Good morning and welcome to the MGM Mirage first quarter 2008 conference call. Joining the call from the company today are Terry Lanni, Chairman and Chief Executive Officer, Jim Murren, President and Chief Operating Officer, Bobby Baldwin, Chief Design and Construction officer of MGM Mirage and President and CEO of CityCenter, Dan D'Arrigo, Executive Vice President and Chief Executive Officer, Gary Jacobs, EVP, General Counsel and Secretary, and Aldo Manzini, Executive Vice President and Chief Administrative Officer. (Operator Instructions) Now I'll like to turn the call over to Mr. Dan D'Arrigo. Please go ahead, sir.

Thank you, Tina and good morning, everyone and welcome to the MGM Mirage first quarter Earnings Call. This call this morning is being broadcast live on the internet at www.mgmmirage.com, and at companyboardroom.com. A complete replay of the call will be available on the company's website. This morning we furnished to the SEC on Form 8-K a copy of the attached press release and in addition we posted supplemental significant detail related to our resort properties on the company's website. Before turning the call over just a quick Safe Harbor disclosure. Information we present on this call may contain forward-looking statements as defined by the SEC. Such forward-looking statements are protected by the Safe Harbor amendments of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could caution actual results to differ materially from estimates. Listeners should also refer to our disclosures about risks and uncertainties made in our filings with the SEC. Now I'd like to turn the call over to Terry Lanni for his introductory comments and some initial commentary on our results and development initiatives.

Thank you, Dan, and good morning, ladies and gentlemen. Let me first make some comments regarding our results in the first quarter and how we see the current environment. The first quarter was obviously challenging. It was clearly impacted by the economy. We did expect this and certainly had already discussed our experience in January and part of February during our last earnings call. We still reported solid results and cash flows at all of our resorts. We have been continually adjusting to the environment and ensuring that we really maximize the volume of guests in each of our resorts. And we continue to look for areas of revenue growth that through marketing and other initiatives, as well as areas for managing expenses as evidenced by our recent reduction in management positions. It's relatively difficult for us to forecast trends into the next few quarters, but so far in the second quarter we are seeing much of the same as it relates to customer volumes and our job is to manage within the context to maximize profitability in what will surely be a rather challenge alleging year. We clearly have not reached our potential in Detroit as the Detroit market is also been challenged. We have the best asset in the marketplace and will continue to seek opportunities to maximize our returns. Let me give you brief comments on the MGM Grand Macao results. MGM Grand Macao generated net revenues of approximately $298 million, and property EBITDA of $43 million. We are generally pleased with the resorts performance thus far, but clearly know that we have several areas to improve on going forward. We expect margins will improve at this joint venture as it grows in this dynamic marketplace and remain focused on improving results in all operating segments. As…

Thank you, Terry. Tina, can you make sure that everybody is in a listen-only mode. We got a little bit of feedback there. Thank you.

Yes, sir, one moment. All line are muted.

Thank you.

You're welcome.

I'd like to provide a short summary right now on the results for our first quarter. The full details were laid out in our earnings release this morning, as well as the supplemental data that we posted to our website earlier today. Our overall operating results this morning we reported diluted EPS from continuing operations for the first quarter of $0.40 per share compared to $0.55 per share in the prior year's quarter. The prior year quarter just to note was an all time company record for any first quarter in the company's history. So we had a pretty tough comp year-over-year. On the operating basis as Terry has mentioned, the economy has certainly impacted our business results here in the first quarter, as well as the closure of Monte Carlo, which negatively impacted our results and we incurred some additional depreciation expense with the newer larger MGM Grand Detroit resort. Net revenues decreased 2% to approximately $1.9 billion in the quarter. Our casino revenues decreased by 3% and our net non-casino revenues were 2% lower. Revenues were down in our Las Vegas resorts by roughly 5%, but excluding Monte Carlo in both periods our strip properties were down approximately 3% year-over-year. While we saw decreases this year again we are mindful of the fact that the 2007 first quarter was a record on most measures for the company. As outlined in the press release our property EBITDA was down approximately 12%. This property EBITDA was impacted by the lower RevPAR numbers in the quarter, lower results at our Mississippi properties and continued ramp up of our Detroit facility, which impacted our ability to leverage the additional gaming capacity and new hotel and dining amenities at that resort. Just a couple of quick comments on our Detroit facility. It's a…

Thank you, Dan. First I'll talk about the non-gaming results and then get into gaming. On the room side our revenue was down $30 million or 6% in the quarter but it excludes Monte Carlo, rooms revenue was actually down only 3% year-over-year on the strip. As noted our RevPAR, was down 4% in the quarter. Our average rate was $155 in the quarter versus $169 in the prior year. Occupancy rate on the strip resorts was 93% in the quarter. We started out much weaker than that in January. Our January occupancy was actually 88.5% but we improved throughout the first quarter. We are 94.6% in February, for example, 97.3% in March and those trends improved and continued into the second quarter. We expect that RevPAR will be down again in the second quarter but less so than in the first quarter. May is looking like a pretty solid month for us. On the conference business we noted in the last call that our conference business had softened in the first quarter. It was actually down 10% in Q1. The attrition rates were very high in January. They are 18% company-wide but they were 16% in February, 13% in March, the attrition rates continued to improve as we move into the second quarter. It looks as though the second quarter on the convention and conference side will be much better than the first quarter. It might be down in the single digits at most. We obviously also had less rooms available in the first quarter primarily related to the Monte Carlo fire and we will have more rooms on the books going into the second half of the year, we get more rooms back in line as a result of room remodels that will be completed [inaudible]. Our revenue…

Thank you, Jim. Good morning. As part of my comments I want to talk just a moment about Monte Carlo and its situation as you know we had a roof top fire that occurred in January 25, and this fire caused the complete closure for three weeks of the Monte Carlo facility. We reopened February 15 and since the reopening we've gradually added back more and more and more room inventory, as those rooms became available for occupancy. For the first quarter we lost 96,000 of room nights to rooms that were out of service and obviously that impacted our results. Beginning on the 15th of April, we'll have about 265 rooms out of service and then in mid-May we'll go down to 162 rooms that remain out of service, mostly suites in the top floor and they'll be out of service throughout the remainder of this year. We expect a total insurance claim as it results to this incident to be $85 million, about $49 million of business interruption and about $36 million in actual property damage. As relates to CityCenter, CityCenter we've been working of course on the overall cost of CityCenter as we work through our maximum price contracts with Perini Building Company. All the GMPs will be finalized by the ends of the third quarter and as relates to the overall cost of CityCenter it's consistent with what has been reported in the most recent Form 10-K. Total project costs are expected to be between $8.1 billion and $8.4 billion, excluding preopening expenses of about $200 million. As relates to the construction update, a few highlights: the central plant which is important to us oddly enough all of the customers never see it we can't do anything without it. We've actually fired up the central plant…

Thank you, Bobby. Just a couple of final comments and a little bit of guidance to help you with your financial models for the second quarter and we'll open up for questions. For the first quarter, we invested approximately $236 million in capital expenditures. The details are outlined in our earnings release but this is pretty consistent with our overall yearly guidance of approximately $1 billion that we had previously provided. Regards to our capital position for the quarter, we borrowed approximately $1.6 billion in net debt in the quarter. Most of this attributable to our share repurchase in the quarter. Remember we completed a joint tender offer with Dubai World at a cost of about $680 million for our share of 8.5 million shares. In addition, we repurchased an additional 7 million shares in the open market during the quarter at a total cost of $427 million. We have roughly about 2.6 million shares remaining under our existing share buyback program. As relates to our balance sheet in February, we repaid $180 million of senior notes using our availability under our credit facility and had minimal debt maturities over the next 12 months. At quarter end, we have approximately $1.9 billion available under our bank credit facility with roughly a 60% of our debt being fixed and 40% of our outstanding debt being floating as of the ends of the quarter. We are currently in the marketplace talking to our lead group of banks with regards to securing financing for CityCenter. We recently held a bank meeting in Dubai with our partners there and these leading institutions which was extremely well attended. The feedback has been very positive from this initial group of banks and we look forward to progressing this financing here in the second quarter. The project…

(Operator Instructions). Your first question comes from the line of Larry Klatzkin with Jefferies & Co.

Hey Guys.

Hi Larry.

Good cost cutting. A couple of questions is as far as the extra 14 acres in AC are you guys still working on partners for that, is that something we could see in the future next quarter or two?

All right. And then as far as international hotel business goes what is going on in the Dubai project and in China, any outlook into that?

Actually we have our people right now like Gamal Aziz. President of Hospitality is in Dubai and Abu Dhabi. We mentioned earlier in our comments that Abu Dhabi, it is a $3 billion first phase of the significant project on waterfront there, which has three hotel products, 10,000 seat arena, half million square feet of convention, half million square feet of retail and that we would expect to have finalized with an architect shortly and begin construction there, again that's no investment on our part, by the end of summer, probably before Labor Day we would expect construction to begin. But again, project, $3 billion, no investment on our part. In China we are continuing our project. We have the second ring road in the Dallas temple project. That is beginning construction moving along. We have other products that we are looking at right now and we will be discussing with our board shortly in that particular marketplace. We are in Dubai and looking at different opportunities in the future there for a major hotel product, again, not owned by us, designed development and managed. So it continues to move and we think it is going to be a very fruitful relationship. There are other parts of the world we are looking at, other parts of the Middle East and outside the United Arab Emirates as well as in Singapore and in other cities in China.

Excellent. Okay. As far as the Macau law changes, do you see that as a positive what they said?

I do not think they are law changes. I think it is basically just a change in the interpretation of what can be done. As you know in the original issuance of concessions and original subsequent sub-concessions you had the ability to reopen with additional concessions that could have been considered in 2009. The Chief Executive in the last couple of weeks has indicated that that is not going to happen. There's going to be a pause in that particular regard. So I think it is positive. I think the other concessionaires and sub- concessionaires have made similar statement. Right now it is our interpretation, because these comments were made in response to a question of the Chief Executive in his legislative conference in, which he met with legislators, which he indicated these factors, but we believe we have each of our items in the pipeline sufficiently in the pipeline the way we understand it. We will get further clarification when Gary Jacobs and I are in Macao at the very early part of June with expect to meet with the Chief Executive and get further clarification. But on balance I think those of us with concessions and sub concessions are quite pleased.

All right. And the last question, Dan, really for you, for you in Dubai funding CityCenter until you have a bank loan it is about 100 million a month each?

That is roughly about right. And I think for the full year CityCenter, for the full 2008 CityCenter was looking at about $2.5 billion of total construction cost for this year. But like I said, we are in the market talking to our lead bank's right now and the initial response has been pretty positive.

All right. As far as gaming revenues in the second quarter you gave room and such for second quarter but how is the gaming revenue look for April and May?

Well, we do not give them out month to month but I did say, Larry, that we are pleased with what's going on right now in the high-end and on balance it looks like the second quarter is a lot like the first on the year-over-year basis.

All right. Thank you, guys.

Thanks, Larry.

Your next question comes from the line of Felicia Hendrix with Lehman Brothers.

Hi, good morning, guys. Jim, you were talking about how the convention outlook is looking in the second quarter. I was wondering if you could give us your outlook on the third and fourth quarter.

Sure. It is getting a little harder to project out quarters because we have gotten a lot of convention that have been either cancelled very soon before they were actually going to occur or actually been booked in very short periods of time. So we are usually a little bit better on this but I will give you a sense of it. It looks like as I said the second quarter looks like it is going to be better than the first. And then it is kind of a tale of which property you're talking about. Bellagio looks like it is going to have a very solid year all year long on the conference convention side. Mandalay Bay is doing better every month. MGM Grand will be down particularly in the third quarter where they had some big business in the third quarter '07, which will not be able to recover from that. And Mirage will be down as well. And those are our major properties as relates to it. So on balance I would say the first quarter is what it is. Second quarter will be better. It is unclear exactly how the second half will turn out except directionally Bellagio and Mandalay should do well. MGM Grand looks like it will be weak versus a year ago in the third quarter. And Mirage looks softer as well in the second half versus the last year quarter.

Okay. And then just moving on to CityCenter, Bobby, you said that there were zero cancellations on the departs, but I was wondering if you can give us has there been any defaults, what the default statistics have been?

No, there have been no defaults at CityCenter.

Okay, great. And then as of March you gave an update I guess of the condos, 52% have been sold and the hotel condos, 42%. Can you bring us very up to date on that as of now?

I can not. As you know, the market has slowed down dramatically. It began to slow in December and for the first quarter we sold, how many units here?

First quarter we sold --

For the first quarter we sold $57 million worth of product or 56 units. And in April we sold $16 million, or $14 million. So the market has slowed down dramatically. The good news kind of bad news is that best we can tell based on our analysis we represented about 93% of the total Las Vegas sales for high rise condominium or condominium hotel products here. So the market is quiet although City Center still enjoys a great deal of success, it is quiet.

Okay. Are you seeing any kind of, I'm wondering if there is going to be a lag effect from the sales efforts you started in Dubai, have you seen any of that hitting your books yet?

We are going to, we are in the process of setting up a sales center over there as I mentioned and we are actually going to kick off a sales program in August. And our hope is to sell 100 units in our first launch over there and we are excited about that.

Okay, great. With CityCenter, I am wondering if you can give us any sense of timing? Dan, you were pretty positive on your conversations you're having with the banks but I was wondering if you could give us any sense of timing when this might all get wrapped up. I am wondering with the funding that you and Dubai World are putting into the JV now off your own balance sheet, do you get that repaid to you once the financing is complete at the JV level?

Well, as far as it relates to timing, Felicia we are looking at a time line of wrapping this up by this summer, by the end of the second quarter here and as it relates to the funding we are making right now, we will see how that negotiation goes with the banks. We may get some of those funds back. We might leave it in for more equity and drive better pricing in terms of the bank deal.

Okay. Just one last question. I am sorry, do you have more to add to your previous answer?

I'm sorry, Felicia, Jim, I was going to add couple of things but we were over there, Dan and I were both over there. The response was very strong. And I'm sure, I'm pretty sure that by the time we report the next quarter we will be able to tell you all about the deal itself, $3.5 billion deal. It won't be a matter in our view of getting the deal done. It will be a matter of pricing. And the pricing obviously will be wide what it would have been say six months ago but those of you who were around like we were when we did the Borgata deal for example back in ‘99 I guess then, the pricing will be inside of that and, of course, LIBOR is lower as an absolute number. So we are going to get a very solid deal done. It will be at I think very reasonable pricing. The demand is quite high. Not only because MGM has good credit but frankly at lot of our banks are welcoming the opportunity to develop a relationship with our partner Dubai World. And so it is a matter of differentiating ourselves a little bit which I think we are doing then will be completed the next couple of months.

Okay, great. And then just final question, on the fourth quarter had you given us the expectations that all the GMP contracts would be signed by this quarter so I was just wondering what has changed there? Bobby?

We have one outstanding item. Actually we have eight GMPs and we have actually received seven of them, one we are going to receive the pricing for GMP eight which is the podium for the casino hotel, one of the most complicated pieces of business at CityCenter. So that particular eighth GMP is, its due date is June 30 and it is going to take us about two months to work through all the detail. So we actually get it at the end of the second quarter but we are not going to execute it probably until the third quarter. And that's the eighth GMP. Most all other GMPs will be or will be executed in the second quarter but not the east and west podium of the Belle casino hotel. That particular piece of business is currently priced, just that one component, at $1.270 billion has many thousands of pages of details associated with us so that one is taking longer to work through.

Got it. Okay. Thanks a lot for your time.

Thank you.

Your next question comes from the line of Bill Lerner with Deutsche Bank.

Thanks, hi, guys. Two questions one, Jim, you mentioned you've identified about $75 million in I think cost saves. Could you just either color that in a little bit or give us a sense of the time frame and then I have a follow up, thanks.

Sure, Bill. Obviously, payroll reduction was one component of it and not the just head lines. We were obviously sorry that we have to do that. But that really was not even the majority component of the cost that we have been able to pull out of the existing expense structure. As I said earlier we really challenged everybody corporate and property wide to go through all of their P&L to look for ways in improving our cost structure, really changing the way we are doing business. We have a variety of energy projects, for example underway which will save tens of millions of dollars on an annualized basis and that's a great effort that's been done at the corporate level but also at the property level. We have dramatically reduced our consulting relationships and our travel and advertising expenses. We have reduced our inventory supply and inventories in general where they have been sitting in warehouses. We have improved our ability from an HR perspective to touch the customers more directly and reduce the layers of supervision and management in order to do that. We have been a little bit smarter on our special events and our casino comping and drilled into those type of expenses both on tee needs but also on our casino comps and that's why will you see our profitability and our margins actually holding up pretty well. And these experiences will drill into throughout 2008 and into 2009. So the number that we talk about is a large but growing number and it really reflects a change in how we are doing business to become more efficient. Payroll is obviously a component of it. There is not a company in our industry that has not laid off people regardless what have they say. And…

That is helpful. Thanks Jim. And then I just had a follow up. It strikes me that you guys get very little credit for this big pipeline of JV type deals where you are not using your own capital, you are contributing land or using your brand or management or construction expertise and maybe that's measured in hundreds of millions of dollars of cash flow going forward. How do you monetize that when you think about other fee businesses in lodging in the past that have traded at relatively big multiples? Is that how you're thinking about it?

Well, clearly that is a factor. When we sat down and worked with our board in determining that it seemed to us that we had great brands and the ability with the contacts that we had, our joint ventures with Mubadala frankly in Abu Dhabi and Dubai World encouraged us to do that and we do think that there's significant cash flows there and I know that Jim, when he was Chief Financial Officer, we used to always be very frustrated that the multiples with pure hotel companies enjoyed as compared to the gaming companies and at some point if that grows to a sufficient level, if that continued to be the factor we could certainly split the companies.

I would add that of course we had a record first quarter in '07 and if you strip out Monte Carlo as we said earlier our cash flows were only down 10%. As Terry said internally here we are still making a considerable amount of money on an annualized basis or in the quarter. The key for us is with the balance sheet that we have and the way we want to reinvest our business how we build our build on that growth. We are capital intensive business and we think we can outthink our competitors in that area. We have in the past and our cash flows and our existing casino resorts we believe will continue to increase over a period of many years. However, I layered on top of that is the growth of MGM Mirage hospitality, which starts out with zero and growing into we think over time a very large company, which will not be capital intensive generating a significant amount of development in fee income on a going forward basis and that of course is the type of income that gets the higher multiple in the marketplace. It is complementary to what we are doing. It is not distracting to what we are doing. And we think it will overall accelerate our growth and improve and diversify our earnings. And I would agree with you, I do not think we get and maybe we should not yet but we do not get a significant amount of emphasis on that business because it is currently small.

Thanks, guys.

Your next question comes from the line of Celeste Brown with Morgan Stanley.

Good morning. What were the CityCenter JV costs in that JV line for the quarter?

The expenses?

Yes.

Our share, roughly about $3 million to $4 million.

Can we expect a similar level throughout the year or should that ramp as you get closer?

It will ramp slightly this year and then it will be more, it will be higher level as we build out into next year closer to opening. So it will ramp off of these levels not too much this year but before next year.

Okay. And then Jim, as you think about your two newer properties MGM Macau and Detroit without sort of speculating as to where the revenues go in this environment, where do you think, what kind of upside could there be on EBITDA if you were operating them at the efficiency level you could expect maybe in a couple of quarters?

Well, I will make a general comment and maybe one specific on Detroit and I will bounce it over to Terry on Macau, maybe. But clearly you've been around awhile and you know that when we open up a property we open it up with over staffing our properties and spending a considerable amount of money on pre-opening as we position a property. We went into Detroit from an interim facility with limited food and beverage, no entertainment, no hotel, no convention business, and really a gaming operation; to a full scale integrated resort. And spent a lot of money making the right impression and that clearly has happened. You can see our market share has grown substantially on the gaming side but more importantly we believe the feedback in the customer reaction and response to the nongaming side at Detroit has been very high. We have been ever since we opened working to improve the efficiencies. That property will make considerably more money than it is right now as we finish that program. It will take about all year. On top of that of course the economy is very tough in the Midwest and tough in Michigan and tough in Detroit. You have to take that into account when you think about what we will make there. What we can control, which is to drive more business through the properties through our marketing efforts and to improve efficiencies you should expect Detroit to make more money sequentially throughout '08 as we do what we do whenever we open a property and improve the margins. I guess a similar story being Macau, Terry, but I will turn it over to you.

Great. In Macau if you take a look at the parameters there, we are roughly about 9% of the capacity represented in MGM Grand Macau property and frankly since opening we are running about just under 8% of market share. So we are below our capacity in market share. But, one, we have an absolutely fabulous facility there. It is getting rave reviews from people. Number two, if you really look at it there is three components to the business in Macau. And the first component is the area of VIP rooms. A significant part of it, lower margins obviously because of the partners that you have there. We are exceeding our expectations there and we consistently have done that. The other two components are the mass market and the area of slot machines. Frankly, we erred in this because we were very fixated in getting that building open. We were having difficulties with subcontractors because everyone else was trying to get buildings finished and we put a lot of focus on that. The assumptions erroneously from us were the determination because MGM is a known name because of our former sister company, the studios that people would flock there in the mass market and the slot area. Well, those people come from the four coastal provinces of China, 90% of the business by most estimates there and frankly those people may recognize the studio but they didn't recognize the fact that there was an MGM Grand hotel casino if will you in Macau. So we need to be much more aggressive and we developed and are beginning to develop programs to deal with that mass market where we are underperforming and the slots were underperforming and we have seen some movement there, a positive movement in that regard. You are able to advertise nongaming aspects in a judicious matter in the People's Republic of China, that's something we had failed to do and it is something we are now addressing. So I believe we have a great facility, great people there and the ability and the to bring more customers in and we need to address those two areas of mass market and slots.

Terry, how do you think about the commission pressures in that market? Do you feel like the property is at an appropriate level or do you think you need to be paying more?

Well, we have adjusted that as of May 1 and I'm not going to give all the details on it. Let our competitors find out on their own as to how that works but we have adjusted that to deal with the marketplace as I said even without that adjustment we were getting a more than our fair share of that business and we expect even to grow that business further. The real issue though is that you really want to get as much business as you can in the mass market in slots because that's where the margins are. When you have partners sharing in the other it is an important part of the business but I think sincerely we really have to grow the other two parts of the business. What we are doing in the room operations we are doing quite well and I think as I am convinced that we are doing that well and continue to improve on it but I want to see the other two parts of the business grow so that we can really get the high margin returns that we should get.

I think of that Terry, on that business, of course, we have known these junket operators for a long, long time. I think we have the best in the marketplace and we did adjust the structure as Terry said on May 1. We are clearly not leaving the market. We are anywhere but the most aggressive in that area. So we are leading with the relationship that we have with these operators and more importantly the facility and its location and not on price.

Thank you.

Ladies and gentlemen, we have reached the allotted time for question and answer session. I would now like to turn the call back over to Mr. D'Arrigo for closing remarks.

Well thank you, Tina, and thanks everyone for joining us. If there is any follow up questions please feel free to call my office and we will be around all day. Thank you very much.

Thank you. This concludes today's conference. You may now disconnect.