Jim Murren - Chairman and CEO Bobby Baldwin - Chief Design and Construction Officer and President and CEO of City Center Dan D'Arrigo - EVP, CFO, and Treasurer Grant Bowie - President, MGM Grand Paradise Ltd. Corey Sanders - Chief Operating Officer

Stephen Kent - Goldman Sachs Shaun Kelley - Bank of America Joe Greff - JP Morgan David Katz - Jefferies & Co. Janet Brashear - Sanford C.

Bernstein Felicia Hendrix - Barclays Bill Lerner - Union Gaming Mark Strawn - Morgan Stanley Harry Curtis - Nomura Securities Robin Farley - UBS

Well, thank you operator, and good afternoon and welcome to MGM Resort International's second quarter earnings call. This call is being broadcast live on the Internet at www.mgmresorts.com, and a replay of the call will be made available on the company's website.

Just a short time ago we furnished our press release on form 8-K with the SEC and before turning the call over to Jim, I'd like to just read our Safe Harbor statement. On this call, we will make forward looking statements under the Safe Harbor provisions of the federal securities laws.

Actual results might differ materially from those projected in the forward looking statements. Additional information concerning factors that could cause actual results to materially differ from those in these forward looking statements is contained in today's press release and our periodic filings with the SEC, including our most recent form 10-K and subsequent 10-Q filings.

During the call, we will also discuss non-GAAP financial measures in talking about the company's performance. You can find the reconciliation of these measures to GAAP financial measures in our press release, which is available on our website.

Finally, please note that this presentation is also being recorded. I'd now like to turn the call over to Mr.

Jim Murren.

Thank you Dan. And before we get going, I'd like to take a moment to remember our colleague, Terry Lanni.

Terry was, of course, an iconic leader of our company, our community, and the industry, and he was a wonderful man. We're going to miss him very much.

A personal friend of mine, and we wish his family, of course, all of our best wishes. So just not too long ago, we reported a very solid second quarter.

Importantly, for the first time since the downturn, the company experienced two consecutive sequential quarters of operational improvement. This, combined with very positive forward trends that we are currently seeing, leads us to believe that the signs of the recovery here in Las Vegas is consistent.

We're going to see continued improvement as we move into the back half of this year and into 2012. Our adjusted EBITDA was $366 million, but that included a couple impacts I'd like to lay out for you.

We were negatively impacted by hold, a mandatory closure of our Tunica casino, as well as our share of a writedown at City Center. So to put numbers around that, the $366 million, you'd have to adjust for hold, which would have been an adjustment of $27 million.

Tunica cost us $12 million, closing that for the quarter. Our share of the City Center residential was $26 million.

RA actually held well, so that would go the other way, $9 million. So netting those out, the adjusted EBITDA would have been $422 million.

It was a fine quarter for us. The results were broad-based.

We saw positive trends in both our luxury portfolio as well as the core brands, and really it came from all segments of our business, which again, I think, bodes well for the future. In the quarter MGM and our joint venture partner executed on an important long term goal to bring MGM China public on the Hong Kong exchange.

We priced that deal at the high end of the range and Pansy and I are very gratified with the investor response that we got on the transaction. Grant and our operating team there continue to execute on their goals and they brought us another record quarter at MGM Macau, driven by improvements in just about every metric.

Back here in Las Vegas, I recall that on our last call we talked about a guidance of Strip RevPAR we thought would be up in the mid-single digits in the second quarter. We actually surpassed that goal and reported RevPAR up 10% due to a nice increase in short-term bookings and really strong demand across our portfolio.

During the quarter we saw particular strength within the retail segment, or in other words, our FIT and leisure markets, and that led to additional increases in occupancy and in ADR. And in fact, June was surprisingly strong and was actually our biggest RevPAR growth month in the quarter, up in the low teens.

Again, we see this as another indicator of a recovery here in the retail segment, which of course is very important to us. It represents the largest percentage of our rooms.

On the casino side, casino revenues were up despite the low hold that I talked about. Our hold was below our normal range.

We didn’t do as well as we have been doing for many quarters internationally. We didn't do well in April, but we had a really good quarter on our national rated play, second consecutive quarter growth there, and slots were up very nicely in the quarter.

And in fact, over in Detroit, we had the best slot quarter in our history. We see these are more indicators of an improving domestic customer, which with our problem in our industry in 2008, 2009, and 2010, we're seeing strength in the national play, both on the table side and on the slots side.

I think that has also something to do with the fact that our loyalty program M life has been rolling out with great momentum. If you'll recall, we launched that on the Strip here in January of this year, and we've seen a nice increase in our active players and in trips in the quarter.

Promotional spend, by the way, is down as a percentage of revenue, largely due to more targeted marketing, more clever marketing from our perspective. We're excited about this because next month, in September, we roll out all the non-gaming elements of M life into our regional properties, and then in the following month, in October, we do the same thing here in Las Vegas.

That will be the culmination of the full M life launch. And with this rollout, we believe we're going to see nice increases in the nongaming revenues against even what we've been doing thus far this year.

With that, I think I'll turn it over to Dan to get into a little more operational detail.

Thanks Jim. First, a few highlights from our operating results.

Our wholly-owned domestic operations held approximately 1% lower, below the low end of our range this quarter. As Jim mentioned, had we held at the midpoint of our range, our EBITDA would have been higher by $27 million.

Even still, our EBITDA margins at our wholly-owned Strip properties increased by 125 basis points to 22.4%. The recovery is broad-based.

Our luxury properties, despite the lower hold percentage, showed strong EBITDA improvement of 9% and our core properties were up 16% in the current quarter. We were impacted by the $12 million of the closure of Gold Strike Tunica.

Our casino revenues were up 1% and excluding the impact of Tunica, it would have been up 3% in the quarter. Tunica is now back on track and performing well.

Moving on to Macau, we invested approximately $280 million when we opened MGM Macau in 2007, and have since received about $190 million in cash distributions to date. The IPO put a fair value on the equity of approximately $7.5 billion, valuing our share at almost $3.8 billion, resulting in a significant gain in the quarter and having a profound impact on our balance sheet by being able to consolidate this entity.

As a result of the consolidation, just to help you with modeling going forward, in the accounting adjustments depreciation and amortization expense will increase by approximately $85-95 million per quarter as a result of the accounting adjustments with the consolidation of Macau. Our balance sheet continues to improve, driven by the consolidation of Macau and the strengthening of our cash flows at our wholly-owned operations.

Our leverage at June 30 pro forma for the consolidation of Macau is roughly eight times. MGM China reported another record quarter with net revenues up 118% year over year to $668 million, and EBITDA was up 177% to $170 million, which was well above our forecast and our perspective.

MGM Macau saw improvements across all major drivers in the quarter, including VIP volumes, up 110% to $22.4 billion, a 21% increase in our main floor table games drop to $544 million, and slot handle was up nicely, 76% to $862 million in the quarter. At the end of the second quarter, MGM China had cash of $417 million, debt of $591 million, and a leverage of 1.4x, and that's before adjusting for any excess cash.

This morning we were notified that the New Jersey Casino Control Commission voted unanimously to approve the extension of our control of the sale of our share of Borgata to March 2013, and the company will work through its sales process. Future updates will be provided in due course.

Our second quarter capex was $48 million, bringing our year to date total to $83 million. We continue to expect to spend around $275 million in capital in 2011, which includes room remodel activity at both Bellagio and MGM Grand Las Vegas.

Our properties continue to be in great condition, with several new restaurant, entertainment, and retail upgrades in process. Bellagio's room remodel program began on June 20 and will finish in time for the December holidays.

We have already turned two floors and the new rooms are receiving great feedback from our customers. We expect we'll earn up to an approximately $30 per night rate premium once these new rooms come online.

Also at Bellagio, the build out of Hyde Lounge is underway, anticipated to be unveiled on New Year's Eve, and MGM Grand Las Vegas will begin its room remodel in September and we'll be opening its new room product to the public over the course of about a year. With that, I turn it over to Bobby Baldwin.

Thanks Dan, and good afternoon. We're extremely pleased with the results of all of the City Center, as we continue to solidify City Center as one of the premier luxury destinations in Las Vegas.

City Center resort operations reported net revenues of $275 million, and adjusted EBITDA of $64 million in the second quarter. Aria was designed to be an elite high-end resort, and we're living up to that promise.

Second quarter EBITDA for Aria was $53 million on record revenues of $233 million. Aria EBITDA benefited by approximately $18 million due to high hold percentage in the second quarter.

Operating results were driven by a 90% hotel occupancy, the highest RevPAR since opening of $181, and strong table games volumes and its best slot quarter ever. One of the factors driving occupancy and ADRs continued growth in the convention segment, thanks to our world-class convention facilities.

The Aria is seeing increased bookings in 2011 and beyond. Aria's Sky Suites was recently recognized by AAA as one of America's most luxurious accommodations by receiving to coveted Five Diamond Award as its own hotel experience within Aria.

We're now proud to be the recipients of two Five Star hotel awards at Aria. Vdara has established itself as an intimate nonsmoking, nongaming boutique hotel, and has been extremely well received by our guests.

Vdara has increased rate and occupancy in the quarter and now has approximately 1,300 hotel rooms online. Vdara posted its best quarter since opening at $5 million in the second quarter.

Vdara recently received the AAA Four Diamond rating recognizing our commitment to enhanced quality, high level of service, and attention to detail at Vdara. Crystals second quarter EBITDA was $6 million versus $2 million in the second quarter of 2010.

Same-store sales were up 24% year over year, maintaining its position as the second highest sales per square foot in the Las Vegas market. 87% of Crystals is currently under lease.

The Jimmy Choo just opened this month and Dolce Gabbana's men's and women's stores are scheduled to open early in January 2012. Residential sales pace continues to be slow.

However, we're having a great deal of success in the leasing program to people with the residential component of City Center. To date, we've leased 346 units and will produce total annual lease income of around $8 million.

And with that, I'll send it back to you Mr. Murren.

Well, thank you Bobby. We made a lot of strides in the second quarter.

We're pleased with that, but we recognize we've got some more work to do. I want to give you a little bit of insight as to what we see happening here in Las Vegas for the summer and into the fall, and it's a good story.

Our booking pace is so far up quite nicely for the summer, and really throughout the fall period as well. We expect RevPAR in the third quarter here in the Las Vegas strip to be up around 10%.

We're particularly encouraged, in terms of the second half of the year, on our convention calendar, most notably the months of September and October. They were exceptionally strong.

And in fact the third quarter convention mix is expected to be up about 300 basis points over last year's mix. The event calendar is also strong.

The back half of this year is better than the first half, led by, in this quarter, an important fight, the Mayweather fight, in September. And then there's the Pacquiao fight in November, along with some really We've been up in profitability throughout the first half of the year, and based on the booking trends that we see in our forecast we expect that this trend will continue throughout the year.

We believe we've positioned ourselves to take full advantage of the Las Vegas recovery. We're seeing results in both strong RevPAR and in customer spend now and in casino volumes.

We've been very diligent in keeping our costs in line. We'll continue to do that, and we expect therefore to be able to drive this revenue growth to the bottom line.

Over in Asia, we worked with Grant and the team. The Macau team's doing a tremendous job, not only in the existing property, but on our plans in Cotai.

We're very excited with our progress there. We've been working with the government to have our land concession issued, and while there's no specific date at this point for that land grant issuance, we are hopeful that we can secure that approval in the near future.

In the meantime, we've been working overtime on our internal development work and permitting with the agencies there. We've also looked at other expansion opportunities within the exiting MGM property in Macau and throughout the SAR.

We are expanding further in Asia with our hospitality division and they're bringing the first hotel online literally this year in Sanya in Hainan Island. The MGM Grand will open.

The owner there is [Copco] and it will be the first of many hotels we expect to have throughout China in cities such as Beijing, Chengdu, Tianjin, Nanjing, among many others in the region. We expect to have multiple properties there over the coming years as we continue to expand our portfolio, not only here domestically but overseas.

We want to make sure that we have plenty of time for your questions, which we have done so, and so I think at this point I'll turn it over to the operator for Q&A.

A couple things. Just on the hold percentage, maybe if you could give us a little more color on that, away from just the usual that we played unlucky or we played lucky.

Was there any shifting of customers from your properties to other properties? That's my first question.

The second question is you mentioned, I think Jim in your commentary, that casino and restaurant spends are increasing. Maybe if you could give some color on that to show the vibrancy of the North American consumer and sort of give us a sense for what's going on there.

And then finally, given what's going on in the market and given some what appears to be expectations of a slowing economic environment, could you revisit your ability to cut expenses or to do things if in fact your forecast, our forecast, doesn't turn out to be the way it's looking.

Okay, that's a mouthful there Steve. We'll try to hit them all.

But if we miss something let us know. I'll take the casino side, your first question.

We had a poor April. We just didn’t hold well at all in April.

Plus, in the very rarefied area of high-end, customers do move around, and we pick up more than our share and we lose share. So in that month we didn’t do as well as we'd like.

May, June, July we've been up, and in fact we're having a very solid time of the high-end internationally. Internationally, as you know, was strong for us throughout even the recession, and I do not believe we've lost any permanent share.

We did not have a good April, but that happens. And I think some of those customers that beat us are back and we're getting even.

From a standpoint of cutting expenses, I'll go to your last question and then while I try to find some examples of what you're looking for. We always are doing that.

Our payroll is pretty flat. Expenses are up a little bit, but in terms of salaries, bonus accruals, the culinary contract, but in terms of any major cost savings beyond what we accomplished early and effectively, I don't anticipate seeing anything significant.

Every year we look to take costs out of our business. We do that in the January-February period as we get into a year.

We'll do that again, but at this point we're showing margin growth, we're seeing good occupancy, great occupancy, across our portfolios. Our food covers are up.

Our retail sales in most every venue is up. Slot revenue is up.

And so I don’t see a need or even an opportunity to cut costs when our revenues are building.

On your middle question, I think it was related to kind of how do we see the domestic spend, and I think one of the key points we track is we look at our net RevPAR and excluding our casino and hotel business, so picking up all the other lines, we're up almost 3% in the quarter, which speaks to our food and beverage, our entertainment offerings, and night life offerings. And that's been a nice data point here in the quarter year over year.

Thanks. That's exactly what I was looking for.

Yeah, so I'm looking at the food and beverage numbers. Up.

Entertainment's up. Retail sales were up at Via Bellagio.

They were tremendous. And also, Bobby, did you mention on Crystals - I think you did - that same-store sales, the retail, up 24%.

And we're seeing those trends continue in the summer.

I just wanted to start with Las Vegas. If you could give us a little bit more color on the slot business, it looks like you actually did quite well there and it looks like you probabilities actually gained a little bit of market share relative to the Strip.

So could you give us a sense of maybe what you're doing? Is that kind of M life rolling into the results?

And how sustainable do you think that is?

Maybe I'll start and then turn it over to anyone who can jump in. M life just really began, and I think that is having an impact.

I think the far bigger impact will be next year. I think the slot increases are a function of a few things.

One, overall general improvement in the customer that's coming to Las Vegas. We're seeing across the board improvements in RevPAR, total revenue per occupied room.

That translates well on the slot side. The mix has improved in terms of the room mix, so as we're driving more productive customers through the buildings we're seeing higher slot revenue.

The marketing we're doing, packaging rooms with entertainment, has been very effective. M life definitely has had an impact on that.

And one of the programs we did with M life as an example is we made all of our employees, and we have 62,000 of them, we made them M life insiders. And what they can do now is with their employee IDs is help book rooms for their friends and themselves, customers, family members.

We're seeing an impact in terms of hotel reservations and gaming and nongaming revenue an as a result of that. So I think it's a function of a variety of things.

I think we're just really scratching the surface on the M life side though.

And then my second question was really primary related to Macau. I know there's some operational improvements that are expected to come online there, particularly on some of the direct VIP side.

So could you give us an update - or maybe Grant could, if he's on - about what the timing around some of that is? And then for Dan, on the same note, just the balance sheet in MGM Macau obviously looks like it has some room there.

I know some competitors have done some refinancing activity there. So what you might be able to do on that front.

That would be helpful.

Great. I'll turn it over to Grant.

I think it's about five in the morning there. Grant, are you with us?

Sorry, let me just wake up. Yes, thank you.

Okay. So some of the improvements on the Macau property?

I guess the first point, we opened the Platinum Lounge, which is part of the main floor operation. That comes on, the first phase, in August, in fact the end of next week.

That will be completed before the National Day holiday. The upgrade for the in house VIP customers is now looking like it's going to unfortunately miss the National Day holiday, but we do have gaming capacity to cover that in late October, early November.

So we're looking for a really strong stream of additional capacity coming online, and the market's still looking good for us.

And Shaun, on your Macau balance sheet question, we believe there is an opportunity there to take a look at the markets. The good news is as I mentioned earlier, they're less than 1.4x leveraged.

So we are going to look at a new financing opportunity there, which will most likely involve bringing down the cost of that debt and maybe adding some capacity and preparing for our Cotai development plan.

When you look backwards at the second quarter, and you look at the different segments on the Las Vegas Strip, what's the ADR delta between the group and the FIT, the leisure segment? And then when you look at the third quarter, fourth quarter, or recently booked 2012 plus group bookings, is there any slowdown in the pace of ADR improvement?

We're digging in to look at that. The delta has remained the same between the convention and the leisure, I know that.

And in all cases, it's been moving up.

It's really been a pace story in the second quarter Joe. Our convention business is relatively flat year over year in terms of the room mix, and we've really seen a nice pickup, as Jim mentioned earlier, in the retail and leisure channels, and that's given us the ability to price up as well.

Yeah, and I think your second part of the question was on [paids]? Is that right Joe?

Yes, if you look at [paids] now versus [paids] a quarter ago, and you look at the rate on an individual rooms basis.

Well, you know, [paids] is up. We're going to be up all year.

It looks like we're up all year in [paids]. We gave you the RevPAR guidance for the third quarter.

That's the highest number we've given as a forecast since 2007 I think. We had a good pop in the first quarter, but that was a recovery quarter.

But we're getting good, strong growth in all the segments. I think on the convention side, we're going to be up in rate again in 2012.

I don't think we've given a number but it will be up a healthy rate in 2012. And the leisure, meaning the FIT and the leisure segment, the retail segment has been what drove the second quarter and what's driving our confidence in the third quarter.

We're seeing the same kind of growth in rate of the convention block as we are in the leisure block.

I think in the commentary, and the release, in Macau specifically, it says that the hold percentage was slightly higher than the normal range. Did you quantify for us what that benefit was, or was that included?

I thought the $27 million was a number that was really just related to domestic wholly-owned.

The $27 million was purely domestic, wholly-owned. And the important VIP segment was about 3.1% in the quarter.

So slightly above the normal range for Macau.

Got it. And then just a different question.

It does feel, to some degree, as though there's kind of an elephant in the room, and there has been for us with other earnings calls, and this is not the type of question I would normally ask. But we have had an unusual 10 days, and have you observed or perceived anything over the past 10 days that's an observable change in mood, customer behavior, or anything like that?

And how'd the weekend go? [laughter]

Well, I'm not surprised we're getting the question given what's going on in the markets. First off, the weekend was packed here.

My wife's out of town, so I was on the Strip quite a bit this weekend. I had dinner with Bobby Baldwin, and went to a Don Henley concert we had for our best customers.

There has been one discernible change, and that is - I saw it this morning when I was working out in the gym here. The gym was packed.

That's the good news. The change is that everyone was watching CNBC and Bloomberg.

Usually there are a few other channels on all the TV monitors. But they were almost exclusively financial.

And even the nonfinancial ones they had the Dow in the corner of the Weather Channel and just about everywhere else. So honestly, we've been looking at this very carefully.

We've seen zero impact to our call center. We've had no change in our cancellation activity at all.

We're having a very strong August in terms of occupancy. Great weekend trends.

And I know it's important to you, but in the real world, living, watching people come to Las Vegas here, there's been no change at all.

Okay. Very helpful.

Appreciate it.

I have a question for Grant, since we've already woken him up here. As you look at July, your share had a little bit of a setback in Macau from 11% roughly to about 8% roughly.

I'm wondering maybe what you think the drivers of that were. Was it a delayed impact from the Galaxy opening?

And what level of share do you think might be sustainable going forward? And then part two to the question, your margins came up quite a bit, and are getting stronger in Macau, but they're still fairly low for the market, and in the past you've said you can ramp those higher.

What's the potential for margins in Macau?

For the first question, July was really a pure hold issue. Volumes actually were quite strong, and we were pacing the market growth.

And by foot traffic and hotel occupancy we're trending upwards. And in terms of the margin issue, I think if you look on a unitized basis, by revenue stream, our margins are actually already getting into the zone.

There are some unique characteristics between the different operators that create different trends. So yes, we're obviously very focused on moving those margins up.

At this point in time, I'm not going to commit myself absolutely to where they will sit, but as you're aware, we've continued to look for productivity and performance improvements. In terms of sustainable share, with the opening of the Galaxy, our fair share, the whole market has come down to about 8 point something percent.

But we still see ourselves the opportunity to rise above that. And we're still looking at the double-digit opportunity there.

Wondering if you could just share with us what your cash ADR was in the quarter, and what that change was year over year.

All right. We're looking for it.

Give us another question while we find it, okay.

Sure. Next one is just Bobby, at Aria, if you back out the benefit of holds, the property was just lower than what we were looking for in the run rate that we've been expecting.

So just wondering can you just give us some color specifically about what happened in the quarter and how we should think over the rest of the year at that property?

Well, the weakest component, of course, is the entertainment policy with the show, and that's something that the entire company's addressing, with Cirque du Soleil and our partners at TKX, the people that own the right to Elvis. Other than the weakness in the show, we actually had pretty reasonable performance in the quarter.

The whole percentage moves around, and we were the beneficiary of an $18 million hold. We think that Aria should have done a little bit better in the quarter, but we were still happy with the progress year to date, and comparing to, of course, 2010.

I can't cite any particular weakness other than the entertainment. Slots and hotel both were up nicely.

And so were the food and beverage.

Okay. So for the show, I guess there's just lots of aspects to that.

It's just the actual ticket sales, the traffic that it brings in. Is that what you're alluding to?

Yes. The show's only about half occupied, and we can do a lot better than that.

We're going to have to make some modifications to the show. And those are in the works.

But a good strong show like an "O" show, or a "Love" show should contribute as much as $40-50 million in EBITDA, and we have virtually no contribution at Aria since that show opened. We lose a little money directly with the show, but we lose even more money because we only get about half as much traffic as we should get with the Elvis show.

So that's $10 million a quarter, and Jim and I and others, and Mr. MacBeth, will work with Cirque du Soleil to improve that.

And then can you just tell us where at that property - because you said slots are okay - where you are in terms of win per slot per day at Aria maybe versus Bellagio?

In just a moment. If you have your answer, Jim, I'll…

We're going to have to get a separate analyst for you, Felicia.

That would be helpful. [laughter]

We're trying to dig out the cash ADR. We don't have it right in front of us right now.

Do you have the win per unit per day at Aria?

That's up quite a bit. They're going to get it right now, but it was up pretty dramatically.

Okay. If I can get Grant for a second if I may?

Hi Grant. I'm just wondering if you can talk a little bit about what you're seeing competitively on the VIP side.

As we all know, a major competitor is trying to bolster their presence on the VIP part of the market, and I'm just wondering if you've heard anything from your major junkets that might indicate that there's more attractive deals to be had on Cotai.

No, I think the general strength of the market has continued. There's still, obviously, a lot of talk from most of the operators of additional openings.

We also have additional capacity coming on board with one of our principal operators. The key issue is liquidity still seems to be strong.

There seems to be certainly enough business for all of us to achieve the sorts of outcomes we've been looking at and if you look at the market growth, July, that would tend to bear out. There's always cost pressures.

Junket operators are always looking for opportunities, but I think generally the market is pretty stable in terms of that.

That's great to hear.

All right. We have your other numbers, Felicia.

You want those?

I would love them.

Win per unit in slots at Aria is up 9.4%. It's $206 versus $188 a year ago.

And the comp rate was flat year over year, so all the ADR increase we got was on cash.

Fantastic. Thank you.

A couple questions. One, you talked about a third quarter, 300 basis point increase in the mix towards convention.

What has the premium been in convention versus the rest of your segments. I know you talked about 10% in aggregate for guidance, if you will, in RevPAR, but I'm just curious what that premium is.

And then I have a followup.

Well, as you know, the third quarter is the smallest quarter of the year from a convention mix perspective. I think last year we were like 9% or something like that, convention mix?

This year we were 12.5-13%. And the delta is, what you're doing is you're replacing the leisure customer with the convention customer.

So that's the best delta in rate relative to the whole mix. And it's been running on average, I think it was about $40-60 depending on the month.

That's $40-60 in rate premium for those comparatively for that segment, right?

That's right. Because it's coming all out of the leisure segment.

The FIT segment's up, casino's pretty flat. So when we can drive a lot of casino mix in the third quarter, which we typically do not do, it's coming out of the leisure segment in the third quarter.

And then the followup, just back to M life for a second. And it's probably too early, but maybe you just can help us generally.

7% growth in slot revenue in Vegas. I'm not sure what your hold was there, but assuming that part of your gaming business was normal, how much of that 7% can you attribute to M life?

We don’t know, obviously, the June numbers for the Strip yet, but I suspect that that's better than the Strip.

Well, a few things on M life in the quarter. Our database, active players, people that have been activated in our database, went up 12% versus before we launched M life.

So year over year we're up 12%. The average number of trips per year has increased 4% on those customers that I'm talking about.

We've seen quite a bit of tier migration. As you know, we have a tiered program finally, and that's working.

We were up double-digits in growth of people moving up the tiers. And that has had a particular impact on slot handle and win.

In the second quarter alone, we added 500,000 new customers to M life. And so we're up in total enrollment this year by about 1.5 million.

And in terms of the average trips being up, we're seeing more consistency in the nongaming spend as well. So M life is certainly working.

It's just early days still. And I think once we can turn on the nongaming components of that, which we will in the regionals next month and here in October, that's going to have a bigger impact.

One other thing I wanted to mention, we're talking about conventions and the mix, is in the Mirage, which has been around for a while, in terms of looking at booking trends, it had its biggest booking month in three years in the month of July. So in terms of booking new business, getting back to an earlier question, we're seeing booking trends, if anything, have not fallen, certainly not in July, not here in August.

But we're seeing it accelerate in some of our properties.

Could you guys talk a little bit about maybe how the volatility in the market has altered your capital raising plans at all? I know you guys had talked previously about having enough liquidity through 2012, and also maybe how the cash that you have in Macau and the free cash flow that you're going to generate going forward maybe kind of fits into that equation?

Well, I think we would have to be pleased with the progress we made when we made it. We haven't anticipated being in the capital markets this year.

Certainly it seems highly unlikely now given the disruption of value that we've seen in the last few weeks, but we never envisioned being in the markets anyway. I think Dan's going to be working on the bank side, which he alluded to, but in terms of the debt or equity markets, I don't think you'll see anything, pretty confidently, nothing from us.

We don't have to be. We mentioned that last quarter, and we certainly don’t expect to be.

From the standpoint of cash, Grant and the team have done such a wonderful job in Macau. Dan mentioned we've already brought back $190 million of cash from a very underleveraged joint venture, which we now own 51% of.

That certainly has a future opportunity for us from a capital raise standpoint should we choose to. From the standpoint of looking forward, our job here is to continue to grow our property cash flows, which as I said, we believe will be up all year.

We have a defined capital expenditure program, and we know what our interest is. So we'll be generating free cash.

Combine that with what we're doing out of Macau, and the fact that we have quite a bit of cash in New Jersey, which we will get when we ultimately sell our interest in Borgata. We have many tools at our disposal to continue to deleverage, which is a goal.

As Dan said, now that we consolidate Macau, our leverage at the end of the quarter was eight times. That's far lower than it was only a couple years ago.

And our goal is to get that down under six times over the next couple of years, under five times over the next three or four years, as we continue to deleverage the company.

Just to drill down a little bit further in the booking pace, you mentioned that it was pretty strong still for July, and so far in August. Does that also apply to the booking pace as you look out into 2012?

It does, but obviously it's a lot less information when we go out that far.

If we go out to 2012, we're focused on the convention calendar more. We go out about 4 to 5 months on the whole retail convention/casino.

So we have a much better idea of total pace for those segments 4 to 5 months out.

So for 2012, just drilling into the convention piece of it, how fully booked are you relative to your expectations on the convention piece for 2012?

Well, we're ahead of this year, that's for sure, where we were, and at Mandalay Bay, I think that's their big convention…

The first four months is virtually sold out, and [inaudible] doesn't have any space, more or less, to really book any large piece of business at Mandalay. So our goal, as it is every year, is by the time we get into fall, the October-November time period, is to have about 80% of our convention room nights on the books going into the following year.

And we feel pretty good right now that we're going to achieve, maybe even exceed that goal. I think Aria is even pacing ahead of that in terms of 2012, this early in the game.

And our convention folks are pretty excited about the way '13 and '14 are actually shaping up. So there's many more conversations today with the meeting planners on multiyear contracts, and that's pretty encouraging as you look out over the next couple of years.

Bobby, what do you see over at…

We actually have 68% of the rooms booked for 2012, which is, as Dan pointed out, ahead of the pace we would normally expect. And much better than last year.

And the quality is improving dramatically in terms of types of shows. When you look at 18 months ago, the books were wide open, and we were just basically penciling anyone and everyone in.

The quality of events are improving, and the spend around those events is getting better.

Two questions on Macau. First, you talked about on Cotai that you're doing design work and permitting.

I guess what's your timeframe in terms of being ready to break ground if you did get approval tomorrow. I'm just trying to get a sense of the timing and what are really the gating issues here.

The gating issue is the government from that standpoint. We are prepared as soon as we get approval, which we expect, to start moving dirt immediately, and clearing the site.

And so then, in theory, what would your opening date be if you got approval tomorrow?

Grant, it hasn't changed since our IPO road show. We said it would take about three years to build it, right?

Correct.

So it will be three years from whenever that approval comes. Okay.

And then also I don't know if you've really said much more, certainly not on this call, on what kind of dividend payout may be likely from there now that it's consolidated. Just kind of what your thoughts are on a dividend from MGM China, back to you.

Well, we haven’t said. We've been opportunistic in the past on that.

The board would have to opine on that. The next board meeting is August 19, so I'm sure that will be a topic of discussion.

But we haven't made that determination at this point.

Is there anything sort of philosophically that you can share?

Well, philosophically, we have an underleveraged asset today that's generating great return, but we want to grow that company nicely in Macau, and Taiwan too should that be a possibility. So I would say that there'll be an opportunity for both dividends to shareholders and growing in Macau, and I think that the future holds, for both of them.

But in terms of whether we're going to do periodic distributions or quarterly distributions, we're not prepared to discuss it at this time. We need to discuss that with our board.

A couple things. Jim, [inaudible] I see that you made a little bit of money this quarter.

2012, with hotels starting to open up, what can we see '12 and '13 as far as the acceleration of that income stream?

Well, in the management side, the ramp up begins, really, when we open up in Sanya, and we'll have that all for next year. And then moving into another hotel, we'll have at least one, maybe two other hotels next year.

So it doesn't become substantial until we get into 2013 and 2014. Then if you're referring to the fees we're taking from MGM China, that's a different calculation.

That's part of the China prospectus. But in general we expect the whole enterprise to be generating north of $50 million a year within the next few years getting into the $100 million range five plus years out.

And the leased residential, can you divide that up, Bobby, around which buildings you've leased out and what you have left that are not being used right now?

I have the number here. Tell me if this is right, Bobby.

I think Mandarin Oriental there are 225 units there. We sold 62 of them, and we've leased 98 of them.

So we have 65 left in the inventory. Over at [inaudible] we have what, 669 units?

That's the number you have. We've sold 225 of those, leased 241 of those, which means we have 202 remaining.

And of course as you know, we're fully opening Vdara as a hotel, and we had a good quarter out of Vdara right there.

And then the last thing, Atlantic City. You just got that extension.

You have people in there looking at this point? Or is kind of nothing going on given the economy and now you have extra time?

Well, we actually have been talking pretty consistently with a couple groups. This obviously changes the dynamic of the conversation a little bit.

Gives us more time. Puts us in a stronger position than we were, say, a couple months ago.

We'll see how we do. I think we'll do pretty well there.

Well, I appreciate you taking the time today given what's going on in the broader markets. We're pleased with how we did, but we know we've got more work to do here, and we look forward to answering any questions you may have.

And thank you for participating.