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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION

     Organization. MGM MIRAGE (the “Company”) is a Delaware corporation incorporated on January 29, 1986. As of June 30, 2009, approximately 37% of the outstanding shares of the Company’s common stock were owned by Tracinda Corporation, a Nevada corporation wholly owned by Kirk Kerkorian. Prior to the May 2009 issuance of common stock (see Note 2), Tracinda Corporation owned more than 50% of the outstanding shares of the Company’s common stock. As a result, Tracinda Corporation had the ability to elect the Company’s entire Board of Directors and to determine the outcome of other matters submitted to the Company’s stockholders, such as the approval of significant transactions. MGM MIRAGE acts largely as a holding company and, through wholly-owned subsidiaries, owns and/or operates casino resorts.

     The Company owns and operates the following casino resorts in Las Vegas, Nevada: Bellagio, MGM Grand Las Vegas, Mandalay Bay, The Mirage, Luxor, New York-New York, Excalibur, Monte Carlo, Circus Circus Las Vegas and Slots-A-Fun. Operations at MGM Grand Las Vegas include management of The Signature at MGM Grand Las Vegas, a condominium-hotel consisting of over 1,500 units. Other Nevada operations include Circus Circus Reno, Gold Strike in Jean, and Railroad Pass in Henderson. The Company has a 50% investment in Silver Legacy in Reno, which is adjacent to Circus Circus Reno. 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. The Company owns land for future development on the North Las Vegas Strip; see Note 6 for the status of the Company’s joint venture project with Kerzner International and Istithmar planned for this site. In March 2009, the Company completed the sale of Treasure Island (“TI”) to Ruffin Acquisition, LLC — see further discussion in Note 3.

     The Company owns 50% of CityCenter, a mixed-use development on the Las Vegas Strip, between Bellagio and Monte Carlo. The other 50% of CityCenter is owned by Infinity World Development Corp. (“Infinity World”), a wholly-owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity. The Company is managing the development of CityCenter and will manage the operations of CityCenter for a fee. CityCenter will feature Aria, a 4,000-room casino resort; two 400-room non-gaming boutique hotels, the Mandarin Oriental, Las Vegas and The Harmon Hotel & Spa; 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 the opening of The Harmon Hotel & Spa has been postponed until such time as the Company and Infinity World mutually agree to proceed with its completion. The Company anticipates the total cost of CityCenter, excluding costs of completing The Harmon Hotel & Spa, to be $8.5 billion, including preopening costs of $0.2 billion and financing costs of $0.3 billion.

     The Company and its local partners own and operate MGM Grand Detroit in downtown Detroit, Michigan. The Company also owns and operates two resorts in Mississippi — Beau Rivage in Biloxi, which includes the Fallen Oak golf course, and Gold Strike Tunica.

     The Company has 50% interests in three casino resorts outside of Nevada: Grand Victoria, Borgata and MGM Grand Macau. Grand Victoria is a riverboat casino in Elgin, Illinois — an affiliate of Hyatt Gaming owns the other 50% of Grand Victoria and also operates the resort. Borgata is located on Renaissance Pointe in the Marina area of Atlantic City, New Jersey — Boyd Gaming Corporation owns the other 50% of Borgata and also operates the resort. MGM Grand Macau opened on December 18, 2007 — Pansy Ho Chiu-King owns the other 50% of MGM Grand Macau. See Note 6 for further discussion related to our Borgata and Macau joint ventures.

     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 by Borgata, and a portion of which is planned for a wholly-owned development, MGM Grand Atlantic City — that development is currently postponed and will remain postponed until such time as general economic conditions and the Company’s financial position improve.

     Financial statement impact of the Monte Carlo fire. The Company maintains 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.

     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 the Company’s estimate of the total claim for property damage and business interruption compared to the recoveries 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 with “Property transactions, net.” 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.

     As of June 30, 2009, the Company had received all of the proceeds from its insurance carriers related to the Monte Carlo fire and had settled its final claim for a total of $74 million. The following table shows the net pre-tax impact on the Statements of Operations for insurance recoveries from the Monte Carlo fire:

		Three Months								Six Months
For the periods ended June 30,		2009				2008				2009				2008
		(In thousands)
Reduction of general and administrative expenses		$	—			$	9,146			$	15,115			$	9,146
Reduction of property transactions, net		$	—			$	9,639			$	7,186			$	9,639

     Fair value measurement. The Company adopted Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”) for financial assets and liabilities on January 1, 2008 and for non-financial assets and liabilities on January 1, 2009. The adoption of SFAS 157 for non-financial assets and liabilities did not have a material impact on the Company’s financial statements. SFAS 157 defines fair value 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. The Company accounts for its financial assets and liabilities and non-financial assets and liabilities required to be measured at fair value in accordance with SFAS 157 and measures fair value using “Level 1” inputs, such as quoted prices in an active market; “Level 2” inputs, which are observable inputs for similar assets; or “Level 3” inputs, which are unobservable inputs. The Company’s significant financial assets and liabilities accounted for at fair value are:

	1)		The Company’s investment in The M Resort LLC 6% convertible note maturing June 2015 and embedded call option (the “M Resort Note”). The fair value of the convertible note was previously measured using “Level 2” inputs. As of June 30, 2009, the fair value of the convertible note and embedded call option were measured using “Level 3” inputs. See below for further discussion of the valuation of the M Resort Note.
	2)		The completion guarantee provided in connection with the CityCenter credit facility, discussed in Notes 4 and 6, which fair value was measured using “Level 3” inputs and based on a statistical analysis of future cash flows.

     M Resort note valuation. At March 31, 2009, the carrying value of the M Resort Note was $92 million compared to its accreted value, including accrued “paid-in-kind” interest, of $174 million. The Company had previously concluded that the decline in value was not “other-than-temporary” since a) the Company believed that projected cash flows of the M Resort — which opened on March 1, 2009 — would allow full recovery of the Company’s investment, and b) the Company had the ability and intent to hold the M Resort Note to maturity. At June 30, 2009, the Company determined that the fair value of the M Resort Note was $0, that the decline in value was “other-than-temporary,” and that the entire amount of the indicated impairment related to a credit loss as defined in FSP FAS 115-2 and FAS 124-2 (see below). The conclusion that the decline in value was “other-than-temporary” was based on the Company’s assessment of actual results since the opening of the M Resort and M Resort’s management’s revised cash flow projections since its opening, which are significantly lower than original predictions due to market and general economic conditions. Based on the conclusions above, the Company recorded a pre-tax impairment of $176 million — the accreted value as of May 31, 2009 — in the second quarter of 2009 within “Other non-operating expense.” Of that amount, $82 million was reclassified from accumulated other comprehensive loss, which amount was $53 million net of tax. As of May 31, 2009, the Company stopped recording accrued “paid-in-kind” interest.

     Recently Issued Accounting Standards

     Subsequent Events. In May 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“SFAS 165”). SFAS 165 establishes standards for accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, including the period after the balance sheet date during which management should evaluate for recognition or disclosure in the financial statements, circumstances under which an entity would recognize the events, and required disclosures. This standard is effective for the Company for the interim period ended June 30, 2009. SFAS 165 did not have a material effect on the Company’s consolidated financial statements.

     Amendments to FASB Interpretation No. 46(R). In June 2009, the FASB issued Statement of Financial Accounting Standards No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”). SFAS 167 amends the quantitative approach to determine the primary beneficiary of a variable interest entity (“VIE”) previously required by Interpretation No. 46(R). 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 impact 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. SFAS 167 also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE. This standard is effective for the Company for the annual period ended December 31, 2009. The Company is currently evaluating the impact the adoption of SFAS 167 will have on its consolidated financial statements.

     Recognition and Presentation of Other-Than-Temporary Impairments. In April 2009, the FASB issued FASB Staff Position (“FSP”) FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments.” The FSP changes the recognition threshold of an other-than-temporary impairment for an entity’s debt securities. The FSP also provides guidance on calculating the amount of other-than-temporary impairment recognized in earnings and other comprehensive income. This FSP is effective for the Company for the interim period ended June 30, 2009. The adoption of the FSP did not have a material impact on the Company’s consolidated financial statements.

     Interim Disclosures About Fair Value of Financial Instruments. In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1 “Interim Disclosures About Fair Value of Financial Instruments.” The FSP amends Statement of Financial Accounting Standards No. 107, “Disclosures About Fair Value of Financial Instruments,” to require fair value disclosures in interim as well as annual reporting periods. This FSP is effective for the Company for the interim period ended June 30, 2009. The Company has included the required fair value disclosures for long-term debt in Note 5.

     Basis of presentation. As permitted by the rules and regulations of the Securities and Exchange Commission, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the Company’s 2008 annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and the updated annual consolidated financial statements and notes thereto for 2008, included in our Form 8-K dated June 23, 2009.

     In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments — which include only normal recurring adjustments — necessary to present fairly the Company’s financial position as of June 30, 2009 and the results of its operations and cash flows for the three and six month periods ended June 30, 2009 and 2008. The results of operations for such periods are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through August 6, 2009, the date these financial statements were available to be issued.

NOTE 2 — LIQUIDITY AND FINANCIAL POSITION

     Until May 2009, the Company had borrowed the total amount of borrowing capacity available under its senior credit facility and had no other sources of borrowing availability. In May 2009, the Company executed a series of transactions to improve its financial condition, consisting of the following:

	•		The Company entered into an amendment to its senior credit facility, under which certain covenants and potential events of default were waived and other covenants were amended, and under which the Company permanently repaid $826 million of credit facility borrowings, and $400 million of previous repayments under separate amendments were treated as permanent reductions. Additional information about the credit facility amendment is described below.
	•		The Company issued approximately 164.5 million shares of its common stock at $7 per share, for total net proceeds to the Company of approximately $1.1 billion. A portion of the shares were previously held by the Company as treasury stock and a portion of the shares were newly issued. Proceeds from the common stock offering and concurrent offering of senior secured notes were used to repay outstanding amounts under the Company’s senior credit facility and redeem certain outstanding senior debentures and senior notes and for general corporate purposes.
	•		The Company issued $650 million of 10.375% senior secured notes due 2014 and $850 million of 11.125% senior secured notes due 2017 for net proceeds to the Company of approximately $1.4 billion. The notes are secured by the equity interests and substantially all of the assets of Bellagio and The Mirage and otherwise rank equally with the Company’s existing and future senior indebtedness. Upon the issuance of such notes, the holders of the Company’s 13% senior notes due 2013 obtained an equal and ratable lien in all collateral securing these notes.

     Concurrently with the close of the above transactions on May 19, 2009, the Company delivered a notice of redemption for the $100 million of outstanding 7.25% senior debentures of Mirage Resorts, Incorporated (“MRI”), a wholly owned subsidiary of the Company. The notes were redeemed in June 2009, at a total cost of approximately $127 million. Additionally, in May 2009, the Company commenced tender offers to purchase all $820.0 million of its outstanding 6.0% senior notes due October 2009 and all $226.3 million of its outstanding 6.50% senior notes due July 2009 of Mandalay Resort Group, a wholly owned subsidiary of the Company. As of the close of the tender offers in June 2009, the Company had received valid tenders for $762.6 million of the senior notes due October 2009 and $122.3 million of the senior notes due July 2009, and purchased such notes essentially at par value.

     While the Company was in compliance with the financial covenants under its senior credit facility at December 31, 2008, as previously anticipated, the Company was not in compliance with the financial covenants as of March 31, 2009 and received a waiver of the requirement to comply with such covenants through June 30, 2009. Subsequent to the receipt of the waiver, in April and May 2009, the Company entered into amendments of senior credit facility which included the following key terms:

	•		Amended certain financial and non-financial covenants to 1) require a quarterly minimum EBITDA test, based on a rolling 12-month EBITDA; 2) provide for a covenant limiting annual capital expenditures; 3) eliminate the total leverage ratio and interest charge coverage ratio tests and permanently waive any prior non-compliance with such ratio tests for the quarter ended March 31, 2009; and 4) permanently waive any potential default from the inclusion of a “going concern” explanatory paragraph in the report of its independent registered public accountants for the years ended or ending December 31, 2008 or December 31, 2009;
	•		Amended existing restrictions to allow for the issuance of equity and debt securities described above and, in connection therewith, amended existing restrictions to allow for the granting of liens to secure indebtedness of up to $1.5 billion;
	•		Amended existing restrictions to allow the prepayment, redemption, or purchase of indebtedness, including payment of any premium, pursuant to the tender offers described above;

	•		Amended existing restrictions to allow 1) the redemption, prepayment, repurchase and/or defeasance of the MRI notes described above; 2) repayment of any debt securities currently outstanding and maturing through February 28, 2011; 3) utilization of up to $300 million in cash to prepay, repurchase, or redeem indebtedness with a maturity date following February 28, 2011 at a discount to par; and 4) exchange of indebtedness for up to $500 million in equity interests as long as a change of control does not occur as a result of such exchange;
	•		Allowed the Company to incur additional indebtedness up to $500 million, provided that such indebtedness must be unsecured indebtedness with a maturity after the maturity of the senior credit facility and with covenants no more restrictive than those contained in the indentures governing the Company’s existing senior unsecured indebtedness. The Company must use 50% of the net proceeds of such indebtedness to permanently reduce the term loan and revolving portions of the senior credit facility on a pro rata basis;
	•		Provided that 50% of the net proceeds from any future asset sales would be used to permanently reduce the term loan and revolving portions of the senior credit facility on a pro rata basis, subject to any similar requirements in other debt instruments;
	•		Fixed the LIBOR margin at 4.00% and the base rate margin at 3.00%, which margins reflect an increase of 1.00% from the highest corresponding margins previously applicable; and
	•		Required the Company to grant the lenders a security interest in the assets of Gold Strike Tunica and certain undeveloped land on the Las Vegas Strip to secure up to $300 million of obligations under the credit facility. In addition, MGM Grand Detroit, which is a co-borrower under the credit facility, granted the lenders a security interest in its assets to secure its obligations under the credit facility which obligations must be at least $450 million.

     The Company believes that the $2.5 billion of proceeds of the common stock and senior secured notes offering — in addition to the covenant relief provided under the amendment to its senior credit facility, the $755 million proceeds from the March 2009 sale of TI (see Note 3) and the Company’s operating cash flow — will allow the Company to fulfill its financial commitments through 2009 and 2010 including any amounts due under the CityCenter completion guarantee (see Notes 4 and 6), notwithstanding the $1.26 billion of permanent repayments of credit facility borrowings. However, the Company’s ability to meet its obligations to redeem its $782 million 8.5% senior notes maturing in September 2010 depends in part on the Company’s operating performance and amounts required to be funded under the Company’s CityCenter completion guarantee meeting management’s current expectations. Should operating results or the amount required under the CityCenter completion guarantee not meet expectations, it may be necessary for the Company to seek additional financing or explore the sale of non-core assets to satisfy the September 2010 senior note maturity.

NOTE 3 — ASSETS HELD FOR SALE

     On March 20, 2009, the Company closed the sale of TI to Ruffin Acquisition, LLC. At closing, the Company received $600 million in cash proceeds and a $175 million secured note bearing interest at 10% payable not later than 36 months after closing. Ruffin Acquisition, LLC exercised its option, provided for by an amendment to the purchase agreement, to prepay the note on or before April 30, 2009 and received a $20 million discount on the purchase price. In connection with the sale of TI, including the transfer of all of the membership interest in TI, TI was released as a guarantor of the outstanding indebtedness of the Company and its subsidiaries. The Company recognized a pre-tax gain of $187 million on the sale, which is included within “Property transactions, net” in the accompanying consolidated statements of operations for the six month period ended June 30, 2009.

     The assets and liabilities of TI were classified as held for sale as of December 31, 2008. However, the results of its operations were not classified as discontinued operations because the Company expects to continue to receive significant cash flows from customer migration. The following table summarizes the assets related to TI classified as assets held for sale and the liabilities related to assets held for sale in the accompanying consolidated balance sheet for the year ended December 31, 2008:

     The key terms of the amendment to the joint venture agreement included the following:

	•		Provided for funding under the letters of credit to be drawn as follows: Infinity World for the first $135 million, the Company for the next $224 million and Infinity World for the final $359 million; and
	•		Amended the provisions for distributions to allow the first $494 million of available distributions to 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.

     As a result of the amendments to the joint venture agreement and the CityCenter credit facility, the Company concluded that it should reassess whether CityCenter is a variable interest entity under FASB Interpretation No. 46(R) (as amended), “Consolidation of Variable Interest Entities — an Interpretation of ARB No. 51.” The Company’s assessment confirmed its previous conclusion that CityCenter is not a variable interest entity and the equity method of accounting remains appropriate, as equity at risk is sufficient and the equity holders continue to control CityCenter and have the right/obligation to receive/absorb expected returns/losses of CityCenter. In addition, while the Company’s obligation to absorb expected losses is not proportionate to its 50% voting rights as a result of the changes to the completion guarantees, substantially all of the activities of CityCenter do not involve — and are not conducted on behalf of — the Company.

     In March 2009, Infinity World filed a lawsuit against the Company that sought judicial relief from Infinity World’s contractual funding obligations to CityCenter on several grounds, which the Company contested. The lawsuit was dismissed with prejudice in conjunction with the amended and restated joint venture agreement.

     During each of the three and six months ended June 30, 2009 and 2008, the Company incurred $12 million and $25 million, respectively, of costs reimbursable by CityCenter, primarily employee compensation, residential sales costs, and certain allocated costs. Such costs are recorded as “Other” operating expenses, and the reimbursement of such costs is recorded as “Other” revenue, in the accompanying consolidated statements of operations.

     The Company evaluates its investments in unconsolidated affiliates for impairment whenever events or changes in circumstances indicate that the carrying value of such investment may have experienced an 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 such impairment is “other-than-temporary” based on its assessment of relevant factors. The Company estimates fair value using a discounted cash flow analysis utilizing “Level 3” inputs under FAS 157, including market indicators of discount rates and terminal year capitalization rates. At March 31, 2009, the Company reviewed its CityCenter investment for impairment. The Company’s discounted cash flow analysis for CityCenter was based on estimated future cash outflows for construction and maintenance expenditures and future cash inflows from operations and residential sales of CityCenter. Based on its analysis, the Company determined that no impairment charge was necessary at March 31, 2009.

     The Company recorded its share of the results of operations of unconsolidated affiliates as follows:

		Three Months								Six Months
For the periods ended June 30,		2009				2008				2009				2008
						(In thousands)
Income from unconsolidated affiliates		$	4,175			$	17,045			$	19,724			$	51,156
Preopening and start-up expenses			(8,848	)			(6,350	)			(16,729	)			(11,156	)
Non-operating items from unconsolidated affiliates			(12,314	)			(7,288	)			(23,445	)			(17,179	)
		$	(16,987	)		$	3,407			$	(20,450	)		$	22,821

NOTE 5 — LONG-TERM DEBT

     Long-term debt consisted of the following:

		June 30,				December 31,
		2009				2008
		(In thousands)
Senior credit facility		$	4,124,033			$	5,710,000
$104.1 million 6.5% senior notes, due 2009, net			104,087				226,720
$57.4 million 6% senior notes, due 2009, net			57,404				820,894
$297.0 million 9.375% senior subordinated notes, due 2010, net			301,672				305,893
$782 million 8.5% senior notes, due 2010, net			781,456				781,223
$400 million 8.375% senior subordinated notes, due 2011			400,000				400,000
$128.7 million 6.375% senior notes, due 2011, net			129,277				129,399
$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			153,581				153,960
$750 million 13% senior secured notes, due 2013, net			703,153				699,440
$508.9 million 5.875% senior notes, due 2014, net			507,458				507,304
$650 million 10.375% senior secured notes, due 2014, net			632,027				—
$875 million 6.625% senior notes, due 2015, net			878,494				878,728
$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
$100 million 7.25% senior debentures, redeemed in 2009			—				85,537
$743 million 7.625% senior notes, due 2017			743,000				743,000
$850 million 11.125% senior secured notes, due 2017, net			827,614				—
Floating rate convertible senior debentures, due 2033			8,472				8,472
$0.5 million 7% debentures, due 2036, net			573				573
$4.3 million 6.7% debentures, due 2096			4,265				4,265
Other notes			3,748				4,233
			12,364,839				13,464,166
Less: Current portion			—				(1,047,614	)
		$	12,364,839			$	12,416,552

     The Company’s $5.8 billion senior credit facility consists of a term loan facility of $2.2 billion and a revolving credit facility of $3.6 billion and matures in 2011. In conjunction with the May 2009 credit facility amendment, the Company granted the lenders a security interest in the assets of Gold Strike Tunica and certain undeveloped land on the Las Vegas Strip to secure up to $300 million of obligations under the credit facility and MGM Grand Detroit, which is a co-borrower under the credit facility, granted lenders a security interest in its assets to secure its obligations under the credit facility. The senior credit facility bears interest at a LIBOR margin at 4.00%, with a LIBOR floor of 2.00%, and a base rate margin at 3.00%, with a base rate floor of 4.00%. The weighted average interest rate on outstanding borrowings under the senior credit facility at June 30, 2009 and December 31, 2008 was 6.0% and 3.4%, respectively. During the quarter ending June 30, 2009, the Company recorded a loss on early retirement of debt of $20 million related to amendments to its senior credit facility recorded within “Other non-operating expense” in the accompanying consolidated statement of operations.

     As of June 30, 2009, amounts due within one year of the balance sheet date are classified as long-term in the accompanying consolidated balance sheets because the Company has both the intent and ability to repay these amounts with available borrowings under the senior credit facility. As discussed in Note 2, the senior credit facility was fully drawn until May 2009; therefore, the Company’s senior notes due in 2009 were classified as current obligations at December 31, 2008.

     Interest expense, net consisted of the following:

		Three Months								Six Months
For the periods ended June 30,		2009			2008						2009				2008
						(In thousands)
Total interest incurred		$	268,039			$	184,311			$	507,869			$	373,379
Interest capitalized			(66,752	)			(39,007	)			(134,946	)			(78,286	)
		$	201,287			$	145,304			$	372,923			$	295,093

     In May 2009, the Company issued $650 million of 10.375% senior secured notes due 2014 and $850 million of 11.125% senior secured notes due 2017 for net proceeds to the Company of approximately $1.4 billion. The notes are secured by the equity interests, and substantially all of the assets of Bellagio and The Mirage and otherwise rank equally with the Company’s existing and future senior indebtedness. Upon the issuance of such notes, the holders of the Company’s 13% senior notes due 2013 obtained an equal and ratable lien in all collateral securing these notes.

     In June 2009, the Company redeemed the $100 million 7.25% senior debentures at a cost of $127 million. Also, in June 2009, the Company redeemed, essentially at par, $762.6 million of its 6.0% senior notes due October 2009 and $122.3 million of its 6.5% senior notes due July 2009 as a result of a tender offer process. During the quarter ending June 30, 2009, the Company recorded a loss on early retirement of debt of $38 million related to these transactions recorded within “Other non-operating expense” in the accompanying consolidated statement of operations.

     Under the indenture governing the Company’s 13% senior secured notes due 2013, upon consummation of an asset sale the Company was required to 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. In June 2009, the Company entered into a supplemental indenture for the 13% senior secured notes due 2013 which provided that 1) the original covenant does not apply to the sale of TI; 2) any indebtedness of the Company or subsidiaries validly released in writing in exchange for assets of the Company or subsidiaries will be “deemed cash” for purposes of the 75% cash consideration requirement under the original covenant; and 3) permitted uses of net proceeds of non-collateral asset sales to include payment of indebtedness that ranks equally with the 13% senior secured notes due 2013. These amended terms are consistent with the terms of the 10.375% senior secured notes due 2014 and the 11.125% senior secured notes due 2017. As discussed in Note 2, the Company’s senior credit facility requires that 50% of the net proceeds from future asset sales must be used to permanently reduce the available borrowings under the senior credit facility.

     The Company’s long-term debt obligations contain certain financial and non-financial covenants. At June 30, 2009, the Company was required to maintain a minimum trailing annual EBITDA (as defined) of $900 million, beginning in June 2009. Additionally, the Company is limited to $250 million of annual capital expenditures (as defined) during 2009. Through June 30, 2009, the Company was in compliance with the minimum EBITDA and maximum capital expenditures covenants. The credit facility amendment in May 2009 eliminated the Company’s requirement to maintain a maximum leverage and interest charge ratio, and permanently waived any previous non-compliance with such ratio tests.

     The estimated fair value of the Company’s long-term debt at June 30, 2009 was approximately $9.8 billion, versus its book value of $12.4 billion. At December 31, 2008, the estimated fair value of the Company’s long-term debt was approximately $8.5 billion, versus its book value of $13.5 billion. The estimated fair value of the Company’s senior and senior subordinated notes was based on quoted market prices; the fair value of the Company’s senior credit facility was determined using estimates based on recent trading prices.

NOTE 6 — COMMITMENTS AND CONTINGENCIES

     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 future joint projects.

     North Las Vegas Strip 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 April 2009, the Company funded its $13 million share of pre-development costs to date, and was relieved of its obligation to contribute land to the joint venture. Either partner now has the right to dissolve the joint venture at any time and the design and pre-construction activities will remain postponed until such time as the partners agree to move forward with the project. The Company does not expect to move forward with this project until general economic conditions and the Company’s financial position improve.

     CityCenter completion guarantee. As discussed in Note 4, in April 2009 the Company entered into a new completion guarantee in conjunction with the CityCenter credit facility. The completion guarantee provides for additional contingent funding of construction costs in the event such funding is necessary to complete the project, and is secured by the Company’s interests in the assets of Circus Circus Las Vegas and certain adjacent undeveloped land. Also impacting the potential exposure under the completion guarantee is the ability to utilize up to $250 million of net residential proceeds to fund construction costs. At June 30, 2009, the Company recorded a liability of $64 million, classified as “Other accrued liabilities” in the accompanying consolidated balance sheets, equal to the fair value of the completion guarantee, which is an estimate of the price the Company would pay to transfer this liability to a third party market participant in an orderly transaction. The difference between the amount recorded at June 30, 2009 and the previous liability of $205 million was recorded as an adjustment to the Company’s investment in CityCenter.

     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 June 30, 2009, the Company had provided $132 million of total letters of credit. As discussed in Note 4, in April 2009 the Company funded its remaining equity contributions to CityCenter of $224 million through an irrevocable letter of credit, of which $89 million remained undrawn as of June 30, 2009 and does not count against the $250 million limit described above. Though not subject to a letter of credit, the Company has an agreement with the Nevada Gaming Control Board to maintain $112 million of cash in bank at the corporate level to support normal bankroll requirements at the Company’s Nevada operations.

     New Jersey regulatory review of Macau investment. In its June 2005 report to the New Jersey Casino Control Commission (“the New Jersey Commission”) 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 relationship of MGM MIRAGE with its joint venture partner in Macau and that it would report any material information to the New Jersey Commission it deemed appropriate.

     On May 18, 2009, the DGE issued a report to the New Jersey Commission on its investigation. While the report itself is confidential, at the conclusion of 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 New Jersey Commission hold a hearing to address the report.

     The DGE is responsible for investigating licensees and prosecuting matters before the New Jersey Commission. However, the report is merely a recommendation and is not binding on the New Jersey Commission, which has sole responsibility and authority for deciding all regulatory and licensing matters. The New Jersey Commission has not yet taken any action with respect to the report, but on July 27, 2009, the DGE submitted a letter to the New Jersey Commission recommending that the New Jersey Commission reopen the licensing of Borgata to address the ongoing suitability of the Company as a licensee; under New Jersey regulations, the New Jersey Commission is obligated to reopen the licensing. This was a procedural step required by the New Jersey Casino Control Act that does not represent a finding as to the issues raised by the DGE. The Company will have the opportunity to respond to the DGE report in an open public proceeding.

     However, the Company believes it is reasonably possible that actions of the New Jersey Commission may cause us to dispose of our investment in either MGM Grand Macau or Borgata. Such an action may result in an impairment of such investment and, in the case of New Jersey, our Renaissance Pointe land, due to a) the buy-sell provision of the operating agreements of these entities may result in a sale below our carrying value; b) market values at that time may be below our carrying value; or c) in the case of New Jersey, alternate uses of the Renaissance Pointe land may not support our carrying value of approximately $745 million.

     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.

NOTE 7 — 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:

		Three Months								Six Months
For the periods ended June 30,		2009				2008				2009				2008
						(In thousands)
Weighted-average common shares outstanding (used in the calculation of basic earnings per share)			352,457				277,468				314,718				283,205
Potential dilution from stock options and restricted stock			—				7,147				—				8,303
Weighted-average common and common equivalent shares (used in the calculation of diluted earnings per share)			352,457				284,615				314,718				291,508

     The Company had a loss from continuing operations for the three and six months ended June 30, 2009. Therefore, approximately 26.5 million shares underlying outstanding stock-based awards were excluded from the computation of diluted earnings per share for these periods because to include these awards would be anti-dilutive. Approximately 5.0 million and 4.3 million shares underlying stock-based awards were excluded from the computation of diluted earnings per share in the three and six months ended June 30, 2008, respectively.

NOTE 8 — COMPREHENSIVE INCOME

     Comprehensive income consisted of the following:

		Three Months								Six Months
For the periods ended June 30,		2009				2008				2009				2008
						(In thousands)
Net income (loss)		$	(212,575	)		$	113,101			$	(107,376	)		$	231,447
Valuation adjustment to M Resort convertible note, net of tax			—				(7,221	)			962				(7,221	)
Currency translation adjustment			193				31				822				(3,084	)
Reclassification of comprehensive income to earnings — M Resort note			53,305				—				53,305				—
Other			—				107				165				—
		$	(159,077	)		$	106,018			$	(52,122	)		$	221,142

NOTE 9 — STOCKHOLDERS’ EQUITY

     Dubai tender offer. In February 2008, the Company and a wholly-owned subsidiary of Dubai World completed a joint tender offer to purchase 15 million shares of Company 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 repurchases. In addition to the tender offer, the Company repurchased 9.7 million shares of common stock in the six months ended June 30, 2008, at a total cost of $561 million. The Company did not repurchase common stock during the six months ended June 30, 2009. At June 30, 2009, the Company had 20 million shares available for repurchase under its May 2008 authorization.

     Stock sale. 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 $7 per share, for total net proceeds to the Company of approximately $1.1 billion. A portion of the shares were previously held by the Company as treasury stock and a portion of the shares were newly issued. Proceeds from the common stock offering and concurrent offering of senior secured notes were and will be used to repay outstanding amounts under the Company’s senior credit facility and redeem certain outstanding senior debentures and senior notes and for general corporate purposes.

NOTE 10 — STOCK-BASED COMPENSATION

     Activity under share-based payment plans. As of June 30, 2009, the aggregate number of share-based awards available for grant under the Company’s omnibus incentive plan was 16.8 million. A summary of activity under the Company’s share-based payment plans for the six months ended June 30, 2009 is presented below:

Stock options and stock appreciation rights

						Weighted
						Average
		Shares				Exercise
		(000's)				Price
Outstanding at January 1, 2009			25,210			$	26.98
Granted			2,084				5.89
Exercised			(53	)			12.74
Forfeited or expired			(1,700	)			26.93
Outstanding at June 30, 2009			25,541				25.28
Exercisable at June 30, 2009			17,435				25.17

     As of June 30, 2009, there was a total of approximately $49 million of unamortized compensation related to stock options and stock appreciation rights expected to vest, which is expected to be recognized over a weighted-average period of 2.0 years.

Restricted stock units (“RSUs”)

						Weighted
						Average
		Shares				Exercise
		(000's)				Price
Nonvested at January 1, 2009			1,054			$	18.93
Granted			6				16.10
Vested			—				—
Forfeited			(111	)			18.99
Nonvested at June 30, 2009			949				18.91

     As of June 30, 2009, there was a total of approximately $62 million of unamortized compensation related to RSUs which is expected to be recognized over a weighted-average period of 2.1 years.

     The following table includes additional information related to stock options and SARs:

Six months ended June 30,		2009				2008
		(In thousands)
Intrinsic value of stock options and SARs exercised		$	169			$	30,555
Income tax benefit from stock options and SARs exercised			59				10,136
Proceeds from stock option exercises			632				11,331

     Recognition of compensation cost. Compensation cost was recognized as follows:

		Three Months								Six Months
For the periods ended June 30,		2009				2008				2009				2008
						(In thousands)
Compensation cost
Stock options and SARS		$	5,321			$	11,118			$	10,668			$	23,727
RSUs			5,225				—				10,324				—
Total compensation cost			10,546				11,118				20,992				23,727
Less: CityCenter reimbursed cost			(1,503	)			(1,491	)			(3,192	)			(2,858	)
Less: Compensation cost capitalized			(20	)			(35	)			(44	)			(74	)
Compensation cost recognized as expense			9,023				9,592				17,756				20,795
Less: Related tax benefit			(3,120	)			(3,279	)			(6,137	)			(7,126	)
Compensation expense, net of tax benefit		$	5,903			$	6,313			$	11,619			$	13,669

     Compensation cost for stock options and SARs is based on the fair value of each award, measured by applying the Black-Scholes model on the date of grant, using the following weighted-average assumptions:

		Three Months								Six Months
For the periods ended June 30,		2009				2008				2009				2008
Expected volatility			82	%			41	%			81	%			39	%
Expected term		4.7 years				4.5 years				4.7 years				4.5 years
Expected dividend yield			0	%			0	%			0	%			0	%
Risk-free interest rate			2.4	%			2.9	%			2.4	%			2.6	%
Forfeiture rate			3.4	%			3.4	%			3.4	%			3.4	%
Weighted-average fair value of options granted		$	3.54			$	20.03			$	3.75			$	21.80

     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 11 — PROPERTY TRANSACTIONS, NET

     Net property transactions consisted of the following:

		Three Months								Six Months
For the periods ended June 30,		2009				2008				2009				2008
						(In thousands)
Write downs and impairments		$	249			$	5,794			$	2,277			$	8,023
Insurance recoveries			—				(9,639	)			(7,186	)			(9,639	)
Demolition costs			—				3,672				—				4,169
Gain on sale of TI			2,928				—				(187,442	)			—
Net losses on sale or disposal of fixed assets			71				55				474				105
		$	3,248			$	(118	)		$	(191,877	)		$	2,658

     Write-downs and impairments in 2009 primarily related to the write-off of several abandoned capital projects. Insurance recoveries related to the Monte Carlo fire – See Note 1. Write-downs and impairments in 2008 primarily related to a damaged marquee sign at Bellagio, assets written off in conjunction with retail store changes at Mandalay Bay, and discontinued capital projects. Demolition costs in 2008 relate largely to room remodel activity.

NOTE 12 — CONSOLIDATING CONDENSED FINANCIAL INFORMATION

     The Company’s subsidiaries (excluding MGM Grand Detroit, LLC, foreign subsidiaries, and certain minor subsidiaries) have fully and unconditionally guaranteed, on a joint and several basis, payment of the senior credit facility, the senior notes and the senior subordinated notes. Separate condensed financial statement information for the subsidiary guarantors and non-guarantors as of June 30, 2009 and December 31, 2008 and for the three and six month periods ended June 30, 2009 and 2008 is as follows:

CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION

		At June 30, 2009
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
									(In thousands)
Current assets		$	351,450			$	625,393			$	98,477			$	—			$	1,075,320
Property and equipment, net			—				15,221,316				715,335				(11,972	)			15,924,679
Investments in subsidiaries			19,374,035				450,053				—				(19,824,088	)			—
Investments in unconsolidated affiliates			—				4,367,124				233,251				—				4,600,375
Other non-current assets			169,725				530,563				109,263				—				809,551
		$	19,895,210			$	21,194,449			$	1,156,326			$	(19,836,060	)		$	22,409,925
Current liabilities		$	331,954			$	860,986			$	39,021			$	—			$	1,231,961
Intercompany accounts			(397,149	)			308,360				88,789				—				—
Deferred income taxes			3,581,454				—				—				—				3,581,454
Long-term debt			11,209,164				705,675				450,000				—				12,364,839
Other long-term obligations			124,857				60,745				1,139				—				186,741
Stockholders’ equity			5,044,930				19,258,683				577,377				(19,836,060	)			5,044,930
		$	19,895,210			$	21,194,449			$	1,156,326			$	(19,836,060	)		$	22,409,925

		At December 31, 2008
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
									(In thousands)
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		$	863,038			$	1,055,921			$	36,003			$	—			$	1,954,962
Current portion of long-term debt			820,894				226,720				—				—				1,047,614
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 STATEMENT OF OPERATIONS INFORMATION

		For the Three Months Ended June 30, 2009
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
									(In thousands)
Net revenues		$	—			$	1,358,557			$	135,598			$	—			$	1,494,155
Equity in subsidiaries’ earnings			117,075				8,103				—				(125,178	)			—
Expenses:
Casino and hotel operations			3,552				783,370				76,660				—				863,582
General and administrative			2,167				248,044				23,356				—				273,567
Corporate expense			16,393				29,026				(2,413	)			—				43,006
Preopening and start-up expenses			—				9,410				—				—				9,410
Restructuring costs			—				50				—				—				50
Property transactions, net			—				3,248				—				—				3,248
Depreciation and amortization			—				163,657				10,711				—				174,368
			22,112				1,236,805				108,314				—				1,367,231
Income from unconsolidated affiliates			—				9,249				(5,074	)			—				4,175
Operating income			94,963				139,104				22,210				(125,178	)			131,099
Interest income (expense), net			(200,912	)			12,055				(6,134	)			—				(194,991	)
Other, net			(209,745	)			(30,000	)			(6,750	)			—				(246,495	)
Income (loss) before income taxes			(315,694	)			121,159				9,326				(125,178	)			(310,387	)
Benefit (provision) for income taxes			103,119				(4,084	)			(1,223	)			—				97,812
Net income (loss)		$	(212,575	)		$	117,075			$	8,103			$	(125,178	)		$	(212,575	)

		For the Three Months Ended June 30, 2008
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
									(In thousands)
Net revenues		$	—			$	1,744,181			$	151,538			$	—			$	1,895,719
Equity in subsidiaries’ earnings			316,206				12,293				—				(328,499	)			—
Expenses:
Casino and hotel operations			3,437				935,849				85,205				—				1,024,491
General and administrative			2,317				295,714				25,780				—				323,811
Corporate expense			3,565				23,046				10				—				26,621
Preopening and start-up expenses			—				7,016				(59	)			—				6,957
Property transactions, net			(5,372	)			5,254				—				—				(118	)
Depreciation and amortization			(449	)			183,369				14,298				—				197,218
			3,498				1,450,248				125,234				—				1,578,980
Income from unconsolidated affiliates			—				21,185				(4,140	)			—				17,045
Operating income			312,708				327,411				22,164				(328,499	)			333,784
Interest income (expense), net			(127,449	)			(11,322	)			(2,853	)			—				(141,624	)
Other, net			(3,815	)			632				(5,669	)			—				(8,852	)
Income before income taxes			181,444				316,721				13,642				(328,499	)			183,308
Provision for income taxes			(68,343	)			(515	)			(1,349	)			—				(70,207	)
Net income		$	113,101			$	316,206			$	12,293			$	(328,499	)		$	113,101