UNITED STATES
SECURITIES & EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(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

Commission File No. 001-10362

MGM Resorts International

 

(Exact name of registrant as specified in its charter)

Delaware		88-0215232
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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

(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 þ 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:

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 Common Stock, $.01 par value		Outstanding at May 2, 2011 488,590,169 shares

 

 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

FORM 10-Q

I N D E X

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at March 31, 2011 and December 31, 2010			1
Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and March 31, 2010			2
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and March 31, 2010			3
Condensed Notes to Consolidated Financial Statements			4-15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16-25
Item 3. Quantitative and Qualitative Disclosures About Market Risk			25
Item 4. Controls and Procedures			26
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			26
Item 1A. Risk Factors			27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			27
Item 6. Exhibits			27
SIGNATURES			28
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

		March 31,				December 31,
		2011				2010
ASSETS
Current assets
Cash and cash equivalents		$	431,275			$	498,964
Accounts receivable, net			317,974				321,894
Inventories			95,097				96,392
Income tax receivable			173,451				175,982
Deferred income taxes			84,567				110,092
Prepaid expenses and other			264,047				252,321
Total current assets			1,366,411				1,455,645
Property and equipment, net			14,426,622				14,554,350
Other assets
Investments in and advances to unconsolidated affiliates			1,941,786				1,923,155
Goodwill			86,353				86,353
Other intangible assets, net			342,626				342,804
Other long-term assets, net			596,551				598,738
Total other assets			2,967,316				2,951,050
		$	18,760,349			$	18,961,045
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable		$	138,533			$	167,084
Accrued interest on long-term debt			238,175				211,914
Other accrued liabilities			795,732				867,223
Total current liabilities			1,172,440				1,246,221
Deferred income taxes			2,371,875				2,469,333
Long-term debt			12,081,108				12,047,698
Other long-term obligations			215,764				199,248
Commitments and contingencies (Note 4)
Stockholders’ equity
Common stock, $.01 par value: authorized 600,000,000 shares;
Issued and outstanding 488,581,951 and 488,513,351 shares			4,886				4,885
Capital in excess of par value			4,068,751				4,060,826
Accumulated deficit			(1,156,736	)			(1,066,865	)
Accumulated other comprehensive income (loss)			2,261				(301	)
Total stockholders’ equity			2,919,162				2,998,545
		$	18,760,349			$	18,961,045

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

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

		Three Months Ended March 31,
		2011				2010
Revenues
Casino		$	582,323			$	610,757
Rooms			368,337				325,676
Food and beverage			336,824				316,156
Entertainment			119,593				116,682
Retail			46,150				43,889
Other			114,223				109,006
Reimbursed costs			86,288				93,323
			1,653,738				1,615,489
Less: Promotional allowances			(148,784	)			(158,097	)
			1,504,954				1,457,392
Expenses
Casino			342,868				345,945
Rooms			116,986				100,746
Food and beverage			198,248				182,612
Entertainment			88,211				90,996
Retail			29,159				27,999
Other			78,297				78,027
Reimbursed costs			86,288				93,323
General and administrative			269,562				276,054
Corporate expense			36,485				24,878
Preopening and start-up expenses			—				3,494
Property transactions, net			91				689
Depreciation and amortization			152,397				163,134
			1,398,592				1,387,897
Income (loss) from unconsolidated affiliates			63,343				(80,918	)
Operating income (loss)			169,705				(11,423	)
Non-operating income (expense)
Interest expense			(269,914	)			(264,175	)
Non-operating items from unconsolidated affiliates			(40,290	)			(23,350	)
Other, net			(3,955	)			141,855
			(314,159	)			(145,670	)
Loss before income taxes			(144,454	)			(157,093	)
Benefit for income taxes			54,583				60,352
Net loss		$	(89,871	)		$	(96,741	)
Loss per share of common stock
Basic		$	(0.18	)		$	(0.22	)
Diluted		$	(0.18	)		$	(0.22	)

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

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

		Three Months Ended March 31,
		2011				2010
Cash flows from operating activities
Net loss		$	(89,871	)		$	(96,741	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			152,397				163,134
Amortization of debt discounts, premiums and issuance costs			23,558				15,497
Gain on retirement of long-term debt			—				(141,755	)
Provision for doubtful accounts			8,406				1,306
Stock-based compensation			9,210				9,555
Property transactions, net			91				689
(Income) loss from unconsolidated affiliates			(23,053	)			107,762
Distributions from unconsolidated affiliates			38,029				11,909
Change in deferred income taxes			(65,418	)			91,106
Change in current assets and liabilities:
Accounts receivable			(4,486	)			21,187
Inventories			1,294				5,442
Income taxes receivable and payable, net			2,606				(152,102	)
Prepaid expenses and other			(11,685	)			(14,610	)
Accounts payable and accrued liabilities			(12,761	)			(83,667	)
Other			(4,339	)			16,379
Net cash provided by (used in) operating activities			23,978				(44,909	)
Cash flows from investing activities
Capital expenditures, net of construction payable			(34,459	)			(53,942	)
Investments in and advances to unconsolidated affiliates			(76,648	)			(262,000	)
Distributions from unconsolidated affiliates in excess of earnings			985				—
Investments in treasury securities — maturities longer than 90 days			(60,035	)			—
Proceeds from treasury securities — maturities longer than 90 days			59,994				—
Other			(374	)			(292	)
Net cash used in investing activities			(110,537	)			(316,234	)
Cash flows from financing activities
Net borrowings (repayments) under bank credit facilities — maturities of 90 days or less			215,672				(1,275,177	)
Borrowings under bank credit facilities — maturities longer than 90 days			1,206,728				1,942,524
Repayments under bank credit facilities — maturities longer than 90 days			(1,077,400	)			(2,399,037	)
Issuance of senior notes			—				845,000
Retirement of senior notes			(325,470	)			(296,956	)
Debt issuance costs			—				(70,654	)
Other			(660	)			(177	)
Net cash provided by (used in) financing activities			18,870				(1,254,477	)
Cash and cash equivalents
Net decrease for the period			(67,689	)			(1,615,620	)
Balance, beginning of period			498,964				2,056,207
Balance, end of period		$	431,275			$	440,587
Supplemental cash flow disclosures
Interest paid		$	220,095			$	251,849
Federal, state and foreign income taxes paid, net of refunds			1,913				740

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

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION

     Organization. MGM Resorts International (the “Company”) is a Delaware corporation. As of March 31, 2011, approximately 27% of the outstanding shares of the Company’s common stock were owned by Tracinda Corporation, a Nevada corporation wholly owned by Kirk Kerkorian. Tracinda Corporation has significant influence with respect to the election of directors and other matters, but it does not have the power to solely determine these matters. MGM Resorts International 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, The Mirage, Mandalay Bay, Luxor, New York-New York, Monte Carlo, Excalibur, 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 three towers. Other Nevada operations include Circus Circus Reno, Gold Strike in Jean, and Railroad Pass in Henderson. The Company and its local partners own and operate MGM Grand Detroit in Detroit, Michigan. The Company also owns and operates two resorts in Mississippi: Beau Rivage in Biloxi and Gold Strike Tunica. The Company also owns Shadow Creek, an exclusive world-class golf course located approximately ten miles north of its Las Vegas Strip resorts, Primm Valley Golf Club at the California/Nevada state line and Fallen Oak golf course in Saucier, Mississippi.

     The Company owns 50% of CityCenter, located 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. CityCenter consists of Aria, a casino resort; Mandarin Oriental Las Vegas, a non-gaming boutique hotel; Crystals, a retail, dining and entertainment district; and Vdara, a luxury condominium-hotel. In addition, CityCenter features residential units in the Residences at Mandarin Oriental and Veer. Aria, Vdara, Mandarin Oriental and Crystals all opened in December 2009 and the sales of residential units within CityCenter began closing in early 2010. The Company receives a management fee of 2% of revenues for the management of Aria and Vdara, and 5% of EBITDA (as defined in the agreements governing the Company’s management of Aria and Vdara). In addition, the Company receives an annual fee of $3 million for the management of Crystals.

     The Company has 50% interests in MGM Macau, Grand Victoria and Silver Legacy. Ms. Ho, Pansy Catilina Chiu King (“Ms. Pansy Ho”) owns the other 50% of MGM Macau. See Note 2 for further discussion of recent events related to the Company’s interests in MGM 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. Silver Legacy is located in Reno, adjacent to Circus Circus Reno, and the other 50% is owned by Eldorado LLC.

     MGM Hospitality seeks to leverage the Company’s management expertise and well-recognized brands through strategic partnerships and international expansion opportunities. The Company has entered into management agreements for hotels in the Middle East, North Africa, India and China.

     Borgata. The Company has a 50% economic interest in Borgata Hotel Casino & Spa (“Borgata”) located on Renaissance Pointe in the Marina area of Atlantic City, New Jersey. Boyd Gaming Corporation (“Boyd”) owns the other 50% of Borgata and also operates the resort. The Company’s interest is held in trust and currently offered for sale pursuant to the Company’s settlement agreement with New Jersey Department of Gaming Enforcement (“DGE”). In March 2010, the New Jersey Casino Control Commission (‘CCC”) approved the Company’s settlement agreement with the DGE pursuant to which the Company placed its 50% ownership interest in Borgata and related leased land in Atlantic City into a divestiture trust. Following the transfer of these interests into trust, the Company ceased to be regulated by the CCC or the DGE, except as otherwise provided by the trust agreement and the settlement agreement. Boyd’s 50% interest is not affected by the settlement.

     The terms of the settlement mandate the sale of the trust property within a 30-month period ending in September 2012. During the 18 months ending in September 2011, the Company has the right to direct the trustee to sell the trust property, subject to approval of the CCC. If a sale is not concluded by that time, the trustee is responsible for selling the trust property during the following 12-month period. The Company continues to negotiate with certain parties that have expressed interest in the asset, but can provide no assurance that a transaction will be completed. Prior to the consummation of the sale, the divestiture trust will retain any cash flows received in respect of the trust property, but will pay property taxes and other costs attributable to the trust property. The Company is the

sole economic beneficiary of the trust and will be permitted to reapply for a New Jersey gaming license beginning 30 months after the completion of the sale of the trust assets. As of March 31, 2011, the trust had $188 million of cash and investments, of which $150 million is held in treasury securities with maturities greater than 90 days but less than one year, and is recorded within “Prepaid expenses and other.”

     As a result of the Company’s ownership interest in Borgata being placed into a trust, the Company no longer has significant influence over Borgata; therefore, the Company discontinued the equity method of accounting for Borgata at the point the assets were placed in the trust in March 2010, and accounts for its investment in Borgata under the cost method of accounting. The carrying value of the investment related to Borgata is included in “Other long-term assets, net.” Earnings and losses that relate to the investment that were previously accrued remain as a part of the carrying amount of the investment. Distributions received by the trust that do not exceed the Company’s share of earnings are recognized currently in earnings. However, distributions received by the trust that exceed the Company’s share of earnings for such periods are applied to reduce the carrying amount of its investment. The Company consolidates the trust as it is the sole economic beneficiary. The trust did not receive distributions from Borgata during the three months ended March 31, 2011 or March 31, 2010.

     Fair value measurement. Fair value measurements affect the Company’s accounting and impairment assessments of its long-lived assets, investments in unconsolidated affiliates, cost method investments, goodwill, and other intangibles. Fair value measurements also affect 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 that 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. At March 31, 2011, the fair value of the Company’s treasury securities held by the Borgata trust was $150 million, measured using “Level 1” inputs.

     Reimbursed expenses. The Company recognizes costs reimbursed pursuant to management services as revenue in the period it incurs the costs. Reimbursed costs, which are related mainly to the Company’s management of CityCenter, were $86 million and $93 million for the first quarter of 2011 and 2010, respectively.

     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 2010 annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

     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 March 31, 2011 and the results of its operations and cash flows for the three months ended March 31, 2011 and 2010. The results of operations for such periods are not necessarily indicative of the results to be expected for the full year. Certain reclassifications, which have no effect on previously reported net income and net revenue, have been made to the 2010 financial statements to conform to the 2011 presentation. These reclassifications related to the classification of hotel resort fees to “Rooms” revenue from “Other” revenue. The total amount reclassified to rooms revenue for the three months ended March 31, 2010 was $12 million.

NOTE 2 — INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

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

		March 31,				December 31,
		2011				2010
		(In thousands)
CityCenter Holdings, LLC — CityCenter (50%)		$	1,409,221			$	1,417,843
Elgin Riverboat Resort—Riverboat Casino — Grand Victoria (50%)			293,320				294,305
MGM Grand Paradise Limited — MGM Macau (50%)			202,803				173,030
Circus and Eldorado Joint Venture — Silver Legacy (50%)			23,801				25,408
Other			12,641				12,569
		$	1,941,786			$	1,923,155

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

		Three Months Ended March 31,
		2011				2010
		(In thousands)
Income (loss) from unconsolidated affiliates		$	63,343			$	(80,918	)
Preopening and start-up expenses			—				(3,494	)
Non-operating items from unconsolidated affiliates			(40,290	)			(23,350	)
		$	23,053			$	(107,762	)

CityCenter

     January 2011 debt restructuring transactions. In January 2011, CityCenter completed a series of transactions including issuance of $900 million in aggregate principal amount of 7.625% senior secured first lien notes due 2016 and $600 million in aggregate principal amount of 10.75%/11.50% senior secured second lien PIK toggle notes due 2017 in a private placement. The interest rate on the second lien notes is 10.75% for interest paid in cash, and 11.50% if CityCenter pays interest in the form of additional debt. CityCenter received net proceeds from the offering of the notes of $1.46 billion after initial purchaser’s discounts and commissions but before other offering expenses.

     Effective concurrently with the notes offering, CityCenter’s senior credit facility was amended and restated which extended the maturity of $500 million of the $1.85 billion outstanding loans until January 21, 2015. The restated senior credit facility does not include a revolving loan component. All borrowings under the senior credit facility in excess of $500 million were repaid using the proceeds of the first lien notes and the second lien notes. In addition, net proceeds from the note offerings, together with equity contributions of $73 million from the members, were used to fund the interest escrow account of $159 million for the benefit of the holders of the first lien notes and the lenders under the restated senior credit facility. The restated senior credit facility is secured, on a pari passu basis with the first lien notes, by a first priority lien on substantially all of CityCenter’s assets and those of its subsidiaries, except that any proceeds generated by the sale of Crystals outside of bankruptcy or foreclosure proceedings will be paid first to the lenders under the restated senior credit facility. CityCenter recorded a loss on debt modification of $24 million in the first quarter related to the above transactions.

     Completion guarantee. The Company also entered into an amended completion and cost overrun guarantee in connection with CityCenter’s restated senior credit facility agreement and issuance of $1.5 billion of senior secured first lien notes and senior secured second lien notes, as discussed in Note 4.

     CityCenter summary financial information. Summarized balance sheet information of the CityCenter joint venture is as follows:

		March 31,				December 31,
		2011				2010
		(In thousands)
Current assets		$	368,086			$	211,646
Property and other assets, net			9,415,096				9,430,171
Current liabilities			344,470				381,314
Long-term debt including sponsor notes and other liabilities			2,524,716				2,752,196
Equity			6,913,996				6,508,307

     Summary results of operations for CityCenter are provided below:

		Three Months Ended March 31,
		2011				2010
		(In thousands)
Net revenues		$	271,124			$	259,862
Operating expenses, except preopening expenses			(308,016	)			(509,069	)
Preopening and start-up expenses			—				(6,202	)
Operating loss			(36,892	)			(255,409	)
Other non-operating expense			(88,135	)			(55,060	)
Net loss		$	(125,027	)		$	(310,469	)

MGM Macau

     Proposed Initial Public Offering and Related Transactions. In April 2011, the Company entered into a partner process and securities purchase agreement with Ms. Pansy Ho and certain wholly-owned subsidiaries of Ms. Pansy Ho pursuant to which the proposed initial public offering of the shares of MGM China Holdings Limited (“MGM China”) on the Hong Kong Stock Exchange (the “IPO”) and related transactions will be structured so that the Company would obtain 51% ownership, and management control, of MGM China upon consummation of the offering. MGM China will become the owner of MGM Grand Paradise, S.A., the Macau company that owns the MGM Macau resort and casino and the related gaming sub-concession. Upon consummation of the initial public offering, MGM China will be owned (through intermediary companies) 51% by the Company, 29% by Ms. Pansy Ho, and 20% by public shareholders. An entity controlled by Ms. Pansy Ho will grant an over-allotment option to the underwriters equal to up to 3% of the shares of MGM China, the exercise of which will reduce her holdings. In the transactions, the Company will acquire a 1% interest in MGM China at the same price per share as the shares sold to public shareholders. The net proceeds of the offering and of the Company’s 1% purchase will be remitted to an entity controlled by Ms. Pansy Ho. The agreements described above remain subject to certain conditions, including required approvals of the Hong Kong Stock Exchange. Additionally, the timing and terms of any such listing have not yet been determined, and there can be no assurance that the proposed transactions will be consummated.

     In addition, the partner process and securities purchase agreement provides, among other things, for the sale of $300 million in aggregate principal amount of the Company’s 4.25% convertible senior notes due 2015 on terms that will be substantially similar to those governing the Company’s existing convertible senior notes due 2015 (the “Notes”) for a purchase price of 103.805% of the principal amount thereof to a wholly-owned subsidiary of Ms. Pansy Ho in a transaction exempt from registration under the Securities Act of 1933, as amended. The Notes will be convertible at an initial conversion rate, subject to adjustment under certain circumstances, of approximately 53.83 shares of the Company’s common stock per $1,000 principal amount of the Notes. The issuance of the Notes is conditioned upon (a) the consummation of the initial public offering of the shares of MGM China on the Hong Kong Stock Exchange and (b) the Company’s receipt of stockholder approval at its annual meeting to be held on June 14, 2011 to increase the number of authorized shares of common stock under its certificate of incorporation.

     In the event the proposed transactions are consummated, the Company will consolidate MGM China with its consolidated financial statements due to its ownership control and the non-controlling interests in MGM China will be presented as a component of the Company’s stockholders’ equity. The Company expects to recognize a significant gain on the transactions based on the anticipated excess value to be established by the initial public offering over the carrying value of the Company’s existing investment. Such gain will not be currently taxable.

     In addition, the agreement to issue the Notes at a later date based on the fixed terms described above constitutes a derivative instrument. As such, changes in the fair value of the instrument must be recognized by the Company currently in earnings. Upon issuance of the Notes, the fair value of the derivative instrument will be equal to the difference between the fair value of the Notes and the Notes’ issuance price. The Notes will be recorded at fair value determined by the trading price of the Company’s existing convertible notes on the date of issuance of the Notes with the difference recorded as a discount or premium to be recognized over the term of the Notes. If the Notes are not issued, the derivative will expire.

     Distributions. The Company received a distribution of approximately $31 million from MGM Macau during the quarter ending March 31, 2011. The Company recognized this distribution as a cash inflow from operating activities in the accompanying consolidated statement of cash flows.

NOTE 3 — LONG-TERM DEBT

     Long-term debt consists of the following:

		March 31,				December 31,
		2011				2010
		(In thousands)
Senior credit facility:
$1,834 million term loans, net		$	1,696,266			$	1,686,043
Revolving loans			815,000				470,000
$325.5 million 8.375% senior subordinated notes, repaid in 2011			—				325,470
$128.7 million 6.375% senior notes, due 2011, net			128,852				128,913
$544.7 million 6.75% senior notes, due 2012			544,650				544,650
$484.2 million 6.75% senior notes, due 2013			484,226				484,226
$150 million 7.625% senior subordinated debentures, due 2013, net			152,150				152,366
$750 million 13% senior secured notes, due 2013, net			718,477				716,045
$508.9 million 5.875% senior notes, due 2014, net			507,999				507,922
$650 million 10.375% senior secured notes, due 2014, net			637,412				636,578
$875 million 6.625% senior notes, due 2015, net			877,615				877,747
$1,150 million 4.25% convertible senior notes, due 2015			1,150,000				1,150,000
$242.9 million 6.875% senior notes, due 2016			242,900				242,900
$732.7 million 7.5% senior notes, due 2016			732,749				732,749
$500 million 10% senior notes, due 2016, net			494,772				494,600
$743 million 7.625% senior notes, due 2017			743,000				743,000
$850 million 11.125% senior secured notes, due 2017, net			830,716				830,234
$475 million 11.375% senior notes, due 2018, net			464,121				463,869
$845 million 9% senior secured notes, due 2020			845,000				845,000
Floating rate convertible senior debentures, due 2033			8,472				8,472
$0.6 million 7% debentures, due 2036, net			573				573
$4.3 million 6.7% debentures, due 2096			4,265				4,265
Other notes			1,893				2,076
		$	12,081,108			$	12,047,698

     As of March 31, 2011 and December 31, 2010, long-term debt due within one year of the balance sheet date is classified as long-term because the Company has both the intent and ability to repay these amounts with available borrowings under the senior credit facility. The Company did not capitalize interest in the three months ending March 31, 2011 and 2010.

     Senior credit facility. The Company’s senior credit facility matures in February 2014 and consists of approximately $1.8 billion in term loans and a $1.7 billion revolving loan. The Company had approximately $826 million of available borrowing capacity under its senior credit facility at March 31, 2011.

     Interest on the senior credit facility is based on a LIBOR margin of 5.00%, with a LIBOR floor of 2.00%, and a base rate margin of 4.00%, with a base rate floor of 4.00%. The weighted average interest rate on outstanding borrowings under the senior credit facility at March 31, 2011 and December 31, 2010 was 7.0%.

     At March 31, 2011, the Company was required under its senior credit facility to maintain a minimum trailing annual EBITDA (as defined in the agreement governing the Company’s senior credit facility) of $1.1 billion, which increases to $1.15 billion as of September 30, 2011 and to $1.2 billion as of December 31, 2011, with periodic increases thereafter. Additionally, the Company is limited to $500 million of annual capital expenditures (as defined) during 2011. At March 31, 2011, the Company was in compliance with the minimum EBITDA and maximum capital expenditures covenants.

     Senior notes. In February 2011, the Company repaid the $325 million of outstanding principal amount of its 8.375% senior subordinated notes due 2011 at maturity.

     Fair value of long-term debt. The estimated fair value of the Company’s long-term debt at March 31, 2011 was approximately $12.7 billion. At December 31, 2010, the estimated fair value of the Company’s long-term debt was approximately $12.4 billion. The estimated fair value of the Company’s senior notes, senior subordinated notes and senior credit facility were based on quoted market prices.

NOTE 4 — COMMITMENTS AND CONTINGENCIES

     CityCenter completion guarantee. In January 2011, the Company entered into an amended completion and cost overrun guarantee in connection with CityCenter’s restated senior credit facility agreement and issuance of $1.5 billion of senior secured first lien notes and senior secured second lien toggle notes, as previously discussed. Consistent with the terms of the previous completion guarantee, the terms of the amended completion guarantee provide for the ability to utilize the then remaining $124 million of net residential proceeds to fund construction costs, or to reimburse the Company for construction costs previously expended, though the timing of receipt of such proceeds is uncertain.

     As of March 31, 2011, the Company has funded $593 million under the completion guarantee. The Company has recorded a receivable from CityCenter of $116 million related to these amounts, which represents amounts reimbursable to the Company from CityCenter from future residential proceeds. The Company has a remaining estimated net obligation under the completion guarantee of $35 million which includes estimated litigation costs related to the resolution of disputes with contractors as to the final construction costs and estimated amounts to be paid to contractors either through the joint venture’s extra-judicial settlement process or through the legal process related to the Perini litigation. The Company’s accrual also reflects certain estimated offsets to the amounts claimed by the contractors. CityCenter has reached, or expects to reach, settlement agreements with most of the construction subcontractors. However, significant disputes remain with the general contractor and certain subcontractors. Amounts claimed by such parties exceed amounts included in the Company’s completion guarantee accrual by approximately $200 million, as such amounts exceed the Company’s best estimate of its liability. Moreover, the Company has not accrued for any contingent payments to CityCenter related to the Harmon Hotel & Spa component, which is unlikely to be completed using the building as it now stands. The Company does not believe it would be responsible for funding any additional remediation efforts that might be required with respect to the Harmon; however, the Company’s view is based on a number of developing factors, including with respect to on-going litigation with CityCenter’s contractors, actions by local officials and other developments related to the CityCenter venture, that are subject to change.

     CityCenter construction litigation. In March 2010, Perini Building Company, Inc. (“Perini”), general contractor for the CityCenter development project (the “Project”), filed a lawsuit in the Eighth Judicial District Court for Clark County, State of Nevada, against MGM MIRAGE Design Group (a wholly-owned subsidiary of the Company which was the original party to the Perini construction agreement) and certain direct or indirect subsidiaries of CityCenter Holdings, LLC (the “CityCenter Owners”). Perini asserts that the Project was substantially completed, but the defendants failed to pay Perini approximately $490 million allegedly due and owing under the construction agreement for labor, equipment and materials expended on the Project. The complaint further charges the defendants with failure to provide timely and complete design documents, late delivery to Perini of design changes, mismanagement of the change order process, obstruction of Perini’s ability to complete the Harmon Hotel & Spa component, and fraudulent inducement of Perini to compromise significantly amounts due for its general conditions. The complaint advances claims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious breach of the implied covenant of good faith and fair dealing, unjust enrichment and promissory estoppel, and fraud and intentional misrepresentation. Perini seeks compensatory damages, punitive damages, attorneys’ fees and costs.

     In April 2010, Perini served an amended complaint in this case which joins as defendants many owners of CityCenter residential condominium units (the “Condo Owner Defendants”), adds a count for foreclosure of Perini’s recorded master mechanic’s lien against the CityCenter property in the amount of approximately $491 million, and asserts the priority of this mechanic’s lien over the interests of the CityCenter Owners, the Condo Owner Defendants and the Project lenders in the CityCenter property.

     The CityCenter Owners and the other defendants dispute Perini’s allegations, and contend that the defendants are entitled to substantial amounts from Perini, including offsets against amounts claimed to be

owed to Perini and its subcontractors and damages based on breach of their contractual and other duties to CityCenter, duplicative payment requests, non-conforming work, lack of proof of alleged work performance, defective work related to the Harmon Hotel & Spa component, property damage and Perini’s failure to perform its obligations to pay Project subcontractors and to prevent filing of liens against the Project. Parallel to the court litigation CityCenter management conducted an extra-judicial program for settlement of Project subcontractor claims. CityCenter has resolved the claims of the majority of the 223 first-tier subcontractors, with only several remaining for further proceedings along with trial of Perini’s claims and CityCenter’s Harmon-related counterclaim and other claims by CityCenter against Perini and its parent guarantor, Tutor Perini. In December 2010, Perini recorded an amended notice of lien reducing its lien to approximately $313 million.

     The CityCenter Owners and the other defendants will continue to vigorously assert and protect their interests in the lawsuit. The Company believes that a loss with respect to Perini’s punitive damages claim is neither probable nor reasonably possible. Please refer to the disclosure above for further discussion on the Company’s completion guarantee obligation which may be impacted by the outcome of the above litigation and the joint venture’s extra-judicial settlement process.

     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 March 31, 2011, the Company had provided $37 million of total letters of credit.

     Other litigation. The Company is a party to various legal proceedings, most of which relate to routine matters incidental to its business. Management does not believe that the outcome of such proceedings will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

NOTE 5 — LOSS PER SHARE OF COMMON STOCK

     The weighted-average number of common and common equivalent shares used in the calculation of basic and diluted loss per share consisted of the following:

		Three Months Ended March 31,
		2011				2010
		(In thousands)
Weighted-average common shares outstanding (used in the calculation of basic loss per share)			488,539				441,240
Potential dilution from stock options and restricted stock			—				—
Weighted-average common and common equivalent shares			488,539				441,240

     The Company had a loss from continuing operations for the three months ended March 31, 2011 and 2010. Therefore, the approximately 29 million shares and 28 million shares at March 31, 2011 and 2010, respectively, 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. In addition, the effect of an assumed conversion of the Company’s convertible senior notes due 2015 would be anti-dilutive.

NOTE 6 — COMPREHENSIVE LOSS

     Comprehensive loss consisted of the following:

		Three Months Ended March 31,
		2011				2010
		(In thousands)
Net loss		$	(89,871	)		$	(96,741	)
Currency translation adjustment			2,599				—
Other			(37	)			(70	)
		$	(87,309	)		$	(96,811	)

NOTE 7 — STOCK-BASED COMPENSATION

     Activity under share-based payment plans. As of March 31, 2011, the Company had an aggregate of approximately 11 million shares of common stock available for grant as share-based awards under the Company’s omnibus incentive plan. However, the Company only has approximately 4 million of authorized shares in excess of its outstanding shares and shares underlying its outstanding convertible senior notes and share-based awards. A summary of activity under the Company’s share-based payment plans for the three months ended March 31, 2011 is presented below:

Stock options and stock appreciation rights (“SARs”)

		Shares				Weighted Average
		(000’s)				Exercise Price
Outstanding at January 1, 2011			28,129			$	21.73
Granted			30				14.94
Exercised			(96	)			7.41
Forfeited or expired			(170	)			22.69
Outstanding at March 31, 2011			27,893				21.77
Exercisable at March 31, 2011			18,295				26.07

     As of March 31, 2011, there was a total of $52 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 1.8 years.

Restricted stock units (“RSUs”)

						Weighted
						Average
		Shares				Grant-Date
		(000’s)				Fair Value
Nonvested at January 1, 2011			1,144			$	13.90
Granted			—				—
Vested			(51	)			18.81
Forfeited			(32	)			14.10
Nonvested at March 31, 2011			1,061				13.66

     As of March 31, 2011, there was a total of $31 million of unamortized compensation related to RSUs which is expected to be recognized over a weighted-average period of 1.4 years.

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

		Three Months Ended March 31,
		2011				2010
		(In thousands)
Intrinsic value of share-based awards exercised or RSUs vested		$	1,319			$	596
Income tax benefit from share-based awards exercised or RSUs vested			455				203

     The Company net settles stock option exercises, whereby shares of common stock are issued equivalent to the intrinsic value of the option less applicable taxes. Accordingly, the Company does not receive proceeds from the exercise of stock options.

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

		Three Months Ended March 31,
		2011				2010
		(In thousands)
Compensation cost
Stock options and SARS		$	5,867			$	5,797
RSUs			4,606				5,162
Total compensation cost			10,473				10,959
Less: CityCenter reimbursed costs			(1,263	)			(1,404	)
Less: Compensation cost capitalized			—				—
Compensation cost recognized as expense			9,210				9,555
Less: Related tax benefit			(3,205	)			(3,325	)
Compensation expense, net of tax benefit		$	6,005			$	6,230

     Compensation costs for 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 Ended March 31,
		2011				2010
Expected volatility			68	%			76	%
Expected term		4.9 yrs.				4.8 yrs.
Expected dividend yield			0	%			0	%
Risk-free interest rate			2.2	%			2.5	%
Forfeiture rate			6.1	%			4.8	%
Weighted-average fair value of SARs granted		$	8.51			$	7.29

     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 8 — CONSOLIDATING CONDENSED FINANCIAL INFORMATION

     Excluding MGM Grand Detroit, LLC, certain minor subsidiaries and foreign subsidiaries, the Company’s subsidiaries that are 100% directly or indirectly owned have fully and unconditionally guaranteed, on a joint and several basis, payment of the senior credit facility, the senior notes, senior secured notes, the convertible senior notes and the senior subordinated notes. Separate condensed financial statement information for the subsidiary guarantors and non-guarantors as of March 31, 2011 and December 31, 2010 and for the three month periods ended March 31, 2011 and 2010 is as follows:

CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION

		At March 31, 2011
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
										(In thousands)
Current assets		$	340,710			$	847,785			$	177,916			$	—			$	1,366,411
Property and equipment, net			—				13,806,555				632,039				(11,972	)			14,426,622
Investments in subsidiaries			16,590,789				490,360				—				(17,081,149	)			—
Investments in and advances to unconsolidated affiliates			—				1,941,786				—				—				1,941,786
Other non-current assets			291,468				405,627				328,435				—				1,025,530
		$	17,222,967			$	17,492,113			$	1,138,390			$	(17,093,121	)		$	18,760,349
Current liabilities		$	307,107			$	830,077			$	35,256			$	—			$	1,172,440
Intercompany accounts			118,811				(127,588	)			8,777				—				—
Deferred income taxes			2,369,159				—				2,716				—				2,371,875
Long-term debt			11,334,903				296,205				450,000				—				12,081,108
Other long-term obligations			173,825				41,295				644				—				215,764
Stockholders’ equity			2,919,162				16,452,124				640,997				(17,093,121	)			2,919,162
		$	17,222,967			$	17,492,113			$	1,138,390			$	(17,093,121	)		$	18,760,349

		At December 31, 2010
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
										(In thousands)
Current assets		$	358,725			$	930,936			$	165,984			$	—			$	1,455,645
Property and equipment, net			—				13,925,224				641,098				(11,972	)			14,554,350
Investments in subsidiaries			16,520,722				471,283				—				(16,992,005	)			—
Investments in and advances to unconsolidated affiliates			—				1,923,155				—				—				1,923,155
Other non-current assets			294,165				436,353				297,377				—				1,027,895
		$	17,173,612			$	17,686,951			$	1,104,459			$	(17,003,977	)		$	18,961,045
Current liabilities		$	305,354			$	911,731			$	29,136			$	—			$	1,246,221
Intercompany accounts			(44,380	)			38,277				6,103				—				—
Deferred income taxes			2,469,333				—				—				—				2,469,333
Long-term debt			11,301,034				296,664				450,000				—				12,047,698
Other long-term obligations			143,726				54,828				694				—				199,248
Stockholders’ equity			2,998,545				16,385,451				618,526				(17,003,977	)			2,998,545
		$	17,173,612			$	17,686,951			$	1,104,459			$	(17,003,977	)		$	18,961,045

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION

		For the Three Months Ended March 31, 2011
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
										(In thousands)
Net revenues		$	—			$	1,361,268			$	143,686			$	—			$	1,504,954
Equity in subsidiaries’ earnings			113,599				65,370				—				(178,969	)			—
Expenses:
Casino and hotel operations			2,806				862,274				74,977				—				940,057
General and administrative			2,430				241,732				25,400				—				269,562
Corporate expense			15,710				21,009				(234	)			—				36,485
Property transactions, net			—				(11	)			102				—				91
Depreciation and amortization			—				142,632				9,765				—				152,397
			20,946				1,267,636				110,010				—				1,398,592
Income from unconsolidated affiliates			—				1,752				61,591				—				63,343
Operating income (loss)			92,653				160,754				95,267				(178,969	)			169,705
Interest expense, net			(257,224	)			(4,813	)			(7,877	)			—				(269,914	)
Other income (expense), net			10,982				(42,618	)			(12,609	)			—				(44,245	)
Income (loss) before income taxes			(153,589	)			113,323				74,781				(178,969	)			(144,454	)
Benefit (provision) for income taxes			63,718				(100	)			(9,035	)			—				54,583
Net income (loss)		$	(89,871	)		$	113,223			$	65,746			$	(178,969	)		$	(89,871	)

		For the Three Months Ended March 31, 2010
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
										(In thousands)
Net revenues		$	—			$	1,311,022			$	146,370			$	—			$	1,457,392
Equity in subsidiaries’ earnings			(43,224	)			40,555				—				2,669				—
Expenses:
Casino and hotel operations			3,457				838,988				77,203				—				919,648
General and administrative			2,449				247,242				26,363				—				276,054
Corporate expense			3,649				22,106				(877	)			—				24,878
Preopening and start-up expenses			—				3,494				—				—				3,494
Property transactions, net			—				689				—				—				689
Depreciation and amortization			—				152,964				10,170				—				163,134
			9,555				1,265,483				112,859				—				1,387,897
Income (loss) from unconsolidated affiliates			—				(104,131	)			23,213				—				(80,918	)
Operating income (loss)			(52,779	)			(18,037	)			56,724				2,669				(11,423	)
Interest expense, net			(250,039	)			(7,216	)			(6,920	)			—				(264,175	)
Other income (expense), net			151,557				(25,989	)			(7,063	)			—				118,505
Income (loss) before income taxes			(151,261	)			(51,242	)			42,741				2,669				(157,093	)
Benefit (provision) for income taxes			54,520				7,138				(1,306	)			—				60,352
Net income (loss)		$	(96,741	)		$	(44,104	)		$	41,435			$	2,669			$	(96,741	)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION

		For the Three Months Ended March 31, 2011
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
										(In thousands)
Cash flows from operating activities
Net cash provided by (used in) operating activities		$	(171,230	)		$	142,245			$	52,963			$	—			$	23,978
Cash flows from investing activities
Capital expenditures, net of construction payable			—				(33,654	)			(805	)			—				(34,459	)
Investments in and advances to unconsolidated affiliates			(40,000	)			(36,648	)			—				—				(76,648	)
Distributions from unconsolidated affiliates			—				985				—				—				985
Investments in treasury securities — maturities longer than 90 days			—				(60,035	)			—				—				(60,035	)
Proceeds from treasury securities — maturities longer than 90 days			—				59,994				—				—				59,994
Other			—				(374	)			—				—				(374	)
Net cash provided by (used in) investing activities			(40,000	)			(69,732	)			(805	)			—				(110,537	)
Cash flows from financing activities
Net (repayments) borrowings under bank credit facilities — maturities of 90 days or less			529,910				—				(314,238	)			—				215,672
Borrowings under bank credit facilities — maturities longer than 90 days			824,609				—				382,119				—				1,206,728
Repayments under bank credit facilities — maturities longer than 90 days			(1,009,519	)			—				(67,881	)			—				(1,077,400	)
Retirement of senior notes			(325,470	)			—				—				—				(325,470	)
Intercompany accounts			201,619				(164,006	)			(37,613	)			—				—
Other			(438	)			(204	)			(18	)			—				(660	)
Net cash (used in) provided by financing activities			220,711				(164,210	)			(37,631	)			—				18,870
Cash and cash equivalents
Net increase (decrease) for the period			9,481				(91,697	)			14,527				—				(67,689	)
Balance, beginning of period			72,457				278,801				147,706				—				498,964
Balance, end of period		$	81,938			$	187,104			$	162,233			$	—			$	431,275

		For the Three Months Ended March 31, 2010
						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Elimination				Consolidated
										(In thousands)
Cash flows from operating activities
Net cash provided by (used in) operating activities		$	(241,321	)		$	173,855			$	22,557			$	—			$	(44,909	)
Cash flows from investing activities
Capital expenditures, net of construction payable			—				(52,928	)			(1,014	)			—				(53,942	)
Investments in and advances to unconsolidated affiliates			—				(262,000	)			—				—				(262,000	)
Other			—				(292	)			—				—				(292	)
Net cash used in investing activities			—				(315,220	)			(1,014	)			—				(316,234	)
Cash flows from financing activities
Net repayments under bank credit facilities — maturities of 90 days or less			(1,105,177	)			—				(170,000	)			—				(1,275,177	)
Borrowings under bank credit facilities maturities longer than 90 days			1,492,524				—				450,000				—				1,942,524
Repayments under bank credit facilities maturities longer than 90 days			(2,119,037	)			—				(280,000	)			—				(2,399,037	)
Issuance of senior notes, net			845,000				—				—				—				845,000
Retirement of senior notes			—				(296,956	)			—				—				(296,956	)
Debt issuance costs			(70,654	)			—				—				—				(70,654	)
Intercompany accounts			(330,532	)			363,798				(33,266	)			—				—
Payment of Detroit Economic Development Other			(178	)			17				(16	)			—				(177	)
Net cash provided by (used in) financing activities			(1,288,054	)			66,859				(33,282	)			—				(1,254,477	)
Cash and cash equivalents
Net decrease for the period			(1,529,375	)			(74,506	)			(11,739	)			—				(1,615,620	)
Balance, beginning of period			1,718,616				263,386				74,205				—				2,056,207
Balance, end of period		$	189,241			$	188,880			$	62,466			$	—			$	440,587

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     This management’s discussion and analysis of financial condition and results of operations (“MD&A”) contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions that may cause our actual results to differ materially from those discussed in the forward-looking statements. This discussion should be read in conjunction with our historical financial statements and related notes thereto and the other disclosures contained elsewhere in this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and notes for the fiscal year ended December 31, 2010, which were included in our Form 10-K, filed with the SEC on February 28, 2011. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods. MGM Resorts International together with its subsidiaries may be referred to as “we,” “us” or “our.”

Executive Overview

   General

     Our primary business is the ownership and operation of casino resorts, which includes offering gaming, hotel, dining, entertainment, retail and other resort amenities. Over half of our net revenue is derived from non-gaming activities as our operating philosophy is to provide a complete resort experience for our guests, including non-gaming amenities for which our guests are willing to pay a premium. Our significant convention and meeting facilities allow us to maximize hotel occupancy and customer volumes during off-peak times such as mid-week or during traditionally slower leisure travel periods, which also leads to better labor utilization. We believe that we own several of the premier casino resorts in the world and have continually reinvested in our resorts to maintain our competitive advantage.

     As a resort-based company, our operating results are highly dependent on the volume of customers at our resorts, which in turn affects the price we can charge for our hotel rooms and other amenities. We also generate a significant portion of our operating income from the high-end gaming segment, which can be a cause for variability in our results. Key performance indicators related to revenue are:

	•		Gaming revenue indicators — table games drop and slots handle (volume indicators); “win” or “hold” percentage, which is not fully controllable by us. Our normal table games hold percentage is in the range of 19% to 23% of table games drop and our normal slots hold percentage is in the range of 7.5% to 8.5% of slots handle;
	•		Hotel revenue indicators — hotel occupancy (a volume indicator); average daily rate (“ADR,” a price indicator); revenue per available room (“REVPAR,” a summary measure of hotel results, combining ADR and occupancy rate).

     Most of our revenue is essentially cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit cards. Our resorts, like many in the industry, generate significant operating cash flow. Our industry is capital intensive and we rely heavily on the ability of our resorts to generate operating cash flow to repay debt financing, fund maintenance capital expenditures and provide excess cash for future development.

     We generate a majority of our net revenues and operating income from our resorts in Las Vegas, Nevada, which exposes us to certain risks, such as increased competition from new or expanded Las Vegas resorts, and from the expansion of gaming in California. We are also exposed to risks related to tourism and the general economy, including national and global economic conditions and terrorist attacks or other global events.

     Our results of operations do not tend to be seasonal in nature, though a variety of factors may affect the results of any interim period, including the timing of major Las Vegas conventions, the amount and timing of marketing and special events for our high-end customers, and the level of play during major holidays, including New Year and Chinese New Year. We market to different customer segments to manage our hotel occupancy, such as targeting large conventions to increase mid-week occupancy. Our results do not depend on key individual customers, although our success in marketing to customer groups, such as convention customers, or the financial health of customer segments, such as business travelers or high-end gaming customers from a particular country or region, can affect our results.

   Gold Strike Tunica

     On May 2, 2011, Gold Strike Tunica was closed due to flooding of the Mississippi River. We do not know how long the property will be closed or the extent of potential damage which may occur. We carry flood and business interruption insurance, but it is not possible at this time to predict any future claims or payments.

   Effect of Economic Factors on Results of Operations

     The state of the U.S. economy has negatively affected our results of operations over the past several years, and we expect to continue to be sensitive to certain aspects of the current uncertain economic conditions. Individuals and businesses responded to the difficult economic conditions by reducing spending and travel budgets. We have begun to see a rebound in each of our segments, including our convention business, but we expect conditions currently or recently present in the economic environment to continue to negatively affect our operating results including:

	•		Weaknesses in employment and increases in unemployment;
	•		Weak consumer confidence;
	•		Weak housing market and significant declines in housing prices and related home equity; and
	•		Decreases in airline capacity to Las Vegas.

     Because of these economic conditions, we have increasingly focused on managing costs and continue to review all areas of operations for efficiencies and we continually manage staffing levels across all our resorts. Our results of operations are also affected by decisions we make related to our capital allocation, our access to capital, and our cost of capital — all of which are affected by the uncertain state of the global economy and the continued instability in the capital markets. For example, we will incur higher interest costs in connection with the amendments to our senior credit facility in 2009 and 2010. Also, our general cost of debt has increased over the past few years. These factors may affect our ability to access future capital and cause future borrowings to carry higher interest rates.

    MGM Macau

     Proposed Initial Public Offering and Related Transactions. In April 2011, we entered into a partner process and securities purchase agreement with Ms. Ho, Pansy Catilina Chiu King (“Ms. Pansy Ho”) and certain wholly-owned subsidiaries of Ms. Pansy Ho pursuant to which the proposed initial public offering of the shares of MGM China Holdings Limited (“MGM China”) on the Hong Kong Stock Exchange (the “IPO”) and related transactions will be structured so that we would obtain 51% ownership, and management control, of MGM China upon consummation of the offering. MGM China will become the owner of MGM Grand Paradise, S.A., the Macau company that owns the MGM Macau resort and casino and the related gaming sub-concession. Upon consummation of the initial public offering, MGM China will be owned (through intermediary companies) 51% by us, 29% by Ms. Pansy Ho, and 20% by public shareholders. An entity controlled by Ms. Pansy Ho will grant an over-allotment option to the underwriters equal to up to 3% of the shares of MGM China, the exercise of which will reduce her holdings. In the transactions, we will acquire a 1% interest in MGM China at the same price per share as the shares sold to public shareholders. The net proceeds of the offering and of our 1% purchase will be remitted to an entity controlled by Ms. Pansy Ho. The agreements described above remain subject to certain conditions, including required approvals of the Hong Kong Stock Exchange. Additionally, the timing and terms of any such listing have not yet been determined, and there can be no assurance that the proposed transactions will be consummated.

     In addition, the partner process and securities purchase agreement provides, among other things, for the sale of $300 million in aggregate principal amount of our 4.25% convertible senior notes due 2015 on terms that will be substantially similar to those governing our existing convertible senior notes due 2015 (the “Notes”) for a purchase price of 103.805% of the principal amount thereof to a wholly-owned subsidiary of Ms. Pansy Ho in a transaction exempt from registration under the Securities Act of 1933, as amended. The Notes will be convertible at an initial conversion rate, subject to adjustment under certain circumstances, of approximately 53.83 shares of our common stock per $1,000 principal amount of the Notes. The issuance of the Notes is conditioned upon (a) the consummation of the initial public offering of the shares of MGM China on the Hong Kong Stock Exchange and (b) our receipt of stockholder approval at our annual meeting to be held on June 14, 2011 to increase the number of authorized shares of common stock under our certificate of incorporation.

     In the event the proposed transactions are consummated, we will consolidate MGM China with our consolidated financial statements due to our ownership control and the non-controlling interests in MGM China will be presented as a component of our stockholders’ equity. We expect to recognize a significant gain on the transactions based on the anticipated excess value to be established by the initial public offering over the carrying value of our existing investment. Such gain will not be currently taxable.

     In addition, the agreement to issue the Notes at a later date based on the fixed terms described above constitutes a derivative instrument. As such, changes in the fair value of the instrument must be recognized

by us currently in earnings. Upon issuance of the Notes, the fair value of the derivative instrument will be equal to the difference between the fair value of the Notes and the Notes’ issuance price. The Notes will be recorded at fair value determined by the trading price of our existing convertible notes on the date of issuance of the Notes with the difference recorded as a discount or premium to be recognized over the term of the Notes. If the Notes are not issued, the derivative will expire.

     Distributions. We received a distribution of approximately $31 million from MGM Macau during the quarter ending March 31, 2011. We recognized this distribution as a cash flow from operating activities in the accompanying consolidated statement of cash flows.

   Borgata

     We have a 50% economic interest in Borgata Hotel Casino & Spa (“Borgata”) located on Renaissance Pointe in the Marina area of Atlantic City, New Jersey. Boyd Gaming Corporation (“Boyd”) owns the other 50% of Borgata and also operates the resort. Our interest is held in trust and currently offered for sale pursuant to our settlement agreement with New Jersey Department of Gaming Enforcement (“DGE”). In March 2010, the New Jersey Casino Control Commission (‘CCC”) approved our settlement agreement with the DGE pursuant to which we placed our 50% ownership interest in Borgata and related leased land in Atlantic City into a divestiture trust. Following the transfer of these interests into trust, we ceased to be regulated by the CCC or the DGE, except as otherwise provided by the trust agreement and the settlement agreement. Boyd’s 50% interest is not affected by the settlement.

     The terms of the settlement mandate the sale of the trust property within a 30-month period ending in September 2012. During the 18 months ending in September 2011, we have the right to direct the trustee to sell the trust property, subject to approval of the CCC. If a sale is not concluded by that time, the trustee is responsible for selling the trust property during the following 12-month period. We continue to negotiate with certain parties that have expressed interest in the asset, but can provide no assurance that a transaction will be completed. Prior to the consummation of the sale, the divestiture trust will retain any cash flows received in respect of the trust property, but will pay property taxes and other costs attributable to the trust property. We are the sole economic beneficiary of the trust and will be permitted to reapply for a New Jersey gaming license beginning 30 months after the completion of the sale of the trust assets. As of March 31, 2011, the trust had $188 million of cash and investments, of which $150 million is held in treasury securities with maturities greater than 90 days but less than one year, and is recorded within “Prepaid expenses and other.”

     As a result of our ownership interest in Borgata being placed into a trust we no longer have significant influence over Borgata; therefore, we discontinued the equity method of accounting for Borgata at the point the assets were placed in the trust in March 2010, and account for our rights under the trust agreement under the cost method of accounting. The carrying value of our investment related to Borgata is included in “Other long-term assets, net.” Earnings and losses that relate to the investment that were previously accrued remain as a part of the carrying amount of the investment. Distributions received by the trust that do not exceed our share of earnings are recognized currently in earnings. However, distributions received by the trust that exceed our share of earnings for such periods are applied to reduce the carrying amount of our investment. We consolidate the trust as we are the sole economic beneficiary. The trust did not receive distributions from Borgata during the three months ended March 31, 2011 or March 31, 2010.

   Impairments

     A complete discussion of our critical accounting policies related to impairments of long-lived assets and investments in unconsolidated affiliates is included in our Form 10-K for the period ending December 31, 2010. We did not identify circumstances that existed that would indicate the carrying value of our long-lived assets may not be recoverable; therefore, we did not review any of our wholly-owned long-lived asset groups, generally our operating resorts, for impairment as of March 31, 2011. Historically, the undiscounted cash flows of our significant long-lived assets have exceeded their carrying values by a substantial margin such that any recent decline in operating performance would not be indicative of a potential impairment.

   Reimbursed Costs

     Reimbursed costs revenue represents reimbursement of costs, primarily payroll-related, incurred by us in connection with the provision of management services. We recognize costs reimbursed pursuant to management services as revenue in the period we incur the costs. Reimbursed costs, which are related mainly to our management of CityCenter, were $86 million and $93 million for the first quarter of 2011 and 2010, respectively.

Results of Operations

     The following discussion is based on our consolidated financial statements for the three months ended March 31, 2011 and 2010.

   Summary Financial Results

     Net revenue increased 4% excluding reimbursed costs revenue. Revenues benefited from an increase in convention room nights during the first quarter, which contributed to increases in rooms revenue and other non-gaming revenues. Operating income increased to $170 million as a result of increases in revenue and stronger margins and from an increase in income from unconsolidated affiliates which was driven by strong results at MGM Macau. Our share of operating losses from CityCenter also decreased significantly compared to the prior year quarter which included $86 million related to our share of the residential inventory impairment charge at CityCenter.

    Operating Results — Detailed Revenue Information

     The following table presents details of our net revenues:

		Three Months Ended March 31,
						Percentage
		2011				Change				2010
		(In thousands)
Casino revenue, net:
Table games		$	184,808				(13	%)		$	212,679
Slots			380,649				1	%			376,607
Other			16,866				(21	%)			21,471
Casino revenue, net			582,323				(5	%)			610,757
Non-casino revenue:
Rooms			368,337				13	%			325,676
Food and beverage			336,824				7	%			316,156
Entertainment, retail and other			279,966				4	%			269,577
Reimbursed costs			86,288				(8	%)			93,323
Non-casino revenue			1,071,415				7	%			1,004,732
			1,653,738				—				1,615,489
Less: Promotional allowances			(148,784	)			(6	%)			(158,097	)
		$	1,504,954				3	%		$	1,457,392