MGM Resorts International (MGM) 8-K Unaudited Pro Forma Condensed Combined Financial Statements

Exhibit 99

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     The following unaudited pro forma condensed combined financial statements have been prepared to give effect to the acquisition by MGM MIRAGE of Mandalay, and are derived from our historical financial statements, the historical financial statements of Mandalay, the historical financial statements of MotorCity Casino, 53.5% owned by Mandalay and sold in connection with the merger, and the historical financial statements of Monte Carlo, a joint venture between us and Mandalay. The historical financial statements have been adjusted as described in the notes to the unaudited pro forma condensed combined financial statements.

     The unaudited pro forma condensed combined financial statements are prepared in accordance with Article 11 of Regulation S-X. Mandalay has historically had a fiscal year-end of January 31. Therefore, the full-year historical Mandalay and MotorCity statements of income are for the year ended January 31, 2005. Since Mandalay did not complete its first fiscal quarter of fiscal 2006 before the close of the merger, the interim historical Mandalay and MotorCity statements of income are for the three months ended March 31, 2005 and the historical Mandalay and MotorCity balance sheets are as of March 31, 2005. Monte Carlo’s financial statements are as of and for the same periods as ours, because Monte Carlo has a calendar-year reporting period.

     For purposes of the unaudited pro forma condensed combined balance sheet, we assumed the acquisition occurred on March 31, 2005. For purposes of the unaudited pro forma condensed combined statements of income, we assumed the acquisition occurred on January 1, 2004. In all cases, we applied the purchase method of accounting, which requires an allocation of the purchase price to the assets acquired and liabilities assumed, at fair value.

     The purchase price allocation reflected in the unaudited condensed combined financial statements is preliminary and is subject to revision. The final purchase price allocation will be based on formal valuations of tangible assets, identification and valuation of identifiable intangible assets, and an analysis of the value of liabilities assumed. The final purchase price allocation may differ materially from the preliminary estimate due to different valuations and differences in useful lives and amortization methods applied to tangible and intangible assets. Therefore, the unaudited pro forma condensed combined financial statements are for informational purposes only and are not intended to represent or be indicative of the consolidated results of operations or financial position that we would have reported had the acquisition of Mandalay been completed as of the dates presented. Additionally, the unaudited pro forma condensed combined financial statements should not be considered representative of our future consolidated results of operations or financial position.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2005

	MGM MIRAGE			Mandalay			Monte Carlo			MotorCity			Pro Forma			MGM MIRAGE
	Historical			Historical			Historical (a)			Disposition (b)			Adjustments			Pro Forma
	(In thousands, except per share data)
Revenues
Casino	$	614,813		$	338,796		$	26,697		$	(108,386	)	$	—		$	871,920
Rooms		274,054			222,066			36,275			—			—			532,395
Food and beverage		243,478			133,899			11,674			(11,364	)		—			377,687
Entertainment, retail and other		193,861			85,297			7,540			(3,551	)		(875	)(c)		282,272
		1,326,206			780,058			82,186			(123,301	)		(875	)		2,064,274
Less: Promotional allowances		(122,071	)		(49,929	)		(3,785	)		10,414			—			(165,371	)
		1,204,135			730,129			78,401			(112,887	)		(875	)		1,898,903
Expenses
Casino		310,789			187,891			11,706			(59,327	)		—			451,059
Rooms		69,479			70,882			9,496			—			—			149,857
Food and beverage		134,311			87,539			9,631			(4,632	)		—			226,849
Entertainment, retail and other		129,114			49,424			4,059			(1,156	)		—			181,441
General and administrative		158,364			121,805			10,621			(13,132	)		—			277,658
Corporate expense		26,791			22,215			—			—			—			49,006
Preopening and start-up expenses		2,524			—			—			—			—			2,524
Restructuring costs (credit)		(66	)		—			—			—			—			(66	)
Property transactions, net		4,203			1,249			(8	)		15			—			5,459
Depreciation and amortization		110,495			47,303			4,244			(1,943	)		2,649	(d)		162,748
		946,004			588,308			49,749			(80,175	)		2,649			1,506,535
Income from unconsolidated affiliates		35,045			21,954			—			—			(28,483	)(a)		28,641
														125	(e)
Operating income		293,176			163,775			28,652			(32,712	)		(31,882	)		421,009
Non-operating income (expense)
Interest income		1,697			1,415			60			—			—			3,172
Interest expense, net		(101,468	)		(50,222	)		—			541			(46,280	)(f)		(197,429	)
Non-operating items from unconsolidated affiliates		(2,787	)		(2,038	)		—			—			313	(e)		(4,512	)
Other, net		(15,691	)		2,615			—			—			—			(13,076	)
		(118,249	)		(48,230	)		60			541			(45,967	)		(211,845	)
Minority interest		—			(14,950	)		—			14,950			—			—
Income from continuing operations before income taxes		174,927			100,595			28,712			(17,221	)		(77,849	)		209,164
Provision for income taxes		(63,848	)		(38,423	)		—			6,027			17,198	(g)		(79,046	)
Income from continuing operations	$	111,079		$	62,172		$	28,712		$	(11,194	)	$	(60,651	)	$	130,118
Basic earnings per share
Income from continuing operations	$	0.39														$	0.46
Shares used in calculation		282,516															282,516
Diluted earnings per share
Income from continuing operations	$	0.38														$	0.44
Shares used in calculation		294,646															294,646

     The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2004

			��
	MGM MIRAGE			Mandalay			Monte Carlo			MotorCity			Pro Forma			MGM MIRAGE
	Historical			Historical			Historical (a)			Disposition (b)			Adjustments			Pro Forma
	(In thousands, except per share data)
Revenues
Casino	$	2,223,965		$	1,331,009		$	104,299		$	(418,778	)	$	—		$	3,240,495
Rooms		911,259			792,524			121,428			—			—			1,825,211
Food and beverage		841,147			502,975			45,210			(44,858	)		—			1,344,474
Entertainment, retail and other		696,117			372,708			33,990			(10,929	)		(3,354	)(c)		1,088,532
		4,672,488			2,999,216			304,927			(474,565	)		(3,354	)		7,498,712
Less: Promotional allowances		(434,384	)		(190,073	)		(14,704	)		37,516			—			(601,645	)
		4,238,104			2,809,143			290,223			(437,049	)		(3,354	)		6,897,067
Expenses
Casino		1,102,513			697,231			54,652			(218,293	)		—			1,636,103
Rooms		247,387			272,757			35,247			—			—			555,391
Food and beverage		482,417			354,654			32,927			(18,619	)		—			851,379
Entertainment, retail and other		456,949			224,744			16,499			(4,287	)		—			693,905
General and administrative		612,615			475,437			43,241			(50,709	)		—			1,080,584
Corporate expense		77,910			64,372			—			—			—			142,282
Preopening and start-up expenses		10,276			—			—			—			—			10,276
Restructuring costs		5,625			—			—			—			—			5,625
Property transactions, net		8,665			4,507			(121	)		(11	)		—			13,040
Depreciation and amortization		402,545			189,786			15,193			(11,436	)		10,594	(d)		606,682
		3,406,902			2,283,488			197,638			(303,355	)		10,594			5,595,267
Income from unconsolidated affiliates		119,658			83,269			—			—			(89,781	)(a)		113,645
														499	(e)
Operating income		950,860			608,924			92,585			(133,694	)		(103,230	)		1,415,445
Non-operating income (expense)
Interest income		5,664			8,498			90			(23	)		—			14,229
Interest expense, net		(378,386	)		(188,441	)		(12	)		1,976			(185,121	)(f)		(749,984	)
Non-operating items from unconsolidated affiliates		(12,298	)		(8,245	)		—			—			1,254	(e)		(19,289	)
Other, net		(10,025	)		—			—			—			—			(10,025	)
		(395,045	)		(188,188	)		78			1,953			(183,867	)		(765,069	)
Minority interest		—			(61,220	)		—			61,220			—			—
Income from continuing operations before income taxes		555,815			359,516			92,663			(70,521	)		(287,097	)		650,376
Provision for income taxes		(205,959	)		(130,454	)		—			24,682			68,052	(g)		(243,679	)
Income from continuing operations	$	349,856		$	229,062		$	92,663		$	(45,839	)	$	(219,045	)	$	406,697
Basic earnings per share
Income from continuing operations	$	1.25														$	1.46
Shares used in calculation		279,326															279,326
Diluted earnings per share
Income from continuing operations	$	1.21														$	1.41
Shares used in calculation		289,332															289,332

     The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2005

	MGM MIRAGE			Mandalay			Monte Carlo		MotorCity			Pro Forma			MGM MIRAGE
	Historical			Historical			Historical (a)		Disposition (b)			Adjustments			Pro Forma
	(In thousands)
ASSETS
Current assets
Cash and cash equivalents	$	395,746		$	214,487		$	18,645	$	(72,624	)		—		$	556,254
Accounts receivable, net		218,360			86,526			10,249		(1,200	)		—			313,935
Inventories		70,553			40,570			3,101		(512	)		—			113,712
Deferred income taxes		39,670			10,006			—		—			—			49,676
Prepaid expenses and other		85,299			52,788			4,627		(15,677	)		—			127,037
																	��
Total current assets		809,628			404,377			36,622		(90,013	)		—			1,160,614
Property and equipment, net		8,909,721			3,491,400			293,596		(82,151	)		(5,343	)(c)		16,553,068
													596,814	(h)
													3,349,031	(i)
Other assets
Investments in unconsolidated affiliates		856,241			575,364			—		—			(696,166	)(j)		703,868
													(31,571	)(e)
Goodwill and other intangible assets, net		232,902			140,471			—		(102,497	)		1,226,855	(k)		1,700,506
													(37,965	)(l)
													240,740	(m)
Deposits and other assets, net		322,806			152,337			2,445		(6,280	)		16,282	(n)		501,373
													13,783	(o)
Total other assets		1,411,949			868,172			2,445		(108,777	)		731,958			2,905,747
	$	11,131,298		$	4,763,949		$	332,663	$	(280,941	)	$	4,672,460		$	20,619,429
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	123,342		$	54,154		$	2,161	$	(2,950	)	$	—		$	176,707
Income taxes payable		15,762			22,988			—		115,000			—			153,750
Current portion of long-term debt		14			328			—		—			—			342
Accrued interest on long-term debt		82,828			31,874			—		—			—			114,702
Other accrued liabilities		586,340			209,105			21,235		(25,001	)		—			791,679
Total current liabilities		808,286			318,449			23,396		87,049			—			1,237,180
Deferred income taxes		1,802,297			208,339			—		24,739			1,272,164	(p)		3,307,539
Long-term debt		5,334,650			2,648,308			—		(525,000	)		138,375	(q)		12,702,459
													(400,000	)(r)
													(243,914	)(s)
													5,750,040	(t)
Other long-term obligations		163,269			233,047			79		(49,360	)		2,420	(o)		349,455
Minority interest		—			57,771			—		(57,771	)		—			—
Commitments and contingencies
Stockholders’ equity
Partners’ equity		—			—			309,188		—			(309,188	)(u)		—
Common stock		3,532			1,913			—		—			(1,913	)(u)		3,532
Capital in excess of par value		2,484,121			630,953			—		—			(630,953	)(u)		2,484,121
Deferred compensation		(8,978	)		(49,088	)		—		—			49,088	(u)		(8,978	)
Treasury stock, at cost		(1,110,551	)		(1,061,615	)		—		—			1,061,615	(u)		(1,110,551	)
Retained earnings		1,655,548			1,840,251			—		239,402			(2,079,653	)(u)		1,655,548
Accumulated other comprehensive income (loss)		(876	)		(64,379	)		—		—			64,379	(o)		(876	)
Total stockholders’ equity		3,022,796			1,298,035			309,188		239,402			(1,846,625	)		3,022,796
	$	11,131,298		$	4,763,949		$	332,663	$	(280,941	)	$	4,672,460		$	20,619,429

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. Basis of presentation

     The accompanying unaudited pro forma condensed combined financial statements present the pro forma results of operations and financial position of MGM MIRAGE and Mandalay Resort Group (“Mandalay”) on a combined basis based on the historical financial information of each company and after giving effect to the acquisition of Mandalay by MGM MIRAGE. The acquisition will be recorded using the purchase method of accounting, with MGM MIRAGE as the acquirer.

     Mandalay has historically had a fiscal year-end of January 31. Therefore, the full-year historical Mandalay and MotorCity statements of income are for the year ended January 31, 2005. Since Mandalay did not complete its first fiscal quarter of fiscal 2006 before the close of the merger, the interim historical Mandalay and MotorCity statements of income are for the three months ended March 31, 2005 and the historical Mandalay and MotorCity balance sheets are as of March 31, 2005. Monte Carlo’s financial statements are as of and for the same periods as ours, because Monte Carlo has a calendar-year reporting period.

     The share and per share amounts in the accompanying unaudited forma condensed combined financial statements have been revised to reflect a stock split effected in the form of a 100% stock dividend distributed on May 18, 2005. Certain reclassifications have been made to the historical Mandalay financial statements to conform to the presentation used in the MGM MIRAGE historical financial statements. Such reclassifications had no effect on Mandalay’s previously reported income from continuing operations.

     For purposes of the unaudited pro forma condensed combined balance sheet, we assumed the acquisition occurred on March 31, 2005. For purposes of the unaudited pro forma condensed combined statements of income, we assumed the acquisition occurred on January 1, 2004.

2. Preliminary Purchase Price Allocation

     The following table sets forth the determination of the consideration paid for Mandalay as if the acquisition occurred on March 31, 2005 (in thousands, except per share amounts):

Cash consideration for outstanding Mandalay shares and stock options ($71 per share, 67.5 million outstanding shares and 0.8 million outstanding options at a weighted average exercise price of $22.55)	$	4,832,233
Estimated fair value of Mandalay long-term debt being assumed or refinanced		2,387,011
Payment due on convertible debentures, $71 per converted share, 8.1 million converted shares		573,893
Estimated transaction costs and expenses		100,000
		7,893,137
Less: Proceeds from sale of MotorCity Casino		(525,000	)
	$	7,368,137

The following table sets forth the preliminary allocation of purchase price (in thousands):

Current assets	$	350,986
Property and equipment		7,217,649
Goodwill		1,226,855
Other intangible assets		240,749
Other assets		451,892
Assumed liabilities, excluding long-term debt		(614,752	)
Deferred taxes		(1,505,242	)
	$	7,368,137

     The amount allocated to intangible assets includes existing Mandalay intangible assets and the recognition of customer lists with an estimated value of $9 million and an estimated useful life of 5 years and trade names and trademarks with an estimated value of $232 million and an indefinite life.

3. Pro Forma Adjustments

     The following are brief descriptions of each of the pro forma adjustments included in the unaudited pro forma condensed combined financial statements:

(a)	To reflect the historical results of operations and assets and liabilities of Monte Carlo as if it were a consolidated subsidiary and to reflect the elimination of income from unconsolidated affiliate from the MGM MIRAGE and Mandalay historical financial statements. Purchase price adjustments related to recording the assets and liabilities of Monte Carlo at fair value are included in the pro forma adjustments. Monte Carlo is a partnership and therefore does not record a provision for income taxes. An adjustment to reflect an income tax provision on Monte Carlo’s income is included in pro forma adjustment (g) below.
(b)	To reflect the disposition of MotorCity Casino, of which Mandalay held a 53.5% interest and consolidated. Proceeds from the sale of MotorCity are assumed to be used to reduce outstanding borrowings, thereby reducing interest expense (reflected in the pro forma adjustment column — see pro forma adjustment (f)).
(c)	To eliminate intercompany payments from MGM MIRAGE to Monte Carlo related to the removal of service of the tram connecting Bellagio and Monte Carlo to facilitate the construction of the Bellagio expansion.
(d)	To reflect adjustments to depreciation and amortization related to the recognition of depreciable property and equipment at fair value and the recognition of definite-lived intangible assets in the preliminary purchase price allocation.
(e)	To reflect adjustments to the value of Mandalay’s investments in unconsolidated affiliates other than Monte Carlo, and the related income statement impacts.
(f)	To reflect the pro forma interest expense resulting from the merger. The pro forma interest expense reflects the interest on $4.6 billion of incremental new borrowings and amortization of debt issuance costs related to the new borrowings, offset by the amortization of the premium recorded resulting from recording the Mandalay debt assumed in the transaction at fair value. We have entered into a $7 billion bank credit facility to finance the Mandalay merger. The bank credit facility consists of entirely variable rate borrowings, with an assumed weighted average interest rate of 4.7% (variable rate debt based on LIBOR at March 31, 2005). A 0.125% change in the estimated interest rate would result in a $5.7 million change in annual pro forma interest expense.
(g)	To reflect the tax effect of the pro forma adjustments at the 35% statutory rate. Also included in this amount is an adjustment to reflect an income tax provision on Monte Carlo’s income at the 35% statutory rate. See also pro forma adjustment (a) above.
(h)	To reflect the net increase in value of Monte Carlo’s property and equipment.
(i)	To reflect the net increase in value of Mandalay’s property and equipment.
(j)	To eliminate the historical investments in Monte Carlo of MGM MIRAGE and Mandalay.
(k)	To reflect the estimated goodwill resulting from the allocation of the purchase price to the fair value of assets acquired and liabilities assumed.
(l)	To reflect the write-off of Mandalay’s historical goodwill.
(m)	To reflect the intangible assets arising from the transaction.
(n)	To reflect the write-off of Mandalay’s historical deferred financing costs and the financing costs incurred on borrowings to fund the merger.

(o)	To reflect adjustments to the amounts recorded for Mandalay’s Supplemental Executive Retirement Program (“SERP”). In purchase accounting, the pension liability is adjusted to equal the projected benefit obligation, and all other amounts related to the SERP are written off. These adjustments also include an adjustment to reflect the required additional funding of the life insurance contracts on SERP participants in the case of a change in control, included in deposits and other assets.
(p)	To reflect the deferred tax effects of the pro forma adjustments.
(q)	To reflect Mandalay’s long-term debt at fair value.
(r)	To reflect the conversion of Mandalay’s $400 million of convertible debentures, due 2033. Holders of the convertible debentures are entitled to merger consideration at $71 per share on a basis of 8,083,000 converted shares.
(s)	To reflect the refinancing of amounts outstanding under Mandalay’s existing bank credit facility and capital lease facility.
(t)	To reflect the issuance of new debt to finance the acquisition.
(u)	To eliminate the historical equity balances of Mandalay and Monte Carlo.

4. Cost Savings, Merger-related Charges, and Disposals of Long-lived Assets

     The unaudited pro forma condensed combined financial statements do not reflect any cost savings of duplicative departments and redundant infrastructure, the benefit of operational efficiencies, or the benefit of revenue enhancements which may be achieved after the Mandalay acquisition.

     The unaudited pro forma condensed combined financial statements do not reflect any restructuring or other merger-related charges and liabilities resulting from possible actions taken as a result of the integration of Mandalay, such as certain exit activities, contract terminations or severance. We have not finalized such plans and any charges related to such actions may be material.

     The unaudited pro forma condensed combined financial statements reflect the disposition of Mandalay’s interest in MotorCity Casino in Detroit, Michigan. The unaudited pro forma condensed combined financial statements do not reflect any other disposals of long-lived assets. We do not currently intend to dispose of any other operating casino resorts. We may dispose of other long-lived assets, such as undeveloped land or certain corporate assets, such as airplanes, but no assurance can be give as to if and when such disposals will occur.