(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(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 No.)

3600 Las Vegas Boulevard South, Las Vegas, Nevada 89109
(Address of principal executive offices — Zip Code)

(702) 693-7120
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 þ No o

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 of Regulation 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 o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer   o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class		Outstanding at November 4, 2009
Common Stock, $.01 par value		441,219,641 shares

 

 

MGM MIRAGE AND SUBSIDIARIES

FORM 10-Q

I N D E X

				Page
PART I. FINANCIAL INFORMATION
Item 1.		Financial Statements (Unaudited)
		Consolidated Balance Sheets at September 30, 2009 and December 31, 2008			1
		Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2009 and September 30, 2008			2
		Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and September 30, 2008			3
		Condensed Notes to Consolidated Financial Statements			4-21
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			22-31
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			31
Item 4.		Controls and Procedures			31
PART II. OTHER INFORMATION
Item 1.		Legal Proceedings			31-33
Item 1A.		Risk Factors			33-35
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			35
Item 4.		Submission of Matters to a Vote of Security Holders			35-36
Item 6.		Exhibits			36
SIGNATURES					37
EX-31.1
EX-31.2
EX-32.1
EX-32.2

MGM MIRAGE AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)

		September 30,				December 31,
		2009				2008
ASSETS
Current assets
Cash and cash equivalents		$	896,990			$	295,644
Accounts receivable, net			309,281				303,416
Inventories			98,121				111,505
Income tax receivable			166,907				64,685
Deferred income taxes			45,997				63,153
Prepaid expenses and other			107,169				155,652
Assets held for sale			—				538,975
Total current assets			1,624,465				1,533,030
Property and equipment, net			15,751,056				16,289,154
Other assets
Investments in and advances to unconsolidated affiliates			3,544,425				4,642,865
Goodwill			86,353				86,353
Other intangible assets, net			344,976				347,209
Deposits and other assets, net			375,246				376,105
Total other assets			4,351,000				5,452,532
		$	21,726,521			$	23,274,716
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable		$	130,708			$	142,693
Construction payable			13,208				45,103
Current portion of long-term debt			—				1,047,614
Accrued interest on long-term debt			205,786				187,597
Other accrued liabilities			807,427				1,549,296
Liabilities related to assets held for sale			—				30,273
Total current liabilities			1,157,129				3,002,576
Deferred income taxes			3,142,220				3,441,198
Long-term debt			12,910,322				12,416,552
Other long-term obligations			221,707				440,029
Commitments and contingencies (Note 6)
Stockholders’ equity
Common stock, $.01 par value: authorized 600,000,000 shares; issued 441,163,787 and 369,283,995 shares; outstanding 441,163,787 and 276,506,968 shares			4,412				3,693
Capital in excess of par value			3,487,883				4,018,410
Treasury stock, at cost: 0 and 92,777,027 shares			—				(3,355,963	)
Retained earnings			804,450				3,365,122
Accumulated other comprehensive loss			(1,602	)			(56,901	)
Total stockholders’ equity			4,295,143				3,974,361
		$	21,726,521			$	23,274,716

MGM MIRAGE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
Revenues
Casino		$	699,806			$	739,331			$	1,990,103			$	2,271,978
Rooms			340,165				458,051				1,045,504				1,500,322
Food and beverage			344,284				395,090				1,040,540				1,229,045
Entertainment			128,568				135,673				369,998				408,541
Retail			54,525				69,205				156,785				202,060
Other			138,073				155,335				419,248				478,664
			1,705,421				1,952,685				5,022,178				6,090,610
Less: Promotional allowances			(172,198	)			(167,154	)			(496,005	)			(506,355	)
			1,533,223				1,785,531				4,526,173				5,584,255
Expenses
Casino			367,720				383,406				1,093,068				1,200,948
Rooms			108,273				136,313				325,247				412,846
Food and beverage			196,778				237,130				590,137				720,201
Entertainment			91,422				94,667				267,786				288,617
Retail			33,684				42,411				99,760				128,070
Other			91,261				99,389				260,562				307,521
General and administrative			290,766				326,831				825,130				971,016
Corporate expense			31,928				24,466				99,295				83,537
Preopening and start-up expenses			10,058				5,505				27,539				17,626
Restructuring costs			—				—				493				329
Property transactions, net			971,208				32,326				779,331				34,984
Depreciation and amortization			170,651				200,102				521,877				591,659
			2,363,749				1,582,546				4,890,225				4,757,354
Income (loss) from unconsolidated affiliates			(132,893	)			38,572				(113,169	)			89,728
Operating income (loss)			(963,419	)			241,557				(477,221	)			916,629
Non-operating income (expense)
Interest income			857				5,910				11,535				13,056
Interest expense, net			(181,899	)			(144,751	)			(554,822	)			(439,844	)
Non-operating items from unconsolidated affiliates			(14,613	)			(9,552	)			(38,058	)			(26,731	)
Other, net			826				2,125				(234,693	)			791
			(194,829	)			(146,268	)			(816,038	)			(452,728	)
Income (loss) before income taxes			(1,158,248	)			95,289				(1,293,259	)			463,901
Benefit (provision) for income taxes			407,860				(34,011	)			435,495				(171,176	)
Net income (loss)		$	(750,388	)		$	61,278			$	(857,764	)		$	292,725
Income (loss) per share of common stock
Basic		$	(1.70	)		$	0.22			$	(2.40	)		$	1.04
Diluted		$	(1.70	)		$	0.22			$	(2.40	)		$	1.02

The accompanying notes are an integral part of these consolidated financial statements.

MGM MIRAGE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

		Nine Months Ended
		September 30,
		2009				2008
Cash flows from operating activities
Net income (loss)		$	(857,764	)		$	292,725
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			521,877				591,659
Amortization of debt discounts, premiums and issuance costs			36,204				2,530
Loss on retirement of long-term debt			58,631				—
Provision for doubtful accounts			43,054				46,616
Stock-based compensation			27,076				29,665
Business interruption insurance — lost profits			(15,115	)			(9,146	)
Business interruption insurance — cost recovery			—				(27,668	)
Property transactions, net			779,331				34,984
Convertible note impairment			175,690				—
(Income) loss from unconsolidated affiliates			178,628				(47,069	)
Distributions from unconsolidated affiliates			43,527				55,704
Deferred income taxes			(271,736	)			(41,820	)
Change in current assets and liabilities
Accounts receivable			(50,875	)			44,518
Inventories			10,259				1,518
Income taxes receivable and payable			(114,659	)			(237,582	)
Prepaid expenses and other			(20,627	)			(10,969	)
Accounts payable and accrued liabilities			(22,392	)			(227,947	)
Business interruption insurance recoveries			16,391				28,891
Other			(19,184	)			(25,889	)
Net cash provided by operating activities			518,316				500,720
Cash flows from investing activities
Capital expenditures, net of construction payable			(122,684	)			(674,110	)
Proceeds from sale of Treasure Island, net			746,266				—
Dispositions of property and equipment			22,067				648
Investments in and advances to unconsolidated affiliates			(922,067	)			(881,136	)
Property damage insurance recoveries			7,186				21,109
Other			(5,054	)			(3,653	)
Net cash used in investing activities			(274,286	)			(1,537,142	)
Cash flows from financing activities
Net borrowings (repayments) under bank credit facilities — maturities of 90 days or less			(2,485,000	)			850,950
Borrowings under bank credit facilities — maturities longer than 90 days			6,661,492				7,430,000
Repayments under bank credit facilities — maturities longer than 90 days			(5,576,340	)			(5,780,000	)
Issuance of senior notes, net			1,921,751				—
Retirement of senior notes			(1,119,090	)			(376,663	)
Debt issuance costs			(113,227	)			(36,200	)
Issuance of common stock in public offering, net			1,103,737				—
Issuance of common stock upon exercise of stock options			637				14,010
Purchases of common stock			—				(1,240,857	)
Excess tax benefits from stock-based compensation			—				9,145
Payment of Detroit Economic Development Corporation bonds			(49,393	)			—
Other			(1,405	)			—
Net cash provided by financing activities			343,162				870,385
Cash and cash equivalents
Net increase (decrease) for the period			587,192				(166,037	)
Change in cash related to assets held for sale			14,154				—
Balance, beginning of period			295,644				416,124
Balance, end of period		$	896,990			$	250,087
Supplemental cash flow disclosures
Interest paid, net of amounts capitalized		$	500,429			$	500,949
Federal, state and foreign income taxes paid, net of refunds			—				435,127
Non-cash investing and financing activities
Reduction in investment in CityCenter related to change in completion guarantee liability		$	141,000			$	—

MGM MIRAGE AND SUBSIDIARIES
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 September 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, and Circus Circus Las Vegas. 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 in Crystals; 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 December 2009, except the residential components will begin closings in early 2010 and 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 the Company operates 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 within “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.

     The Company has received all of the proceeds from its insurance carriers related to the Monte Carlo fire and 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								Nine Months
For the periods ended September 30,		2009				2008				2009				2008
						(In thousands)
Reduction of general and administrative expenses		$	—			$	—			$	15,115			$	9,146
Reduction of property transactions, net		$	—			$	—			$	7,186			$	9,639

     Fair value measurements. Fair value measurements impact the Company’s accounting for certain of its financial assets and liabilities. 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 which includes “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.

     The Company also uses fair value measurements to evaluate the fair value of its investments in unconsolidated affiliates. See Note 4 for further discussion.

     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. 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. The Company stopped recording accrued “paid-in-kind” interest as of May 31, 2009.

     Recently issued accounting standards. The Company adopted various accounting standards during 2009, none of which had a material impact on its consolidated financial statements. In addition, 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) if 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 beginning January 1, 2010. The Company is currently evaluating the impact the adoption of SFAS 167 will have on its consolidated financial statements.

     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 September 30, 2009 and the results of its operations for the three and nine month periods ended September 30, 2009 and 2008 and cash flows for the nine month periods ended September 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 November 5, 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 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 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 at approximately 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.

     In September 2009, the Company issued $475 million of 11.375% senior notes due 2018 for net proceeds to the Company of $451 million. In October 2009, the Company used the net proceeds of this offering to pay down amounts outstanding under the senior credit facility, including a permanent reduction of $226 million as required by the senior credit facility.

     In November 2009, the Company entered into a further amendment to its senior credit facility which permits the Company to:

	•		Issue additional unsecured debt to refinance certain existing debt so long as the maturity of the newly issued debt is not earlier than the maturity of the debt being refinanced or six months after the date the senior credit facility is set to mature;
	•		Issue, in addition to any such refinancing debt, up to $1 billion of other unsecured debt, provided that 50% of the net cash proceeds over $250 million must be applied to permanently reduce outstanding senior credit facility balances;
	•		Issue additional equity securities, subject to compliance with certain provisions set forth in the senior credit facility agreement, provided that 50% of the net cash proceeds over $500 million must be applied to reduce outstanding senior credit facility balances.

     The Company believes that the availability under its senior credit facility and future operating cash flow will allow the Company to fulfill its financial commitments through 2010 including any amounts due under the CityCenter completion guarantee (see Notes 4 and 6). 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 nine month period ended September 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:

		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

NOTE 4 — INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

     Investments in and advances to unconsolidated affiliates consisted of the following:

		September 30,				December 31,
		2009				2008
		(In thousands)
CityCenter Holdings, LLC — CityCenter (50%)		$	2,448,192			$	3,581,188
Marina District Development Company — Borgata (50%)			506,180				474,171
Elgin Riverboat Resort — Riverboat Casino — Grand Victoria (50%)			293,551				296,746
MGM Grand Paradise Limited — Macau (50%)			250,773				252,060
Circus and Eldorado Joint Venture — Silver Legacy (50%)			29,541				27,912
Other			16,188				10,788
		$	3,544,425			$	4,642,865

     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 whether an impairment is indicated and determines whether such impairment is “other-than-temporary” based on its assessment of relevant factors, including consideration of the Company’s intent and ability to retain its investment. The Company estimates fair value using a discounted cash flow analysis utilizing “Level 3” inputs, including market indicators of discount rates and terminal year capitalization rates.

     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 maintenance expenditures and future cash inflows from operations, including residential sales. Based on its analysis, the Company determined that the carrying value of its investment exceeded its fair value 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 extent of the 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 $956 million included in “Property transactions, net” in the accompanying consolidated statement of operations for the three and nine months ended September 30, 2009.

     In April 2009, the Company and Dubai World entered into an amended and restated joint venture agreement. Also in April 2009, CityCenter and its lenders entered into an amendment to the bank credit facility. The key terms of the amendment to the CityCenter credit facility included the following:

	•		Reduced the maximum amount of the credit facility to $1.8 billion;
	•		Changed the maturity date from April 2013 to June 2012 and increased the pricing of the facility;
	•		Required the entire amount of remaining equity contributions to be funded through irrevocable letters of credit at the closing, and required the lenders to fund the remaining $800 million of the credit facility at the closing;
	•		Amended the funding order such that future funding is pro rata between the equity contributions and the amounts available under the credit facility, with the equity contributions drawn from the letters of credit;
	•		Amended the completion guarantees to a) relieve Dubai World of its completion guarantee as amounts are funded from its letter of credit, and b) require an unlimited completion and cost overrun guarantee from the Company, secured by its interests in the assets of Circus Circus Las Vegas and certain adjacent undeveloped land. See Note 6 for further discussion; and
	•		Allowed for the first $250 million of net residential sales proceeds to be used to fund project costs which would otherwise be funded under the new completion guarantee.

     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 during the second quarter, the Company concluded that it should reassess, as of June 30, 2009, whether CityCenter is a variable interest entity. 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 the three and nine months ended September 30, 2009, the Company incurred $15 million and $40 million, and during the three and nine months ended September 30, 2008, the Company incurred $9 million and $34 million 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 recorded its share of the results of operations of unconsolidated affiliates as follows:

     

		Three Months								Nine Months
For the periods ended September 30,		2009				2008				2009				2008
		(In thousands)
Income (loss) from unconsolidated affiliates		$	(132,893	)		$	38,572			$	(113,169	)		$	89,728
Preopening and start-up expenses			(10,671	)			(4,710	)			(27,401	)			(15,928	)
Non-operating items from unconsolidated affiliates			(14,613	)			(9,552	)			(38,058	)			(26,731	)
		$	(158,177	)		$	24,310			$	(178,628	)		$	47,069

     Included in income (loss) from unconsolidated affiliates for the three and nine months ended September 30, 2009 is the 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 of September 30, 2009, mainly due to CityCenter’s September 2009 decision to discount the prices 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 is 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 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 50% of such impairment charge, adjusted by certain basis differences, resulting in a pre-tax charge of $203 million.

     Summary statement of operations information for the CityCenter joint venture is provided below:

		Three Months								Nine Months
For the periods ended September 30,		2009				2008				2009				2008
						(In thousands)
Operating expenses:
Preopening and start-up expenses		$	(21,343	)		$	(6,963	)		$	(53,171	)		$	(24,325	)
Write-downs and impairments			(347,534	)			—				(348,790	)			—
Other operating expenses			(3,512	)			(5,552	)			(7,997	)			(20,230	)
Operating loss			(372,389	)			(12,515	)			(409,958	)			(44,555	)
Other income (expense)			(1,516	)			837				(8,668	)			3,068
Net loss		$	(373,905	)		$	(11,678	)		$	(418,626	)		$	(41,487	)

NOTE 5 — LONG-TERM DEBT

     Long-term debt consisted of the following:

		September 30,				December 31,
		2009				2008
		(In thousands)
Senior credit facility		$	4,310,152			$	5,710,000
$226.3 million 6.5% senior notes, due 2009, net			—				226,720
$57.4 million 6% senior notes, due 2009, net			57,362				820,894
$297.0 million 9.375% senior subordinated notes, due 2010, net			299,904				305,893
$782 million 8.5% senior notes, due 2010, net			781,573				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			129,216				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			153,387				153,960
$750 million 13% senior secured notes, due 2013, net			705,110				699,440
$508.9 million 5.875% senior notes, due 2014, net			507,535				507,304
$650 million 10.375% senior secured notes, due 2014, net			632,735				—
$875 million 6.625% senior notes, due 2015, net			878,374				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			828,021				—
$475 million 11.375% senior notes, due 2018			462,656				—
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			3,462				4,233
			12,910,322				13,464,166
Less: Current portion			—				(1,047,614	)
		$	12,910,322			$	12,416,552

     At September 30, 2009, the Company’s $5.8 billion senior credit facility consisted of a term loan facility of $2.2 billion and a revolving credit facility of $3.6 billion and matures in 2011. In October 2009, the Company used the net proceeds received from its $475 million senior notes issuance in late September 2009 (discussed below) to repay amounts outstanding under its senior credit facility, including a permanent repayment of $226 million which reduced the term loan and revolving loans on a pro rata basis. As of September 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.

     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 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 September 30, 2009 and December 31, 2008 was 6.0% and 3.4%, respectively. During the nine months ending September 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.

     Interest expense, net consisted of the following:

		Three Months								Nine Months
For the periods ended September 30,		2009				2008				2009				2008
		(In thousands)
Total interest incurred		$	257,406			$	187,224			$	765,275			$	560,603
Interest capitalized			(75,507	)			(42,473	)			(210,453	)			(120,759	)
		$	181,899			$	144,751			$	554,822			$	439,844

      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. 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.

     In September 2009, the Company issued $475 million of 11.375% senior notes due 2018 for net proceeds to the Company of approximately $451 million. The notes rank equally with the Company’s existing and future senior unsecured indebtedness. In October 2009, the Company repaid the remaining $57.4 million of its 6.0% senior notes.

     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 1) reinvest the net after-tax proceeds, which can include committed capital expenditures; or 2) 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 include permanent payment of indebtedness that ranks equally in right of payment 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 September 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 September 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 September 30, 2009 was approximately $11.8 billion, versus its book value of $12.9 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. Under the strategic alliance, a casino resort owned and operated by MPTN located adjacent to the Foxwoods casino resort carries the “MGM Grand” brand name. The Company and MPTN also formed a jointly owned company — Unity Gaming, LLC — to acquire or develop future gaming and non-gaming enterprises. On September 30, 2009, the Company and MPTN agreed to dissolve Unity Gaming, LLC and release the Company of its $200 million financial commitment with respect thereto due to the current economic environment. The Company and MPTN also agreed that the Company will no longer provide consulting services to MPTN for the operations of MGM Grand at Foxwoods; however, the Company will continue to earn a fee for MPTN’s use of the “MGM Grand” brand name.

     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 September 30, 2009, the Company had provided $37 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, which did not count against the $250 million limit described above. At September 30, 2009, that letter of credit had been fully drawn and was no longer in effect. 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 that may result in a sale below our carrying value; b) market values which at that time may be below our carrying value; or c) in the case of New Jersey, alternate uses of the Renaissance Pointe land that 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								Nine Months
For the periods ended September 30,		2009				2008				2009				2008
		(In thousands)
Weighted-average common shares outstanding (used in the calculation of basic earnings per share)			441,214				276,417				357,348				280,926
Potential dilution from stock options and restricted stock			—				3,429				—				6,678
Weighted-average common and common equivalent shares (used in the calculation of diluted earnings per share)			441,214				279,846				357,348				287,604

     The Company had a loss from continuing operations for the three and nine months ended September 30, 2009. Therefore, approximately 27.8 million shares and 26.8 million shares underlying outstanding stock-based awards were excluded from the computation of diluted earnings per share for three and nine months ended September 30, 2009, respectively, because to include these awards would be anti-dilutive. Approximately 18.6 million and 9.1 million shares underlying stock-based awards were excluded from the computation of diluted earnings per share in the three and nine months ended September 30, 2008, respectively.

NOTE 8 — COMPREHENSIVE INCOME (LOSS)

     Comprehensive income (loss) consisted of the following:

		Three Months								Nine Months
For the periods ended September 30,		2009				2008				2009				2008
		(In thousands)
Net income (loss)		$	(750,388	)		$	61,278			$	(857,764	)		$	292,725
Valuation adjustment to M Resort convertible note, net of tax			—				(16,496	)			962				(23,717	)
Currency translation adjustment			45				(272	)			867				(3,356	)
Reclassification of comprehensive income to earnings — M Resort note			—				—				53,305				—
Other			—				—				165				—
		$	(750,343	)		$	44,510			$	(802,465	)		$	265,652

NOTE 9 — STOCKHOLDERS’ EQUITY

     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 nine months ended September 30, 2008, at a total cost of $561 million. The Company did not repurchase common stock during the nine months ended September 30, 2009. At September 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 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 September 30, 2009, the aggregate number of share-based awards available for grant under the Company’s omnibus incentive plan was 14.6 million. A summary of activity under the Company’s share-based payment plans for the nine months ended September 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			4,689				6.97
Exercised			(73	)			12.74
Forfeited or expired			(2,233	)			26.69
Outstanding at September 30, 2009			27,593				23.63
Exercisable at September 30, 2009			17,475				25.25

     As of September 30, 2009, there was a total of approximately $54 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.

						Weighted
						Average
		Shares				Grant Date
		(000’s)				Fair Value
Nonvested at January 1, 2009			1,054			$	18.93
Granted			6				16.10
Vested			(216	)			18.90
Forfeited			(123	)			18.98
Nonvested at September 30, 2009			721				18.91

     As of September 30, 2009, there was a total of approximately $55 million of unamortized compensation related to RSUs which is expected to be recognized over a weighted-average period of 2.0 years.

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

Nine months ended September 30,		2009				2008
		(In thousands)
Intrinsic value of share-based awards exercised or vested		$	1,594			$	33,316
Income tax benefit from share-based awards exercised or vested			558				10,702
Proceeds from stock option exercises			637				14,010

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

		Three Months								Nine Months
For the periods ended September 30,		2009				2008				2009				2008
		(In thousands)
Compensation cost
Stock options and SARS		$	5,650			$	10,345			$	16,318			$	34,072
RSUs			5,070				—				15,394				—
Total compensation cost			10,720				10,345				31,712				34,072
Less: CityCenter reimbursed cost			(1,381	)			(1,447	)			(4,573	)			(4,305	)
Less: Compensation cost capitalized			(20	)			(28	)			(63	)			(102	)
Compensation cost recognized as expense			9,319				8,870				27,076				29,665
Less: Related tax benefit			(3,244	)			(3,172	)			(9,381	)			(10,298	)
Compensation expense, net of tax benefit		$	6,075			$	5,698			$	17,695			$	19,367

      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								Nine Months
For the periods ended September 30,		2009				2008				2009				2008
Expected volatility			86	%			53	%			84	%			41	%
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			2.2	%			3.1	%			2.2	%			2.7	%
Forfeiture rate			3.4	%			3.4	%			3.4	%			3.4	%
Weighted-average fair value of options and SARs granted		$	5.17			$	14.52			$	4.54			$	20.48

     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								Nine Months
For the periods ended September 30,		2009				2008				2009				2008
		(In thousands)
CityCenter investment impairment charge		$	955,898			$	—			$	955,898			$	—
Other write-downs and impairments			14,141				30,928				16,418				38,449
Insurance recoveries			—				—				(7,186	)			(9,639	)
Demolition costs			—				799				—				5,470
Gain on sale of TI			—				—				(187,442	)			—
Net losses on sale or disposal of fixed assets			1,169				599				1,643				704
		$	971,208			$	32,326			$	779,331			$	34,984

     See Note 4 for discussion of the CityCenter investment impairment charge. Other write-downs and impairments in 2009 primarily related to the write-off of several discontinued capital projects. Insurance recoveries in 2009 and 2008 relate to the Monte Carlo fire — see Note 1. Write-downs and impairments in 2008 primarily related the write-down of Primm Valley Golf Club. Additional write-downs and impairments in 2008 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 September 30, 2009 and December 31, 2008 and for the three and nine month periods ended September 30, 2009 and 2008 is as follows:

CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION

		At September 30, 2009
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
		(In thousands)
Current assets		$	848,912			$	664,941			$	110,612			$	—			$	1,624,465
Property and equipment, net			—				15,061,987				701,041				(11,972	)			15,751,056
Investments in subsidiaries			18,429,040				456,381				—				(18,885,421	)			—
Investments in unconsolidated affiliates			—				3,293,652				250,773				—				3,544,425
Other non-current assets			169,414				526,163				110,998				—				806,575
		$	19,447,366			$	20,003,124			$	1,173,424			$	(18,897,393	)		$	21,726,521
Current liabilities		$	264,181			$	856,337			$	36,611			$	—			$	1,157,129
Intercompany accounts			(278,362	)			179,324				99,038				—				—
Deferred income taxes			3,142,220				—				—				—				3,142,220
Long-term debt			11,861,043				599,279				450,000				—				12,910,322
Other long-term obligations			163,141				57,988				578				—				221,707
Stockholders’ equity			4,295,143				18,310,196				587,197				(18,897,393	)			4,295,143
		$	19,447,366			$	20,003,124			$	1,173,424			$	(18,897,393	)		$	21,726,521

		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 September 30, 2009
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
		(In thousands)
Net revenues		$	—			$	1,400,768			$	132,455			$	—			$	1,533,223
Equity in subsidiaries’ earnings (loss)			(982,568	)			32,808				—				949,760				—
Expenses:
Casino and hotel operations			3,617				811,887				73,634				—				889,138
General and administrative			2,783				264,685				23,298				—				290,766
Corporate expense			4,702				28,143				(917	)			—				31,928
Preopening and start-up expenses			—				10,058				—				—				10,058
Restructuring costs			—				—				—				—				—
Property transactions, net			—				971,208				—				—				971,208
Depreciation and amortization			—				161,683				8,968				—				170,651
			11,102				2,247,664				104,983				—				2,363,749
Income (loss) from unconsolidated affiliates			—				(156,463	)			23,570				—				(132,893	)
Operating income (loss)			(993,670	)			(970,551	)			51,042				949,760				(963,419	)
Interest income (expense), net			(174,141	)			4				(6,905	)			—				(181,042	)
Other, net			3,605				(8,139	)			(9,253	)			—				(13,787	)
Income (loss) before income taxes			(1,164,206	)			(978,686	)			34,884				949,760				(1,158,248	)
Benefit (provision) for income taxes			414,722				(5,690	)			(1,172	)			—				407,860
Net income (loss)		$	(749,484	)		$	(984,376	)		$	33,712			$	949,760			$	(750,388	)

		For the Three Months Ended September 30, 2008
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
		(In thousands)
Net revenues		$	—			$	1,639,174			$	146,357			$	—			$	1,785,531
Equity in subsidiaries’ earnings			216,099				18,663				—				(234,762	)			—
Expenses:
Casino and hotel operations			3,200				908,830				81,286				—				993,316
General and administrative			2,034				296,560				28,237				—				326,831
Corporate expense			3,193				21,242				31				—				24,466
Preopening and start-up expenses			—				5,505				—				—				5,505
Property transactions, net			(3,121	)			35,447				—				—				32,326
Depreciation and amortization			—				185,837				14,265				—				200,102
			5,306				1,453,421				123,819				—				1,582,546
Income from unconsolidated affiliates			—				30,707				7,865				—				38,572
Operating income			210,793				235,123				30,403				(234,762	)			241,557
Interest income (expense), net			(122,339	)			(12,465	)			(4,037	)			—				(138,841	)
Other, net			—				(1,030	)			(6,397	)			—				(7,427	)
Income before income taxes			88,454				221,628				19,969				(234,762	)			95,289
Provision for income taxes			(27,176	)			(5,529	)			(1,306	)			—				(34,011	)
Net income		$	61,278			$	216,099			$	18,663			$	(234,762	)		$	61,278