\nStatement of Income Data
\nGross revenues………. $ 824,450 $ 861,687 $ 808,556 $ 1,451,952 $ 3,393,252 $ 1,110,563 $ 2,326,925
\n Less: Promotional
\n allowances………… (56,249) (63,733) (66,219) (112,560) (286,343) (83,768) (206,477)
\n ———- ———- ———- ———– ———– ———– ———–
\nNet revenues………… 768,201 797,954 742,337 1,339,392 3,106,909 1,026,795 2,120,448
\n Operating expenses….. (571,743) (575,134) (600,502) (1,044,343) (2,403,885) (782,521) (1,645,348)
\n Master plan asset
\n dispositions………. (49,401) (28,566) — — — — —
\n Preopening and other… (7,868) — — (71,496) (5,624) (2,199) (1,980)
\n Restructuring costs…. — — — — (23,520) (23,520) —
\n Write-downs and
\n impairments……….. — — — — (102,225) (102,225) —
\n Corporate expense…… (9,895) (3,284) (10,261) (13,685) (33,939) (12,686) (21,199)
\n ———- ———- ———- ———– ———– ———– ———–
\nOperating income…….. 129,294 190,970 131,574 209,868 537,716 103,644 451,921
\n Interest income…….. 4,247 1,268 12,997 2,142 12,964 7,725 3,780
\n Interest expense, net
\n of amounts
\n capitalized……….. (33,778) (1,242) (24,613) (59,853) (272,856) (69,460) (190,012)
\n Interest expense from
\n unconsolidated
\n affiliate…………. — (9,891) (8,376) (1,058) (2,043) (273) (1,510)
\n Other, net…………. (612) (804) (2,054) (946) (741) (512) (1,471)
\n ———- ———- ———- ———– ———– ———– ———–
\nIncome before income
\n taxes, extraordinary
\n item and cumulative
\n effect of change in
\n accounting principle… 99,151 180,301 109,528 150,153 275,040 41,124 262,708
\nProvision for income
\n taxes……………… (24,634) (65,045) (40,580) (55,029) (108,880) (15,080) (101,450)
\n ———- ———- ———- ———– ———– ———– ———–
\nIncome before
\n extraordinary item and
\n cumulative effect of
\n change in accounting
\n principle………….. $ 74,517 $ 115,256 $ 68,948 $ 95,124 $ 166,160 $ 26,044 $ 161,258
\n ========== ========== ========== =========== =========== =========== ===========
\nNet income………….. $ 43,706 $ 111,018 $ 68,948 $ 86,058 $ 160,744 $ 25,311 $ 160,480
\n ========== ========== ========== =========== =========== =========== ===========
\nDiluted income per share
\n before extraordinary
\n item and cumulative
\n effect of change in
\n accounting principle… $ 0.68 $ 0.98 $ 0.61 $ 0.80 $ 1.13 $ 0.20 $ 0.99
\nCash dividends per
\n common share……….. $ — $ — $ — $ — $ — $ 0.10 $ —
\nOther Financial Data
\nEBITDA(1)…………… $ 258,781 $ 287,064 $ 218,117 $ 421,659 $ 996,205 $ 343,794 $ 668,437
\nEBITDA Margin……….. 33.7% 36.0% 29.4% 31.5% 32.1% 33.5% 31.5%
\nCash flows from
\n operating activities… 245,151 184,012 171,680 289,877 817,558 284,932 449,403
\nCash flows from
\n investing activities… (120,815) (201,778) (395,484) (386,693) (5,556,692) (5,434,402) (138,805)
\nCash flows from
\n financial activities… (172,941) (9,040) 271,154 136,382 4,845,580 5,239,336 (323,700)
\nDepreciation and
\n amortization……….. 62,323 64,244 76,282 126,610 293,181 99,520 193,337
\nCapital expenditures…. 84,775 227,756 361,942 375,260 336,499 125,068 144,013
\nRatio of earnings to
\n fixed charges(2)……. 2.78x 10.11x 2.94x 2.73x 1.50x 1.30x 1.93x
\nBalance Sheet Data (end
\n of period)
\nCash and cash
\n equivalents………… $ 61,412 $ 34,606 $ 81,956 $ 121,522 $ 227,968 $ 211,388 $ 214,866
\nTotal assets………… 1,279,180 1,377,102 1,745,030 2,743,454 10,734,601 10,718,505 10,550,437
\nTotal debt(3)……….. 94,022 68,365 545,049 1,330,206 5,880,819 6,278,699 5,553,815
\nTotal stockholders’
\n equity…………….. 977,441 1,088,908 948,231 1,023,201 2,382,445 2,238,379 2,546,230
\nStockholders’ equity per
\n common share……….. $ 8.44 $ 9.39 $ 9.11 $ 8.98 $ 14.97 $ 14.11 $ 15.97
\n<\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n 18<\/p>\n
——–
\n(1) EBITDA consists of operating income plus depreciation and amortization,
\n one-time charges (which consist of master plan asset disposition,
\n preopening and other, restructuring costs and write-downs and impairments)
\n and corporate expense. EBITDA should not be construed as an alternative to
\n operating income, as an indicator of our operating performance, or as an
\n alternative to cash flows generated by operating, investing or financing
\n activities as an indicator of cash flows, or a measure of liquidity, or as
\n any other measure of performance determined in accordance with generally
\n accepted accounting principles. In addition, it should be noted that not
\n all gaming companies that report EBITDA calculate this measure in the same
\n manner as MGM MIRAGE, and therefore, our measure of EBITDA may not be
\n comparable to similarly titled measures used by other gaming companies.<\/p>\n
(2) For purposes of computing the ratio of earnings to fixed charges: (i)
\n “earnings” consists of income from continuing operations before income
\n taxes and fixed charges, adjusted to exclude capitalized interest, and (ii)
\n “fixed charges” consist of interest, whether expensed or capitalized,
\n amortization of debt discount and issuance costs and our proportionate
\n share of interest cost of 50%-owned joint ventures.<\/p>\n
(3) Includes current and long term portions of capitalized lease obligations
\n and long term debt.<\/p>\n
On October 30, 2001, we announced that our earnings before nonrecurring
\nexpenses for the quarter ended September 30, 2001 were $0.19 per share and that
\nwe had a net loss of $0.09 per share, which is substantially below the
\nconsensus estimate of $0.38 per share prior to the terrorist attacks of
\nSeptember 11, 2001. These results reflect a substantial decline in business
\nvolumes at our hotel and casino resorts immediately after the attacks. While
\nour business activity has gradually improved, it is not nearly back to pre-
\nattack levels. We have implemented numerous initiatives to improve revenues and
\nreduce costs to manage our business in the current environment. Our primary
\nobjective at this time is to increase customer volume so that we may bring back
\nas many of our displaced employees as quickly as possible.<\/p>\n
10. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS ABOUT
\n THE OPTIONS.<\/p>\n
A list of our directors and executive officers is attached to this offer to
\nexchange as Schedule A. As of November 5, 2001, our executive officers and non-
\nemployee directors (34 persons) as a group held options outstanding under the
\nnonqualified option plans to purchase a total of 8,978,076 shares of our common
\nstock. This represented approximately 51.8% of the shares subject to all
\noptions outstanding under the nonqualified option plans as of that date. Of
\nthose options, 5,466,538 are eligible to participate in this offer. Our
\nexecutive officers and directors have not informed us whether or not they
\nintend to participate in the offer and exchange their eligible options.<\/p>\n
Other than as set forth on Schedule A, which is incorporated herein by
\nreference, neither we, nor to the best of our knowledge, any of our directors,
\nexecutive officers or affiliates, have engaged in transactions involving the
\noptions during the 60 days prior to this offer to exchange.<\/p>\n
11. STATUS OF OPTIONS ACQUIRED BY US IN THE OFFER; ACCOUNTING CONSEQUENCES OF
\n THE OFFER.<\/p>\n
Many of our option holders hold options with exercise prices significantly
\nhigher than the current market price of our common stock. We believe it is in
\nour best interest to offer these option holders an opportunity to more
\neffectively participate in the potential growth in our stock price. We<\/p>\n
19<\/p>\n
could accomplish this goal by repricing certain existing options, which would
\nenable option holders to immediately receive replacement options with a lower
\nexercise price. However, the repriced options would be subject to variable
\naccounting, which could require us to record additional compensation expense
\neach quarter until the repriced options were exercised, cancelled or expired.<\/p>\n
We believe that we can accomplish our goal of providing option holders with
\nthe benefit of owning options that over time may have a greater potential to
\nincrease in value without MGM MIRAGE becoming subject to variable accounting
\nbecause:<\/p>\n
. We will not grant any replacement options until a day that is at least
\n six months and one day after the expiration date of the offer;<\/p>\n
. The exercise price of the replacement options will equal the fair market
\n value equal to the closing price of our common stock as reported on the
\n New York Stock Exchange on the grant date for the replacement options;<\/p>\n
. We will require any option holder who tenders eligible options in the
\n offer to tender all eligible options that he or she received after May
\n 11, 2001; and<\/p>\n
. We will not grant any other options to an option holder who tendered
\n eligible options in the offer until the replacement option grant date or
\n later.<\/p>\n
Eligible options we acquire in connection with the offer will be cancelled,
\nand the shares of common stock that may be purchased under those options
\ngranted under the 1997 Plan will be returned to the pool of shares available
\nfor grants of new options under the 1997 Plan without further stockholder
\naction, except as required by applicable law or the rules of the New York Stock
\nExchange or any other stock exchange or any securities quotation system on
\nwhich our common stock is then listed or quoted.<\/p>\n
12. LEGAL MATTERS; REGULATORY APPROVALS.<\/p>\n
We are not aware of any license or regulatory permit that appears to be
\nmaterial to our business that might be adversely affected by the offer, or of
\nany approval or other action by any government or regulatory authority or
\nagency that is required for the acquisition or ownership of the options as
\ndescribed in the offer. If any other approval or action should be required, we
\npresently intend to seek the approval or take the action. This could require us
\nto delay the expiration of the offer. We cannot assure you that we would be
\nable to obtain any required approval or take any other required action. Our
\nfailure to obtain any required approval or take any required action might
\nresult in harm to our business. Our obligation under the offer to accept
\nexchanged eligible options and to issue new options is subject to conditions,
\nincluding the conditions described in section 6.<\/p>\n
13. MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES.<\/p>\n
The following is a general summary of the material U.S. federal income tax
\nconsequences of the exchange of options under the offer. This discussion is
\nbased on the Internal Revenue Code, its legislative history, Treasury
\nRegulations and administrative and judicial interpretations as of the date of
\nthe offer, all of which may change, possibly on a retroactive basis. This
\nsummary does not discuss all of the tax consequences that may be relevant to
\nyou in light of your particular circumstances, nor is it intended to apply in
\nall respects to all categories of option holders. In addition, this discussion
\ndoes not address any aspect of foreign, state or local income taxation or any
\nother form of taxation that may be applicable to an option holder.<\/p>\n
20<\/p>\n
If you exchange outstanding nonqualified stock options for replacement
\noptions, we believe that the exchange will be treated as a non-taxable exchange
\nand that, therefore, you will not be required to recognize income for federal
\nincome tax purposes at the time of the exchange.<\/p>\n
At the date of grant of the replacement options, you will not be required to
\nrecognize additional income for federal income tax purposes. The grant of
\nreplacement options is not recognized as taxable income.<\/p>\n
Under current law, you will not realize taxable income upon the grant of a
\nnonqualified stock option. However, when you exercise the option, the
\ndifference between the exercise price of the option and the fair market value
\nof the shares subject to the option on the date of exercise will be treated as
\ntaxable compensation income to you, and you will be subject to withholding of
\nincome and employment taxes at that time. We will be entitled to a deduction
\nequal to the amount of compensation income taxable to you if we comply with
\napplicable tax reporting requirements.<\/p>\n
If you exchange shares in payment of part or all of the exercise price of a
\nnonqualified stock option, no gain or loss will be recognized with respect to
\nthe shares exchanged and you will be treated as receiving an equivalent number
\nof shares pursuant to the exercise of the option in a nontaxable exchange. The
\ntax basis of the shares exchanged will be treated as the substituted tax basis
\nfor an equivalent number of shares received, and the new shares will be treated
\nas having been held for the same holding period as the holding period that
\nexpired with respect to the transferred shares. The difference between the
\naggregate exercise price and the aggregate fair market value of the shares
\nreceived pursuant to the exercise of the option will be taxed as ordinary
\nincome, just as if you had paid the exercise price in cash.<\/p>\n
The subsequent sale of the shares acquired pursuant to the exercise of a
\nnonqualified stock option generally will give rise to capital gain or loss
\nequal to the difference between the sale price and the sum of the exercise
\nprice paid for the shares plus the ordinary income recognized with respect to
\nthe shares, and these capital gains or losses will be treated as long term
\ncapital gains or losses if you held the shares for more than one year following
\nexercise of the option.<\/p>\n
We recommend that you consult your own tax advisor with respect to the
\nfederal, state, local and foreign tax consequences of participating in the
\noffer.<\/p>\n
14. EXTENSION OF OFFER; TERMINATION; AMENDMENT.<\/p>\n
We may at any time and from time to time, extend the period of time during
\nwhich the offer is open and delay accepting any options surrendered or
\nexchanged by publicly announcing the extension and giving oral or written
\nnotice of the extension to the option holders.<\/p>\n
Prior to the expiration date, we may terminate or amend the offer and
\npostpone accepting and canceling any eligible options if any of the conditions
\nspecified in section 6 occur. In order to postpone accepting and canceling
\neligible options, we must publicly announce the postponement and give oral or
\nwritten notice of the postponement to the option holders. Our right to delay
\naccepting and canceling eligible options is limited by Rule 13e-4(f)(5) under
\nthe Securities Exchange Act, which requires that we must pay the consideration
\noffered or return the surrendered options promptly after we terminate or
\nwithdraw the offer.<\/p>\n
As long as we comply with any applicable laws, we may amend the offer in any
\nway, including decreasing or increasing the consideration offered in the offer
\nto option holders or by decreasing or increasing the number of eligible options
\nto be exchanged or surrendered in the offer.<\/p>\n
21<\/p>\n
We may amend the offer at any time by publicly announcing the amendment. If
\nwe extend the length of time during which the offer is open, the amendment
\nmust be issued no later than 9:00 a.m., Pacific Time, on the next business day
\nafter the last previously scheduled or announced expiration date. Any public
\nannouncement relating to the offer will be sent promptly to option holders in
\na manner reasonably designed to inform option holders of the change, for
\nexample, by issuing a press release.<\/p>\n
If we materially change the terms of the offer or the information about the
\noffer, or if we waive a material condition of the offer, we will extend the
\noffer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the
\nSecurities Exchange Act. Under these rules the minimum period an offer must
\nremain open following material changes in the terms of the offer or
\ninformation about the offer, other than a change in price or a change in
\npercentage of securities sought, will depend on the facts and circumstances.
\nIf we decide to take any of the following actions, we will publish notice of
\nthe action:<\/p>\n
. increase or decrease what we will give you in exchange for your options;<\/p>\n
. increase or decrease the number of options eligible to be exchanged in
\n the offer; or<\/p>\n
. change the terms and conditions of the replacement options in any
\n material respect.<\/p>\n
If the offer is scheduled to expire within ten business days from the date we
\nnotify you of such an increase or decrease, we will also extend the offer for
\na period of ten business days after the date the notice is published.<\/p>\n
15.FEES AND EXPENSES.<\/p>\n
We will not pay any fees or commissions to any broker, dealer or other
\nperson for asking employees and directors to exchange their options under this
\noffer.<\/p>\n
16. ADDITIONAL INFORMATION.<\/p>\n
This offer to exchange is a part of a Tender Offer Statement on Schedule TO
\nthat we have filed with the SEC. This offer to exchange does not contain all
\nof the information contained in the Schedule TO and the exhibits to the
\nSchedule TO. We recommend that you review the Schedule TO, including its
\nexhibits, and the following materials that we have filed with the SEC before
\nmaking a decision on whether to exchange your options:<\/p>\n
(a) our annual report on Form 10-K for our fiscal year ended December 31,
\n 2000, including the information incorporated by reference in the Form
\n 10-K from our definitive proxy statement for our 2001 annual meeting of
\n stockholders;<\/p>\n
(b) our quarterly report on Form 10-Q for our fiscal quarter ended June 30,
\n 2001;<\/p>\n
(c) our Current Reports on Form 8-K dated July 26, 2001, August 29, 2001,
\n October 1, 2001 and November 2, 2001; and<\/p>\n
(d) the description of our common stock included in our registration
\n statement on Form 8-A.<\/p>\n
The SEC file number for these filings is 0-16760. These filings, our other
\nannual, quarterly and current reports, our proxy statements and our other SEC
\nfilings may be examined, and copies may be obtained, at the SEC public
\nreference room at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.<\/p>\n
22<\/p>\n
You may obtain information on the operation of the public reference rooms
\nby calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to
\nthe public on the SEC’s Internet site at http:\/\/www.sec.gov. Our common stock
\nis listed on the New York Stock Exchange under the symbol “MGG,” and our SEC
\nfilings can be read at the offices of the New York Stock Exchange, Inc.,
\n20 Broad Street, New York, NY 10005.<\/p>\n
We will also provide without charge to each person to whom we deliver a
\ncopy of this offer to exchange, upon their written or oral request, a copy of
\nany or all of the documents to which we have referred you, other than exhibits
\nto these documents (unless the exhibits are specifically incorporated by
\nreference into the documents). Requests should be directed to:<\/p>\n
Scott Langsner
\n Senior Vice President
\n and Secretary
\n MGM MIRAGE
\n c\/o Bellagio
\n 3600 Las Vegas Blvd. SouthLas
\n Vegas, NV 89109<\/p>\n
or by telephoning him at (702) 693-8811 between the hours of 9:00 a.m. and
\n5:00 p.m., Las Vegas, Nevada local time.<\/p>\n
As you read the documents listed in section 16, you may find some
\ninconsistencies in information from one document to another. Should you find
\ninconsistencies between the documents, or between a document and this offer to
\nexchange, you should rely on the statements made in the most recent document.<\/p>\n
The information contained in this offer to exchange about MGM MIRAGE should
\nbe read together with the information contained in the documents to which we
\nhave referred you.<\/p>\n
17. FORWARD LOOKING STATEMENTS; MISCELLANEOUS.<\/p>\n
This offer to exchange includes “forward-looking statements” that are
\nsubject to risks and uncertainties. Forward-looking statements made in
\nconnection with this offer do not fall within the meaning of Section 27A of
\nthe Securities Act of 1933 and Section 21E of the Securities Exchange Act of
\n1934. In portions of this offer to exchange, the words “anticipates,”
\n“believes,” “estimates,” “seeks,” “expects,” “plans,” “intends” and similar
\nexpressions, as they relate to us or our management, are intended to identify
\nforward-looking statements. Although we believe that the expectations
\nreflected in such forward-looking statements are reasonable, and have based
\nthese expectations on our beliefs as well as assumptions we have made, such
\nexpectations may prove to be incorrect. Important factors that could cause
\nactual results to differ materially from such expectations are disclosed in
\nour Annual Report on Form 10-K for the fiscal year ended December 31, 2000, as
\nwell as the following factors:<\/p>\n
. development and construction activities;<\/p>\n
. dependence on existing management;<\/p>\n
. leverage and debt service, including sensitivity to fluctuations in
\n interest rates;<\/p>\n
. domestic or international economic conditions, including the impact of
\n recent terrorist activities and sensitivity to fluctuations in foreign
\n currencies;<\/p>\n
23<\/p>\n
. competition and changes in customer demand;<\/p>\n
. ability to achieve certain cost savings, assets sales and revenue
\n enhancements;<\/p>\n
. challenges imposed by the integration of Mirage Resorts, Incorporated’s
\n hotel\/casino properties into our operations;<\/p>\n
. changes or uncertainties in federal or state laws or the administration
\n of such laws;<\/p>\n
. changes or uncertainties in gaming laws or regulations, including
\n legalization of gaming in certain jurisdictions; and<\/p>\n
. any requirement to apply for licenses and approvals under applicable
\n laws, including gaming laws, on our part or on the part of our
\n suppliers.<\/p>\n
If at any time, we become aware of any jurisdiction where the making of this
\noffer violates the law, we will make a good faith effort to comply with the
\nlaw. If, we cannot comply with the law, the offer will not be made to, nor will
\nexchanges be accepted from or on behalf of, the option holders residing in that
\njurisdiction.<\/p>\n
Our board of directors recognizes that the decision to accept or reject this
\noffer is an individual one that should be based on a variety of factors and you
\nshould consult your personal advisors if you have questions about your
\nfinancial or tax situation. The information about this offer from us is limited
\nto this document, the related cover letter and summary of terms and the tender
\noffer statement on Schedule TO.<\/p>\n
November 13, 2001<\/p>\n
24<\/p>\n
SCHEDULE A<\/p>\n
INFORMATION ABOUT THE DIRECTORS AND
\n EXECUTIVE OFFICERS OF MGM MIRAGE<\/p>\n
The following table sets forth, as of November 8, 2001, the name, age and
\nposition of each of our directors and executive officers. Executive officers
\nare elected by and serve at the pleasure of the Board of Directors. We expect
\nto add one additional director to our Board in the first quarter of 2002. The
\naddress for each director and officer for purposes of the offer is c\/o
\nMGM MIRAGE, c\/o Bellagio, 3600 Las Vegas Blvd. South, Las Vegas, Nevada 89109.<\/p>\n
\n\n Name Age Position
\n —- — ——–
\n
\n J. Terrence Lanni…….. 59 Chairman and Chief Executive Officer
\n Daniel M. Wade……….. 49 Vice Chairman
\n John T. Redmond………. 43 President and Chief Executive Officer of MGM Grand
\n Resorts, LLC and Director
\n James J. Murren………. 40 President, Chief Financial Officer and Treasurer
\n and Director
\n Robert H. Baldwin…….. 51 President and Chief Executive Officer of Mirage Resorts,
\n Incorporated and Director
\n Gary N. Jacobs……….. 56 Executive Vice President–General Counsel and Director
\n James D. Aljian………. 69 Director
\n Fred Benninger……….. 84 Director
\n Terry Christensen…….. 60 Director
\n Glenn A. Cramer………. 79 Director
\n Willie D. Davis………. 67 Director
\n Alexander M. Haig, Jr. .. 76 Director
\n Kirk Kerkorian ………. 83 Director
\n George J. Mason………. 70 Director
\n Ronald M. Popeil……… 66 Director
\n Walter M. Sharp………. 85 Director
\n Daniel B. Wayson……… 48 Director
\n Melvin B. Wolzinger…… 81 Director
\n Alex Yemenidjian……… 45 Director
\n Jerome B. York……….. 63 Director
\n William J. Hornbuckle…. 44 Executive Vice President–Marketing
\n Alan Feldman…………. 43 Senior Vice President–Public Affairs
\n Scott Langsner……….. 48 Senior Vice President and Secretary
\n Cynthia Kiser Murphey…. 44 Senior Vice President–Human Resources
\n Glenn D. Bonner………. 50 Vice President–Chief Information Officer
\n Daniel J. D’Arrigo……. 33 Vice President–Finance
\n Kyle Edwards…………. 49 Vice President–Security
\n James H. Fox…………. 42 Vice President–Internal Audit
\n Anthony Gladney………. 37 Vice President–Corporate Diversity
\n Richard L. Jones……… 48 Vice President–Corporate Purchasing
\n Punam Mathur…………. 41 Vice President–Community Affairs
\n Robert C. Selwood…….. 46 Vice President–Accounting
\n Betty M. Wilson………. 54 Vice President–Taxes
\n Bryan L. Wright………. 38 Vice President–Assistant General Counsel
\n<\/s><\/c><\/c><\/caption>\n<\/table>\n A-1<\/p>\n
Mr. Lanni has served as Chairman of MGM MIRAGE since July 1995. He served as
\nChief Executive Officer of MGM MIRAGE from June 1995 to December 1999, and
\nsince March 2001.<\/p>\n
Mr. Wade has served as Vice Chairman of MGM MIRAGE since March 2001 and as a
\ndirector since May 1999. Mr. Wade stepped down from his day-to-day
\nresponsibilities at the end of October 2001, but continues as a director and
\nVice Chairman. He served as Co-Chief Executive Officer from December 1999 to
\nMarch 2001. He served as Chief Operating Officer from April 1999 to December
\n1999, and Executive Vice President from October 1998 to April 1999. Prior
\nthereto, he served as President and Chief Operating Officer of MGM Grand Hotel,
\nInc., having served in various other senior capacities with MGM Grand Hotel,
\nInc. since January 1990.<\/p>\n
Mr. Redmond has served as President and Chief Executive Officer of MGM Grand
\nResorts, LLC since March 2001. He has served as a director of MGM MIRAGE since
\nDecember 1999. He served as Co-Chief Executive Officer of MGM MIRAGE from
\nDecember 1999 to March 2001. He served as President and Chief Operating Officer
\nof Primadonna Resorts from March 1999 to December 1999. He served as Vice
\nChairman of MGM Grand Detroit, LLC from April 1998 to February 2000, and as its
\nChairman since February 2000. He served as Senior Vice President of MGM Grand
\nDevelopment, Inc. from August 1996 to September 1998. Prior thereto, he was
\nSenior Vice President and Chief Financial Officer of Caesars World, Inc.’s
\nCaesars Palace and Desert Inn hotel-casinos and served in various other senior
\noperational and development positions with Caesars World, Inc.<\/p>\n
Mr. Murren has served as President of MGM MIRAGE since December 1999, as
\nChief Financial Officer since January 1998 and as Treasurer since October 2001.
\nHe has served as a director of MGM MIRAGE since January 1998. He served as
\nExecutive Vice President from January 1998 to December 1999. Prior thereto, he
\nwas Managing Director and Co-Director of Research for Deutsche Morgan Grenfell,
\nhaving served that firm in various other capacities since 1984.<\/p>\n
Mr. Baldwin has served as a director of MGM MIRAGE and as President and
\nChief Executive Officer of our subsidiary Mirage Resorts, Incorporated (“Mirage
\nResorts”) since June 2000. He served as Chief Financial Officer and Treasurer
\nof Mirage Resorts from September 1999 to June 2000. He has been President and
\nChief Executive Officer of Bellagio, LLC or its predecessor since June 1996. He
\nserved as President and Chief Executive Officer of The Mirage Casino-Hotel from
\nAugust 1987 to April 1997.<\/p>\n
Mr. Jacobs has served as a director and as Executive Vice President–General
\nCounsel of MGM MIRAGE since June 2000. Prior thereto, he was a partner with the
\nlaw firm of Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP
\nsince 1988 and is currently of counsel to that firm. He is also a director of
\nThe InterGroup Corporation.<\/p>\n
Mr. Aljian has been an Executive of Tracinda since October 1987. He has
\nserved as a director of MGM MIRAGE since 1988. He was a director of Chrysler
\nCorporation (“Chrysler”) from February 1996 to November 1998, and member of the
\nShareholder’s Committee of DaimlerChrylsler Corporation from November 1998 to
\nDecember 2000. He has been a director of Metro-Goldwyn-Mayer Inc. since October
\n1996, of which Tracinda owns a majority of the outstanding shares of common
\nstock.<\/p>\n
Mr. Benninger has served as a director of MGM MIRAGE since 1986. He served
\nas Vice Chairman of the Board from April 1995 to March 1998, Chairman of the
\nBoard from August 1987 to April 1995, President from August 1987 to March 1990,
\nand Chief Executive Officer from August 1987 to January 1991.<\/p>\n
A-2<\/p>\n
Mr. Christensen has served as a director of MGM MIRAGE since 1987. He has
\nbeen a partner of the law firm Christensen, Miller, Fink, Jacobs, Glaser, Weil
\n& Shapiro, LLP since May 1988. He is also a director of GIANT GROUP, LTD. and
\nCheckers Drive-In Restaurants, Inc.<\/p>\n
Mr. Cramer has served as a director of MGM MIRAGE since 1992. He was a
\ndirector of Transamerica Corporation from 1968 to April 1994, and Chairman of
\nthe Executive Committee of Transamerica Airlines from 1983 to April 1994.<\/p>\n
Mr. Davis has served as a director of MGM MIRAGE since 1989. He has been the
\nPresident and a director of All-Pro Broadcasting, Inc., an AM and FM radio
\nbroadcasting company, for more than the past five years. He is currently a
\ndirector of Metro-Goldwyn-Mayer Inc., Sara Lee Corporation, K-Mart Corporation,
\nJohnson Controls, Inc., Alliance Bank, WICOR, Inc., Dow Chemical Company,
\nCheckers Drive-In Restaurants, Inc., Strong Fund and Bassett Furniture
\nIndustries, Incorporated.<\/p>\n
Mr. Haig has served as a director of MGM MIRAGE since 1990. He has been the
\nChairman of Worldwide Associates, Inc., an international business advisory
\nfirm, for more than the past five years. He is currently the host of “World
\nBusiness Review,” a weekly television program and a director of Metro-Goldwyn-
\nMayer Inc., CompuServ Interactive Services Inc. and Interneuron
\nPharmaceuticals, Inc. He has been a consultant to the Company since 1990.<\/p>\n
Mr. Kerkorian has served as a director of MGM MIRAGE since 1986. He is the
\nChief Executive Officer, President and sole director and stockholder of
\nTracinda. He has also been a director of Metro-Goldwyn-Mayer Inc. since October
\n1996.<\/p>\n
Mr. Mason has served as a director of MGM MIRAGE since June 2000. He is a
\nSenior Managing Director of Bear, Stearns & Co. Inc., Los Angeles, California,
\nan investment banking and brokerage firm, and has been employed by that firm
\nsince 1973. He was a director of Mirage Resorts from 1973 to May 31, 2000.<\/p>\n
Mr. Popeil has served as a director of MGM MIRAGE since June 2000. He has
\nbeen the Chief Executive Officer of RONCO, Incorporated, the principal business
\nof which is inventing and marketing consumer products, since co-founding that
\ncompany in May 1984. He was a director of Mirage Resorts from 1979 to May 31,
\n2000.<\/p>\n
Mr. Sharp has served as a director of MGM MIRAGE since 1986. He has been the
\nPresident of Walter M. Sharp Company, a financial consulting company, for more
\nthan the past five years and was a consultant to Tracinda through April 1997.<\/p>\n
Mr. Wayson has served as a director of MGM MIRAGE since June 2000. He has
\nbeen a principal of Wayson Properties, Incorporated, a real estate development
\nand holding company, for more than the past five years, as well as a principal
\nin other real estate and business ventures. He was also the President and Chief
\nExecutive Officer of a former Mirage Resorts New Jersey gaming subsidiary from
\nDecember 1984 through February 1987 and a director of Mirage Resorts from 1987
\nto May 31, 2000.<\/p>\n
Mr. Wolzinger has served as a director of MGM MIRAGE since June 2000. He has
\nbeen a general partner in W.W. Investment Co., a real estate holding company in
\nLas Vegas, Nevada, for more than the past five years. He has been a principal
\nowner of various restaurants and casino gaming establishments in Las Vegas for
\nmany years. He was a director of Mirage Resorts from 1973 to May 31, 2000. Mr.
\nWolzinger has also been a director of Colonial Bank, Inc. since June 1999.<\/p>\n
A-3<\/p>\n
Mr. Yemenidjian has served as a director of MGM MIRAGE since 1989. He has
\nbeen the Chairman of the Board and Chief Executive Officer of Metro-Goldwyn-
\nMayer Inc. since April 1999 and a director of Metro-Goldwyn-Mayer Inc. since
\nNovember 1997. He was the President of MGM MIRAGE from July 1995 to December
\n1999, Chief Operating Officer from June 1995 to April 1999, Executive Vice
\nPresident from June 1992 to July 1995, Chief Financial Officer from May 1994 to
\nJanuary 1998, Chairman of the Executive Committee from January 1991 to June
\n1992, and President and Chief Operating Officer from March 1990 to January
\n1991. He was also an Executive of Tracinda from January 1990 to January 1997,
\nand from February 1999 to April 1999.<\/p>\n
Mr. York has served as a director of MGM MIRAGE since 1995. He has been the
\nChairman, President and Chief Executive Officer of Micro Warehouse, Inc., a
\nreseller of computer hardware, software and peripheral products, since January
\n2000. He was the Vice Chairman of Tracinda from September 1995 to October 1999
\nand a consultant to Tracinda from October 1999 to October 2000. He was also the
\nSenior Vice President and Chief Financial Officer of IBM Corporation from May
\n1993 to September 1995 and director of IBM Corporation from January 1995 to
\nSeptember 1995. Prior to that, he was the Executive Vice President–Finance and
\nChief Financial Officer of Chrysler from May 1990 to May 1993 and a director of
\nChrysler from April 1992 to May 1993. He has been a director of Metro-Goldwyn-
\nMayer Inc. since October 1996, and is a director of Apple Computer, Inc. and
\nNational Tech Team, Inc.<\/p>\n
Mr. Hornbuckle has served as Executive Vice President of MGM MIRAGE since
\nJuly 2001. He served as President and Chief Operating Officer of MGM Grand
\nHotel from October 1998 to July 2001. He served as Executive Vice President of
\nOperations of MGM Grand Hotel from April 1998 to October 1998. Prior thereto,
\nhe served as President and Chief Operating Officer of Planet Hollywood Hotel
\nand served in various other senior operational positions with Caesars World,
\nInc. and Treasure Island.<\/p>\n
Mr. Feldman has served as Senior Vice President–Public Affairs of MGM
\nMIRAGE since September 2001 and as Vice President–Public Affairs from June
\n2000. He served as Vice President of Public Affairs for Mirage Resorts from
\nMarch 1990 through May 2000.<\/p>\n
Mr. Langsner has served as Senior Vice President of MGM MIRAGE since
\nDecember 1999 and as Secretary since July 1987. He also served as Treasurer
\nfrom July 1987 until October 2001.<\/p>\n
Ms. Kiser Murphey has served as Senior Vice President–Human Resources of
\nMGM MIRAGE since November 2000. She served as Senior Vice President–Human
\nResources and Administration of MGM Grand Hotel, Inc. from November 1995
\nthrough October 2000.<\/p>\n
Mr. Bonner has served as Vice President–Chief Information Officer of MGM
\nMIRAGE since June 2000. He served as Chief Information Officer of Mirage
\nResorts from January 1997 through May 2000. Prior thereto, he was a Managing
\nConsultant with Microsoft Corporation from October 1994 through January 1997.<\/p>\n
Mr. D’Arrigo has served as Vice President–Finance of MGM MIRAGE since
\nDecember 2000. He served as Assistant Vice President from January 2000 through
\nDecember 2000. Prior thereto, he served as Director of Corporate Finance from
\nJanuary 1997 through January 2000 and as Manager of Corporate Finance from
\nOctober 1995 through January 1997.<\/p>\n
A-4<\/p>\n
Mr. Edwards has served as Vice President–Security of MGM MIRAGE since
\nDecember 1999. Prior thereto, he served as Deputy Chief of the Patrol Division
\nand Investigative Services Division of the Las Vegas Metropolitan Police
\nDepartment (“LVMPD”), having served in various other senior capacities with the
\nLVMPD since 1973.<\/p>\n
Mr. Fox has served as Vice President–Internal Audit of MGM MIRAGE since
\nNovember 1997. Prior thereto, he was a Manager with Arthur Andersen LLP, a
\npublic accounting firm, from February 1996 through November 1997.<\/p>\n
Mr. Gladney has served as Vice President–Corporate Diversity of MGM MIRAGE
\nsince August 2000. He served as Vice President of Community Affairs of MGM
\nGrand Hotel, Inc. from March 1999 through August 2000. Prior thereto, he served
\nas Executive Director of Community Affairs of MGM Grand Hotel, Inc. from
\nFebruary 1997 through March 1999, and as Director of Community Affairs of MGM
\nGrand Hotel, Inc. from January 1996 through February 1997.<\/p>\n
Mr. Jones has served as Vice President–Corporate Purchasing of MGM MIRAGE
\nsince August 2000. He served as Project Procurement Manager from January 1998
\nthrough August 2000. Prior thereto, he was Vice President–Corporate Purchasing
\nof Caesars World, Inc. from February 1995 through January 1998.<\/p>\n
Ms. Mathur has served as Vice President–Community Affairs of MGM MIRAGE
\nsince November 2000. She was Director of Community Affairs from June 2000
\nthrough October 2000. She served as Director of Community Affairs of Mirage
\nResorts from April 1996 through May 2000.<\/p>\n
Mr. Selwood has served as Vice President–Accounting of MGM MIRAGE since
\nDecember 2000. He served as Director of Corporate Finance of Mirage Resorts
\nfrom April 1993 through December 2000.<\/p>\n
Ms. Wilson has served as Vice President–Taxes of MGM MIRAGE since June
\n2000. She served as Vice President–Taxes of Caesars World, Inc. from December
\n1995 through March 2000.<\/p>\n
Mr. Wright has served as Vice President–Assistant General Counsel of MGM
\nMIRAGE since July 2001. Prior thereto, he served as Vice President and
\nAssistant General Counsel of Boyd Gaming Corporation from February 2000 and as
\nAssociate General Counsel of Boyd Gaming Corporation from September 1993 to
\nFebruary 2000.<\/p>\n
On August 6, 2001, we granted options to purchase a total of 487,500 shares
\nat an exercise price of $29.29 per share, including the following grants to
\nexecutive officers: William J. Hornbuckle, 100,000 shares; Alan Feldman, 10,000
\nshares; Daniel J. D’Arrigo, 5,000 shares; and Punam Mathur, 5,000 shares. On
\nSeptember 4, 2001, we granted options to purchase a total of 62,500 shares at
\nan exercise price of $29.02 per share, of which none were granted to executive
\nofficers or directors. None of our executive officers or directors have
\nexercised any of their options since August 8, 2001.<\/p>\n
A-5<\/p>\n
——————————————————————————–
\n——————————————————————————–<\/p>\n
MGM MIRAGE<\/p>\n
OFFER TO EXCHANGE<\/p>\n
NEW OPTIONS FOR OUTSTANDING OPTIONS<\/p>\n
HAVING AN EXERCISE PRICE OF AT LEAST $23.00 PER SHARE<\/p>\n
—————-<\/p>\n
Any questions or requests for assistance or additional copies of any
\n documents referred to in the offer to exchange may be directed to
\n Scott Langsner
\n telephone: (702) 693-8811.<\/p>\n
—————-<\/p>\n
November 13, 2001<\/p>\n
——————————————————————————–
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