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, 2011, which were included in our Form 10-K, filed with the SEC on February 29, 2012. 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." MGM China Holdings Limited together with its subsidiaries is referred to as "MGM China."

Executive Overview

Our primary business is the ownership and operation of casino resorts, which includes offering gaming, hotel, convention, dining, entertainment, retail and other resort amenities. We believe that we own and invest in several of the premier casino resorts in the world and have continually reinvested in our resorts to maintain our competitive advantage. Most of our revenue is cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit cards. We rely heavily on the ability of our resorts to generate operating cash flow to repay debt financing, fund maintenance capital expenditures and provide cash for future development. Our results of operations are affected by decisions we make related to our capital allocation, our access to capital, and our cost of capital. Our access to lower cost capital has improved, and over the next few years we remain committed to further deleveraging our balance sheet and improving our credit profile.

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. 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. Certain of our resorts earn significant revenues from the high-end gaming business, which leads to variability in our results.

We have two reportable segments that are based on the regions in which we operate: wholly owned domestic resorts and MGM China. We currently operate 15 wholly owned resorts in the United States. MGM China's operations consist of the MGM Macau resort and casino. We have additional business activities including investments in unconsolidated affiliates, our MGM Hospitality operations, and certain other corporate and management operations. CityCenter is our most significant unconsolidated affiliate, which we also manage for a fee. Our operations which have not been segregated into separate reportable segments are reported as "corporate and other" operations in our reconciliations of segment results to consolidated results.

Wholly Owned Domestic Resorts

Over half of the net revenue from our wholly owned domestic resorts is derived from non-gaming activities, including hotel, food and beverage, entertainment and other non-gaming amenities. 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. 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 market to different customer segments to manage our hotel occupancy, such as targeting large conventions to increase mid-week occupancy.

We generate a significant portion of our revenue from our wholly owned domestic 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.

While adverse conditions in the economic environment affected our operating results in recent years, we believe positive trends, such as increased visitation and consumer spending will continue. However, we believe that certain aspects of the current economy, such as continued weaknesses in employment and the housing market, will limit economic growth in the U.S. and temper our recovery. Because of these economic conditions, we have increasingly focused on managing costs and staffing levels across all our resorts and will continue to strive to achieve additional operating efficiencies. However, as a result of our leveraged business model, our operating results are significantly affected by our ability to generate operating revenues.

Key performance indicators related to gaming and hotel revenue at our wholly owned domestic resorts 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); and revenue per available room ("REVPAR," a summary measure of hotel results, combining ADR and occupancy rate).

MGM China

On June 3, 2011, we and Ms. Ho, Pansy Catilina Chiu King ("Ms. Pansy Ho") completed a reorganization of the capital structure and the initial public offering of 760 million shares of MGM China Limited ("MGM China") on The Stock Exchange of Hong Kong Limited (the "IPO"), representing 20% of the post issuance base capital stock of MGM China, at an offer price of HKD 15.34 per share. Pursuant to this reorganization, we acquired, through a wholly owned subsidiary, an additional 1% of the overall capital stock of MGM China for HKD 15.34 per share, or approximately $75 million, and thereby became the owner of 51% of MGM China, which owns MGM Grand Paradise, S.A. ("MGM Grand Paradise"), the Macau company that owns the MGM Macau resort and casino and the related gaming subconcession and land concession.

Through the acquisition of the additional 1% interest of MGM China, we obtained a controlling interest and were required to consolidate MGM China as of June 3, 2011. Prior to the IPO, we held a 50% interest in MGM Grand Paradise, which was accounted for under the equity method. The acquisition of the controlling financial interest was accounted for as a business combination and we recognized 100% of the assets, liabilities, and noncontrolling interests of MGM China at fair value at the date of acquisition. The fair value of the equity of MGM China was determined by the IPO transaction price and equaled approximately $7.5 billion. The carrying value of our equity method investment was significantly less than our share of the fair value of MGM China, resulting in a $3.5 billion gain on the acquisition.

We believe our investment in MGM China plays an important role in extending our reach internationally and will foster future growth and profitability. Asia is the fastest-growing gaming market in the world and Macau is the world's largest gaming destination in terms of revenue, and has continued to grow over the past few years despite the global economic downturn.

Our MGM China operations relate to MGM Macau resort and casino. Revenues at MGM Macau are generated primarily from gaming operations made up of two distinct market segments: main floor and high-end ("VIP"). MGM Macau main floor operations consist of both table games and slot machines offered to the public, which usually consists of walk-in and day trip visitors. VIP players play mostly in dedicated VIP rooms or designated gaming areas. VIP customers can be further divided into customers sourced by in-house VIP programs and those sourced through gaming promoters. A significant portion of our VIP volume is generated through the use of gaming promoters, also known as junket operators. These operators introduce high-end gaming players to MGM Macau, assist these customers with travel arrangements, and extend gaming credit to these players.

VIP gaming at MGM Macau is conducted by the use of special purpose nonnegotiable gaming chips called "rolling chips." Gaming promoters purchase these rolling chips from MGM Macau and in turn they sell these chips to their players. The rolling chips allow MGM Macau to track the amount of wagering conducted by each gaming promoters' clients in order to determine VIP gaming play. In exchange for the gaming promoters' services, MGM Macau pays them either through rolling chip turnover-based commissions or through revenue-sharing arrangements. The estimated portion of the gaming promoter payments that represent amounts passed through to VIP customers is recorded net against casino revenue, and the estimated portion retained by the gaming promoter for its compensation is recorded to casino expense.

In addition to the key performance indicators used by our wholly owned domestic resorts, MGM Macau utilizes "turnover" which is the sum of rolling chip wagers won by MGM Macau (rolling chips purchased plus rolling chips exchanged less rolling chips returned). Turnover provides a basis for measuring VIP casino win percentage. Normal win for VIP gaming operations at MGM Macau is in the range of 2.7% to 3.0% of turnover. MGM Macau's main floor historical table games hold percentage is in the range of 20% to 26% of table games drop. Normal slots hold percentage at MGM Macau is in the range of 5.5% to 7.5% of slots handle.

Corporate and Other

Corporate and other includes our investments in unconsolidated affiliates, MGM Hospitality and certain management and other operations.

CityCenter. We own 50% of CityCenter. 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 and entertainment district; and Vdara, a luxury condominium-hotel. In addition, CityCenter features residential units in the Residences at Mandarin Oriental. We receive a management fee of 2% of revenues for the management of Aria and Vdara, and 5% of EBITDA (as defined in the agreements governing our management of Aria and Vdara). In addition, we receive an annual fee of $3 million for the management of Crystals.

Other unconsolidated affiliates. We also own 50% interests in Grand Victoria and Silver Legacy. 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. MGM Hospitality seeks to leverage our management expertise and well-recognized brands through strategic partnerships and international expansion opportunities. We have entered into management agreements for hotels in the Middle East, North Africa, India and, through its joint venture with Diaoyutai State Guesthouse, The People's Republic of China. MGM Hospitality opened its first resort, MGM Grand Sanya on Hainan Island, People's Republic of China in early 2012.

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 amended settlement agreement with New Jersey Department of Gaming Enforcement ("DGE") and approved by the New Jersey Casino Control Commission ("CCC"). The terms of the amended settlement agreement mandate the sale by March 2014. We have the right to direct the sale through March 2013, subject to approval of the CCC, and the trustee is responsible for selling the trust property during the following 12-month period.

We consolidate the trust as the sole economic beneficiary and account for our interest in Borgata under the cost method. 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. The trust did not receive distributions from Borgata during the three months ended March 31, 2012 and 2011. As of March 31, 2012, the trust had $165 million of cash and investments, of which $135 million is held in U.S. treasury securities with maturities greater than three months but less than one year, and is recorded within "Prepaid expenses and other." During the first quarter of 2012, $23 million was withdrawn from the trust account for the payment of property taxes and interest on our senior credit facility, as authorized in accordance with the terms of the trust agreement.

Results of Operations

The following discussion is based on our consolidated financial statements for the three months ended March 31, 2012 and 2011.

Summary Financial Results



The following table summarizes our financial results:



                                                        Three Months Ended
                                                             March 31,
                                                        2012          2011
                                                          (In thousands)
Net revenues                                         $ 2,287,590   $ 1,512,851
Operating income                                         192,606       169,705
Net loss                                                (203,307 )     (89,871 )
Net loss attributable to MGM Resorts International      (217,253 )     (89,871 )

Our results of operations for the three months ending March 31, 2012 include the results of MGM China which we began consolidating on June 3, 2011. Prior thereto, results of operations of MGM China were reflected under the equity method of accounting - see "Operating Results - Income (Loss) from Unconsolidated Affiliates." MGM China's net revenue for the three months ended March 31, 2012 was $702 million, operating income was $68 million and net income, including the $44 million complementary tax provision discussed further in "Non-operating Results," was $21 million.

Consolidated operating income benefited from improved performance at MGM China and our wholly owned domestic resorts, partially offset by an increase in our share of operating losses at CityCenter.

Corporate expense increased 16% to $42 million for the first quarter of 2012 as a result of expenses related to the outsourcing of information systems and additional legal, professional services and development costs associated with future development initiatives. Depreciation and amortization in the first quarter of 2012 increased from 2011 primarily as a result of the consolidation of MGM China, which had $96 million of depreciation and amortization expense including amortization of intangible assets recognized in the acquisition.

Operating Results - Detailed Segment Information

The following table presents net revenue and Adjusted EBITDA by reportable segment. Management uses Adjusted Property EBITDA as the primary profit measure for our reportable segments. See "Non-GAAP Measures" for additional Adjusted EBITDA information:

                                                 Three Months Ended
                                                      March 31,
                                                 2012          2011
                                                   (In thousands)
Net revenues:
Wholly owned domestic resorts                 $ 1,479,598   $ 1,406,430
MGM China                                         702,090             -
Reportable segment net revenues                 2,181,688     1,406,430
Corporate and other                               105,902       106,421
                                              $ 2,287,590   $ 1,512,851

Adjusted EBITDA:
Wholly owned domestic resorts                 $   320,972   $   299,962
MGM China                                         164,521             -
Reportable segment Adjusted Property EBITDA       485,493       299,962
Corporate and other                               (55,161 )      22,231
                                              $   430,332   $   322,193

See below for detailed discussion of segment results related to our wholly owned domestic operations and MGM China. Corporate and other revenue includes revenues from MGM Hospitality and management operations and reimbursed revenue primarily related to our CityCenter management agreement. Adjusted EBITDA losses related to corporate and other increased as a result of additional losses at CityCenter and the increase in corporate expense discussed above. In addition, the first quarter of 2011 included the results of MGM Macau as an equity method investment.

Wholly owned domestic operations. The following table presents detailed net revenue at our wholly owned domestic resorts:

                                            Three Months Ended
                                                March 31,
                                                Percentage
                                     2012         Change        2011
                                              (In thousands)
Casino revenue, net:
Table games                       $   206,462           12 % $   184,808
Slots                                 417,354            7 %     388,546
Other                                  19,712           17 %      16,866
Casino revenue, net                   643,528            9 %     590,220
Non-casino revenue:
Rooms                                 379,474            3 %     368,337
Food and beverage                     353,126            6 %     334,271
Entertainment, retail and other       264,195            1 %     262,336
Non-casino revenue                    996,795            3 %     964,944
                                    1,640,323            5 %   1,555,164
Less: Promotional allowances         (160,725 )          8 %    (148,734 )
                                  $ 1,479,598            5 % $ 1,406,430

Net revenue related to wholly owned domestic resorts increased 5% in the first quarter of 2012 driven by a 9% increase in casino revenue. Table games revenue increased 12% for the first quarter of 2012. Table games hold percentage was 18.7% in the current year quarter and 17.7% in the prior year quarter. Total table games revenue also improved as a result of table games volume increasing 5% compared to the prior year quarter. Slots revenue increased 7% in the first quarter with an 8% increase at our Las Vegas Strip resorts. Rooms revenue in the first quarter of 2012 increased 3%, with a 4% increase in Las Vegas Strip REVPAR. The following table shows key hotel statistics for our Las Vegas Strip resorts:

                                        Three Months Ended
                                            March 31,
                                        2012         2011
Occupancy                                    90 %         87 %
Average Daily Rate (ADR)              $     131    $     130
Revenue per Available Room (REVPAR)         117          112

Adjusted Property EBITDA for wholly owned domestic resorts increased 7% compared to the first quarter of 2011, led by a 31% increase in Adjusted Property EBITDA at Bellagio.

MGM China. Net revenue for MGM China was $702 million for the three months ending March 31, 2012. Operating income was $68 million and Adjusted Property EBITDA was $165 million for the same period. As previously discussed, prior to June 3, 2011, MGM Macau was recorded as an equity method investment. In the three months ended March 31, 2011, MGM Macau earned operating income of $126 million which included $20 million of depreciation and amortization expense. MGM Macau had year-over-year increases in volume measures for VIP table games, main floor table games, and slots of 6%, 13% and 27%, respectively. VIP table games hold percentage was 3.2% in the current year quarter and 2.9% in the prior year quarter.

Operating Results - Income (loss) from Unconsolidated Affiliates

The following table summarizes information related to our income (loss) from unconsolidated affiliates:

               Three Months Ended
                   March 31,
                2012         2011
                 (In thousands)
CityCenter   $   (18,573 ) $ (5,823 )
MGM Macau              -     61,680
Other              5,264      7,486
             $   (13,309 ) $ 63,343

We ceased recording MGM Macau operating results as income from unconsolidated affiliates under the equity method of accounting in June 2011; our share of operating income for MGM Macau for the 2011 three month period accounted for under the equity method was $62 million.

Our share of losses from CityCenter increased in the first quarter of 2012 driven by higher operating losses at Aria. Aria's operating results were negatively affected by a table games hold percentage which was significantly below the low end of its normal range in the first quarter of 2012 and above the high end of its normal range in the prior year quarter. Table games hold percentage was 16.0% in the current year quarter compared to 27.4% in the prior year quarter.

Non-operating Results

Interest expense. Interest expense increased to $284 million in the first quarter of 2012 compared to $270 million in the prior year quarter. Interest expense increased as a result of $6 million of interest expense for MGM China as well as a higher average debt outstanding during the current year quarter. We had minimal capitalized interest in the first quarter of 2012 and no capitalized interest in the first quarter of 2011.

Non-operating items from unconsolidated affiliates. Non-operating loss from unconsolidated affiliates decreased for the three months ended March 31, 2012 primarily due to a decrease in our share of non-operating items related to CityCenter which included $4 million and $12 million for certain costs incurred to restructure its debt and the write-off of debt issuance costs in 2012 and 2011, respectively. In addition, MGM Macau ceased to be recorded as an equity method investment beginning in June 2011.

Other, net. In connection with the amendment of our senior credit facility as further discussed in "Principal Debt Arrangements" and subsequent repayment of the non-extending loans, we recorded a loss on early retirement of debt of $59 million related to previously recorded discounts and certain debt issuance costs.

Income taxes. We began recording a valuation allowance for U.S. deferred tax assets generated in the current year resulting in additional tax provision of $112 million for the three months ended March 31, 2012. In addition, we recorded a tax provision of $44 million related to complementary tax that will be due on the first quarter 2012 MGM China dividend if an anticipated annual fee arrangement with the Macanese government is not in place prior to June 30, 2013.

Non-GAAP Measures

"Adjusted EBITDA" is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, and property transactions, net. "Adjusted Property EBITDA" is Adjusted EBITDA before corporate expense and stock compensation expense related to the MGM Resorts stock option plan, which is not allocated to each property. MGM China recognizes stock compensation expense related to its stock compensation plan which is included in the calculation of Adjusted Property EBITDA for MGM China. Adjusted EBITDA information is presented solely as a supplemental disclosure to reported GAAP measures because management believes these measures are 1) widely used measures of operating performance in the gaming industry, and 2) a principal basis for valuation of gaming companies.

We believe that while items excluded from Adjusted EBITDA and Adjusted Property EBITDA may be recurring in nature and should not be disregarded in evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods because these items can vary significantly depending on specific underlying transactions or events that may not be comparable between the periods being presented. Also, we believe excluded items may not relate specifically to current operating trends or be indicative of future results. For example, preopening and start-up expenses will be significantly different in periods when we are developing and constructing a major expansion project and dependent on where the current period lies within the development cycle, as well as the size and scope of the project(s). "Property transactions, net" includes normal recurring disposals and gains and losses on sales of assets related to specific assets within our resorts, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period. In addition, capital allocation, tax planning, financing and stock compensation awards are all managed at the corporate level. Therefore, we use Adjusted Property EBITDA as the primary measure of our operating resorts' performance.

Adjusted EBITDA or Adjusted Property EBITDA should not be construed as an alternative to operating income or net income, as an indicator of our performance; or as an alternative to cash flows from operating activities, as a measure of liquidity; or as any other measure determined in accordance with generally accepted accounting principles. We have significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in Adjusted EBITDA. Also, other companies in the gaming and hospitality industries that report Adjusted EBITDA information may calculate Adjusted EBITDA in a different manner.

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