Executive Overview
Liquidity and Financial Position
Until May 2009, we had borrowed the total amount of borrowing capacity under our senior credit facility and we had no other sources of borrowing availability. In May 2009, we executed a series of transactions to improve our financial position, consisting of the following:
• We entered into an amendment to our senior credit facility, under which certain covenants and potential events of default were waived and other covenants were amended, and under which we 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.

• We issued approximately 164.5 million shares of our common stock at $7 per share, for total net proceeds of approximately $1.1 billion. A portion of the shares were previously held by us 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 our senior credit facility and redeem certain outstanding senior debentures and senior notes and for general corporate purposes.

• We 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 us 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 our 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, we delivered a notice of redemption for the $100 million of outstanding 7.25% senior debentures of Mirage Resorts, Incorporated ("MRI"), our wholly owned subsidiary. The notes were redeemed in June 2009, at a total cost of approximately $127 million. Additionally, in May 2009, we commenced tender offers to purchase all $820.0 million of our outstanding 6.0% senior notes due October 2009 and all $226.3 million of our outstanding 6.50% senior notes due July 2009, of Mandalay Resort Group, our wholly owned subsidiary. As of the close of the tender offers in June 2009, we had received valid tenders for $762.6 million of the senior notes due October 2009 and $122.3 million of the senior notes due July 2009 and purchased such notes essentially at par value.
While we were in compliance with the financial covenants under our senior credit facility at December 31, 2008, as previously anticipated, we were 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 September 30, 2009. Subsequent to the receipt of the waiver, in April and May 2009, we entered into amendments of the 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 our 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 us 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 our existing senior unsecured indebtedness. We 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 us 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, we issued $475 million of 11.375% senior notes due 2018 for net proceeds of $451 million. In October 2009, we used the net proceeds 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, we entered into a further amendment to our senior credit facility which permits us 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 6 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.

We believe that the availability under our senior credit facility and future operating cash flow will allow us to fulfill our financial commitments through 2010 including any amounts due under the CityCenter completion guarantee (see "Other Factors Affecting Liquidity"). However, our ability to meet our obligations to redeem our $782 million 8.5% senior notes maturing in September 2010 depends in part on our operating performance and amounts required to be funded under the 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 to seek additional financing or explore the sale of non-core assets to satisfy the September 2010 senior note maturity.
Overview
At September 30, 2009, our primary operations consisted of 15 wholly-owned casino resorts and 50% investments in four other casino resorts, including:

 Las Vegas,     Bellagio, MGM Grand Las Vegas, Mandalay Bay, Mirage, Luxor, New
 Nevada:        York-New York, Excalibur, Monte Carlo, and Circus Circus Las
                Vegas.

 Other:         Circus Circus Reno and Silver Legacy (50% owned) in Reno, Nevada;
                Gold Strike in Jean, Nevada; Railroad Pass in Henderson, Nevada;
                MGM Grand Detroit; Beau Rivage in Biloxi, Mississippi and Gold
                Strike Tunica in Tunica, Mississippi; Borgata (50% owned) in
                Atlantic City, New Jersey; Grand Victoria (50% owned) in Elgin,
                Illinois; and MGM Grand Macau (50% owned).

Other operations include the Shadow Creek golf course in North Las Vegas; the Primm Valley Golf Club at the California state line; and Fallen Oak golf course in Saucier, Mississippi. In March 2009, we completed the sale of TI - see "Other Factors Affecting Liquidity."

We own 50% of CityCenter, currently under development on a 67-acre site on the Las Vegas Strip, between Bellagio and Monte Carlo. Infinity World Development Corp ("Infinity World"), a wholly-owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity, owns the other 50% of CityCenter. CityCenter will feature 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. We are serving as the developer of CityCenter and, upon completion of construction, we will manage CityCenter for a fee.
Our primary business is the ownership and operation of casino resorts, which includes offering gaming, hotel, dining, entertainment, retail and other resort amenities. Over half of our net revenue is derived from non-gaming activities, a higher percentage than many of our competitors, as our operating philosophy is to provide a complete resort experience for our guests, including non-gaming amenities which command above market prices based on their quality. 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 impacts the price we can charge for our hotel rooms and other amenities. We also generate a significant portion of our revenues from high-end gaming customers, which can cause variability in our results. Key performance indicators related to revenue are:
• Casino revenue indicators - table games drop and slots handle (volume indicators); "win" or "hold" percentage, which is not fully controllable by us. Our table games win percentage is normally 18% to 22% of table games drop and our slots win percentage is normally 7% to 8% of slots handle;

• Rooms revenue indicators - hotel occupancy (volume indicator); average daily rate ("ADR," 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 generate significant operating cash flow. Our industry is capital intensive and we rely heavily on the ability of our resorts to generate operating cash flow to repay debt financing, fund maintenance capital expenditures, and provide excess cash for future development.
We generate a majority of our net revenues and operating income from our resorts in Las Vegas, Nevada, which exposes us to certain risks outside of our control, such as competition from other recently opened or expanded Las Vegas resorts, and the impact from expansion of gaming in California. We are also exposed to risks related to tourism and the general economy, including national and global economic conditions and terrorist attacks or other global events.
Our results of operations do not tend to be seasonal in nature, though a variety of factors may affect the results of any interim period, including the timing of major Las Vegas conventions, the amount and timing of marketing and special events for our high-end customers, and the level of play during major holidays, including New Year and Chinese New Year. We market to different customer segments to manage our hotel occupancy, such as targeting large conventions to ensure mid-week occupancy. Our results do not depend on key individual customers, though 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 impact our results. In addition, our operating income is significantly impacted by room rates we are able to yield at our resorts.
Impact of Current Economic Conditions and Credit Markets on Results of Operations
The state of the United States economy has negatively impacted our results of operations since 2008 and we expect these impacts to continue throughout 2009 and into 2010. The decrease in liquidity in the credit markets which began in late 2007 and accelerated in late 2008 has also significantly impacted our Company.

Uncertain economic conditions continue to impact our customers' spending levels. Travel and travel-related expenditures have been particularly affected. Businesses responded to the difficult economic conditions by reducing travel budgets. This factor, along with perceptions surrounding certain types of business travel, negatively impacted convention attendance in Las Vegas. Dramatic drops in convention attendance in late 2008 and into 2009 led to significantly lower room rates as we reacted quickly to re-occupy rooms with leisure travelers. Other conditions currently or recently present in the economic environment are conditions which tend to negatively impact our results, such as:
• Weak housing market and significant declines in housing prices and related home equity;

• Weaknesses in employment and increases in unemployment;

• Weak consumer confidence;

• Decreases in air capacity to Las Vegas; and

• Decreases in equity market value, which impacted many of our customers.

Given the uncertainty in the economy, forecasting future results has become very difficult. In addition, leading indicators such as forward room bookings are difficult to assess, as our booking window has shortened significantly due to consumer uncertainty. Businesses and consumers appear to have altered their spending patterns which may lead to further decreases in visitor volumes and customer spending including convention and conference customers cancelling or postponing their events, although during the second and third quarters we saw these trends stabilize.
Because of these economic conditions, we have increasingly focused on managing costs. For example, we have reduced our salaried management positions; we did not pay discretionary bonuses in 2008 due to not meeting our internal profit targets; we suspended Company contributions to our 401(k) plan and our nonqualified deferred compensation plans; we rescinded cost of living increases for non-union employees; we reached an agreement with our primary union to defer the 2009 contractual pay increase; we have been managing staffing levels across all our resorts; and we have been reviewing all areas of operations for efficiencies. As a result, the average number of full-time equivalents at our resorts for the quarter ended September 30, 2009 was 12% lower than the prior year quarter and 14% lower on a year-to-date basis.
Our results of operations are also impacted by decisions we made related to our capital allocation, our access to capital, and our cost of capital - all of which are impacted by the uncertain state of the global economy and the continued instability in the capital markets. For example:
• In connection with the 2008 and 2009 amendments to our senior credit facility we will incur higher interest costs; and

• The senior notes issued in November 2008, May 2009 and September 2009 carry significantly higher interest rates than the notes maturing in 2009 and 2010, which will also lead to higher interest costs.

CityCenter Impairment Charges
At September 30, 2009, we reviewed our CityCenter investment for impairment using revised operating forecasts developed by CityCenter management late in the third quarter. In addition, the impairment charge related to CityCenter's residential real estate under development discussed below further indicated that our investment may have experienced an other-than-temporary decline in value. Our discounted cash flow analysis for CityCenter included estimated future cash outflows for construction and maintenance expenditures and future cash inflows from operations, including residential sales. Based on our analysis, we determined that the carrying value of our investment exceeded its fair value and therefore an impairment was indicated. We intend to and believe we can retain our investment in CityCenter; however, due to the extent of the shortfall and our assessment of the uncertainty of fully recovering our investment, we 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 addition, included in "Income (loss) from unconsolidated affiliates" for the third quarter of 2009 is our 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. We recognized 50% of such impairment charge, adjusted by certain basis differences, resulting in a pre-tax charge of $203 million. Results of Operations
The following discussion is based on our consolidated financial statements for the three and nine months ended September 30, 2009 and 2008. Certain results referenced in this section are on a "same store" basis excluding the results of TI.
Our net revenue decreased 9% on a same store basis in the three months ended September 30, 2009 compared to the prior year quarter, reflecting the overall continued weakness in room rates and lower spending levels by our customers. For the nine-month period, revenues decreased 16%, as the earlier quarters also saw significant convention cancellations. The convention cancellations in the first half of the 2009 and lack of convention business in the third quarter forced the Company to shift hotel business to the leisure segment at lower rates to maximize occupancy levels. Gaming and other sources of revenue continue to be impacted by lower customer spending at our resorts during 2009. Our regional resorts performed better relative to our Las Vegas Strip resorts, with revenues for the nine months ended September 30, 2009 down 9% at MGM Grand Detroit and 10% at our Mississippi resorts.
Our operating loss for the third quarter of 2009 included two significant impairment charges totaling approximately $1.16 billion related to CityCenter which are discussed above and in the accompanying notes to our consolidated financial statements. Operating results for the third quarter of 2009 benefited from $14 million of income related to our share of insurance proceeds recognized at The Borgata and the prior year included a $22 million dollar impact from the reversal of bonus accruals. Excluding these items, other property transactions, and preopening and start-up expenses, operating income decreased 16% on a same store basis for the third quarter and we achieved an operating margin of 13% compared to a margin of 14% in the third quarter of 2008. For the nine months, operating results was benefited by a pre-tax gain of $187 million on the TI sale and $22 million of insurance recoveries related to the Monte Carlo fire, both in the first quarter. On a comparable basis excluding the items discussed above, our operating income was down 42% for the nine month period. On that basis, we achieved an operating margin of 12% in the 2009 nine month period compared to 17% in 2008.
Operating Results - Detailed Revenue Information The following table presents details of our net revenue:

                                                Three Months Ended September 30,                              Nine Months Ended September 30,
                                                            Percentage                                                   Percentage
                                         2009                 Change               2008                2009                Change               2008
                                                                                     (Dollars in thousands)
Casino revenue, net:
Table games                          $     277,265                    3 %       $   268,006        $     736,431                 (12 %)      $   834,372
Slots                                      402,264                  (11 %)          450,374            1,190,666                 (13 %)        1,362,199
Other                                       20,277                   (3 %)           20,951               63,006                 (16 %)           75,407

Casino revenue, net                        699,806                   (5 %)          739,331            1,990,103                 (12 %)        2,271,978

Non-casino revenue:
Rooms                                      340,165                  (26 %)          458,051            1,045,504                 (30 %)        1,500,322
Food and beverage                          344,284                  (13 %)          395,090            1,040,540                 (15 %)        1,229,045
Entertainment, retail and other            321,166                  (11 %)          360,213              946,031                 (13 %)        1,089,265

Non-casino revenue                       1,005,615                  (17 %)        1,213,354            3,032,075                 (21 %)        3,818,632

                                         1,705,421                  (13 %)        1,952,685            5,022,178                 (18 %)        6,090,610
Less: Promotional allowances              (172,198 )                  3 %          (167,154 )           (496,005 )                (2 %)         (506,355 )

                                     $   1,533,223                  (14 %)      $ 1,785,531        $   4,526,173                 (19 %)      $ 5,584,255

Table game revenue increased 7% for the three month period on a same store basis, mainly due to a 75% increase in baccarat volume. Table games revenue decreased 10% on a same store basis for the nine month period, mainly due to an 8% decrease in total table games volume. The overall table games hold percentage was higher than our normal range in the third quarter of 2009 and toward the top-end of our normal range in the prior year third quarter. For the nine month periods, the table games hold percentage was within the normal range for both the current and prior year period, and was slightly higher in the current period versus the prior year. Slots revenue declined 6% for the third quarter on a same store basis and 9% for the nine month period.
On a same store basis, rooms revenue in the third quarter decreased 21%, with a 23% decrease in Las Vegas Strip REVPAR, resulting from lower rates. The following table shows key hotel statistics for our Las Vegas Strip resorts on a same store basis:

                                                   Three Months         Nine Months
          For the periods ended September 30,     2009      2008      2009      2008

          Occupancy                                 95 %      95 %      92 %      95 %
          Average Daily Rate (ADR)               $ 105     $ 136     $ 111     $ 152
          Revenue per Available Room (REVPAR)      100       129       102       145

Food and beverage revenue decreased 8% on a same store basis for the quarter and 12% for the nine month period. Entertainment revenues were up 5% in the third quarter due to new shows at Luxor (Believe) and Mandalay Bay (Disney's The Lion King), as well as a strong events calendar which offset lower occupancy at existing shows. Entertainment revenues for the nine months were down 3% on a same store basis.
Operating Results - Details of Certain Charges Preopening and start-up expenses largely consisted of our share of CityCenter's preopening costs in 2009. In 2008, preopening and start-up expenses included amounts for CityCenter and Borgata's expansion.
Property transactions, net consisted of the following:

                                                    Three Months                      Nine Months
For the periods ended September 30,             2009             2008             2009             2008
                                                                     (In thousands)
CityCenter investment write-down              $ 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 )             -
. . .