (5,660)  5,194   2,462 
             
Net income $58,822  $314,452  $436,549 
             
Summarized balance sheet information of the CityCenter joint venture is as follows:
         
  At December 31, 
  2008  2007 
  (In thousands) 
 
Current assets $75,944  $217,415 
Property and other assets, net  8,727,378   4,973,887 
Current liabilities  573,797   337,598 
Long-term debt and other liabilities  2,041,166   286,952 
Equity  6,188,359   4,566,752 
Summarized income statement information of the CityCenter joint venture is as follows:
         
  Year Ended December 31, 
  2008  2007 
  (In thousands) 
 
Operating expenses, except preopening expenses $  (39,347) $  (3,842)
Preopening andstart-up expenses
  (34,420)  (5,258)
         
Operating loss  (73,767)  (9,100)
Interest income  5,808   1,913 
Other non-operating income  154   — 
         
Net loss $(67,805) $(7,187)
         
             
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands) 
 
Net revenues $3,343,624  $2,269,709  $2,445,835 
Operating expenses, except preopening expenses  (3,869,237)  (2,391,712)  (2,258,033)
Preopening andstart-up expenses
  (6,202)  (105,504)  (41,442)
             
Operating income (loss)  (531,815)  (227,507)  146,360 
Interest expense  (288,273)  (83,449)  (81,878)
Other non-operating expense  (27,451)  (36,861)  (5,660)
             
Net income (loss) $(847,539) $(347,817) $58,822 
             


7081

 
NOTE 96 —GOODWILL AND OTHER INTANGIBLE ASSETS
 
Goodwill and other intangible assets consisted of the following:
 
                
 At December 31,  At December 31, 
 2008 2007  2010 2009 
 (In thousands)  (In thousands) 
Goodwill:                
Mirage Resorts acquisition (2000) $39,648  $47,186  $39,648  $39,648 
Mandalay Resort Group acquisition (2005)  45,510   1,214,297   45,510   45,510 
Other  1,195   1,439   1,195   1,195 
          
 $86,353  $ 1,262,922  $86,353  $86,353 
          
Indefinite-lived intangible assets:                
Detroit development rights $98,098  $98,098  $98,098  $98,098 
Trademarks, license rights and other  235,672   247,346   235,672   235,672 
          
  333,770   345,444   333,770   333,770 
Other intangible assets, net  13,439   16,654   9,034   10,483 
          
 $   347,209  $362,098  $342,804  $344,253 
          
 
ChangesThere were no changes in the recorded balances of goodwill are as follows:
         
  Year Ended December 31, 
  2008  2007 
  (In thousands) 
 
Balance, beginning of year $1,262,922  $ 1,300,747 
Goodwill impairment charge  (1,168,088)  — 
Resolution of Mirage Resorts acquisition tax reserves  —   (29,156)
Finalization of the Mandalay purchase price allocation  —   (2,693)
Other  (8,481)  (5,976)
         
Balance, end of the year $86,353  $1,262,922 
         
in 2010 or 2009. Goodwill related toremaining for the Mirage Resorts acquisition was assignedrelates to Bellagio and The Mirage. The estimated fair values of Bellagio and Mirage and TI.are substantially in excess of their carrying values including goodwill. Goodwill related to the Mandalay Resort Group acquisition was primarily assigned to Mandalay Bay, Luxor, Excalibur and Gold Strike Tunica. As a result of the Company’s annual impairment test of goodwill in the fourth quarter of 2008, the Company recognized a non-cash impairment charge of goodwill of $1.17$1.2 billion in the fourth quarter of 2008 —– included in “Property transactions, net” in the accompanying consolidated statement of operations.net.” Such charge solely related to goodwill recognized in the Mandalay acquisition.acquisition and represents the Company’s total accumulated impairment losses related to goodwill since January 1, 2002 when the Company adopted new accounting rules for goodwill and intangible assets. Assumptions used in such analysis were impactedaffected by current market conditions including: 1) lower market valuation multiples for gaming assets; 2) higher discount rates resulting from turmoil in the credit and equity markets; and 3) current cash flow forecasts for the affected resorts. The remaining balance of the Mandalay acquisition goodwill primarily relates to goodwill assigned to Gold Strike Tunica. The fair value of Gold Strike Tunica is substantially in excess of its carrying value including goodwill.
 
The Company’s indefinite-lived intangible assets balance of $334 million includes trademarks and trade names of $217 million related to the Mandalay acquisition. As a result of the Company’s annual impairment test in the fourth quarter of 2008 of indefinite-lived intangible assets, the Company recognized a non-cash impairment charge of $12 million in the fourth quarter of 2008 —– included in “Property transactions, net” in the accompanying consolidated statement of operations.net.” Such charge solely related to trade names recognized in the Mandalay acquisition. The fair value of the trade names was determined using the relief-from-royalty method and was negatively impactedaffected by the factors discussed above relating to the impairment of goodwill. The Company’s indefinite-lived intangible assets consist primarily of development rights in Detroit and trademarks.
 
The Company’s remaining finite-livedfinite–lived intangible assets consist primarily of customer lists amortized over five years, lease acquisition costs amortized over the life of the related leases, and certain license rights amortized over their contractual life.


7182

 
NOTE 107 —OTHER ACCRUED LIABILITIES
 
Other accrued liabilities consisted of the following:
 
                
 At December 31,  At December 31, 
 2008 2007  2010 2009 
 (In thousands)  (In thousands) 
Payroll and related $   251,750  $   304,101  $256,305  $267,795 
Advance deposits and ticket sales  105,809   137,814   114,808   104,911 
Casino outstanding chip liability  96,365   105,015   79,987   83,957 
Casino front money deposits  74,165   71,069   97,586   80,944 
Other gaming related accruals  82,827   89,906   79,062   80,170 
Taxes, other than income taxes  59,948   72,806   63,888   60,917 
Delayed equity contribution to CityCenter  700,224   — 
CityCenter completion guarantee  79,583   150,000 
Other  178,208   151,654   96,004   95,007 
          
 $1,549,296  $  932,365  $867,223  $923,701 
          
 
NOTE 118 —LONG-TERM DEBT
 
Long-term debt consisted of the following:
 
         
  At December 31, 
  2008  2007 
  (In thousands) 
 
Senior credit facility $5,710,000  $3,229,550 
$180.4 million 6.75% senior notes, due 2008, net  —   180,085 
$196.2 million 9.5% senior notes, due 2008, net  —   200,203 
$226.3 million 6.5% senior notes, due 2009, net  226,720   227,356 
$820 million 6% senior notes, due 2009, net  820,894   1,052,577 
$297.6 million 9.375% senior subordinated notes, due 2010, net  305,893   312,807 
$782 million 8.5% senior notes, due 2010, net  781,223   823,689 
$400 million 8.375% senior subordinated notes, due 2011  400,000   400,000 
$128.7 million 6.375% senior notes, due 2011, net  129,399   133,320 
$544.7 million 6.75% senior notes, due 2012  544,650   550,000 
$150 million 7.625% senior subordinated debentures, due 2013, net  153,960   154,679 
$484.2 million 6.75% senior notes due 2013  484,226   500,000 
$750 million 13% senior secured notes due 2013, net  699,440   — 
$508.9 million 5.875% senior notes, due 2014, net  507,304   523,089 
$875 million 6.625% senior notes, due 2015, net  878,728   879,173 
$242.9 million 6.875% senior notes due 2016  242,900   250,000 
$732.7 million 7.5% senior notes due 2016  732,749   750,000 
$100 million 7.25% senior debentures, due 2017, net  85,537   84,499 
$743 million 7.625% senior notes due 2017  743,000   750,000 
Floating rate convertible senior debentures due 2033  8,472   8,472 
$0.5 million 7% debentures due 2036, net  573   155,835 
$4.3 million 6.7% debentures, due 2096  4,265   4,265 
Other notes  4,233   5,630 
         
   13,464,166   11,175,229 
Less: Current portion  (1,047,614)  — 
         
  $12,416,552  $11,175,229 
         
         
  At December 31, 
  2010  2009 
  (In thousands) 
 
Senior credit facility:        
Term loans (net of discount of $148 million in 2010) $1,686,043  $2,119,037 
Revolving loans  470,000   3,392,806 
$297 million 9.375% senior subordinated notes, repaid in 2010  -   298,135 
$645.8 million 8.5% senior notes, repaid in 2010  -   781,689 
$325.5 million 8.375% senior subordinated notes, due 2011  325,470   400,000 
$128.7 million 6.375% senior notes, due 2011, net  128,913   129,156 
$544.7 million 6.75% senior notes, due 2012  544,650   544,650 
$484.2 million 6.75% senior notes, due 2013  484,226   484,226 
$150 million 7.625% senior subordinated debentures, due 2013, net  152,366   153,190 
$750 million 13% senior secured notes, due 2013, net  716,045   707,144 
$508.9 million 5.875% senior notes, due 2014, net  507,922   507,613 
$650 million 10.375% senior secured notes, due 2014, net  636,578   633,463 
$875 million 6.625% senior notes, due 2015, net  877,747   878,253 
$1,150 million 4.25% convertible senior notes, due 2015  1,150,000   - 
$242.9 million 6.875% senior notes, due 2016  242,900   242,900 
$732.7 million 7.5% senior notes, due 2016  732,749   732,749 
$500 million 10% senior notes, due 2016, net  494,600   - 
$743 million 7.625% senior notes, due 2017  743,000   743,000 
$850 million 11.125% senior secured notes, due 2017, net  830,234   828,438 
$475 million 11.375% senior notes, due 2018, net  463,869   462,906 
$845 million 9% senior secured notes, due 2020  845,000   - 
Floating rate convertible senior debentures, due 2033  8,472   8,472 
$0.6 million 7% debentures, due 2036, net  573   573 
$4.3 million 6.7% debentures, due 2096  4,265   4,265 
Other notes  2,076   3,196 
         
   12,047,698   14,055,861 
Less: Current portion  -   (1,079,824)
         
  $12,047,698  $12,976,037 
         
 
As of December 31, 2010, long-term debt due within one year of the balance sheet date is classified as long-term because the Company has both the intent and ability to repay these amounts with available borrowings under


83

the senior credit facility. At December 31, 2007, amounts2009, outstanding senior notes due within one year of the balance sheet date were classified as long-term incurrent obligations as the accompanying consolidated balance sheets because the Company had both the intent and ability to repay these amounts with available borrowings under its senior credit facility. As discussed in Note 2, theCompany’s senior credit facility was fully drawn during February 2009; therefore, the Company’s senior notes due in 2009 have been classified as current obligations as of December 31, 2008. We have not reclassified amounts outstanding on other long-term debt obligations — including the senior credit facility — as current. The Company does not believe that the inclusion of


72

an explanatory paragraph relating to its ability to continue as a going concern in the report of the Company’s independent registered public accounting firm constitutes an event of default under the senior credit facility, and does not believe the lenders could successfully assert such claim. However, in entering into the waiver and amendment described in Note 2, the lenders have indicated they are likely to assert such claim, though they have waived their right to assert such claim through May 15, 2009. To the extent the lenders were successful in such assertion, they could demand immediate repayment of all outstanding borrowings under the senior credit facility, and holders of our other long-term debt obligations could make similar demands under cross-default provisions.drawn.
 
Interest expense, net consisted of the following:
 
                        
 Year Ended December 31,  Year Ended December 31, 
 2008 2007 2006  2010 2009 2008 
   (In thousands)    (In thousands) 
Total interest incurred $795,049  $930,138  $900,661  $1,113,580  $1,028,673  $795,049 
Interest capitalized  (185,763)  (215,951)  (122,140)  -   (253,242)  (185,763)
Interest allocated to discontinued operations  —   (5,844)  (18,160)
              
 $609,286  $708,343  $760,361  $1,113,580  $775,431  $609,286 
              
 
Senior credit facility.The Company’s senior credit facility haswas amended and restated in March 2010, and consisted of approximately $2.7 billion in term loans (of which approximately $874 million was required to be repaid by October 3, 2011) and a total capacity$2.0 billion revolving loan (of which approximately $302 million was required to be repaid by October 3, 2011). As discussed below, in November 2010, the Company repaid the outstanding balance of $7the loans maturing in October 3, 2011. As of December 31, 2010, the Company’s senior credit facility consisted of approximately $1.8 billion in term loans and matures$1.7 billion in 2011. The Company has the ability to solicit additional lender commitments to increase the capacity to $8 billion. The componentsrevolving loans and had approximately $1.2 billion of available revolving borrowing capacity.
Interest on the senior credit facility includeis based on a term loan facilityLIBOR margin of $2.5 billion5.00%, with a LIBOR floor of 2.00%, and a revolving credit facilitybase rate margin of $4.5 billion.4.00%, with a base rate floor of 4.00%. The weighted average interest rate on outstanding borrowings under the senior credit facility at December 31, 2008 was 3.4%. At2010 and December 31, 2008,2009 was 7.0% and 6.0%, respectively.
The Company accounted for the modification related to the extending term loans as an extinguishment of debt because the applicable cash flows under the extended term loans were more than 10% different from the applicable cash flows under the previous loans. Therefore, the extended term loans were recorded at fair value resulting in a $181 million gain and a discount of $181 million to be amortized to interest expense over the term of the extended term loans. In the year ended December 31, 2010, the Company had approximately $1.2 billionrecognized $31 million of available borrowinginterest expense related to such discount amortization. Fair value of the estimated term loans was based on trading prices immediately after the transaction. In addition, the Company wrote off $15 million of existing debt issuance costs related to the previous term loans and expensed $22 million for new debt issuance costs incurred related to amounts paid to extending term loan lenders in connection with the modification. The Company also wrote off $2 million of existing debt issuance costs related to the reduction in capacity under the non-extending revolving portion of the senior credit facility. After giving effect to the events described in Note 2,In total, the Company has borrowedrecognized a net pre-tax gain on extinguishment of debt of $142 million in “Other, net” non-operating income in the entire amountfirst quarter of available borrowings2010.
Because net proceeds from the Company’s October 2010 common stock offering were in excess of $500 million, the Company was required to ratably repay indebtedness under the senior credit facility as of $6 million, which equaled 50% of such excess. The Company used the net proceeds from its October 2010 senior notes offering and a portion of the net proceeds from its October 2010 common stock offering discussed in Note 11 to repay the remaining amounts owed to non-extending lenders under its senior credit facility. Loans and revolving commitments aggregating approximately $3.6 billion were extended to February 28, 2009.
21, 2014. In November 2008,2010, the Company issued $750underwriters of the Company’s common stock offering exercised their overallotment option and purchased an additional 6.1 million in aggregate principal amount of 13% senior secured notes due 2013, at a discount to yield 15% withshares for net proceeds to the Company of $687 million. The notes are secured by$76 million, 50% of which was used to ratably repay indebtedness under the equity interests and assetssenior credit facility. As a result of New York-New York and otherwise rank equally with the Company’s existing and future senior indebtedness. The senior secured notes require that upon consummation of an asset sale, such as the proposed sale of TI,these transactions the Company either a) reinvestrecorded a pre-tax loss on retirement of debt related to unamortized debt issuance costs and discounts of $9 million recorded in “Other, net” non-operating revenue in the net after-tax proceeds, which can include committed capital expenditures; or b) make an offer to repurchase a corresponding amount of senior secured notes at par plus accrued interest.fourth quarter.
 
In November 2008,The restated senior credit facility allows the Company redeemed $149.4 million ofto refinance indebtedness maturing prior to February 21, 2014, but limits its ability to prepay later maturing indebtedness until the aggregate outstanding principal amount of its 7% debentures due 2036 pursuant to a one-time put option by the holders of such debentures.extended facilities are paid in full. The Company recognized a $6 million gain on the redemption of these debentures, included within “Other, net” in the accompanying consolidated statement of operations.
In October 2008, the Company’s Board of Directors authorized the purchase of upmay issue unsecured debt, equity-linked and equity securities to $500 million of the Company’s public debt securities. In 2008,refinance its outstanding indebtedness; however, the Company repurchased $345is required to use net proceeds (a) from indebtedness issued in amounts in excess of $250 million of principalover amounts ofused to refinance indebtedness and (b) from equity issued, other than in exchange for its outstanding senior notes at a purchase price of $263 million in open market repurchases as follows:
• $230 million in principal amount of our 6% senior notes due 2009;
• $43 million in principal amount of our 8.5% senior notes due 2010;
• $3.7 million in principal amount of the 6.375% senior notes due 2011;
• $5.4 million in principal amount of our 6.75% senior notes due 2012;
• $15.8 million in principal amount of our 6.75% senior notes due 2013;
• $16.1 million in principal amount of our 5.875% senior notes due 2014;
• $7.1 million in principal amount of our 6.875% senior notes due 2016;
• $17.3 million in principal amount of our 7.5% senior notes due 2016; and
• $7 million in principal amount of our 7.625% senior notes due 2017.


7384

 
Theindebtedness, in amounts in excess of $500 million (which limit the Company recognizedreached with its October 2010 stock offering) to ratably prepay the credit facilities, in each case, in an $82 million gain on the repurchaseamount equal to 50% of the above senior notes, included in “other, net” in the accompanying consolidated statementnet cash proceeds of operations.such excess.
 
In February 2008, the Company repaid the $180.4 million of 6.75%The senior notes at maturity using borrowings undercredit facility contains certain financial and non-financial covenants, including a quarterly minimum EBITDA test, based on a rolling12-month EBITDA and a covenant limiting annual capital expenditures. Further, the senior credit facility. In August 2008,facility and certain of the Company’s debt securities contain restrictive covenants that, among other things, limit its ability to pay dividends or distributions, repurchase or issue equity, prepay debt or make certain investments; incur additional debt or issue certain disqualified stock and preferred stock; incur liens on assets; pledge or sell assets or consolidate with another company or sell all or substantially all assets; enter into transactions with affiliates; allow certain subsidiaries to transfer assets; and enter into sale and lease-back transactions. The Company is in compliance with all covenants, including financial covenants under its senior credit facilities as of December 31, 2010.
At December 31, 2010, the Company repaidwas required under its senior credit facility to maintain a minimum trailing annual EBITDA (as defined) of $1.0 billion, which increases to $1.1 billion as of March 31, 2011, $1.15 billion as of September 30, 2011, and $1.2 billion as of December 31, 2011, with additional periodic increases thereafter. As of December 31, 2010, the $196.2Company had annual EBITDA calculated in accordance with the terms of the agreement of approximately $1.14 billion and was in compliance with the minimum EBITDA covenant. Additionally, the Company is limited to $400 million of 9.5% senior notes at maturity using borrowings under the senior credit facility.
In May 2007,annual capital expenditures (as defined) during 2010. At December 31, 2010, the Company issued $750 million of 7.5% senior notes due 2016. In June 2007,was in compliance with the Company repaid the $710 million of 9.75% senior subordinated notes at maturity. In August 2007, the Company repaid the $200 million of 6.75% senior notes and the $492.2 million of 10.25% senior subordinated notes at maturity using borrowings under the senior credit facility.maximum capital expenditures covenant.
 
The Company and each of its material subsidiaries, excluding MGM Grand Detroit, LLC, the Company’s foreign subsidiaries and their U.S. holding companies and the Company’s foreigninsurance subsidiaries, are directly liable for or unconditionally guarantee the senior credit facility, senior notes, senior debentures, and senior subordinated notes. MGM Grand Detroit, LLC is a guarantor under the senior credit facility, but only to the extent that MGM Grand Detroit, LLC borrows under such facilities. At December 31, 2008,2010, the outstanding amount of borrowings related to MGM Grand Detroit, LLC was $404$450 million. See Note 1916 for consolidating condensed financial information of the subsidiary guarantors and non-guarantors. Substantially
Senior notes. In February 2010, the Company repaid the $297 million of outstanding principal amount of its 9.375% senior subordinated notes due 2010 at maturity. During the second quarter of 2010, the Company repurchased $136 million principal amount of its 8.5% senior notes due 2010 and $75 million principal amount of its 8.375% senior notes due 2011 essentially at par. In September 2010, the Company repaid the remaining $646 million of outstanding principal of its 8.5% senior notes due 2010 at maturity.
In March 2010, the Company issued $845 million of 9% senior secured notes due 2020 for net proceeds to the Company of approximately $826 million. The notes are secured by the equity interests and substantially all of the assets of New York-New York serve as collateral forMGM Grand Las Vegas and otherwise rank equally in right of payment with the Company’s existing and future senior indebtedness. Upon the issuance of such notes, the holders of the Company’s 13% senior secured notes issueddue 2013 obtained an equal and ratable lien in 2008; otherwise, noneall collateral securing these notes. The Company used the net proceeds from the senior note issuance to permanently repay approximately $820 million of our assets serve as collateral for our principal debt arrangements.loans previously outstanding under its credit facility.
 
The Company’s long-term debt obligations contain customary covenants, including requiringIn October 2010, the Company issued $500 million of 10% senior notes due 2016, issued at a discount to maintain certain financial ratios. In September 2008,yield 10.25%, for net proceeds to the Company amendedof approximately $486 million. The notes are unsecured and otherwise rank equally in right of payment with the Company’s existing and future senior indebtedness.
During 2009, the Company executed the following transactions related to its senior credit facilitynotes and senior secured notes:
•  In May, 2009, issued $650 million of 10.375% senior secured notes due 2014 and $850 million of 11.125% senior secured notes due 2017 for total net proceeds to the Company of approximately $1.4 billion;
•  In June, 2009, redeemed $100 million of 7.25% senior debentures at a cost of $127 million, $762.6 million of 6.0% senior notes due October 2009, essentially at par, and $122.3 million of 6.5% senior notes due July


85

2009, essentially at par and recorded a loss on early retirement of debt of $38 million related to these transactions in “Other, net;”
•  In September 2009, issued $475 million of 11.375% senior notes due 2018 for net proceeds to the Company of $451 million; and
•  In October 2009, redeemed the remaining $57.4 million of its 6.0% notes at maturity.
Senior convertible notes. In April 2010, the Company issued $1.15 billion of 4.25% convertible senior notes due 2015 for net proceeds to increase the maximum total leverage ratio (debt to EBITDA, as defined) to 7.5:1.0 beginningCompany of $1.12 billion. The notes are general unsecured obligations of the Company and rank equally in right of payment with the fiscal quarter ending December 31, 2008, which will remain in effect through December 31, 2009, with step downs thereafter.Company’s other existing senior unsecured indebtedness. The Company is also requiredused the net proceeds from the senior convertible note issuance to maintain a minimum coverage ratio (EBITDA to interest charges, as defined) of 2.0:1.0. At December 31, 2008, the Company’s leverage and interest coverage ratios were 6.7:1.0 and 2.7:1.0, respectively. See Note 2 for further discussion of the financial covenants in ourtemporarily repay amounts outstanding under its senior credit facility.
 
The notes are convertible at an initial conversion rate of approximately 53.83 shares of the Company’s common stock per $1,000 principal amount of the notes, representing an initial conversion price of approximately $18.58 per share of the Company’s common stock. The initial conversion rate was determined based on the closing trading price of the Company’s common stock on the date of the transaction, plus a 27.5% premium. The terms of the notes do not provide for any beneficial conversion features.
In connection with the offering, the Company entered into capped call transactions to reduce the potential dilution of the Company’s stock upon conversion of the notes. The capped call transactions have a cap price equal to approximately $21.86 per share. The Company paid approximately $81 million for the capped call transactions, which is reflected as a decrease in “Capital in excess of par value,” net of $29 million of associated tax benefits.
Financial instruments that are indexed to an entity’s own stock and are classified as stockholders’ equity in an entity’s statement of financial position are not considered within the scope of derivative instruments. The Company performed an evaluation of the embedded conversion option and capped call transactions, which included an analysis of contingent exercise provisions and settlement requirements, and determined that the embedded conversion option and capped call transactions are considered indexed to the Company’s stock and should be classified as equity, and therefore are not accounted for as derivative instruments. Accordingly, the entire face amount of the notes was recorded as debt until converted or retired at maturity, and the capped call transactions were recorded within equity as described above.
Maturities of long-term debt.Maturities of the Company’s long-term debt as of December 31, 2008 are2010 were as follows:
 
        
 (In thousands)  (In thousands) 
Years ending December 31,        
2009 $1,047,675 
2010  1,080,891 
2011  6,240,015  $455,482 
2012  544,879   545,543 
2013  1,384,226   1,384,226 
2014  3,463,028 
2015  2,025,000 
Thereafter  3,215,837   4,401,938 
   
     12,275,217 
  13,513,523    
Debt premiums and discounts, net  (49,357)  (227,519)
      
 $13,464,166  $12,047,698 
      
 
Fair value of long-term debt.The estimated fair value of the Company’s long-term debt at December 31, 20082010 was approximately $8.5$12.4 billion, versuscompared to its book value of $13.5$12.0 billion. At December 31, 2007,2009, the estimated fair value of the Company’s long-term debt was approximately $10.9$12.9 billion, versuscompared to its book value of $11.2$14.1 billion. The estimated fair value of the Company’s senior andnotes, senior subordinated notes wasand senior credit facility were based on quoted market prices on or about December 31, 2008 and 2007; the fair value of the Company’s senior credit facility is based on estimated amounts.prices.


86

 
NOTE 129 —INCOME TAXES
 
The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”). SFAS 109 requires the recognition ofrecognizes deferred income tax assets, net of applicable reserves, related to net operating loss carryforwards and certain temporary differences. The standard requires recognition of aCompany recognizes future tax benefitbenefits to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied.


74

The income tax provision attributable to continuingConsolidated loss before taxes for domestic and foreign operations and discontinued operations is as follows:consisted of the following:
 
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
Continuing operations $186,298  $757,883  $341,930 
Discontinued operations  —   92,400   6,205 
             
  $186,298  $850,283  $348,135 
             
             
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands) 
 
Domestic operations $(2,309,317) $(2,003,584) $(660,540)
Foreign operations  93,292   (9,009)  (8,448)
             
  $(2,216,025) $(2,012,593) $(668,988)
             
 
The income tax provision (benefit) attributable to income (loss) from continuing operationsloss before income taxes is as follows:
 
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
Current — federal $186,051  $729,249  $328,068 
Deferred — federal  (14,537)  16,921   8,152 
Other noncurrent — federal  8,627   6,326   — 
             
Provision for federal income taxes  180,141   752,496   336,220 
             
Current — state  8,608   2,493   3,920 
Deferred — state  (651)  728   1,432 
Other noncurrent — state  (1,800)  2,166   — 
             
Provision for state income taxes  6,157   5,387   5,352 
             
Current — foreign  —   —   (72)
Deferred — foreign  —   —   430 
             
Provision for foreign income taxes  —   —   358 
             
  $186,298  $757,883  $341,930 
             
             
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands) 
 
Federal
            
Current $(186,444) $(391,281) $186,051 
Deferred (excluding operating loss carryforward)  (404,522)  (280,603)  (14,537)
Deferred—operating loss carryforward  (225,589)  -   - 
Other noncurrent  5,167   7,891   8,627 
             
Provision (benefit) for federal income taxes  (811,388)  (663,993)  180,141 
             
State
            
Current  7,262   1,105   8,608 
Deferred (excluding operating loss and valuation allowance)  (13,739)  (52,860)  (420)
Deferred—operating loss carryforward  (9,619)  (6,357)  (231)
Deferred—valuation allowance  49,208   -   - 
Other noncurrent  (1,707)  1,125   (1,800)
             
Provision (benefit) for state income taxes  31,405   (56,987)  6,157 
             
Foreign
            
Current  1,355   69   - 
Deferred  -   -   - 
             
Provision for foreign income taxes  1,355   69   - 
             
  $(778,628) $(720,911) $186,298 
             


87

 
A reconciliation of the federal income tax statutory rate and the Company’s effective tax rate is as follows:
 
                        
 Year Ended December 31,  Year Ended December 31, 
 2008 2007 2006  2010 2009 2008 
Federal income tax statutory rate  (35.0)%  35.0%  35.0%  (35.0%)  (35.0%)  (35.0%)
State income tax (net of federal benefit)  0.8   0.1   0.4 
State income tax (net of federal effect)  (0.5)  (1.9)  0.8 
State valuation allowance  1.5   -   - 
Goodwill write-down  61.1   —   —   -   -   61.1 
Reversal of reserves for prior tax years  —   (0.2)  (0.8)
Losses of unconsolidated foreign affiliates  1.0   2.0   — 
Domestic Production Activity deduction  —   (1.8)  — 
Foreign jurisdiction (income) losses  (1.2)  0.4   1.0 
Tax credits  (1.0)  (0.3)  (0.6)  (0.2)  (0.2)  (1.0)
Permanent and other items  0.9   0.3   1.0   0.3   0.9   0.9 
              
  27.8%  35.1%  35.0%  (35.1%)  (35.8%)  27.8% 
              


75

The major tax-effected components of the Company’s net deferred tax liability are as follows:
 
                
 At December 31,  At December 31, 
 2008 2007  2010 2009 
 (In thousands)  (In thousands) 
Deferred tax assets — federal and state        
Deferred tax assets—federal and state        
Bad debt reserve $41,452  $38,144  $43,007  $44,817 
Deferred compensation  35,978   48,439   14,278   13,967 
Net operating loss carryforward  1,204   1,054   237,178   5,336 
Preopening andstart-up costs
  4,928   4,278 
Accruals, reserves and other  69,321   70,350   80,663   98,687 
Investments in unconsolidated affiliates  433,416   - 
Stock-based compensation  50,677   37,059   51,582   49,910 
Tax credits  2,491   2,491   27,774   2,491 
Michigan Business Tax deferred asset, net  39,067   37,541 
          
  206,051   201,815   926,965   252,749 
Less: Valuation allowance  (4,197)  (4,047)  (36,334)  (4,349)
          
 $201,854  $197,768   890,631   248,400 
          
Deferred tax liabilities — federal and state        
Deferred tax liabilities—federal and state        
Property and equipment $(3,455,987) $(3,420,115)  (2,731,513)  (2,732,737)
Long-term debt  (6,500)  (1,479)  (369,946)  (235,372)
Investments in unconsolidated affiliates  (15,709)  (26,643)  -   (173,034)
Cost method investments  (41,849)  - 
Intangibles  (101,703)  (102,738)  (106,564)  (100,073)
          
  (3,579,899)  (3,550,975)  (3,249,872)  (3,241,216)
          
Deferred taxes — foreign  2,034   2,214 
Less: Valuation allowance  (2,034)  (2,214)
     
Net deferred tax liability $(3,378,045) $(3,353,207) $(2,359,241) $(2,992,816)
          
 
The 2009 components of the Company’s net deferred tax liability disclosed in the table above reflect adjustments to correct amounts previously presented. The primary impact was to move $349 million and $55 million of deferred tax liabilities from “Property and equipment” and “Accruals, reserves, and other,” respectively, to “Investments in Unconsolidated Affiliates.” These adjustments have no impact on the Company’s consolidated balance sheet or statement of operations, and the Company does not believe the adjustments to the 2009 footnote presentation are material to the consolidated financial statements.
As of December 31, 2010, the Company has excess financial reporting basis over the tax basis of its foreign corporate joint venture in Macau in the amount of $37 million that management does not consider to be essentially


88

permanent in duration. The Company has not provided deferred taxes for such excess because there would be sufficient creditable foreign taxes to offset all U.S. income tax that would result from the future repatriation of the foreign earnings that created such excess basis.
For U.S. federal income tax purposes, the Company generated in 2010 a net operating loss of $1.2 billion and general business tax credits of $7 million. Approximately $552 million of the net operating loss will be carried back to prior tax years. Consequently, the Company has recorded the expected refund from this carryback in “Income tax receivable” at December 31, 2010. The remaining $645 million of the net operating loss will be carried forward and will expire if not utilized by 2030. In addition, the carryback will create an alternative minimum tax credit carryforward of $12 million that will not expire and a general business tax credit carryforward of $6 million that will expire if not utilized by 2029. The general business tax credit of $7 million generated in 2010 will expire if not utilized by 2030. The Company has a charitable contribution carryforward of $5 million that will begin to expire in 2014 and a foreign tax credit carryforward of $2 million that will expire in 2015 if not utilized.utilized by 2015.
The Company at December 31, 2010, was close to the ownership change threshold set forth in Internal Revenue Code section 382 as a result of transactions in its stock over the past several years. Should an ownership change occur in a future period, the Company’s U.S. federal income tax net operating losses and tax credits incurred prior to the ownership change would generally be subject to a post-change annual usage limitation equal to the value of the Company at the time of the ownership change multiplied by the long-term tax exempt rate at such time as established by the IRS. The Company does not anticipate that this limitation would prevent the utilization of the Company’s net operating losses and tax credits prior to their expiration or materially impact the cash taxes payable in future years.
 
For state income tax purposes, the Company has Illinois and Michigan net operating loss carryforwards of $46 million and $154 million, respectively, which equates to deferred tax assets, after federal tax effect and before valuation allowance, of $2 million and $6 million, respectively. The Illinois and Michigan net operating loss carryforwards will begin to expire if not utilized by 2021 and 2019, respectively. The Company has New Jersey net operating loss carryforwards of $21$49 million, which equates to a deferred tax asset of $1$3 million, after federal tax effect, and before valuation allowance. The New Jersey net operating loss carryforwards will expire atif not utilized by various dates from 20092011 through 2015 if2030.
On January 13, 2011, the state of Illinois enacted increases to its corporate income tax rate and also suspended the use of net operating loss carryforwards for three years, effective beginning 2011. The Company does not utilized.anticipate that these tax law changes will have a material impact on its Illinois deferred tax liability.
 
At December 31, 2008,2010, there is a $2$34 million valuation allowance, after federal effect, provided on certain New Jersey state net operating loss carryforwards and other New Jersey state deferred tax assets,assets. In addition, there is a valuation allowance of $2 million on the foreign tax credit and a $2 million valuation allowance related to certain foreign deferred tax assets because management believes these assets do not meet the “more likely than not” criteria for recognition under SFAS 109. Management believes all otherrecognition. Given the negative impact of the U.S. economy on the results of operations in the past several years and expectations that the Company will continue to be adversely affected by certain aspects of the current economic conditions, the Company no longer relies on future operating income in assessing the realizability of its deferred tax assets are more likely than not to be realized because ofand now relies only on the future reversal of existing taxable temporary differences. Accordingly, the Company concluded during 2010 that realization of certain of its state deferred tax assets was no longer more likely than not and the Company provided an additional valuation allowance in the amount of $32 million, net of federal effect, with a corresponding reduction in income tax benefit. Since the future reversal of existing U.S. federal taxable temporary differences and expectedcurrently exceeds the future reversal of existing U.S. federal deductible temporary differences, the Company continued to conclude that it is more likely than not that its U.S. federal deferred tax assets, other than the foreign tax credit carryforward, are realizable. Should the Company continue to experience operating losses of the same magnitude it has experienced in the past several years, it is reasonably possible in the near term that the future reversal of its U.S. federal deductible temporary differences could exceed the future reversal of its U.S. federal taxable income. Accordingly, there are no othertemporary differences, in which case the Company would record a valuation allowances provided at December 31, 2008.allowance for such excess with a corresponding reduction of federal income tax benefit on its statement of operations.
 
Effective January 1, 2007, theThe Company adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 requires thatassesses its tax positions be assessed using a two-step process. A tax position is recognized if it meets a “more likely than not” threshold, and is measured at the largest amount of benefit that is greater than 50 percent


89

likely of being realized. Uncertain tax positions must be reviewed at each balance sheet date. Liabilities recorded as a result of this analysis must generally be recorded separately from any current or deferred income tax accounts, and at December 31, 2008,2010, the Company has classified $1$16 million as current (“Otherin “Other accrued liabilities”) and $118$144 million as long-term (“Otherin “Other long-term obligations”) in the accompanying consolidated balance sheets,obligations,” based on the time until expected payment. A cumulative effect adjustment to retained earnings was not required as a result of the implementation of FIN 48.


76

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits is as follows (in thousands):follows:
 
                    
 Year Ended December 31,  2010 2009 2008 
 2008 2007  (In thousands) 
Gross unrecognized tax benefits at January 1 $77,328  $105,139  $161,377  $102,783  $77,328 
Gross increases — Prior period tax positions  25,391   14,423 
Gross decreases — Prior period tax positions  (12,467)  (47,690)
Gross increases — Current period tax positions  13,058   13,220 
Gross increases – Prior period tax positions  16,431   13,890   25,391 
Gross decreases – Prior period tax positions  (40,347)  (10,372)  (12,467)
Gross increases – Current period tax positions  14,995   60,286   13,058 
Settlements with taxing authorities  (527)  (7,162)  (14,844)  (5,210)  (527)
Lapse in statutes of limitations  —   (602)  (3,195)  -   - 
            
Gross unrecognized tax benefits at December 31 $102,783  $77,328  $134,417  $161,377  $102,783 
            
 
The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $29$30 million and $24$34 million at December 31, 20082010 and December 31, 2007,2009, respectively.
 
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. This policy did not change as a result of the adoption of FIN 48. The Company had $17$26 million and $11$24 million in interest related to unrecognized tax benefits accrued as of December 31, 20082010 and December 31, 2007,2009, respectively. No amounts were accrued for penalties as of either date. Income tax expense for the years ended December 31, 20082010, 2009, and December 31, 20072008 includes interest related to unrecognized tax benefits of $8 million, $8 million, and $6 million, and $7 million, respectively. For the year prior to adoption of FIN 48, income tax expense included amounts accrued for interest expense of $2 million for the year ended December 31, 2006.
 
The Company files income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and foreign jurisdictions, although the taxes paid in foreign jurisdictions are not material. As of December 31, 2008,2010, the Company wasis no longer subject to examination of its U.S. consolidated federal income tax returns filed for years ended prior to 2003. While the2005. The IRS completed its examination of the 2001 and 2002 tax years closed during the first quarter of 2007, the statute of limitations for assessing tax for such years has been extended in order for the Company to appeal issues related to a land sale transaction that were not agreed upon at the closure of the examination. The appeals discussions continue, and the Company has requested to enter into appeals mediation procedures with the IRS. Consequently, the Company believes that it is reasonably possible to settle these issues within the next twelve months. The IRS is currently examining the Company’s consolidated federal income tax returns for the 2003 and 2004 tax years during 2010 and the Company paid $12 million in tax and $4 million in associated interest with respect to adjustments to which it agreed. In addition, the Company submitted a protest to IRS Appeals of certain adjustments to which it does not agree. The opening Appeals conference has been scheduled to occur in the first quarter of 2011. It is reasonably possible that the issues subject to Appeal may be settled within the next 12 months. During the fourth quarter of 2010, the IRS opened an examination of the Company’s consolidated federal income tax returns for the 2005 through 2009 tax years.
The IRS informed the Company during the fourth quarter of 2010 that they would initiate an audit of the 2007 through 2009 tax years of CityCenter Holdings LLC, an unconsolidated affiliate treated as a partnership for income tax purposes. The IRS also informed the Company that they would initiate an audit of the 2008 through 2009 tax years of MGM Grand Detroit LLC, a subsidiary treated as a partnership for income tax purposes. Neither of these audits were initiated in 2010 but the Company foranticipates that both will be initiated in early 2011.
The Company reached settlement during 2010 with IRS Appeals with respect to the audit of the 2004 through 2006 tax years. Tax returns for subsequent years of MGM Grand Detroit, LLC. At issue was the tax treatment of payments made under an agreement to develop, own and operate a hotel casino in the City of Detroit. The Company will owe $1 million in tax as a result of this settlement.
During the fourth quarter of 2010, the Company are also subjectand its joint venture partner reached tentative settlement with IRS Appeals with respect to examination. In addition,the audit of the 2003 and 2004 tax years of a cost method investee of the Company’s that is treated as a partnership for income tax purposes. The adjustments to which the Company agreed in such settlement will be included in any settlement that it may reach with respect to the 2003 and 2004 examination of its consolidated federal income tax return.
The IRS closed during the first quarter of 2009, the IRS initiated an2010 its examination of the federal income tax return of Mandalay Resort Group for the


90

pre-acquisition year ended April 25, 2005.2005 and issued a “No-Change Letter.” The statute of limitations for assessing tax for theall Mandalay Resort Group federal income tax return for the year ended January 31, 2005 has been extended but such return is not currently under examination by the IRS.pre-acquisition years are now closed.
 
As of December 31, 2008,2010, other than the exceptions noted below, the Company was no longer subject to examination of its various state and local tax returns filed for years ended prior to 2003. A2006. The state of Illinois during 2010 initiated an audit of its Illinois combined returns for the 2006 and 2007 tax years. It is reasonably possible that this audit will close and all issues will be settled in the next 12 months. The state of New Jersey began audit procedures during 2010 of a cost method investee of the Company’s for the 2003 through 2006 tax years. The City of Detroit previously indicated that it would audit a Mandalay Resort Group subsidiary return for the pre-acquisition year ended April 25 2005 is under examination bybut no audit was initiated and the Citystatute of Detroit. During the first quarter of 2008, the state of Mississippi settled an examination of returns filed by subsidiaries of MGM MIRAGE and Mandalay Resort Grouplimitations for the 2004 through 2006assessing tax years. This settlement resultedexpired in a payment of additional taxes and interest of less than $1 million.2010. No other state or local income tax returns of the CompanyCompany’s are currently under exam.
 
The Company believes that it is reasonably possible that the total amounts of unrecognized tax benefits at December 31, 20082010 may decrease by a range of $0 to $2$28 million within the next twelve months primarily on the expectation thatduring such period of possible settlement of certain issues under appeal in connection with the appealIRS audit of the 2001Company’s 2003 and 20022004 consolidated federal income tax year issues may close during such period. As of December 31, 2007, the Company believed that it was reasonably possible that the amount of unrecognized tax benefits at such date may decrease by a range of $0 to $8 million during the year ended December 31, 2008, primarily on the expectation that the appeal of the 2001 and 2002 tax year issues would close and various statutes of limitation would lapse during 2008. However, the appeal did not close during 2008 and the Company increased the amount of certain other unrecognized tax benefits during 2008 based upon a reassessment of the measurement of such tax benefits during the year.returns.


77

NOTE 1310 —COMMITMENTS AND CONTINGENCIES
 
Leases. The Company leases real estate and various equipment under operating and, to a lesser extent, capital lease arrangements. Certain real estate leases provide for escalation of rent based upon a specified price indexand/or based upon periodic appraisals.
 
At December 31, 2008,2010, the Company was obligated under non-cancelablenon-cancellable operating leases and capital leases to make future minimum lease payments as follows:
 
                
 Operating
 Capital
  Operating
 Capital
 
 Leases Leases  Leases Leases 
 (In thousands)  (In thousands) 
Years ending December 31,        
2009 $13,626  $1,887 
2010  10,844   1,859 
2011  8,974   1,670  $13,917  $1,655 
2012  7,901   1,204   11,868   1,179 
2013  5,884   37   8,308   37 
2014  5,644   - 
2015  4,908   - 
Thereafter  44,052   —   36,799   - 
          
Total minimum lease payments $91,281   6,657  $81,444   2,871 
      
Less: Amounts representing interest      (212)      (132)
      
Total obligations under capital leases      6,445       2,739 
Less: Amounts due within one year      (1,685)      (1,503)
      
Amounts due after one year     $4,760      $1,236 
      
 
The current and long-term obligations under capital leases are included in “Other accrued liabilities” and “Other long-term obligations,” respectively, in the accompanying consolidated balance sheets.respectively. Rental expense for operating leases, including rental expense of discontinued operations, was $26 million for 2010, $24 million for 2009, and $29 million for December 31, 2008 and $36 million for each of the years ended December 31, 2007 and 2006.
Mashantucket Pequot Tribal Nation.  The Company entered into a series of agreements to implement a strategic alliance with the Mashantucket Pequot Tribal Nation (“MPTN”), which owns and operates Foxwoods Casino Resort in Mashantucket, Connecticut. The Company and MPTN have formed a jointly owned company — Unity Gaming, LLC — to acquire or develop future gaming and non-gaming enterprises. Under certain circumstances, the Company will provide a loan of up to $200 million to finance a portion of MPTN’s investment in joint projects.
Kerzner/Istithmar Joint Venture.  In September 2007, the Company entered into a definitive agreement with Kerzner International and Istithmar forming a joint venture to develop a multi-billion dollar integrated resort to be located on the southwest corner of Las Vegas Boulevard and Sahara Avenue. In September 2008, the Company and its partners agreed to defer additional design and pre-construction activities and amended their joint venture agreement accordingly. In the event the joint venture determines that the resort will be developed, the Company will contribute 40 acres of land, valued at $20 million per acre, for fifty percent of the equity in the joint venture. Kerzner International and Istithmar will contribute cash totaling $600 million, of which $200 million will be distributed to the Company, for the other 50% of the equity.2008.
 
CityCenter completion guarantee. As discussed in Note 8,The Company entered into a completion guarantee requiring an unlimited completion and cost overrun guarantee from the Company, secured by its interests in the assets of Circus Circus Las Vegas and Infinity World have entered into partialcertain adjacent undeveloped land. The terms of the completion guarantees in conjunction with the CityCenter credit facility. The partial completion guaranteesguarantee provide for additional contingent fundingthe ability to utilize up to $250 million of net residential proceeds to fund construction costs, inthough the eventtiming of receipt of such fundingproceeds is necessary to complete the project, up to a maximum amountuncertain.
As of $600 million from each partner. During the fourth quarter of 2008,December 31, 2010 the Company has funded $553 million under the completion guarantee. The Company has recorded a liabilityreceivable from CityCenter of $205$124 million classified as “Other long-term obligations” in the accompanying consolidated balance sheets, equalrelated to these amounts, which represents amounts reimbursable to the fair value of its partial completion guarantee in accordance with FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.”Company from CityCenter from future residential proceeds. The Company has a


7891

remaining estimated net obligation under the completion guarantee of $80 million which includes estimated litigation costs related to the resolution of disputes with contractors as to the final construction costs and reflects certain estimated offsets to the amounts claimed by the contractors. CityCenter has reached, or expects to reach, settlement agreements with most of the construction subcontractors. However, significant disputes remain with the general contractor and certain subcontractors. Amounts claimed by such parties exceed amounts included in the Company’s completion guarantee accrual by approximately $200 million. Moreover, the Company has not accrued for any contingent payments to CityCenter related to the Harmon Hotel & Spa component, which is unlikely to be completed using the building as it now stands. The Company does not believe it would be responsible for funding any additional remediation efforts that might be required with respect to the Harmon; however, the Company’s view is based on a number of developing factors, including with respect to on-going litigation with CityCenter’s contractors, actions by local officials and other developments related to the CityCenter venture, that are subject to change.
In January 2011, the Company entered into an amended completion and cost overrun guarantee in connection with CityCenter’s restated senior credit facility agreement and issuance of $1.5 billion of senior secured first lien notes and senior secured second lien notes, as previously discussed. Consistent with the terms of the previous completion guarantee, the terms of the amended completion guarantee provide for the ability to utilize the remaining $124 million of net residential proceeds to fund construction costs, or to reimburse the Company for construction costs previously expended, though the timing of receipt of such proceeds is uncertain.
CityCenter construction litigation. In March 2010, Perini Building Company, Inc., general contractor for the CityCenter development project (the “Project”), filed a lawsuit in the Eighth Judicial District Court for Clark County, State of Nevada, against MGM MIRAGE Design Group (a wholly-owned subsidiary of the Company which was the original party to the Perini construction agreement) and certain direct or indirect subsidiaries of CityCenter Holdings, LLC (the “CityCenter Owners”). Perini asserts that the Project was substantially completed, but the defendants failed to pay Perini approximately $490 million allegedly due and owing under the construction agreement for labor, equipment and materials expended on the Project. The complaint further charges the defendants with failure to provide timely and complete design documents, late delivery to Perini of design changes, mismanagement of the change order process, obstruction of Perini’s ability to complete the Harmon Hotel & Spa component, and fraudulent inducement of Perini to compromise significantly amounts due for its general conditions. The complaint advances claims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious breach of the implied covenant of good faith and fair dealing, unjust enrichment and promissory estoppel, and fraud and intentional misrepresentation. Perini seeks compensatory damages, punitive damages, attorneys’ fees and costs.
In April 2010, Perini served an amended complaint in this case which joins as defendants many owners of CityCenter residential condominium units (the “Condo Owner Defendants”), adds a count for foreclosure of Perini’s recorded master mechanic’s lien against the CityCenter property in the amount of approximately $491 million, and asserts the priority of this mechanic’s lien over the interests of the CityCenter Owners, the Condo Owner Defendants and the Project lenders in the CityCenter property.
The CityCenter Owners and the other defendants dispute Perini’s allegations, and contend that the defendants are entitled to substantial amounts from Perini, including offsets against amounts claimed to be owed to Perini and its subcontractors and damages based on breach of their contractual and other duties to CityCenter, duplicative payment requests, non-conforming work, lack of proof of alleged work performance, defective work related to the Harmon Hotel & Spa component, property damage and Perini’s failure to perform its obligations to pay Project subcontractors and to prevent filing of liens against the Project. Parallel to the court litigation CityCenter management conducted an extra-judicial program for settlement of Project subcontractor claims. CityCenter has resolved the claims of the majority of the 223 first-tier subcontractors, with only several remaining for further proceedings along with trial of Perini’s claims and CityCenter’s Harmon-related counterclaim and other claims by CityCenter against Perini and its parent guarantor, Tutor Perini. In December 2010, Perini recorded an amended notice of lien reducing its lien to approximately $313 million.
The CityCenter Owners and the other defendants will continue to vigorously assert and protect their interests in


92

the lawsuit. The range of loss beyond the claims asserted to date by Perini or any gain the joint venture may realize related to the defendants’ counterclaims cannot be reasonably estimated at this time.
Other litigation. The Company is a party to various legal proceedings, most of which relate to routine matters incidental to its business. Management does not believe that the outcome of such proceedings will have a material adverse effect on the Company’s financial position, results of operations or cash flows.
Other guarantees. The Company is party to various guarantee contracts in the normal course of business, which are generally supported by letters of credit issued by financial institutions. The Company’s senior credit facility limits the amount of letters of credit that can be issued to $250 million, and the amount of available borrowings under the senior credit facility is reduced by any outstanding letters of credit. At December 31, 2008,2010, the Company had provided $92$37 million of total letters of credit, including $50 million to support bonds issued by the Economic Development Corporation of the City of Detroit, which are recorded as a liability of the Company. Though not subject to a letter of credit, the Company has an agreement with the Nevada Gaming Control Board to maintain $120 million of availability under its senior credit facility to support normal bankroll requirements at the Company’s Nevada operations. Due to the fact that the Company borrowed the remaining available funds under its senior credit facility after December 31, 2008 as described in Note 2, the Company has established separate bank accounts to hold a minimum of $120 million to support its obligation under the bankroll requirements.
Sales and use tax on complimentary meals.  In March 2008, the Nevada Supreme Court ruled, in a case involving another casino company, that food and non-alcoholic beverages purchased for use in providing complimentary meals to customers and to employees were exempt from sales and use tax. The Company had previously paid use tax on these items and has generally filed for refunds for the periods from January 2001 to February 2008 related to this matter. The amount subject to these refunds, including amounts related to the Mandalay Resort Group properties prior to the Company’s 2005 acquisition of Mandalay Resort Group, is approximately $38 million.
The Nevada Department of Taxation (the “Department”) filed a petition for rehearing, which the Nevada Supreme Court announced in July 2008 it would not grant. As of December 31, 2008, the Company had not recorded income related to this matter because the refund claims are subject to audit and it is unclear whether the Department will pursue alternative legal theories in connection with certain issues raised in the Supreme Court case in any audit of the refund claims. However, the Company is claiming the exemption on sales and use tax returns for periods after February 2008 in light of the Nevada Supreme Court decision.
Litigation.  The Company is a party to various legal proceedings, most of which relate to routine matters incidental to its business. Management does not believe that the outcome of such proceedings will have a material adverse effect on the Company’s financial position or results of operations.credit.
 
NOTE 1411 —STOCKHOLDERS’ EQUITY
 
Tender offer.2010 stock offering. In February 2008,October 2010, the Company issued 40.9 million shares of its common stock for total net proceeds to the Company of $512 million. Concurrently with the Company’s issuance, Tracinda sold approximately 27.8 million shares of the Company’s common stock. The Company did not receive any proceeds from the sale of such common stock by Tracinda. In November 2010, the underwriter exercised its ability to purchase an additional 6.1 million shares from the Company and a wholly-owned subsidiary of Dubai World completed a joint tender offer to purchase 154.2 million shares from Tracinda to cover overallotments, with net proceeds to the Company of approximately $76 million. Proceeds from the common stock offering were used to repay outstanding amounts under the Company’s senior credit facility (see Note 8) and for general corporate purposes. Giving effect to the common stock offering, the Company has approximately 3.3 million authorized shares in excess of its outstanding shares, the underwriter’s overallotment option, and shares underlying its outstanding convertible senior notes and share-based awards.
2009 stock offering. In May 2009, the Company issued approximately 164.5 million shares, including approximately 21.5 million shares issued as a result of the underwriters exercising their over-allotment option, of its common stock at a price of $80 per share. The Company purchased 8.5 million shares at a total purchase price of $680 million.
Stock sale.  On October 18, 2007, the Company completed the sale of 14.2 million shares of common stock to Infinity World Investments, a wholly-owned subsidiary of Dubai World, at a price of $84$7 per share, for total net proceeds to the Company of approximately $1.2$1.1 billion. TheseA portion of the shares were previously held by the Company as treasury stock.stock and a portion of the shares were newly issued. Proceeds from the salecommon stock offering and concurrent offering of senior secured notes were used to reducerepay outstanding amounts outstanding under the Company’s senior credit facility.facility and redeem certain outstanding senior debentures and senior notes and for general corporate purposes.
 
Stock repurchases. Share repurchases are only conducted under repurchase programs approved by the Board of Directors and publicly announced. At December 31, 2008,2010, the Company had 20 million shares available for repurchase under the May 2008 authorization. Shareauthorization, subject to limitations under the Company’s agreements governing its long-term indebtedness. The Company did not repurchase activity was as follows:any shares during 2010 or 2009. The Company repurchased 18.1 million shares in 2008 for $1.24 billion and an average price of $68.36.
 
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
July 2004 authorization (8 million and 6.5 million shares purchased) $—  $659,592  $246,892 
December 2007 authorization (18.1 million and 1.9 million shares purchased)  1,240,856   167,173   — 
             
  $1,240,856  $826,765  $246,892 
             
Average price of shares repurchased $68.36  $83.92  $37.98 


79

NOTE 1512 —STOCK-BASED COMPENSATION
 
Information about the Company’s share-based awards. The Company adopted an omnibus incentive plan in 2005 which, as amended, allows it to grant stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), and other stock-based awards to eligible directors, officers and employees of the Company and its subsidiaries. The plans are administered by the Compensation Committee (the “Committee”) of the Board of Directors. The Committee has discretion under the omnibus plan regarding which type of awards to grant, the vesting and service requirements, exercise price and other conditions, in all cases subject to certain limits, including:
 •  As amended, the omnibus plan allows for the issuance of up to 35 million (20 million prior to an August 2008 amendment) shares or share-based awards; and
 •  For stock options and SARs, the exercise price of the award must be at least equal to the fair market value of the stock on the date of grant and the maximum term of such an award is 10 years.
 
Stock options and SARs granted under all plans generally have terms of either seven or ten years, and in most cases vest in either four or five equal annual installments. RSUs granted vest ratably over 4 years. The Company’s practice is to issue new shares upon exercise or vesting of awards.


93

Exchange offer.  In September 2008, the Company offered certain eligible employees an opportunity to exchange certain outstanding stock options and SARs for RSUs which provide a right to receive one share of common stock for each RSU. The exchange offer expired in October 2008. The number of RSUs to be granted in the exchange offer was based on an exchange ratio for each grant determined by the Committee. The total number of stock options and SARs eligible to be exchanged was approximately 4.7 million, of which approximately 4.2 million were exchanged for a total of approximately 0.7 million RSUs. On the date of the exchange, the estimated fair value of the RSUs did not exceed the estimated fair value of the exchanged stock options and SARs calculated immediately prior to the exchange. Therefore, the Company will not record additional expense related to the exchange and the unamortized compensation related to the exchanged stock options and SARs will continue to be amortized to expense ratably over the remaining life of the new RSUs. The RSUs granted in the exchange offer will vest on the same dates that the underlying stock options and SARs would have otherwise vested, except that no RSUs will vest prior to July 1, 2009. All exchanged stock options and SARs which have vested, or would have vested, before July 1, 2009 were replaced by RSUs that vest on July 1, 2009.
 
Activity under share-based payment plans. As of December 31, 2008,2010, the Company had an aggregate number of share-based awardsapproximately 11 million shares of common stock available for grant as share-based awards under the Company’s omnibus plan was 17.6 million.incentive plan. Such capacity is limited to 3.3 million shares as a result of the Company’s fourth quarter 2010 common stock offering discussed in Note 11. A summary of activity under the Company’s share-based payment plans for the twelve monthsyear ended December 31, 20082010 is presented below:
 
Stock options and stock appreciation rights (“SARs“)
 
                 
        Weighted
    
     Weighted
  Average
  Aggregate
 
     Average
  Remaining
  Intrinsic
 
  Shares
  Exercise
  Contractual
  Value
 
  (000’s)  Price  Term  ($000’s) 
 
Outstanding at January 1, 2008  26,674  $31.90         
Granted  4,952   35.60         
Exercised  (888)  16.08         
Exchanged  (4,235)  68.06         
Forfeited or expired  (1,293)  34.91         
                 
Outstanding at December 31, 2008  25,210   26.98   4.02  $7,348 
                 
Vested and expected to vest at December 31, 2008  24,938   26.96   4.75  $7,348 
                 
Exercisable at December 31, 2008  16,301   23.34   3.60  $7,348 
                 
                 
        Weighted
    
     Weighted
  Average
    
     Average
  Remaining
  Aggregate
 
  Shares
  Exercise
  Contractual
  Intrinsic
 
  (000’s)  Price  Term  Value 
 
Outstanding at January 1, 2010  28,211  $23.17         
Granted  3,850   11.85         
Exercised  (140)  9.86         
Forfeited or expired  (3,792)  22.87         
                 
Outstanding at December 31, 2010  28,129   21.73   3.51  $59,711 
                 
Vested and expected to vest at December 31, 2010  27,616   21.91   3.46  $57,761 
                 
Exercisable at December 31, 2010  18,403   25.96   2.42  $21,298 
                 


80

The following tables include additional information related to stock options, SARs and RSUs:
Restricted stock units (“RSUs“)
         
     Weighted
 
     Average
 
  Shares
  Grant-Date
 
  (000’s)  Fair Value 
 
Nonvested at January 1, 2010  1,080  $15.85 
Granted  453   11.35 
Vested  (323)  16.51 
Forfeited  (66)  15.54 
         
Nonvested at December 31, 2010  1,144   13.90 
         
             
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands) 
 
Intrinsic value of share-based awards exercised or vested $4,377  $2,546  $33,342 
Income tax benefit from share-based awards exercised or vested  1,521   891   10,494 
Proceeds from stock option exercises  -   637   14,116 
In 2009, the Company began to net settle stock option exercises, whereby shares of common stock are issued equivalent to the intrinsic value of the option less applicable taxes. Accordingly, the Company no longer receives proceeds from the exercise of stock options.
As of December 31, 2008,2010, there was a total of $54$58 million of unamortized compensation related to stock options and SARsstock appreciation rights expected to vest, which is expected to be recognized over a weighted-average period of 1.92.0 years. The following table includes additional information related to stock options and SARs:
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
Intrinsic value of stock options and SARs exercised $33,342  $339,154  $166,257 
Income tax benefit from stock options and SARs exercised  10,494   114,641   56,351 
Proceeds from stock option exercises  14,116   97,792   89,113 
Restricted stock units
During the fourth quarter of 2008, the Company issued RSUs for 0.7 million shares as part of the exchange offer discussed above and granted additional RSUs for 0.4 million shares to certain eligible employees.
         
     Weighted
 
     Average
 
  Shares
  Grant-Date
 
  (000’s)  Fair Value 
 
Nonvested at January 1, 2008  —  $— 
Granted in exchange offer  699   18.90 
Granted  386   19.00 
Vested  —   — 
Forfeited  (31)  19.00 
         
Nonvested at December 31, 2008  1,054   18.93 
         
As of December 31, 2008,2010, there was a total of $73$36 million of unamortized compensation related


94

to restricted stock units, which is expected to be recognized over a weighted-average period of 2.11.5 years. $67$27 million of such unamortized compensation relates to the RSUs granted in the exchange.Company’s 2008 exchange offer. RSUs granted to corporate officers are subject to certain performance requirements determined by the Committee. Such performance requirements do not apply to RSUs granted in the exchange offer.
 
Recognition of compensation cost.  The Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”) on January 1, 2006 using the modified prospective method. The Company recognizes the estimated fair value of stock options and SARs granted under the Company’s omnibus plan based on the estimated fair value of these awards measured at the date of grant using the Black-Scholes model. For restricted stock units, compensation cost is calculated based on the fair market value of ourits stock on the date of grant. For stock options awards granted prior to adoption,January 1, 2006, the unamortized expense is being recognized on an accelerated basis, since this was the method used for disclosure purposes prior to the adoption of SFAS 123(R).basis. For all awards granted after adoption,January 1, 2006, such expense is being recognized on a straight-line basis over the vesting period of the awards. Forfeitures are estimated at the time of grant, with such estimate updated periodically and with actual forfeitures recognized currently to the extent they differ from the estimate. The Company capitalizes stock-based compensation related to employees dedicated to construction activities. In addition, the Company charges CityCenter for stock-based compensation related to employees dedicated to CityCenter.


81

The following table shows information about compensation cost recognized:
 
                        
 Year Ended December 31,  Year Ended December 31, 
 2008 2007 2006  2010 2009 2008 
 (In thousands)  (In thousands) 
Compensation cost:            
Stock options and SARs $37,766  $48,063  $71,386 
Restricted stock and RSUs  4,652   —   3,038 
Compensation cost            
Stock options and SARS $20,554  $21,756  $37,766 
RSUs  19,693   21,294   4,652 
              
Total compensation cost  42,418   48,063   74,424   40,247   43,050   42,418 
Less: CityCenter reimbursed costs  (6,019)  (796)  —   (5,259)  (6,415)  (6,019)
Less: Compensation cost capitalized  (122)  (1,589)  (798)  -   (64)  (122)
              
Compensation cost recognized as expense  36,277   45,678   73,626   34,988   36,571   36,277 
Less: Related tax benefit  (12,569)  (15,734)  (24,901)  (12,162)  (12,689)  (12,569)
              
Compensation expense, net of tax benefit $23,708  $29,944  $48,725  $22,826  $23,882  $23,708 
              
 
Compensation cost for stock options and SARs was based on the estimated fair value of each award, measured by applying the Black-Scholes model on the date of grant, using the following weighted-average assumptions:
 
                        
 Year Ended December 31,  Year Ended December 31, 
 2008 2007 2006  2010 2009 2008 
Expected volatility  50%  32%  33%  71%   82%   50% 
Expected term  4.6 years   4.1 years   4.1 years   4.8 yrs.   4.7 yrs.   4.6 yrs. 
Expected dividend yield  0%  0%  0%  0%   0%   0% 
Risk-free interest rate  2.7%  4.4%  4.9%  1.9%   2.4%   2.7% 
Forfeiture rate  3.5%  4.6%  4.6%  4.8%   3.5%   3.5% 
Weighted-average fair value of options granted $14.49  $25.93  $14.50  $6.91  $5.37  $14.49 
 
Expected volatility is based in part on historical volatility and in part on implied volatility based on traded options on the Company’s stock. The expected term considers the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate is based on the rates in effect on the grant date for U.S. Treasury instruments with maturities matching the relevant expected term of the award.
 
NOTE 1613 —EMPLOYEE BENEFIT PLANS
 
Employees of the Company who are members of various unions are covered by union-sponsored, collectively bargained, multi-employer health and welfare and defined benefit pension plans. The Company recorded an


95

expense of $205 million in 2010, $177 million in 2009, and $192 million in 2008 $194 million in 2007 and $189 million in 2006 under such plans. The plans’ sponsors have not provided sufficient information to permit the Company to determine its share of unfunded vested benefits, if any.
 
The Company is self-insured for most health care benefits and workers compensation for its non-union employees. The liability for health care claims filed and estimates of claims incurred but not reported was $18 million and $20 million at December 31, 2010 and 2009, respectively. The workers compensation liability for claims filed and estimates of claims incurred but not reported — $22was $24 million and $25$27 million atas of December 31, 20082010 and 2007, respectively — isDecember 31, 2009, respectively. Both liabilities are included in “Other accrued liabilities” in the accompanying consolidated balance sheets.liabilities.”
 
The Company has retirement savings plans under Section 401(k) of the Internal Revenue Code for eligible employees. The plans allow employees to defer, within prescribed limits, up to 30% of their income on a pre-tax basis through contributions to the plans. The Company matches, within prescribed limits, a portion ofsuspended contributions to the plan in 2009, though certain employees at MGM Grand Detroit and Four Seasons were still eligible employees’for matching contributions. In the case of certain union employees, the Company contributions to the plan are based on hours worked. The Company recorded charges for 401(k) contributions of $3 million in 2010, $2 million in 2009 and $25 million in 20082008. The Company reinstated a more limited 401(k) company contribution in 2011 and $27 million in 2007 and 2006.will continue to monitor the plan contributions as the economy changes.
 
The Company maintains nonqualified deferred retirement plans for certain key employees. The plans allow participants to defer, on a pre-tax basis, a portion of their salary and bonus and accumulate tax deferred earnings, plus investment earnings on the deferred balances, as a deferred tax savings. Through December 31, 2008 participants earned a Company match of up to 4% of salary, net of any Company match received under the Company’s 401(k) plan. In 2009, the Company suspended contributions to the plan. All employee deferrals vest immediately. The Company matching contributions vest


82

ratably over a three-year period. The Company recorded charges for matching contributions of $1 million in 2008 and 2007, and $2 million in 2006.2008.
 
The Company also maintains nonqualified supplemental executive retirement plans (“SERP”) for certain key employees. Until September 30, 2008, the Company made quarterly contributions intended to provide a retirement benefit that is a fixed percentage of a participant’s estimated final five-year average annual salary, up to a maximum of 65%. The Company contributions and investment earnings on the contributions are tax-deferred and accumulate as deferred tax savings.has indefinitely suspended these contributions. Employees do not make contributions under these plans. A portion of the Company contributions and investment earnings thereon vest after three years of SERP participation and the remaining portion vests after both five years of SERP participation and 10 years of continuous service. The Company recorded expense under this plan of $4 million in 2008 and $7 million in 2007 and 2006.2008.
 
Pursuant to the amendments of the nonqualified deferred retirement plans and SERP plans during 2008, and consistent with certain transitional relief provided by the Internal Revenue Service pursuant to rules governing nonqualified deferred compensation, the Company permitted participants under the plans to make a one-time election to receive, without penalty, all or a portion of their respective vested account balances. Based on elections made, the Company made payments to participants of $62 million subsequent to December 31, 2008.in 2009. In addition, the Company made payments of $57 million to participants in 2008 related to previous versions of these plans that were terminated during the year.


96

 
NOTE 1714 —PROPERTY TRANSACTIONS, NET
 
Property transactions, net consisted of the following:
 
             
  Year Ended December 31, 
  2008  2007  2006 
  (In thousands) 
 
Goodwill and other indefinite-lived intangible assets impairment charge $1,179,788  $—  $— 
Other write-downs and impairments  52,170   33,624   40,865 
Demolition costs  9,160   5,665   348 
Insurance recoveries  (9,639)  (217,290)  (86,016)
Other net (gains) losses on asset sales or disposals  (20,730)  (8,312)  3,823 
             
  $1,210,749  $(186,313) $(40,980)
             
             
  Year Ended December 31, 
  2010  2009  2008 
  (In thousands) 
 
CityCenter investment impairment $1,313,219  $955,898  $- 
Borgata impairment  128,395   -   - 
Atlantic City Renaissance Point land impairment  -   548,347   - 
Goodwill and other indefinite-lived intangible assets impairment  -   -   1,179,788 
Gain on sale of TI  -   (187,442)  - 
Other property transactions, net  9,860   11,886   30,961 
             
  $1,451,474  $1,328,689  $1,210,749 
             
See Note 5 for discussion of the Company’s CityCenter investment impairment and Borgata impairment in 2010. Other property transactions in 2010 include the write-off of various abandoned construction projects.
See Note 2 for discussion of the Atlantic City Renaissance Pointe land impairment and Note 5 for discussion of the Company’s CityCenter investment impairment in 2009. Other write-downs in 2009 included the write-down of the Detroit temporary casino and write-off of various discontinued capital projects, offset by $7 million in insurance recoveries related to the Monte Carlo fire.
 
See discussion of goodwill and other indefinite-lived intangible assets impairment charge recorded in 2008 in Note 9.6. Other write-downs and impairmentsproperty transactions in 2008 included $30 million related to the write-down of land and building assets of Primm Valley Golf Club. The 2008 period also includesincluded approximately $9 million of demolition costs associated with various room remodel projects andas well as the write-down of approximately $27 million of various discontinued capital projects. These amounts were offset by a gain on the sale of an aircraft of $25 million.
Write-downsmillion and impairments in 2007 included write-offs related to discontinued construction projects and a write-off$10 million of the carrying value of the Nevada Landing building assets due to its closure in March 2007. The 2007 period also includes demolition costs primarilyinsurance recoveries related to the Mandalay Bay room remodel.Monte Carlo fire.
 
Write-downs and impairments in 2006 included $22 million related to the write-off of the tram connecting Bellagio and Monte Carlo, including the stations at both resorts, in preparation for construction of CityCenter. Other impairments related to assets being replaced in connection with several capital projects.
Insurance recoveries in 2008 related to the insurance recoveries received related to property damage from the Monte Carlo fire in excess of the book value of the damaged assets and post-fire costs incurred. Insurance recoveries in 2007 and 2006 related to the insurance recoveries received related to property damage from Hurricane Katrina in excess of the book value of the damaged assets and post-storm costs incurred.


83

NOTE 1815 —RELATED PARTY TRANSACTIONS
 
CityCenter
Management agreements.The Company and CityCenter have entered into agreements whereby the Company will beis responsible for oversight and management of the design, planning, development and construction of CityCenter and will manageis managing the operations of CityCenter for a fee upon completion of construction.fee. The Company is being reimbursed for certain costs in performing theits development and management services. During the years ended December 31, 20082010, 2009, and 2007,2008 the Company incurred $46$354 million, $95 million, and $5$46 million, respectively, of costs reimbursable by the joint venture, primarily for employee compensation and certain allocated costs. As of December 31, 2008,2010, CityCenter owes the Company $5$35 million for unreimbursed developmentmanagement services and reimbursable costs.
 
BorgataOther agreements. The Company owns OE Pub, LLC, which leases 10 acres fromretail space in Crystals. The Company recorded $1 million of expense related to the Company on a long-term basis for uselease agreement in its current operations and for its expansion, and nine acres from the Company on a short-term basis for surface parking. Total payments received from Borgata under these lease agreements were $6 million in each of the yearsyear ended December 31, 2008, 2007 and 2006.
2010. The Company paid legal fees to a firm that was affiliatedentered into an agreement with the Company’s general counsel. Payments to the firm totaled $10 million, $11 million, and $8 million for the years ended December 31, 2008, 2007, and 2006, respectively. At December 31, 2008 and 2007,CityCenter whereby the Company owed the firm $4 million and $3 million, respectively.
The Company has occasionally chartered aircraft from its majority shareholder, Tracinda, and pays Tracinda at market rates. No payments were made to Tracinda in 2008 or 2007. Payments to Tracinda forprovides CityCenter the use of its aircraft totaled $2 millionon a time sharing basis. CityCenter is charged a rate that is based on Federal Aviation Administration regulations, which provides for reimbursement for specific costs incurred by the Company without any profit ormark-up. During the year ended December 31, 2006.
Members of2010, the Company’s Board of Directors, senior management, and Tracinda signed contracts in 2006 and 2007Company was reimbursed $4 million for aircraft related expenses. The Company has various other arrangements with CityCenter for the purchaseprovision of condominium units at CityCenter, at prices consistent with prices charged to unrelated third parties, when CityCenter was a wholly-owned development. The Company collected $6 millioncertain shared services, reimbursement of deposits related to such purchasescosts and other transactions undertaken in 2007; amounts collected in 2006 were not material.the ordinary course of business.


8497

NOTE 1916 —CONSOLIDATING CONDENSED CONSOLIDATING FINANCIAL INFORMATION
 
The Company’s subsidiaries (excludingExcluding MGM Grand Detroit, LLC and certain minor subsidiaries)other subsidiaries, the Company’s subsidiaries that are 100% directly or indirectly owned have fully and unconditionally guaranteed, on a joint and several basis, payment of the senior credit facility, the senior notes, senior secured notes, convertible senior notes and the senior and senior subordinated notes of the Company and its subsidiaries.notes. Separate condensed consolidating financial statement information for the subsidiary guarantors and non-guarantors as of December 31, 20082010 and 20072009 and for the years ended December 31, 2008, 20072010, 2009 and 20062008 is as follows:
 
                     
  At December 31, 2008 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Balance Sheet
                    
Current assets $126,009  $1,346,094  $60,927  $—  $1,533,030 
Property and equipment, net  —   15,564,669   736,457   (11,972)  16,289,154 
Investments in subsidiaries  18,920,844   625,790   —   (19,546,634)  — 
Investments in and advances to unconsolidated affiliates  —   4,389,058   253,807   —   4,642,865 
Other non-current assets  194,793   500,717   114,157   —   809,667 
                     
  $19,241,646  $22,426,328  $1,165,348  $(19,558,606) $23,274,716 
                     
                     
Current liabilities $1,683,932  $1,282,641  $36,003  $—  $3,002,576 
Intercompany accounts  (1,501,070)  1,451,897   49,173   —   — 
Deferred income taxes  3,441,198   —   —   —   3,441,198 
Long-term debt  11,320,620   692,332   403,600   —   12,416,552 
Other long-term obligations  322,605   66,642   50,782   —   440,029 
Stockholders’ equity  3,974,361   18,932,816   625,790   (19,558,606)  3,974,361 
                     
  $ 19,241,646  $ 22,426,328  $  1,165,348  $(19,558,606) $ 23,274,716 
                     
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
                     
  At December 31, 2010 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Current assets $358,725  $930,936  $165,984  $-  $1,455,645 
Property and equipment, net  -   13,925,224   641,098   (11,972)  14,554,350 
Investments in subsidiaries  16,520,722   471,283   -   (16,992,005)  - 
Investments in and advances to unconsolidated affiliates  -   1,923,155   -   -   1,923,155 
Other non-current assets  294,165   436,353   297,377   -   1,027,895 
                     
  $ 17,173,612  $ 17,686,951  $ 1,104,459  $ (17,003,977) $ 18,961,045 
                     
Current liabilities $305,354  $911,731  $29,136  $-  $1,246,221 
Intercompany accounts  (44,380)  38,277   6,103   -   - 
Deferred income taxes  2,469,333   -   -   -   2,469,333 
Long-term debt  11,301,034   296,664   450,000   -   12,047,698 
Other long-term obligations  143,726   54,828   694   -   199,248 
Stockholders’ equity  2,998,545   16,385,451   618,526   (17,003,977)  2,998,545 
                     
  $17,173,612  $17,686,951  $1,104,459  $(17,003,977) $18,961,045 
                     
 
                     
  For The Year Ended December 31, 2008 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Statement of Operations
                    
Net revenues $—  $  6,623,068  $    585,699  $—  $  7,208,767 
Equity in subsidiaries earnings  (262,825)  49,450   —   213,375   — 
Expenses:                    
Casino and hotel operations  14,173   3,688,837   331,364   —   4,034,374 
General and administrative  9,485   1,160,754   108,262   —   1,278,501 
Corporate expense  13,869   94,958   452   —   109,279 
Preopening andstart-up expenses
  —   22,924   135   —   23,059 
Restructuring costs  —   443   —   —   443 
Property transactions, net  —   1,204,721   6,028   —   1,210,749 
Depreciation and amortization  —   724,556   53,680   —   778,236 
                     
   37,527   6,897,193   499,921   —   7,434,641 
                     
Income from unconsolidated affiliates  —   84,942   11,329   —   96,271 
                     
Operating income  (300,352)  (139,733)  97,107   213,375   (129,603)
Interest expense, net  (517,971)  (58,468)  (16,327)  —   (592,766)
Other, net  140,968   (61,466)  (26,121)  —   53,381 
                     
Income (loss) from continuing operations before income taxes  (677,355)  (259,667)  54,659   213,375   (668,988)
Provision for income taxes  (177,931)  (3,158)  (5,209)  —   (186,298)
                     
Income (loss) from continuing operations  (855,286)  (262,825)  49,450   213,375   (855,286)
                     
Net income (loss) $  (855,286) $(262,825) $49,450  $    213,375  $(855,286)
                     
                     
Statement of Cash Flows
                    
Net cash provided by (used in) operating activities $(982,489) $1,658,238  $77,283  $—  $753,032 
Net cash provided by (used in) investing activities  —   (1,970,738)  (4,721)  (5,981)  (1,981,440)
Net cash provided by (used in) financing activities  962,756   230,120   (76,775)  5,981   1,122,082 
                     
  At December 31, 2009 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Current assets $2,143,019  $810,991  $99,491  $-  $3,053,501 
Property and equipment, net  -   14,391,733   690,191   (11,972)  15,069,952 
Investments in subsidiaries  17,927,664   447,336   -   (18,375,000)  - 
Investments in and advances to unconsolidated affiliates  -   3,353,334   258,465   -   3,611,799 
Other non-current assets  152,205   507,500   123,253   -   782,958 
                     
  $ 20,222,888  $ 19,510,894  $ 1,171,400  $ (18,386,972) $ 22,518,210 
                     
Current liabilities $344,707  $926,780  $32,290  $-  $1,303,777 
Current portion of long-term debt  1,079,824   -   -   -   1,079,824 
Intercompany accounts  (227,808)  120,603   107,205   -   - 
Deferred income taxes  3,031,303   -   -   -   3,031,303 
Long-term debt  11,929,050   596,987   450,000   -   12,976,037 
Other long-term obligations  195,380   60,867   590   -   256,837 
Stockholders’ equity  3,870,432   17,805,657   581,315   (18,386,972)  3,870,432 
                     
  $20,222,888  $19,510,894  $1,171,400  $(18,386,972) $22,518,210 
                     


8598

                     
  At December 31, 2007 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Balance Sheet
                    
Current assets $81,379  $983,836  $60,600  $—  $1,125,815 
Property and equipment, net  —   16,091,836   791,034   (11,972)  16,870,898 
Investments in subsidiaries  19,169,892   484,047   —   (19,653,939)  — 
Investments in and advances to unconsolidated affiliates  —   2,224,429   258,298   —   2,482,727 
Other non-current assets  244,857   1,892,685   110,704   —   2,248,246 
                     
  $19,496,128  $21,676,833  $1,220,636  $(19,665,911) $22,727,686 
                     
                     
                     
Current liabilities $459,968  $1,217,506  $47,213  $—  $1,724,687 
Intercompany accounts  125,094   (396,080)  270,986   —   — 
Deferred income taxes  3,416,660   —   —   —   3,416,660 
Long-term debt  9,347,527   1,467,152   360,550   —   11,175,229 
Other long-term obligations  86,176   209,554   54,677   —   350,407 
Stockholders’ equity  6,060,703   19,178,701   487,210   (19,665,911)  6,060,703 
                     
  $ 19,496,128  $ 21,676,833  $  1,220,636  $(19,665,911) $ 22,727,686
 
                     
  For The Year Ended December 31, 2007 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Net revenues $—  $7,204,278  $487,359  $—  $7,691,637 
Equity in subsidiaries earnings  2,982,008   34,814   —   (3,016,822)  — 
Expenses:                    
Casino and hotel operations  14,514   3,738,593   274,451   —   4,027,558 
General and administrative  11,455   1,167,233   73,264   —   1,251,952 
Corporate expense  35,534   158,359   —   —   193,893 
Preopening andstart-up expenses
  731   28,264   63,110   —   92,105 
Property transactions, net  —   (186,313)  —   —   (186,313)
Gain on CityCenter transaction  —   (1,029,660)  —   —   (1,029,660)
Depreciation and amortization  1,497   667,015   31,822   —   700,334 
                     
   63,731   4,543,491   442,647   —   5,049,869 
                     
Income from unconsolidated affiliates  —   222,162   —   —   222,162 
                     
Operating income  2,918,277   2,917,763   44,712   (3,016,822)  2,863,930 
Interest expense, net  (599,178)  (86,473)  (5,482)  —   (691,133)
Other, net  575   (14,890)  (54)  —   (14,369)
                     
Income from continuing operations before income taxes  2,319,674   2,816,400   39,176   (3,016,822)  2,158,428 
Provision for income taxes  (731,456)  (22,065)  (4,362)  —   (757,883)
                     
Income from continuing operations  1,588,218   2,794,335   34,814   (3,016,822)  1,400,545 
Discontinued operations  (3,799)  187,673   —   —   183,874 
                     
Net income $1,584,419  $2,982,008  $     34,814  $(3,016,822) $1,584,419 
                     
                     
Statement of Cash Flows
                    
Net cash provided by (used in) operating activities $(1,098,889) $2,008,888  $84,417  $—  $994,416 
Net cash provided by (used in) investing activities  —   621,727   (407,745)  (4,681)  209,301 
Net cash provided by (used in) financing activities  1,108,286   (2,675,119)  321,615   4,681   (1,240,537)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
                     
  Year Ended December 31, 2010 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Net revenues $-  $5,480,318  $538,915  $-  $6,019,233 
Equity in subsidiaries’ earnings  (1,281,514)  164,502   -   1,117,012   - 
Expenses:                    
Casino and hotel operations  10,684   3,458,227   288,631   -   3,757,542 
General and administrative  9,974   1,020,119   98,710   -   1,128,803 
Corporate expense  15,734   110,199   (1,692)  -   124,241 
Preopening andstart-up expenses
  -   4,247   -   -   4,247 
Property transactions, net  -   1,451,801   (327)  -   1,451,474 
Depreciation and amortization  -   592,895   40,528   -   633,423 
                     
   36,392   6,637,488   425,850   -   7,099,730 
                     
Income (loss) from unconsolidated affiliates  -   (208,099)  129,665   -   (78,434)
                     
Operating income (loss)  (1,317,906)  (1,200,767)  242,730   1,117,012   (1,158,931)
Interest expense, net  (1,060,511)  (22,512)  (30,557)  -   (1,113,580)
Other, net  148,074   (50,929)  (40,659)  -   56,486 
                     
Income (loss) before income taxes  (2,230,343)  (1,274,208)  171,514   1,117,012   (2,216,025)
Benefit (provision) for income taxes  792,946   (9,316)  (5,002)  -   778,628 
                     
Net income (loss) $ (1,437,397) $ (1,283,524) $ 166,512  $ 1,117,012  $ (1,437,397)
                     


8699

                     
  For The Year Ended December 31, 2006 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Statement of Operations
                    
Net revenues $—  $6,714,659  $461,297  $—  $7,175,956 
Equity in subsidiaries earnings  1,777,144   167,262   —   (1,944,406)  — 
Expenses:                    
Casino and hotel operations  19,251   3,444,697   251,109   —   3,715,057 
General and administrative  20,713   1,092,061   56,497   —   1,169,271 
Corporate expense  40,151   121,356   —   —   161,507 
Preopening andstart-up expenses
  523   32,526   3,313   —   36,362 
Restructuring costs  —   1,035   —   —   1,035 
Property transactions, net  10,872   (51,853)  1   —   (40,980)
Depreciation and amortization  2,398   611,045   16,184   —   629,627 
                     
   93,908   5,250,867   327,104   —   5,671,879 
                     
Income from unconsolidated affiliates  —   218,063   36,108   —   254,171 
                     
Operating income  1,683,236   1,849,117   170,301   (1,944,406)  1,758,248 
Interest income (expense), net  (708,902)  (40,407)  140   —   (749,169)
Other, net  (1,978)  (29,962)  787   —   (31,153)
                     
Income from continuing operations before income taxes  972,356   1,778,748   171,228   (1,944,406)  977,926 
Provision for income taxes  (312,288)  (25,676)  (3,966)  —   (341,930)
                     
Income from continuing operations  660,068   1,753,072   167,262   (1,944,406)  635,996 
Discontinued operations  (11,804)  24,072   —   —   12,268 
                     
Net income $648,264  $1,777,144  $167,262  $(1,944,406) $648,264 
                     
                     
Statement of Cash Flows
                    
Net cash provided by (used in) operating activities $(896,346) $1,974,375  $153,923  $—  $1,231,952 
Net cash provided by (used in) investing activities  5,300   (1,359,878)  (283,241)  (4,608)  (1,642,427)
Net cash provided by (used in) financing activities  874,485   (503,801)  134,732   4,608   510,024 
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
                     
  Year Ended December 31, 2010 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Cash flows from operating activities
                    
Net cash provided by (used in) operating activities $(484,388) $903,454  $84,948  $          -  $504,014 
                     
Cash flows from investing activities
                    
Capital expenditures, net of construction payable  -   (201,917)  (5,574)  -   (207,491)
Dispositions of property and equipment  -   71,292   6,309   -   77,601 
Investments in and advances to unconsolidated affiliates  (553,000)  -   -   -   (553,000)
Distributions from unconsolidated affiliates in excess of earnings  65,563   1,943   67,552   -   135,058 
Distributions from cost method investments, net  -   113,422   -   -   113,422 
Investments in treasury securities with maturities greater than 90 days  -   (149,999)  -   -   (149,999)
Other  -   (1,670)  -   -   (1,670)
                     
Net cash provided by (used in) investing activities  (487,437)    (166,929)  68,287   -   (586,079)
                     
Cash flows from financing activities
                    
Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less  (2,098,198)  -   212,119   -   (1,886,079)
Borrowings under bank credit facilities - maturities longer than 90 days  8,068,342   -   1,417,881   -   9,486,223 
Repayments under bank credit facilities - maturities longer than 90 days  (9,177,860)  -   (1,630,000)  -   (10,807,860)
Issuance of senior notes, net  2,489,485   -   -   -   2,489,485 
Retirement of senior notes  (857,523)  (296,956)  -   -   (1,154,479)
Debt issuance costs  (106,831)  -   -   -   (106,831)
Issuance of common stock in public offering, net  588,456   -   -   -   588,456 
Intercompany accounts  502,553   (422,895)  (79,658)  -   - 
Capped call transactions  (81,478)  -   -   -   (81,478)
Other  (1,280)  (1,268)  (67)  -   (2,615)
                     
Net cash used in financing activities  (674,334)  (721,119)  (79,725)  -   (1,475,178)
                     
Cash and cash equivalents
                    
Net increase (decrease) for the period  (1,646,159)  15,406   73,510   -   (1,557,243)
Balance, beginning of period  1,718,616   263,386   74,205   -   2,056,207 
                     
Balance, end of period $72,457  $278,792  $147,715  $-  $498,964 
                     


87100

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
                     
  Year Ended December 31, 2009 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Net revenues $-  $ 5,435,274  $  543,315  $-  $5,978,589 
Equity in subsidiaries’ earnings  (834,524)  65,531   -   768,993   - 
Expenses:                    
Casino and hotel operations  14,368   3,223,607   301,331   -   3,539,306 
General and administrative  9,584   996,310   94,299   -   1,100,193 
Corporate expense  33,265   114,394   (3,895)  -   143,764 
Preopening andstart-up expenses
  -   53,013   -   -   53,013 
Property transactions, net  -   1,321,353   7,336   -   1,328,689 
Depreciation and amortization  -   648,703   40,570   -   689,273 
                     
   57,217   6,357,380   439,641   -   6,854,238 
                     
Income (loss) from unconsolidated affiliates  -   (112,856)  24,629   -   (88,227)
                     
Operating income (loss)  (891,741)  (969,431)  128,303   768,993   (963,876)
Interest income (expense), net  (953,820)  201,815   (23,426)  -   (775,431)
Other, net  (185,590)  (57,100)  (30,596)  -   (273,286)
                     
Income (loss) before income taxes  (2,031,151)  (824,716)  74,281   768,993   (2,012,593)
Benefit (provision) for income taxes  739,469   (13,726)  (4,832)  -   720,911 
                     
Net income (loss) $ (1,291,682) $(838,442) $69,449  $  768,993  $ (1,291,682)
                     


101

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
                     
  Year Ended December 31, 2009 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Cash flows from operating activities
                    
Net cash provided by (used in) operating activities $(652,977) $1,154,595  $86,296  $-  $587,914 
                     
Cash flows from investing activities
                    
Capital expenditures, net of construction payable  -   (135,211)  (1,639)  -   (136,850)
Proceeds from sale of Treasure Island, net  -   746,266   -   -   746,266 
Dispositions of property and equipment  -   22,291   -   -   22,291 
Investments in and advances to unconsolidated affiliates  -   (956,550)  -   (7,135)  (963,685)
Property damage insurance recoveries  -   7,186   -   -   7,186 
Other  -   (5,463)  -   -   (5,463)
                     
Net cash used in investing activities  -   (321,481)       (1,639)       (7,135)  (330,255)
                     
Cash flows from financing activities
                    
Net repayments under bank credit facilities - maturities of 90 days or less  (983,593)  -   (43,600)  -   (1,027,193)
Borrowings under bank credit facilities maturities longer than 90 days  6,041,492   -   730,000   -   6,771,492 
Repayments under bank credit facilities maturities longer than 90 days  (5,302,455)  -   (640,000)  -   (5,942,455)
Issuance of senior notes, net  1,921,751   -   -   -   1,921,751 
Retirement of senior notes  (820,010)  (356,442)  -   -   (1,176,452)
Debt issuance costs  (112,055)  -   -   -   (112,055)
Issuance of common stock in public offering, net  1,103,738   680   -   -   1,104,418 
Intercompany accounts  1,247,519   (1,222,105)  (32,549)  7,135   - 
Payment of Detroit Economic Development Corporation bonds  -   -   (49,393)  -   (49,393)
Other  3,180   (4,480)  (63)  -   (1,363)
                     
Net cash provided by (used in) financing activities  3,099,567   (1,582,347)  (35,605)  7,135   1,488,750 
                     
Cash and cash equivalents
                    
Net increase (decrease) for the period  2,446,590   (749,233)  49,052   -   1,746,409 
Change in cash related to assets held for sale  -   14,154   -   -   14,154 
Balance, beginning of period  2,665   262,494   30,485   -   295,644 
                     
Balance, end of period $2,449,255  $(472,585) $79,537  $-  $ 2,056,207 
                     


102

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
                     
  Year Ended December 31, 2008 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Net Revenues $-  $ 6,623,068  $  585,699  $-  $ 7,208,767 
Equity in subsidiaries’ earnings  (45,122)  49,450   -   (4,328)  - 
Expenses:                    
Casino and hotel operations  14,173   3,688,837   331,364   -   4,034,374 
General and administrative  9,485   1,161,197   108,262   -   1,278,944 
Corporate Expense  13,869   94,958   452   -   109,279 
Preopening andstart-up expenses
  -   22,924   135   -   23,059 
Property transactions, net  -   1,204,721   6,028   -   1,210,749 
Depreciation and amortization  -   724,556   53,680   -   778,236 
                     
   37,527   6,897,193   499,921   -   7,434,641 
                     
Income from unconsolidated affiliates  -   84,942   11,329   -   96,271 
                     
Operating income (loss)  (82,649)  (139,733)  97,107   (4,328)  (129,603)
Interest income (expense), net  (697,281)  104,322   (16,327)  -   (609,286)
Other, net  102,575   (6,553)  (26,121)  -   69,901 
                     
Income (loss) before income taxes  (677,355)  (41,964)  54,659   (4,328)  (668,988)
Provision for income taxes  (177,931)  (3,158)  (5,209)  -   (186,298)
                     
Net Income (loss) $  (855,286) $(45,122) $49,450  $     (4,328) $(855,286)
                     


103

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
                     
  Year Ended December 31, 2008 
     Guarantor
  Non-Guarantor
       
  Parent  Subsidiaries  Subsidiaries  Elimination  Consolidated 
  (In thousands) 
 
Cash flows from operating activities
                    
Net cash provided by (used in) operating activities $(977,381) $1,650,663  $79,750  $-  $753,032 
                     
Cash flows from investing activities
                    
Capital expenditures, net of construction payable  -   (777,033)  (4,721)  -   (781,754)
Dispositions of property and equipment  -   85,968   -   -   85,968 
Investments in and advances to unconsolidated affiliates  -   (1,274,814)  -   (4,648)  (1,279,462)
Property damage insurance recoveries  -   21,109   -   -   21,109 
Other  -   (27,301)  -   -   (27,301)
                     
Net cash used in investing activities  -   (1,972,071)  (4,721)       (4,648)  (1,981,440)
                     
Cash flows from financing activities
                    
Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less  2,907,400   -     (146,950)  -   2,760,450 
Borrowings under bank credit facilities maturities longer than 90 days  7,820,000   -   350,000   -   8,170,000 
Repayments under bank credit facilities maturities longer than 90 days  (8,290,000)  -   (160,000)  -   (8,450,000)
Issuance of senior notes, net  699,441   (951)  -   -   698,490 
Retirement of senior notes  (341,565)  (447,581)  -   -   (789,146)
Debt issuance costs  (48,700)  -   -   -   (48,700)
Purchases of common stock  (1,240,856)  -   -   -   (1,240,856)
Intercompany accounts  (575,941)  693,526   (122,233)  4,648   - 
Other  32,978   (11,075)  (59)  -   21,844 
                     
Net cash provided by (used in) financing activities  962,757   233,919   (79,242)  4,648   1,122,082 
                     
Cash and cash equivalents
                    
Net decrease for the period  (14,624)  (87,489)  (4,213)  -   (106,326)
Change in cash related to assets held for sale  -   (14,154)  -   -   (14,154)
Balance, beginning of period  17,289   364,137   34,698   -   416,124 
                     
Balance, end of period $2,665  $262,494  $30,485  $-  $295,644 
                     


104

NOTE 2017 —SELECTED QUARTERLY FINANCIAL RESULTS (UNAUDITED)
 
                     
  Quarter 
  First  Second  Third  Fourth  Total 
  (In thousands, except per share amounts) 
 
2008
                    
Net revenues $1,893,391  $1,905,333  $1,785,531  $1,624,512  $7,208,767 
Operating income (loss)  341,288   333,784   241,557   (1,046,232)  (129,603)
Income (loss) from continuing operations  118,346   113,101   61,278   (1,148,011)  (855,286)
Net income (loss)  118,346   113,101   61,278   (1,148,011)  (855,286)
Basic income (loss) per share:                    
Income (loss) from continuing operations $.41  $.41  $.22  $(4.15) $(3.06)
Net income (loss)  .41   .41   .22   (4.15)  (3.06)
Diluted income (loss) per share:                    
Income (loss) from continuing operations $.40  $.40  $.22  $(4.15) $(3.06)
Net income (loss)  .40   .40   .22   (4.15)  (3.06)
                     
2007
                    
Net revenues $1,929,435  $1,936,416  $1,897,070  $1,928,716  $7,691,637 
Operating income  445,133   468,973   464,613   1,485,211   2,863,930 
Income from continuing operations  163,010   182,898   183,863   870,774   1,400,545 
Net income  168,173   360,172   183,863   872,211   1,584,419 
Basic income per share:                    
Income from continuing operations $.57  $.64  $.65  $2.96  $4.88 
Net income  .59   1.27   .65   2.96   5.52 
Diluted income per share:                    
Income from continuing operations $.55  $.62  $.62  $2.85  $4.70 
Net income  .57   1.22   .62   2.85   5.31 
                     
  Quarter 
  First  Second  Third  Fourth  Total 
  (In thousands, except for per share amounts) 
 
2010
                    
Net revenues $1,457,392  $1,537,695  $1,557,705  $1,466,441  $6,019,233 
Operating income (loss)  (11,423)  (1,048,817)  (205,901)  107,210   (1,158,931)
Net income (loss)  (96,741)  (883,476)  (317,991)  (139,189)  (1,437,397)
Basic income (loss) per share $(0.22) $(2.00) $(0.72) $(0.29) $(3.19)
Diluted income (loss) per share $(0.22) $(2.00) $(0.72) $(0.29) $(3.19)
2009
                    
Net revenues $1,498,795  $1,494,155  $1,533,223  $1,452,416  $5,978,589 
Operating income (loss)  355,099   131,099   (963,419)  (486,655)  (963,876)
Net income (loss)  105,199   (212,575)  (750,388)  (433,918)  (1,291,682)
Basic income (loss) per share $0.38  $(0.60) $(1.70) $(0.98) $(3.41)
Diluted income (loss) per share $0.38  $(0.60) $(1.70) $(0.98) $(3.41)
 
Because income per share amounts are calculated using the weighted average number of common and dilutive common equivalent shares outstanding during each quarter, the sum of the per share amounts for the four quarters maydoes not equal the total income per share amounts for the year.
 
As discussed in Note 5, in 2010 the Company recorded a $1.3 billion impairment charge related to its CityCenter investment and a $166 million charge related to its share of the CityCenter residential real estate impairment. The impairment of the CityCenter investment was recorded in the second and third quarters and resulted in an impact to diluted loss per share of $1.64 in the second quarter, $0.27 in the third quarter, and $1.88 for the full year of 2010. The residential real estate impairment charges were recorded in each of the four quarters of 2010. The impact to diluted loss per share was $0.13 in the first quarter, $0.04 in the second quarter, $0.07 in the third quarter, $0.02 in the fourth quarter and $0.24 on the full year of 2010.
As discussed in Note 5, the Company recorded a $128 million impairment charge related to its investment in Borgata. The impairment was recorded in the third quarter of 2010, and resulted in a $0.17 impact on third quarter of 2010 diluted loss per share and a $0.18 impact on full year 2010 diluted loss per share.
As discussed in Note 9, the Company recorded a $1.18 billion impairment charge related to goodwill and indefinite-lived intangible assets recognized$32 million reduction in the Mandalay acquisition in 2005.Company’s income tax benefit as a result of providing reserves for certain state-level deferred tax assets. The impairmentreduction was recorded in the fourth quarter of 2008,2010, and resulted in a $4.25$0.07 impact on fourth quarter 2008 diluted loss per share and a $4.20$0.07 impact on full year 20082010 diluted loss per share.
 
As discussed in Note 5, in 2009 the Company recorded a $1.03 billion pre-tax gain on the contribution$956 million impairment charge related to its CityCenter investment and a $203 million charge related to its share of the CityCenter assets to a joint venture. The gain wasresidential impairment. These impairments were recorded in the fourththird quarter, of 2007, and resulted in a $2.23$1.70 impact on fourththird quarter 20072009 diluted earningsloss per share and a $2.28$1.98 impact on full year 20072009 diluted earningsloss per share.
 
As discussed in Note 1, Beau Rivage closed2, in August 2005 due2009 the Company recorded a $548 million impairment charge related to damage sustained from Hurricane Katrina and re-opened one year later. During 2007, weits Renaissance Pointe Land. The impairment was recorded pre-tax income from insurance recoveries of $284 million with an annual impact on diluted earnings per share of $0.62. We recorded $135 million in the third quarter of 2007 and $149 million in the fourth quarter of 2007, with corresponding impacts2009, and resulted in a $0.73 impact on fourth quarter of 2009 diluted earningsloss per share and a $0.85 impact on full year 2009 diluted loss per share.
As discussed in Note 2, the Company recorded a $176 million impairment charge related to its M Resort convertible note. The impairment was recorded in the second quarter of 2009, and resulted in a $0.32 impact on second quarter of 2009 diluted loss per share and a $0.30 impact on full year 2009 diluted loss per share.
As discussed in Note 2, the Company sold TI in the first quarter of 2009 and $0.32, respectively.recorded a gain of $187 million. The sale resulted in an impact of $0.44 on first quarter of 2009 diluted income per share and a $0.31 impact on the full year 2009 diluted loss per share.


88105

SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) 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 MIRAGEResorts International
 
By:  
/s/  JamesJAMES J. MurrenMURREN
James J. Murren, Chairman of the Board, Chief Executive Officer
  and President

(Principal Executive Officer)
 
By: 
/s/  Daniel J. D’Arrigo
Daniel J. D’Arrigo, Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
By: 
/s/  Robert C. Selwood
Robert C. Selwood, Executive Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Dated: March 17, 2009February 28, 2011
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
 
       
Signature Title Date
 
     
/s/  James J. Murren

James J. Murren		 Chief Executive Officer, President and Chairman of the Board, (Principal
Chief Executive Officer and President
(Principal Executive Officer)		 March 17, 2009February 28, 2011
     
/s/  Robert H. Baldwin

Robert H. Baldwin		 Chief ConstructionDesign and Design Construction
Officer and Director		 March 17, 2009February 28, 2011
     
/s/  Gary N. JacobsDaniel J. D’Arrigo

Gary N. JacobsDaniel J. D’Arrigo		 Executive Vice President, General Counsel, Secretary
Chief Financial Officer and Treasurer
(Principal Financial Officer)		February 28, 2011
/s/  Robert C. Selwood

Robert C. Selwood		Executive Vice President
and Chief Accounting Officer
(Principal Accounting Officer)		February 28, 2011
/s/  William A. Bible

William A. Bible		Director March 17, 2009February 28, 2011
/s/  Burton M. Cohen

Burton M. Cohen		DirectorFebruary 28, 2011
     
/s/  Willie D. Davis

Willie D. Davis		 Director March 17, 2009
/s/  Kenny G. Guinn

Kenny G. Guinn		DirectorMarch 17, 2009
/s/  Alexander M. Haig, Jr.

Alexander M. Haig, Jr.		DirectorMarch 17, 2009February 28, 2011
     
/s/  Alexis M. Herman

Alexis M. Herman		 Director March 17, 2009February 28, 2011
     
/s/  Roland Hernandez

Roland Hernandez		 Director March 17, 2009


89

SignatureTitleDate
February 28, 2011
     
/s/  Kirk Kerkorian

Kirk Kerkorian		 Director March 17, 2009February 28, 2011
     
/s/  Anthony Mandekic

Anthony Mandekic		 Director March 17, 2009February 28, 2011
     
/s/  Rose McKinney-James

Rose McKinney-James		 Director March 17, 2009February 28, 2011
     
/s/  Daniel J. Taylor

Daniel J. Taylor		 Director March 17, 2009February 28, 2011
     
/s/  Melvin B. Wolzinger

Melvin B. Wolzinger		 Director March 17, 2009February 28, 2011


90106

Schedule

VALUATION AND QUALIFYING ACCOUNTS

MGM MIRAGERESORTS INTERNATIONAL
 
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
 
                     
           Deductions
    
  Balance at
  Provision for
  Write-offs
  Related to
  Balance at
 
  Beginning of
  Doubtful
  net of
  Discontinued
  End of
 
Description Period  Accounts  Recoveries  Operations  Period 
 
Allowance for Doubtful Accounts                    
Year Ended December 31, 2008 $85,924  $80,293  $(66,611) $—  $99,606 
Year Ended December 31, 2007  90,024   32,910   (37,010)  —   85,924 
Year Ended December 31, 2006  77,270   47,950   (34,658)  (538)  90,024 
                 
  Balance at
 Provision for
 Write-offs,
 Balance at
  Beginning of
 Doubtful
 Net of
 End of
  Period Accounts Recoveries Period
 
Allowance for Doubtful Accounts                
Year Ended December 31, 2010 $     97,106  $  29,832  $     (33,178) $    93,760 
Year Ended December 31, 2009  99,606   54,074   (56,574)  97,106 
Year Ended December 31, 2008  85,924   80,293   (66,611)  99,606 


91107