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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1998.



OR



[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from           to



Commission file number 0-16760



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MGM GRAND, INC.

(Exact name of registrant as specified in its charter)



<TABLE>

<S>                                                 <C>

DELAWARE                                     88-0215232

(State or other jurisdiction of                      (I.R.S. Employer

incorporation or organization)                      Identification No.)

</TABLE>



3799 Las Vegas Boulevard South Las Vegas, Nevada 89109

(Address of principal executive office) (Zip Code)



(702) 891-3333

(Registrant's telephone number, including area code)



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Securities registered pursuant to Section 12(b) of the Act:



<TABLE>

<CAPTION>

Name of each exchange

Title of each class                           on which registered

-------------------                          ---------------------

<S>                                             <C>

Common Stock, $.01 Par Value                    New York Stock Exchange

</TABLE>



Securities registered pursuant to Section 12(g) of the Act:



None



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Indicate by check mark whether the Registrant (1) has filed all reports

required to be filed by Section 13 or 15(d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the

Registrant was required to file such reports), and (2) has been subject to

such filing requirements for the past 90 days. Yes [X] No [_]



Indicate by check mark if disclosure of delinquent filers pursuant to Item

405 Regulation S-K ((S)229.405 of this chapter) is not contained herein, and

will not be contained, to the best of registrant's knowledge, in definitive

proxy or information statements incorporated by reference in Part III of this

Form 10-K or any amendment to this Form 10-K. [X]



The aggregate market value of Registrant's Common Stock held by non-

affiliates (based on the closing price on the New York Stock Exchange-

Composite Transactions on March 11, 1999) was approximately $929.3 million. As

of March 11, 1999, 61,758,829 shares of Registrant's Common Stock, $.01 par

value, were outstanding.



Portions of the Annual Report to Stockholders for the fiscal year ended

December 31, 1998 are incorporated by reference into Part II of this Form 10-

K. Portions of the Registrant's Proxy Statement dated March 31, 1999 are

incorporated by reference into Part III of this Form 10-K.



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PART I



Item 1. Business



Safe Harbor Provisions



The Private Securities Litigation Reform Act of 1995 provides a "safe

harbor" for forward-looking statements. Certain information included in this

Form 10-K contains statements that are forward-looking, such as statements

relating to plans for future expansion and other business development

activities, as well as other capital spending, financing sources, the effects

of regulation (including gaming and tax regulations) and competition. Such

forward-looking information involves important risks and uncertainties that

could significantly affect anticipated results in the future and, accordingly,

such results may differ from those expressed in any forward-looking statements

made by or on behalf of the MGM Grand, Inc. (the "Company"). These risks and

uncertainties include, but are not limited to, those relating to development

and construction activities, dependence on existing management, leverage and

debt service (including sensitivity to fluctuations in interest rates),

domestic or global economic conditions (including sensitivity to fluctuations

in foreign currencies), changes in federal or state tax laws or the

administration of such laws, changes in gaming laws or regulations (including

legalization of gaming in certain jurisdictions) and the requirement to apply

for licenses and approvals under applicable jurisdictional laws and

regulations (including gaming laws and regulations).



General



The Company was organized as a Delaware corporation on January 29, 1986.



Through its wholly-owned subsidiary, MGM Grand Hotel, Inc., the Company owns

and operates the MGM Grand Las Vegas, a hotel/casino entertainment complex

offering a full range of destination resort amenities. The resort is located

on approximately 116 acres at the northeast corner of Las Vegas Boulevard

South (the "Strip") and Tropicana Avenue, the "New Four Corners," in Las

Vegas, Nevada, across the street from New York-New York Hotel and Casino.



Through its wholly-owned subsidiary, MGM Grand Australia Pty Ltd., the

Company owns and operates the MGM Grand Australia, a hotel/casino resort in

Darwin, Australia. MGM Grand Australia is located on 18 acres of beachfront

property on the north central coast of Australia.



Through February 28, 1999, the Company and Primadonna Resorts, Inc.

("Primadonna Resorts") each owned 50% of New York-New York Hotel and Casino,

LLC. ("NYNY LLC"), which completed development of the $460 million

architecturally distinctive themed destination resort called New York-New York

Hotel and Casino ("NYNY") in December 1996. NYNY opened on January 3, 1997,

and is located on approximately 20 acres at the northwest corner of Tropicana

Avenue and the Strip, across from MGM Grand Las Vegas. On March 1, 1999, the

Company completed a merger with Primadonna Resorts, thereby acquiring the

other 50% of NYNY LLC as well as three hotel/casino resorts in Primm, Nevada

and two championship golf courses nearby in California. The merger provided

Primadonna Resorts' shareholders 0.33 shares of the Company's common stock for

each share of Primadonna Resorts common stock held, which resulted in the

issuance of a total of approximately 9.5 million shares of the Company's stock

on March 1, 1999.



Through its wholly-owned subsidiary, MGM Grand South Africa, Inc., the

Company manages temporary casinos in Nelspruit, Witbank and Johannesburg in

the Republic of South Africa. The temporary casinos began operations on

October 15, 1997, March 10, 1998 and September 28, 1998, respectively. On July

30, 1996, the Company entered into an agreement with Tsogo Sun Holdings (Pty)

Limited ("Tsogo Sun"), a joint venture company formed by the Southern Sun

Group and Tsogo Investment Holding Company (Pty) Limited, to act as the

exclusive casino project developer and manager for the joint venture company,

which contemplates applying for up to 15 casino licenses in the Republic of

South Africa. Under the agreement, the Company will earn fees for the

development and management of all casino operations of Tsogo Sun. Tsogo Sun

will provide or procure



1

all of the financing necessary for the hotel/casino projects. The National

Gambling Act was approved by the President of the government of the Republic

of South Africa on June 27, 1996.



Through its wholly-owned subsidiary, MGM Grand Detroit, Inc., the Company

and its local partners in Detroit, Michigan, formed MGM Grand Detroit, LLC to

develop a hotel/casino and entertainment complex ("MGM Grand Detroit") at an

approximate cost of $800 million. On November 20, 1997, MGM Grand Detroit, LLC

was chosen as a finalist for a development agreement to construct, own and

operate one of Detroit's three new casinos. On April 9, 1998, the Detroit City

Council approved MGM Grand Detroit, LLC's development agreement with the City

of Detroit. Construction of the project is subject to the receipt of various

governmental approvals. The plans for the permanent facility call for an 800-

room hotel, a 100,000 square-foot casino, signature restaurants and retail

outlets, a showroom and other entertainment venues. On July 22, 1998, the

Michigan Gaming Control Board adopted a resolution which allows the issuance

of casino licenses to conduct gaming operations in temporary facilities.

During November 1998, MGM Grand Detroit, LLC commenced construction activities

on its temporary casino which will consist of approximately 73,000 square feet

of casino space, 2,300 slot machines, 80 table games, as well as signature

restaurants and bars. Pending the receipt of its license, MGM Grand Detroit,

LLC anticipates the opening of the temporary facility in the third quarter of

1999.



Through its wholly-owned subsidiary, MGM Grand Atlantic City, Inc., the

Company intends to construct and operate a destination resort hotel/casino,

entertainment and retail facility in Atlantic City, New Jersey, at a minimum

approximate cost of $700 million, on approximately 35 acres of land on the

Atlantic City Boardwalk. Construction of the project is subject to the receipt

of various governmental approvals. On July 24, 1996, the Company was found

suitable for licensing by the New Jersey Casino Control Commission.



For certain information about the performance of the Company's properties,

see Note 19 to the Company's 1998 Annual Report to Stockholders which is

incorporated herein by reference.



The Company's principal executive offices are located at 3799 Las Vegas

Boulevard South, Las Vegas, Nevada 89109. The Company's telephone number is

(702) 891-3333.



Hotels and Gaming



MGM Grand Las Vegas



MGM Grand Las Vegas, the Company's flagship property, is a multi-themed

destination resort, located on approximately 116 acres, which management

believes is a "must see" attraction for visitors to Las Vegas. The resort

opened on December 18, 1993, and has over 350 feet of frontage on the Strip

and 1,450 feet of frontage on Tropicana Avenue. The complex is easily

accessible from McCarran International Airport and from Interstate 15 via

Tropicana Avenue.



MGM Grand Las Vegas creates an exciting and unique gaming and entertainment

experience which is intended to appeal to all segments of the Las Vegas

market.



The casino is approximately 171,500 square feet in size, which management

believes is one of the largest casinos in the world. The casino has 3,669 slot

machines and 157 table games, a state of the art baccarat room, including

private premium play facilities, a poker room, a race and sports book, and a

keno lounge. The casino is themed with various entertainment features,

including well-known movie characters and settings, which enhance the

experience of the casino patron.



The hotel/casino, which management believes is one of the largest in the

world, has 5,005 rooms, including approximately 4,254 tastefully decorated

standard guest rooms. The hotel also has 751 luxury suites, ranging in size

from 650 to 6,000 square feet, representing a suite to room ratio which is one

of the highest among the Strip properties.





2

In an effort to continue a legacy of providing exceptional entertainment

through the leveraging of its highly recognizable brand name, in mid-1996, the

Company embarked on an extensive Master Plan transformation of MGM Grand Las

Vegas into "The City of Entertainment." The Master Plan program was designed

to enhance the quality of the entertainment experience, through a series of

substantive improvements and additions throughout the 116 acre destination

resort. Master Plan projects which have been completed to date include a

380,000 square foot state-of-the-art conference center, a 6.6 acre pool and

spa complex, an approximately 50 foot tall polished bronze lion sculpture on a

25 foot pedestal, which is the resort's signature, and a re-themed

entertainment casino that includes a Rainforest Cafe and a Studio 54

nightclub. Also completed in the Master Plan is "Studio Walk," which portrays

a Hollywood sound stage and reflects an appearance that is inspired by a

number of Hollywood landmarks, including the Brown Derby restaurant, the

Farmers Market food court, and Griffith Park Observatory retail facilities.

The final elements of the Master Plan are nearing completion, including the

"Mansion at the MGM Grand" which will offer 29 exclusive suites and villas

ranging in size from 2,400 square feet to 12,000 square feet and is

anticipated to open in April 1999, the lion habitat which is anticipated to

open in May 1999, and significantly expanded and improved parking facilities

which are anticipated to open during the second half of 1999.



Other entertainment facilities include: an amusement zone including thrill

rides such as the 250 foot high SkyScreamer Skycoaster; an 11,700 square foot

arcade containing carnival games of skill and an extensive video arcade

including virtual reality simulators; a 660 seat showroom providing celebrity

entertainment; a 1,774 seat showroom specifically designed for the EFX

production show, the Company's original grand spectacle special effects stage

production; eleven restaurants and a food court; 36 retail shopping outlets,

including 19 owned and 17 leased facilities; and a special events center,

which seats a maximum of 16,766 patrons, providing mega entertainment such as

Barbra Streisand, Bette Midler, the Rolling Stones, Rod Stewart, Neil Diamond,

Elton John, Phil Collins, and Luther Vandross, as well as championship boxing

events and various other sporting events.



MGM Grand Las Vegas uses the unique characteristics of the property to

target the following segments of the Las Vegas market: (i) free and

independent travelers; (ii) tour and travel; (iii) special events/conventions;

(iv) high-end gaming; and (v) locals.



New York-New York



Construction of NYNY was completed in December 1996, and NYNY opened to the

public on January 3, 1997. The 47-story destination resort replicates many of

Manhattan's landmark buildings and icons, including the Statue of Liberty, the

Empire State Building, Central Park, the Brooklyn Bridge, a Coney Island-style

roller coaster, and is considered to be one of the most architecturally

distinctive and unique buildings in the world.



The casino is approximately 84,000 square feet in size and has approximately

2,400 slot machines and 70 table games. The casino features highly themed

interiors: Park Avenue with retail shops, The Financial District consisting of

the cashiers' cage, a Central Park setting in the central casino area, and

Little Italy with its traditional food court set inside a typical residential

neighborhood. NYNY features 2,033 guest rooms and suites as well as 7

specialty leased restaurants.



Primm Properties



Primadonna Resorts, which the Company acquired in a merger on March 1, 1999,

owns and operates, through its wholly-owned subsidiary, the Primadonna

Corporation ("Primadonna"), three hotel/casinos on both sides of Interstate 15

at the California/Nevada border in Primm, Nevada and the Primm Valley Golf

Club ("Golf Club") nearby in California.



Buffalo Bill's Resort & Casino ("Buffalo Bill's"), Primm Valley Resort &

Casino ("Primm Valley"), and Whiskey Pete's Hotel & Casino ("Whiskey Pete's")

(collectively, the "Primm Properties") form a major destination location and

offer, to the more than eleven million vehicles traveling through Primm on

Interstate 15,



3

the first opportunity to wager upon entering Nevada, and the last opportunity

before leaving. Primadonna estimates that more than 27% of all passing

vehicles stopped at the Primm Properties in 1998.



The Primm Properties appeal to "tiered" market segments including the

family/entertainment-oriented Buffalo Bill's, the conference/leisure-oriented

Primm Valley, and the value-oriented Whiskey Pete's. These hotel/casinos

attract drive-by and overnight customers, and offer good values on dining and

lodging, with an emphasis on service, quality, cleanliness and comfort. The

Primm Properties offer an array of amenities and attractions, including

133,400 square feet of casino space, 2,642 hotel rooms, a 25,000 square foot

conference center, 10 restaurants, and a variety of amusement rides. The three

casinos include 4,494 slot machines, 101 table games, poker, keno, and race

and sports books. In addition, the Primm Properties offer swimming pools, a

movie theater, motion simulation theaters, a ferris wheel, a bowling center,

an interactive water flume ride, "The Desperado" roller coaster and the "Turbo

Drop" thrill ride. The 6,100-seat Star of the Desert Arena hosts top-name

entertainers, and has allowed the Primm Properties to use special events as

part of extended stay packages.



In February 1997, Primadonna opened a championship 18-hole Primm Valley Golf

Club, designed by Tom Fazio, located four miles south of Primm in California.

In the second quarter of 1998, the second championship 18-hole course and a

golf academy opened to the public.



Las Vegas Market



MGM Grand Las Vegas, NYNY and the Primm Properties operate in the Las Vegas

market. MGM Grand Las Vegas and NYNY are located on the Strip and the Primm

Properties are located approximately 40 miles south of Las Vegas on Interstate

15. Las Vegas is the largest city in Nevada, with a metropolitan area

population in excess of one million and is one of the most visited resort

destinations in the world.



Gaming has continued to be a strong and growing business in Las Vegas. Las

Vegas Strip gaming revenues have increased at a compound annual growth rate of

7.3% from $1.9 billion in 1988 to $3.8 billion in 1998.



The hotel/casino industry in Las Vegas is highly competitive. Currently,

several new resorts are under construction on the Las Vegas Strip and two

other resorts have recently been completed. The Venetian, Paris and Aladdin

are in various stages of construction, while the recently opened Bellagio and

Mandalay Bay hotel/casinos provide additional competitive pressures. While

some of the large themed resorts pose direct competition to MGM Grand Las

Vegas, NYNY and the Primm Properties, the Las Vegas Convention and Visitors

Authority ("LVCVA") statistics show that tourism growth is increasing at a

rate which appears sufficient to absorb the increased room capacity, with

visitor volume having increased at a compound annual growth rate of 5.9% from

17.2 million in 1988 to 30.6 million in 1998. The Company's future operating

results could be adversely affected by excess room and gaming capacity.



MGM Grand Las Vegas, NYNY and the Primm Properties compete with gaming and

resort facilities in Las Vegas as well as gaming and resort facilities

elsewhere in the world. To some extent, state lotteries and state-authorized

and locally approved card rooms and Native American gaming facilities, such as

those operating in California, compete with the gaming and resort facilities

in Las Vegas. Gambling, with various limitations and conditions, is currently

legal in numerous locations throughout the United States. The proliferation of

such gaming facilities on riverboats and elsewhere is increasing. Also, as a

result of certain legislative and court decisions, casino-type operations are

being established at various Native American reservations throughout the

country. The development of full service casinos in California would likely

have a negative effect on MGM Grand Las Vegas, NYNY and the Primm Properties

operations in Nevada. Additionally, slot machines are operating in various

jurisdictions in California, the legality of which is the subject of dispute

between the State of California and various Native American tribes. See

"Competition."



The Company's business strategy at Primm is to capitalize on its unique and

advantageous location on the heavily traveled Interstate 15 corridor.

Approximately 11.7 million, 11.3 million, and 10.8 million vehicles traveled

through Primm on Interstate 15 in 1998, 1997, and 1996, respectively. The next

closest casino-hotel is



4

located in Jean, Nevada, approximately eleven miles north towards Las Vegas.

Most of the land between Primm and Jean that is not owned, leased or subject

to the Company's exclusive gaming rights, is owned by the Federal Government.

The Primm Properties offer a convenient stop for Interstate 15 travelers, and

an attractive destination location for Southern California residents, and to a

lesser extent, visitors from Las Vegas and elsewhere.



Insurance



MGM Grand Las Vegas, NYNY and the Primm Properties carry insurance of the

type customary in the hotel and casino industry and in amounts deemed adequate

by management to protect the properties. The policies provide business and

commercial coverages, including workers' compensation, third party liability,

property damage, boiler and machinery, and business interruption.



Nevada Government Regulation



The ownership and operation of casino gaming facilities in Clark County,

Nevada are subject to: (i) the Nevada Gaming Control Act and the regulations

promulgated thereunder (collectively, the "Nevada Act"); and (ii) various

local regulations. The Company's gaming operations are subject to the

licensing and regulatory control of the Nevada Gaming Commission (the "Nevada

Commission"), the Nevada State Gaming Control Board (the "Nevada Board"), and

the Clark County Liquor and Gaming Licensing Board (the "CCLGLB"). The Nevada

Commission, the Nevada Board, and the CCLGLB are collectively referred to as

the "Nevada Gaming Authorities."



The laws, regulations and supervisory procedures of the Nevada Gaming

Authorities are based upon declarations of public policy that are concerned

with, among other things: (i) the prevention of unsavory or unsuitable persons

from having a direct or indirect involvement with gaming at any time or in any

capacity; (ii) the establishment and maintenance of responsible accounting

practices of licensees, including the establishment of minimum procedures for

internal fiscal affairs and the safeguarding of assets and revenues;

(iii) providing reliable record keeping and requiring the filing of periodic

reports with the Nevada Gaming Authorities; (iv) the prevention of cheating

and fraudulent practices; and (v) providing a source of state and local

revenues through taxation and licensing fees. Any change in such laws,

regulations and procedures could have an adverse effect on the Company's

gaming operations.



MGM Grand Las Vegas, NYNY and Primadonna operate casinos and are required to

be licensed by the Nevada Gaming Authorities. The gaming licenses require the

periodic payment of fees and taxes and are not transferable. MGM Grand Las

Vegas is also licensed as a manufacturer and distributor of gaming devices, as

the operator of the racebook and sportspool at NYNY, and the Company and an

indirect wholly-owned subsidiary of the Company are the two managers of NYNY.

The Company is also required to be registered by the Nevada Commission as a

publicly traded corporation ("Registered Corporation") and as such, it is

required periodically to submit detailed financial and operating reports to

the Nevada Commission and furnish any other information that the Nevada

Commission may require. No person may become a stockholder or member of, or

receive any percentage of profits from, MGM Grand Las Vegas, NYNY or

Primadonna without first obtaining licenses and approvals from the Nevada

Gaming Authorities. The Company, MGM Grand Las Vegas, NYNY and Primadonna have

obtained from the Nevada Gaming Authorities the various registrations,

approval permits and licenses required in order to engage in gaming activities

in Nevada.



The Nevada Gaming Authorities may investigate any individual who has a

material relationship to, or material involvement with, the Company, MGM Grand

Las Vegas, NYNY or Primadonna to determine whether such individual is suitable

or should be licensed as a business associate of a gaming licensee. Officers,

directors and certain key employees of MGM Grand Las Vegas, NYNY and

Primadonna must file applications with the Nevada Gaming Authorities and may

be required to be licensed or found suitable by the Nevada Gaming Authorities.

Officers, directors and key employees of the Company who are actively and

directly involved in the gaming activities of MGM Grand Las Vegas, NYNY and

Primadonna may be required to be licensed or found



5

suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may

deny an application for licensing for any cause they deem reasonable. A

finding of suitability is comparable to licensing, and both require submission

of detailed personal and financial information followed by a thorough

investigation. The applicant for licensing or a finding of suitability, or the

gaming licensee by whom the applicant is employed or for whom the applicant

serves, must pay all the costs of the investigation. Changes in licensed

positions must be reported to the Nevada Gaming Authorities, and in addition

to their authority to deny an application for a finding of suitability or

licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a

change in a corporate position.



If the Nevada Gaming Authorities were to find an officer, director or key

employee unsuitable for licensing or unsuitable to continue having a

relationship with the Company, MGM Grand Las Vegas, NYNY or Primadonna, such

company or companies would have to sever all relationships with such person.

In addition, the Nevada Commission may require the Company, MGM Grand Las

Vegas, NYNY or Primadonna to terminate the employment of any person who

refuses to file appropriate applications. Determinations of suitability or of

questions pertaining to licensing are not subject to judicial review in

Nevada.



The Company, MGM Grand Las Vegas, NYNY and Primadonna are required to submit

detailed financial and operating reports to the Nevada Commission.

Substantially all material loans, leases, sales or securities and similar

financing transactions by the Company, MGM Grand Las Vegas, NYNY and

Primadonna must be reported to or approved by the Nevada Commission.



If it were determined that the Nevada Act was violated by MGM Grand Las

Vegas, NYNY or Primadonna, the gaming licenses they hold could be limited,

conditioned, suspended or revoked, subject to compliance with certain

statutory and regulatory procedures. In addition, MGM Grand Las Vegas, NYNY,

Primadonna, the Company and the persons involved could be subject to

substantial fines for each separate violation of the Nevada Act at the

discretion of the Nevada Commission. Further, a supervisor could be appointed

by the Nevada Commission to operate the Company's gaming properties and, under

certain circumstances, earnings generated during the supervisor's appointment

(except for the reasonable rental value of the gaming properties) could be

forfeited to the State of Nevada. Limitation, conditioning or suspension of

any gaming license or the appointment of a supervisor could (and revocation of

any gaming license would) materially adversely affect the Company's gaming

operations.



Any beneficial holder of the Company's voting securities, regardless of the

number of shares owned, may be required to file an application, be

investigated, and have their suitability as a beneficial holder of the

Company's voting securities determined if the Nevada Commission has reason to

believe that such ownership would otherwise be inconsistent with the declared

policies of the State of Nevada. The applicant must pay all costs of

investigation incurred by the Nevada Gaming Authorities in conducting any such

investigation.



The Nevada Act requires any person who acquires more than 5% of the

Company's voting securities to report the acquisition to the Nevada

Commission. The Nevada Act requires that beneficial owners of more than 10% of

the Company's voting securities apply to the Nevada Commission for a finding

of suitability within thirty days after the Chairman of the Nevada Board mails

the written notice requiring such filing. Under certain circumstances, an

"institutional investor" as defined in the Nevada Act, which acquires more

than 10% but not more than 15% of the Company's voting securities, may apply

to the Nevada Commission for a waiver of such finding of suitability if such

institutional investor holds the voting securities for investment purposes

only. An institutional investor shall not be deemed to hold voting securities

for investment purposes unless the voting securities were acquired and are

held in the ordinary course of business as an institutional investor and not

for the purpose of causing, directly or indirectly, the election of a majority

of the members of the board of directors of the Company, any change in the

Company's corporate charter, bylaws, management, policies or operations of the

Company or any of its gaming affiliates, or any other action which the Nevada

Commission finds to be inconsistent with holding the Company's voting

securities for investment purposes only. Activities that are not deemed to be

inconsistent with holding voting securities for investment purposes only

include: (i) voting on all matters voted on by stockholders; (ii) making

financial and other inquiries of management of the type normally



6

made by securities analysts for informational purposes and not to cause a

change in its management, policies or operations; and (iii) such other

activities as the Nevada Commission may determine to be consistent with such

investment intent. If the beneficial holder of voting securities who must be

found suitable is a corporation, partnership or trust, it must submit detailed

business and financial information including a list of beneficial owners. The

applicant is required to pay all costs of investigation.



Any person who fails or refuses to apply for a finding of suitability or a

license within thirty days after being ordered to do so by the Nevada

Commission or the Chairman of the Nevada Board, may be found unsuitable. The

same restrictions apply to a record owner if the record owner, after request,

fails to identify the beneficial owner. Any stockholder found unsuitable and

who holds, directly or indirectly, any beneficial ownership of the common

stock of a Registered Corporation beyond such period of time as may be

prescribed by the Nevada Commission may be guilty of a criminal offense. The

Company is subject to disciplinary action if, after it receives notice that a

person is unsuitable to be a stockholder or to have any other relationship

with the Company, MGM Grand Las Vegas, NYNY or Primadonna, and subsequently

the Company, MGM Grand Las Vegas, NYNY or Primadonna (i) pays that person any

dividend or interest upon voting securities of the Company; (ii) allows that

person to exercise, directly or indirectly, any voting right conferred through

securities held by that person; (iii) pays remuneration in any form to that

person for services rendered or otherwise; or (iv) fails to pursue all lawful

efforts to require such unsuitable person to relinquish his voting securities

for cash at fair market value. Additionally, the CCLGLB has taken the position

that it has the authority to approve all persons owning or controlling the

stock of any corporation controlling a gaming license.



The Nevada Commission may, in its discretion, require the holder of any debt

security of a Registered Corporation to file an application, be investigated

and be found suitable to own the debt security of a Registered Corporation. If

the Nevada Commission determines that a person is unsuitable to own such

security, then pursuant to the Nevada Act, the Registered Corporation can be

sanctioned, including through the loss of its approvals, if without the prior

approval of the Nevada Commission, it: (i) pays to the unsuitable person any

dividend, interest, or any distribution whatsoever; (ii) recognizes any voting

right by such unsuitable person in connection with such securities; (iii) pays

the unsuitable person remuneration in any form; or (iv) makes any payment to

the unsuitable person by way of principal, redemption, conversion, exchange,

liquidation, or similar transaction.



The Company is required to maintain a current stock ledger in Nevada that

may be examined by the Nevada Gaming Authorities at any time. If any

securities are held in trust by an agent or by a nominee, the record holder

may be required to disclose the identity of the beneficial owner to the Nevada

Gaming Authorities. A failure to make such disclosure may be grounds for

finding the record holder unsuitable. The Company is also required to disclose

the identity of the beneficial owner to the Nevada Gaming Authorities. A

failure to make such disclosure may be grounds for finding the record holder

unsuitable. The Company is also required to render maximum assistance in

determining the identity of the beneficial owner. The Nevada Commission has

the power to require the Company's stock certificates to bear a legend

indicating that such securities are subject to the Nevada Act. However, to

date, the Nevada Commission has not imposed such a requirement on the Company.



The Company may not make public offerings of any securities without the

prior approval of the Nevada Commission if the securities or the proceeds

therefrom are intended to be used to construct, acquire or finance gaming

facilities in Nevada, or to retire or extend obligations incurred for such

purposes. Such approval, if given, does not constitute a finding,

recommendation or approval by the Nevada Commission or the Nevada Board as to

the accuracy or adequacy of the prospectus or the investment merits of the

securities. Any representation to the contrary is unlawful.



On July 24, 1997, the Nevada Commission granted the Company prior approval

to make public offerings for a period of two years, subject to certain

conditions (the "Shelf Approval"). However, the Shelf Approval may be

rescinded for good cause without prior notice upon the issuance of an

interlocutory stop order by the Chairman of the Nevada Board. The Shelf

Approval does not constitute a finding, recommendation or approval



7

by the Nevada Commission or the Nevada Board as to the accuracy or adequacy of

the prospectus or the investment merits of the securities offered. Any

representation to the contrary is unlawful.



Changes in control of the Company through merger, consolidation, stock or

asset acquisitions, management or consulting agreements, or any act or conduct

by any person whereby he or she obtains control, may not occur without the

prior approval of the Nevada Commission. Entities seeking to acquire control

of a Registered Corporation must satisfy the Nevada Board and the Nevada

Commission concerning a variety of stringent standards prior to assuming

control of such Registered Corporation. The Nevada Commission may also require

controlling stockholders, officers, directors and other persons having a

material relationship or involvement with the entity proposing to acquire

control, to be investigated and licensed as part of the approval process of

the transaction.



The Nevada legislature has declared that some corporate acquisitions opposed

by management, repurchases of voting securities and corporate defense tactics

affecting Nevada gaming licensees, and Registered Corporations that are

affiliated with those operations, may be injurious to stable and productive

corporate gaming. The Nevada Commission has established a regulatory scheme to

ameliorate the potentially adverse effects of these business practices upon

Nevada's gaming industry and to further Nevada's policy to: (i) assure the

financial stability of corporate gaming operators and their affiliates; (ii)

preserve the beneficial aspects of conducting business in the corporate form;

and (iii) promote a neutral environment for the orderly governance of

corporate affairs. Approvals are, in certain circumstances, required from the

Nevada Commission before the Company can make exceptional repurchases of

voting securities above the current market price thereof and before a

corporate acquisition opposed by management can be consummated.



The Nevada Act also requires prior approval of a plan of recapitalization

proposed by the Company's board of directors in response to a tender offer

made directly to the Registered Corporation's stockholders for the purposes of

acquiring control of the Registered Corporation.



License fees and taxes, computed in various ways depending on the type of

gaming or activity involved, are payable to the State of Nevada and to Clark

County, Nevada. Depending upon the particular fee or tax involved, these fees

and taxes are payable either monthly, quarterly or annually and are based upon

either: (i) a percentage of the gross revenues received; (ii) the number of

gaming devices operated; or (iii) the number of table games operated. A casino

entertainment tax is also paid by MGM Grand Las Vegas, NYNY and Primadonna

where certain entertainment is provided in a cabaret, nightclub, cocktail

lounge or casino showroom in connection with the serving or selling of food,

refreshments, or merchandise. Casino entertainment tax is also paid for

admission, food and refreshments at a bar located adjacent to a cabaret

nightclub, cocktail lounge or casino showroom if portions of the bar can

clearly see and hear the entertainment, or at a location adjacent to those

venues if such locations' primary purpose is to provide refreshment to patrons

viewing entertainment in the cabaret, nightclub, cocktail lounge or casino

showroom. Nevada licensees that hold a license as a manufacturer or a

distributor, such as MGM Grand Las Vegas, NYNY and Primadonna, also pay

certain fees and taxes to the State of Nevada.



Any person who is licensed, required to be licensed, registered, required to

be registered, or is under common control with such persons (collectively,

"Licensees"), and who proposes to become involved in a gaming venture outside

of Nevada, is required to deposit with the Nevada Board, and thereafter

maintain, a revolving fund in the amount of $10,000 to pay the expenses of

investigation of the Nevada Board of their participation in such foreign

gaming. The revolving fund is subject to increase or decrease at the

discretion of the Nevada Commission. Thereafter, Licensees are also required

to comply with certain reporting requirements imposed by the Nevada Act.

Licensees are also subject to disciplinary action by the Nevada Commission if

they knowingly violate any laws of the foreign jurisdiction pertaining to

foreign gaming operation, fail to conduct the foreign gaming operation in

accordance with the standards of honesty and integrity required of Nevada

gaming operations, engage in activities that are harmful to the State of

Nevada or its ability to collect gaming taxes and fees, or employ a person in

a foreign operation who has been denied a license or a finding of suitability

in Nevada on the ground of personal unsuitability.



8

The sale of alcoholic beverages by MGM Grand Las Vegas, NYNY and Primadonna

are subject to licensing, control and regulation by the applicable local

authorities. All licenses are revocable and are not transferable. The agencies

involved have full power to limit, condition, suspend or revoke any such

license, and any such disciplinary action could (and revocation would) have a

material adverse effect upon the Company's operations.



Pursuant to a 1985 agreement between the State of Nevada and the United

States Department of the Treasury (the "Treasury"), the Nevada Commission and

the Nevada Board have authority, under Regulation 6A of the Nevada Act, to

enforce their own cash transaction reporting laws applicable to casinos which

substantially parallel the federal Bank Secrecy Act. Under the Money

Laundering Suppression Act of 1994 which was passed by Congress, the Secretary

of the Treasury retained the ability to permit states, including Nevada, to

continue to enforce their own cash transaction reporting laws applicable to

casinos. The Nevada Act requires gaming licensees to file reports related to

cash purchases of chips, cash wagers, cash deposits or cash payment of gaming

debts, if any such transactions aggregate more than $10,000 in a 24-hour

period. Casinos are required to monitor receipts and disbursements of currency

in excess of $10,000 and until November 1, 1997, were required to report them

to the Nevada Board, who in turn reported them to the Treasury. As of November

1, 1997, the casinos were required to submit such reports directly to the

Treasury. Pursuant to amendments to the Nevada Act that became effective on

October 1, 1997, casinos also are required under certain circumstances to file

suspicious activity reports directly with an office of the Treasury and

provide copies thereof to the Nevada Board. Although it is not possible to

quantify the full impact of these requirements on the Company's business, the

changes are believed to have had some adverse effect on results of operations

since inception.



Regulation and Taxes



As stated above, the Company is subject to extensive regulation by the

Nevada Gaming Authorities. The Company will also be subject to regulation,

which may or may not be similar to that in Nevada, by the appropriate

authorities in any other jurisdiction where the Company may conduct gaming

activities in the future. Changes in applicable laws or regulations could have

an adverse effect on the Company.



The gaming industry represents a significant source of tax revenues to the

State of Nevada and Clark County. From time to time, federal and state

legislators and officials have proposed changes in tax law, or in the

administration of such law, affecting the gaming industry. Recent proposals

have included a federal gaming tax and increases in state or local gaming

taxes. They have also included limitations on the federal income tax

deductibility of the cost of furnishing certain complimentary promotional

items to customers, as well as various measures which would require tax

withholding on amounts won by customers. It is not possible to determine with

certainty the likelihood of possible changes in tax law or in the

administration of such law. Such changes, if adopted, could have a material

adverse effect on the Company's financial results.



Competition



The hotel industry is highly competitive. Hotels located on or near the

Strip ("Strip Hotels") compete primarily with other Strip Hotels and with a

few major hotels in downtown Las Vegas. Strip Hotels offering similar prices

compete with each other primarily on the basis of quality of rooms,

restaurants and facilities, entertainment offered, complimentary goods and

services given, credit limits and quality of personal attention offered to

guests and casino customers. The Company's hotel/casino operations also

compete with a large number of hotels and motels, and gaming facilities not

related to hotels or motels, located in and near Las Vegas. Some of the

Company's competitors may have greater resources.



According to the LVCVA, as of December 31, 1998, there were approximately

109,000 hotel and motel rooms in the Las Vegas area. During early March 1999,

the Mandalay Bay opened just south of Tropicana on the Strip adding

approximately 3,700 rooms. In addition, the LVCVA reports projects under

construction and/or proposed for future development of approximately 12,300

more hotel and motel rooms, including two themed hotel/casino properties

currently under construction on the Strip between Tropicana Avenue and

Flamingo Road



9

and one major facility north of Flamingo Road. The Company cannot make any

prediction as to how many additional rooms will be constructed in Las Vegas.

The Company's future operating results could be adversely affected by excess

Las Vegas rooms and gaming capacity.



In addition to competing with hotel/casino facilities elsewhere in Nevada

(i.e., the Reno/Lake Tahoe areas and the Laughlin area) and in Atlantic City,

the Company competes with hotel/casino facilities elsewhere in the world and

with state lotteries. Certain states are currently considering legalizing

casino gaming in specific geographic areas, and several other states have

recently legalized casino gaming. This growth has been driven by the expansion

of traditional land-based casino destinations and the continued development of

new riverboat and Native American reservation casinos throughout the United

States. Currently, casinos are operating or are approved in 32 states.

Elsewhere in North America, nearly all of the Canadian provinces and

territories offer some form of casino gaming. Legalized casino gaming in other

states could adversely affect the Company's activities in Las Vegas,

particularly if such legalization were to occur in areas close to Nevada, such

as California. In addition, with respect to group bookings, the Company's

hotel/casino facilities in Las Vegas also compete with hotels and resorts,

which do not include casinos, throughout the United States. See "Las Vegas

Market."



Additionally, certain gaming operations are conducted or have been proposed

on federal Native American reservations, including those located in the

primary market to be served by MGM Grand Las Vegas, NYNY and the Primm

Properties. Approximately 29 California tribes, without approval from the

state or national government, offer various types of gaming activities, most

notably house-banked video gaming devices, which are illegal under the

California State Constitution and the California State Lottery Act. Last year,

the California State Senate and Assembly ratified 11 tribal-state compacts,

permitting tribes to move forward on developing limited scale casinos that

will offer pari-mutuel games. On November 3, 1998, Californians passed

Proposition 5, thereby potentially allowing expanded Nevada-style gaming on

tribal lands. The passage of Proposition 5, along with the election of a new

governor who is apparantly amenable to Native American causes, strongly

suggests that the governor's office could ultimately relax several

restrictions previously placed on tribal gaming. Within several weeks of the

passage of Proposition 5, two lawsuits were filed in the State Supreme Court

to preclude its implementation, claiming that Proposition 5 is

unconstitutional. It is likely that this matter will be litigated for at least

the next several years. The 11 tribes that have signed tribal-state compacts

will continue to offer pari-mutual games, while the 29 tribes without compacts

continue to operate what the state considers illegal devices. If Proposition 5

is ultimately upheld, the Company would anticipate a substantial increase in

competition from the Native American casinos in California.



The Company's Primm Properties compete primarily with two casino-hotels

located 11 miles north along Interstate 15 in Jean, Nevada, and with numerous

other hotel/casinos in the Las Vegas area and indian gaming facilities in

Southern California, principally on the basis of location, range and pricing

of amenities, gaming mix, and overall atmosphere. As mentioned previously, the

Las Vegas market will have increasing competitive pressures with regards to

room and gaming capacity with the opening of the resorts currently under

construction. This increase in capacity may increase competition for customers

at the Company's Primm Properties. Since many of the Company's current

customers stop at Primm as they are driving on Interstate 15 to and from major

casino-hotels located in Las Vegas, the Company believes that its success at

Primm is also favorably influenced by the popularity of the Las Vegas resorts.

To a lesser extent, the Company's Primm Properties also compete with gaming

establishments in or near Laughlin, Nevada, approximately 90 miles away in

Southern Nevada. Laughlin caters to moderate and middle income, value oriented

customers who travel primarily by car, bus, and recreational vehicle. The

addition of major gaming properties or the substantial expansion of existing

Laughlin resorts could have an adverse effect on the number of customers

visiting the Company's Primm Properties.



MGM Grand Australia



On September 7, 1995, the Company, through its wholly-owned subsidiary, MGM

Grand Australia Pty Ltd., completed the acquisition of the MGM Grand Australia

in Darwin, Northern Territory, Australia. MGM Grand Australia is located on 18

acres of beachfront property next to the Arafura Sea on the north central

coast. The



10

resort includes a public and private casino, 96 rooms, restaurants and other

facilities. Casino operations include approximately 32 table games, 360 slot

machines and a keno lounge. The Company has positioned MGM Grand Australia as

a multi-faceted gaming/entertainment facility for the local market and, to a

lesser extent, as an exclusive destination resort for international table game

customers.



Two casinos operate in the Northern Territory, including MGM Grand's

property in Darwin on the northern coast, and a small casino in Alice Springs

in the southern part of the Territory. Unlike the U.S., Australia has granted,

for the most part, regional casino monopolies in its provinces. Gaming

machines (i.e., slots or "poker machines") were installed in clubs and hotels

in 1996, and MGM Grand Australia will effectively receive 22.0% of the

revenues from these machines through 2005 in the form of a tax rebate.

Northern Territory Keno machines ("NT Keno") are also being installed in pubs,

hotels and clubs in the Northern Territory. NT Keno is a territory-wide keno

game that the Northern Territory Government has licensed to MGM Grand

Australia, whereby keno tickets are sold in pubs, hotels and clubs throughout

the Northern Territory. The pubs, hotels and clubs act as agents on behalf of

MGM Grand Australia and sell keno tickets in return for a commission paid by

MGM Grand Australia. NT Keno commenced operations on October 30, 1996.



The success of MGM Grand Australia will depend in part upon a balance of (i)

its ability to effectively serve the local community as well as (ii) its

ability to make efficient use of its strategic location to the South East

Asian gaming market. The Darwin International Airport is an average of 5.5

hours away from the major Asian cities. However, frequency of scheduled air

service is a limiting factor.



There exist 13 casinos in Australia competing for the Far East Market.

Australian casinos operate under exclusive arrangements, which create a

regional monopoly for a fixed term. As such, Australian casinos do not compete

among themselves for the regional middle to low end players. However, Far East

premium players have become an increasingly important source of revenues;

consequently, this market has become very competitive. Competition for the Far

East premium player is increasing, as evidenced by the gaming activity in

Kuala Lumpur and Macao, the recent growth in the number of casinos operating

in Australia, and an increase in the quantity of casino cruise ships. In an

effort to attract premium players, MGM Grand Australia completed a $15 million

capital improvement program in June 1996, which included renovation of all 96

rooms (including 16 suites), enhanced casino facilities, and additional

dining, entertainment and retail amenities. Due to the increasing competition

and the limitations on scheduled air service, the desired mixture of premium

players has not been attained at MGM Grand Australia. As a result, the

operating margins have been negatively impacted and future operating results

could be adversely affected if this trend continues. MGM Grand Australia

therefore revised its marketing efforts with an emphasis on the local

population and instituted cost reduction and revenue enhancement programs in

an effort to strengthen operating results. The results of the cost reduction

and revenue enhancement programs have resulted in improved operating margins

and increased revenues.



Australia Government Regulation



The Northern Territory of Australia, like Nevada, has comprehensive laws and

regulations governing the conduct of gaming. MGM Grand Australia's operations

are subject to the Gaming Control Act of 1993 and regulations promulgated

thereunder (the "Northern Territory Law") and to the licensing and general

control of the Minister for Racing and Gaming (the "Minister"). MGM Grand

Australia Pty. Ltd. has entered into a Casino Operator's Agreement with the

Minister pursuant to which MGM Grand Australia was granted a license (the

"License") to conduct casino gaming on an exclusive basis through June 30,

2005 in the northern half of the Northern Territory (which includes Darwin,

its largest city, where MGM Grand Australia is located). The License provides

for good faith negotiations to reach agreement on an extension of the License.

The License provides for a tax payable to the Northern Territory Government on

gross profits derived from gaming, including gaming devices. The License is

not exclusive with respect to gaming devices, and the Minister may permit such

devices to be placed in limited numbers in locations not operated by MGM Grand

Australia. However, under the License, a portion of the operators' win on such

gaming devices is to be offset against gaming tax otherwise payable by MGM

Grand Australia.





11

The License may be terminated if MGM Grand Australia breaches the Casino

Operator's Agreement or the Northern Territory Law or fails to operate in

accordance with the requirements of the License. The Northern Territory

authorities have the right under the Northern Territory Law, the Casino

Operator's Agreement and the License to monitor and approve virtually all

aspects of the conduct of gaming by MGM Grand Australia.



Additionally, under the terms of the License, the Minister has the right to

approve the directors and corporate secretary of the Company and its

subsidiaries which own or operate MGM Grand Australia, as well as changes in

the ownership or corporate structure of such subsidiaries. The Company is

required to file with the Northern Territory authorities copies of all

documents required to be filed by the Company or any of its subsidiaries with

the Nevada Gaming Authorities. In the event of any person becoming the

beneficial owner of 10% or more of the outstanding stock of the Company, the

Minister must be so notified and may investigate the suitability of such

person. If the Minister determines such person to be unsuitable and following

such determination such person remains the beneficial owner of 10% or more of

the Company's stock, that would constitute a default under the License.



MGM Grand Detroit



The Michigan Gaming Control and Revenue Act (the "Michigan Act") provides

that not more than three casinos may be licensed by the State of Michigan

("Michigan") and that they be located only in the City of Detroit ("Detroit").

In November 1997, at the conclusion of a competitive selection process, the

Mayor of Detroit designated MGM Grand Detroit, LLC to develop one of the three

authorized hotel and casino complexes. MGM Grand Detroit, Inc., a wholly-owned

subsidiary of the Company, will hold a controlling interest in MGM Grand

Detroit, LLC and plans to provide a majority of the equity capital. A minority

interest will be held by Partners Detroit, LLC, a Michigan limited liability

company owned by ten individual residents of the Detroit metropolitan area. As

planned, the Detroit permanent facility is expected to include a 100,000

square foot casino, an 800 room hotel with ballroom, convention and meeting

rooms, restaurants, bars, entertainment and retail facilities. The total

project cost could exceed $800 million and development could take up to three

years. Development of the permanent facility will not proceed until after (i)

acquisition by MGM Grand Detroit of the permanent development site; and (ii) a

finding by the Michigan Gaming Control Board that MGM Grand Detroit, LLC is

suitable for licensing. The design, budget and schedule for development of the

permanent facility are at a preliminary stage, and will be subject to the

risks attendant to large-scale projects and may be subject to additional costs

and delays beyond preliminary estimates. No assurance can be given that the

Company will develop a hotel/casino in Detroit, or if it does, as to its

ultimate size, configuration or costs. On July 22, 1998, the Michigan Gaming

Control Board adopted a resolution which allows the issuance of casino

licenses to conduct gaming operations in temporary facilities. During November

1998, MGM Grand Detroit, LLC commenced construction activities on its

temporary casino which will consist of approximately 73,000 square feet of

casino space, 2,300 slot machines, 80 table games, as well as signature

restaurants and bars. Pending the receipt of a license, MGM Grand Detroit LLC

anticipates the opening of a temporary gaming facility in the third quarter of

1999.



Detroit Market



An assessment prepared by independent consultants for the Company concludes

that the Detroit, Michigan and Windsor, Ontario casino gaming markets are

effectively one market, and that aggregate annual revenues of approximately

$1.1 billion will be generated by patrons living within 150 miles of downtown

Detroit. It is anticipated that the market will be divided among the three

casinos to be licensed under the Michigan Act and a fourth casino which is

currently operating in Windsor, Ontario. The Company anticipates that all four

casinos will have roughly comparable gaming areas.



Michigan Government Regulation and Taxation



The Michigan Act subjects the ownership and operation of casino gaming

facilities to extensive state licensing and regulatory requirements. The

Michigan Act also authorizes local regulation of casino gaming



12

facilities by Detroit, provided that any such local ordinances regulating

casino gaming are consistent with the Michigan Act and rules promulgated to

implement it.



The Michigan Act creates the Michigan Gaming Control Board (the "MGCB") and

authorizes it to grant casino licenses to not more than three applicants who

have entered into development agreements with Detroit. The MGCB is granted

extensive authority to conduct background investigations and determine the

suitability of casino license applicants, affiliated companies, officers,

directors, or managerial employees of applicants and affiliated companies and

persons or entities holding a one percent or greater direct or indirect

interest in an applicant or affiliated company. Institutional investors

holding less than certain specified amounts of debt or equity securities are

exempted from meeting the suitability requirements of the Michigan Act,

provided such securities are issued by a publicly traded corporation, such as

the Company, and the securities were purchased for investment purposes only

and not for the purpose of influencing or affecting the affairs of the issuer.



The Michigan Act imposes the burden of proof on the applicant for a casino

license to establish its suitability to receive and hold the license. The

applicant must establish its suitability as to integrity, moral character and

reputation, business probity, financial ability and experience,

responsibility, and other criteria deemed appropriate by the MGCB. A casino

license is valid for a period of one year and the MGCB may refuse to renew it

upon a determination that the licensee no longer meets the requirements for

licensure.



The MGCB may, among other things, revoke, suspend or restrict a casino

license. Substantial fines or forfeiture of assets for violations of gaming

laws or rules may also be levied against a casino licensee. In the event that

a casino license is revoked or suspended for more than 120 days, the Michigan

Act provides for the appointment of a conservator who, among other things, is

required to sell or otherwise transfer the assets of the casino licensee or

former licensee to another person or entity who meets the requirements of the

Michigan Act for licensure.



The MGCB has adopted administrative rules (the "Rules"), which became

effective on June 23, 1998, to implement the terms of the Michigan Act. Among

other things, the Rules impose more detailed substantive and procedural

requirements with respect to casino licensing and operations. Included are

requirements regarding such things as licensing investigations and hearings,

record keeping and retention, contracting, reports to the MGCB, internal

control and accounting procedures, security and surveillance, extensions of

credit to gaming patrons, conduct of gaming, and transfers of ownership

interests in licensed casinos. The Rules also establish numerous MGCB

procedures regarding licensing, disciplinary and other hearings, and similar

matters. The Rules have the force of law and are binding on the MGCB as well

as on applicants for or holders of casino licenses.



The Detroit City Council recently enacted an ordinance entitled "Casino

Gaming Authorization and Casino Development Agreement Certification and

Compliance". The ordinance authorizes casino gaming only by operators who are

licensed by the MGCB and are parties to a development agreement which has been

approved and certified by the City Council and is currently in effect or are

acting on behalf of such party. The development agreement between MGM Grand

Detroit, LLC, the City and the City Economic Development Corporation has been

so approved and certified and is currently in effect. The ordinance requires

each casino operator to submit to the Mayor and to the City Council periodic

reports regarding the operator's compliance with its development agreement or,

in the event of non-compliance, reasons of non-compliance and an explanation

of efforts to comply. The ordinance requires the Mayor to monitor each casino

operator's compliance with its development agreement, to take appropriate

enforcement action in the event of default and to notify the City Council of

defaults and enforcement action taken and, if a development agreement is

terminated, it requires the City Council to transmit notice of such action to

the MGCB within 5 business days along with the City's request that the MGCB

revoke the relevant operator's certificate of suitability or casino license.



The Michigan Act effectively provides that each of the three casinos in

Detroit shall pay a wagering tax equal to 18% of its adjusted gross receipts,

to be paid 8.1% to Michigan and 9.9% to Detroit, a municipal services fee

equal to the greater of $4 million or 1.25% of adjusted gross receipts of each

casino to be paid to Detroit to defray its cost of hosting casinos and an

annual assessment (as adjusted based upon a consumer price index) in



13

the initial amount of approximately $8.3 million to be paid by each casino to

Michigan to defray its regulatory enforcement and other casino-related costs.

These are in addition to the taxes, fees, and assessments customarily paid by

business entities situated in Detroit.



MGM Grand Atlantic City



The Company, through its wholly-owned subsidiary, MGM Grand Atlantic City,

Inc., intends to create a destination resort hotel/casino in Atlantic City,

("MGM Grand Atlantic City") that will be larger and more elaborate than any

other facility currently in existence in that market. The Company expects to

use similar entertainment themes from MGM Grand Las Vegas at MGM Grand

Atlantic City, and plans to offer a wide array of gaming and non-gaming

amenities to its prospective customers. The Company's plans for MGM Grand

Atlantic City also include the development of retail and food and beverage

facilities. The Company believes that the development of MGM Grand Atlantic

City could cost in excess of $700 million, and that the development could take

up to three years following the successful acquisition of land necessary to

complete the project. The design, budget and schedule for development of the

project are at a preliminary stage, and will be subject to the risks attendant

to large-scale projects and may be subject to additional costs and delays

beyond preliminary estimates. No assurance can be given that the Company will

develop a hotel/casino in Atlantic City, or if it does, as to its ultimate

size, configuration or cost. Any development or operation in Atlantic City

will be subject to the receipt of regulatory approvals. On July 24, 1996, the

Company was found suitable for licensing by the New Jersey Casino Control

Commission.



Atlantic City Market



Atlantic City is, after Las Vegas, the second largest gaming destination in

the United States. The Company believes that it has the potential to

successfully expand its domestic base through developing and operating a

destination resort in Atlantic City. Management believes that Atlantic City

represents an attractive market for additional development due to its

proximity to areas with favorable demographics, including a large population

base with a high level of disposable income. The Atlantic City market

currently consists of 12 hotel/casinos which as of December 31, 1998 had

11,885 rooms, 1,211,451 square feet of casino space, 36,271 slot machines and

1,345 table games. According to the Atlantic City Department of Planning and

Development (the "ACDPD"), more than 58 million people (approximately 23.5% of

the United States population) live within 300 miles of Atlantic City, and more

than 17.8 million people live within 100 miles. Most of the Atlantic City

visitors are "day-trippers," but there are a substantial number of overnight

visitors, who are believed to have a higher gaming budget. The Company

believes that the overnight visitor component will increase substantially as

destination resorts and "must see" attractions such as the proposed MGM Grand

Atlantic City make Atlantic City a more exciting and appealing attraction for

the middle and high-end gaming customer.



The Atlantic City gaming market has demonstrated continued growth despite

the recent proliferation of new gaming venues across the country. The 12

hotel/casinos in Atlantic City generated approximately $4.03 billion in gaming

revenues in 1998, a 3.2% increase over 1997 gaming revenues of approximately

$3.91 billion. From 1990 to 1998, gross total annual gaming revenues in

Atlantic City increased 36.5%, while hotel rooms increased only approximately

28% during this period.



The regulatory environment in Atlantic City has improved significantly over

the last several years. New games, such as poker and keno, have been approved,

24-hour gaming has been permitted, registration of hotel employees has been

eliminated, license terms have been extended, and various operational

requirements have been relaxed. These regulatory changes have resulted in

reduced costs for the operators and created a more varied and attractive

environment for the gaming customer. Management believes that the reforms will

serve to permit future reductions in operating expenses of casinos in Atlantic

City and to increase the funds available for additional infrastructure

development through the New Jersey Casino Redevelopment Authority ("CRDA").

Due principally to an improved regulatory environment, general improvements of

economic conditions and high occupancy rates, the majority of the Atlantic

City hotel/casinos have recently expanded, are in the process of expanding or

have announced plans to expand their facilities. In 1997 and 1998, other

gaming companies entered



14

the Atlantic City market by acquiring hotel/casino facilities. In addition,

some companies have entered into an agreement with Atlantic City for the

development of the "H-Tract," a 170-acre site in the Atlantic City Marina.

Management believes that these increases in hotel/casino capacity, together

with infrastructure improvements, and community revitalization programs, will

be instrumental in stimulating future revenue growth in the Atlantic City

market and increasing its appeal as a destination resort.



In addition to the planned casino expansions, major infrastructure

improvements have been proposed or have begun. These include, among other

projects, new housing and retail development and a tunnel connecting the

Atlantic City Expressway to the Marina. Construction of a new $254 million

Convention Center was completed and the facility opened in May 1997. The CRDA

is currently overseeing the development of the "tourist corridor" that will

link the Convention Center with the Boardwalk and will, when completed,

feature approximately 500,000 square feet of exhibit and pre-function space,

meeting rooms, food-service facilities and a 1,600 car underground parking

garage. The new convention center will be the largest exhibition space between

New York and Washington D.C.



New Jersey Government Regulation



The ownership and operation of hotel/casino facilities and gaming activities

in Atlantic City, New Jersey are subject to extensive state regulation under

the New Jersey Casino Control Act (the "New Jersey Act") and the regulations

("Regulations") of the New Jersey Casino Control Commission (the "New Jersey

Commission") and other applicable laws. In order to operate a hotel/casino

facility in New Jersey, MGM Grand Atlantic City, Inc. must obtain a license

from the New Jersey Commission and obtain numerous other licenses, permits and

approvals from other states as well as local governmental authorities. The New

Jersey Act also established the New Jersey Division of Gaming Enforcement (the

"New Jersey Division") to investigate all license applications, enforce the

provisions of the New Jersey Act and Regulations and prosecute all proceedings

for violations of the New Jersey Act and Regulations before the New Jersey

Commission.



The New Jersey Commission has broad discretion regarding the issuance,

renewal, revocation and suspension of casino licenses. The New Jersey Act and

Regulations concern primarily the good character, honesty, integrity and

financial stability of casino licensees, their intermediary and holding

companies, their employees, their security holders and others financially

interested in casino operations; financial and accounting practices used in

connection with casino operations; rules of games, levels of supervision of

games and methods of selling and redeeming chips; manner of granting credit,

duration of credit and enforceability of gaming debts; and distribution of

alcoholic beverages.



The Company's wholly-owned subsidiary, MGM Grand Atlantic City, Inc., has

applied to be licensed by the New Jersey Commission to operate a casino, and

the Company has applied to be approved as a qualified holding company. On July

24, 1996, the Company and MGM Grand Atlantic City, Inc., and their then

officers, directors, and 5% or greater shareholders were found suitable for

licensing by the New Jersey Commission. These findings of suitability are

subject to review and revision by the New Jersey Commission based upon a

change in any material fact that is relevant to the findings.



The New Jersey Act further provides that each person who directly or

indirectly holds any beneficial interest or ownership of the securities issued

by a casino licensee or any of its intermediary or holding companies, those

persons who, in the opinion of the New Jersey Commission, have the ability to

control the casino licensee or its intermediary or holding companies or elect

a majority of the board of directors of said companies, other than a banking

or other licensed lending institution which makes a loan or holds a mortgage

or other lien acquired in the ordinary course of business, lenders and

underwriters of said companies are required to be qualified by the New Jersey

Commission. However, with respect to a publicly traded holding company such as

the Company, a waiver of qualification may be granted by the New Jersey

Commission, with the concurrence of the Director of the New Jersey Division,

if the New Jersey Commission determines that said persons or entities are not

significantly involved in the activities of MGM Grand Atlantic City, Inc. and

in the case of security holders, do not have the ability to control the

Company or elect one or more of its directors. There exists a rebuttable



15

presumption that any person holding 5% or more of the equity securities of a

casino licensee's intermediary or holding company or a person having the

ability to elect one or more of the directors of such a company has the

ability to control the company and thus must obtain qualification from the New

Jersey Commission.



Notwithstanding this presumption of control, the New Jersey Act provides for

a waiver of qualification for passive "institutional investors," as defined by

the New Jersey Act, if the institutional investor purchased publicly traded

securities for investment purposes only and where such securities constitute

(i) less than 10% of the equity securities of a casino licensee's holding or

intermediary company or (ii) debt securities of a casino licensee's holding or

intermediary company representing a percentage of the outstanding debt of such

company not exceeding 20% or a percentage of any issue of the outstanding debt

of such company not exceeding 50%. The waiver of qualification is subject to

certain conditions including, upon request of the New Jersey Commission,

filing a certified statement that the institutional investor has no intention

of influencing or affecting the affairs of the issuer, except that an

institutional investor holding voting securities shall be permitted to vote on

matters put to a vote of the holders of outstanding voting securities.

Additionally, a waiver of qualification may also be granted to institutional

investors holding a higher percentage of securities of a casino licensee's

holding or intermediary company upon a showing of good cause.



The New Jersey Act requires the certificate of incorporation of a publicly

traded holding company to provide that any securities of such corporation are

held subject to the condition that if a holder is found to be disqualified by

the New Jersey Commission pursuant to the New Jersey Act, such holder shall

dispose of his interest in such company. Accordingly, the Company amended its

Certificate of Incorporation to provide that a holder of the Company's

securities must dispose of such securities if the holder is found disqualified

under the New Jersey Act. In addition, the Company amended its Certificate of

Incorporation to provide that the Company may redeem the stock of any holder

found to be disqualified.



If the New Jersey Commission should find a security holder to be unqualified

to be a holder of securities of a casino licensee or holding company, not only

must the disqualified holder dispose of such securities but in addition,

commencing on the date the New Jersey Commission serves notice upon such a

company of the determination of disqualification, it shall be unlawful for the

disqualified holder (i) to receive any dividends or interest upon any such

securities, (ii) to exercise, directly or through any trustee or nominee, any

right conferred by such securities, or (iii) to receive any remuneration in

any form from the licensee for services rendered or otherwise. If the New

Jersey Commission should find a security holder to be unqualified to be a

holder of securities of a casino licensee or holding company, the New Jersey

Commission shall take any necessary action to protect the public interest

including the suspension or revocation of the casino license except that if

the disqualified person is the holder of securities of a publicly traded

holding company, the New Jersey Commission shall not take action against the

casino license if (i) the holding company has the corporate charter provisions

concerning divestiture of securities by disqualified owners required by the

New Jersey Act, (ii) the holding company has made good faith efforts including

the pursuit of legal remedies to comply with any order of the New Jersey

Commission, and (iii) the disqualified holder does not have the ability to

control the company or elect one or more members of the company's board of

directors.



If, after licensure, the New Jersey Commission determines that MGM Grand

Atlantic City, Inc. has violated the New Jersey Act or Regulations, or if any

security holder of the Company or MGM Grand Atlantic City, Inc. who is

required to be qualified under the New Jersey Act is found to be disqualified

but does not dispose of the securities, MGM Grand Atlantic City, Inc. could be

subject to fines or its license could be suspended or revoked. If MGM Grand

Atlantic City, Inc.'s license is revoked after issuance, the New Jersey

Commission could appoint a conservator to operate and to dispose of any

hotel/casino facilities of MGM Grand Atlantic City, Inc. Net proceeds of a

sale by a conservator and net profits of operations by a conservator (at least

up to an amount equal to a fair return on MGM Grand Atlantic City, Inc.'s

investment which is reasonable for casinos or hotels) would be paid to the

Company.



The New Jersey Act imposes an annual tax of eight percent on gross casino

revenues (as defined in the New Jersey Act). In addition, casino licensees are

required to invest one and one-quarter percent of gross casino



16

revenues for the purchase of bonds to be issued by the Casino Reinvestment

Development Authority or make other approved investments equal to that amount.

In the event the investment requirement is not met, the casino licensee is

subject to a tax in the amount of two and one-half percent on gross casino

revenues. The New Jersey Commission has established fees for the issuance or

renewal of casino licenses and casino hotel alcoholic beverage licenses and an

annual license fee on each slot machine.



In addition to compliance with the New Jersey Act and Regulations relating

to gaming, any facility built in Atlantic City by MGM Grand Atlantic City,

Inc. or any other subsidiary of the Company must comply with the New Jersey

and Atlantic City laws and regulations relating to, among other things, the

Coastal Area Facilities Review Act, construction of buildings, environmental

considerations, and the operation of hotels.



Employees



As of December 31, 1998, the Company and its subsidiaries employed

approximately 6,671 full-time equivalent employees at the MGM Grand Las Vegas

and at the Company's corporate offices. Effective December 1, 1996, MGM Grand

Las Vegas and the International Union of Operating Engineers Local 501

finalized a collective bargaining agreement, running through December 1, 2001,

covering approximately 116 facilities and maintenance employees. On November

13, 1997, MGM Grand Las Vegas finalized a collective bargaining agreement with

the Local Joint Executive Board of Las Vegas, on behalf of the Hotel Employees

Restaurant Employee International Union, Local 226 and the Bartenders Union,

Local 165 as the exclusive bargaining representative of approximately 3,351

employees, running through December 12, 2000.



As of December 31, 1998, MGM Grand Australia employed approximately 350

full-time equivalent employees. Hourly employees are covered by collective

bargaining agreements.



As of December 31, 1998, NYNY employed approximately 2,053 full-time

equivalent employees. As of December 31, 1998, 760 of NYNY's employees were

covered by collective bargaining agreements.



As of December 31, 1998, the Primm Properties employed approximately 3,390

full-time equivalent employees. None of the Primm Properties' employees are

represented by a labor union, but there can be no assurance that this will

continue.



Item 2. Properties



The Company's principal executive offices are located at 3799 Las Vegas

Boulevard South, Las Vegas, Nevada 89109, where it rents approximately 8,800

square feet from MGM Grand Las Vegas.



MGM Grand Las Vegas' principal executive offices are also located at 3799

Las Vegas Boulevard South, Las Vegas, Nevada, 89109. Certain other office and

warehouse space is leased by MGM Grand Las Vegas consisting of approximately

132,000 square feet located in Las Vegas, Nevada, for an annual rent of

approximately $525,000.



MGM Grand Las Vegas is located on approximately 116 acres on the Strip in

Las Vegas, Nevada. The property is subject to a first priority deed of trust

securing bank financing of up to $1.25 billion, on which there were no amounts

outstanding as of December 31, 1998, which bears interest based on LIBOR or

the bank reference rate, and which is due December 2002. The property is also

subject to a first priority deed of trust with respect to $500 million in

senior collateralized notes (secured on a pari passu basis with the bank

financing) issued on January 26, 1998 and February 6, 1998, in tranches of

$300 million and $200 million, respectively.



In January 1995, the Company contributed an 18-acre site, located at the

intersection of the Strip and Tropicana Avenue to the Company's New York-New

York joint venture. (See Item 1. Business.) This property, together with an

adjacent two-acre parcel, are subject to a first priority deed of trust

securing bank financing of up of $210 million, of which $178.5 million was

outstanding as of December 31, 1998, and which bears interest based on the

bank prime rate, federal funds rate or LIBOR rate, and is due December 2001.



17

MGM Grand Australia's principal executive offices are located at Gilruth

Avenue, Mindil Beach, Darwin, Northern Territory 0801 Australia. In September

1995, the Company acquired MGM Grand Australia which is located on an 18-acre

beach front site on the north central coast of Australia (See Item 1.

Business.) This property is subject to a first priority deed of trust securing

bank financing of up to approximately $45 million, which bears interest based

on the Australian bank bill rate and is due December 2002.



The Primm Properties are located on approximately 143 acres of land on both

sides of Interstate 15 at the California/Nevada state line. Substantially all

of the land is leased from Primm South Real Estate Company, a corporation

owned by the Primm family. The lease has an expiration date of 2043 with an

option to renew for an additional 25 years. Rent for all properties covered by

the lease is approximately $469,000 per month. Rent increases each year by the

cost of living, but not more than eight percent in any one year. Every eight

years, the rent is to be reset by two appraisers, or, if they are unable to

agree, by another appraiser selected by the first two appraisers. The lease

provides for a fee of $100,000 per year, adjusted every 10 years by the cost

of living but not more than eight percent annually, for lessor's agreement not

to engage in or permit any gaming activity on any of the unleased acreage

owned by the lessor. In addition, the lessor has made available to Primadonna

acreage for a wastewater treatment plant operated by Primadonna and the

associated rapid infiltration basins. The wastewater treatment plant has

sufficient capacity to support the Primm Properties' requirements. The plant

was constructed, and is being expanded, in a manner to allow for expansion on

the site if additional capacity is needed in the future.



Primadonna owns approximately 16 acres immediately north of Buffalo Bill's

that are currently the site of 144 company-owned mobile homes rented to

employees. A subsidiary of the Company owns approximately 573 acres of land in

California, approximately four miles south of Primm, which is the location for

the Primm Valley Golf Club. Approximately 125 of these acres remain available

for future development.



Primadonna has rights to water in various wells located on federal land in

the vicinity of the Primm Properties, and has received permits to pipe the

water to the Primm Properties. The Company believes that there is adequate

water, and that Primadonna has the necessary permits to pipe sufficient

quantities of water, to meet present and ongoing needs of the Primm

Properties. Such permits and rights are subject to the jurisdiction and on-

going regulatory authority of the U.S. Bureau of Land Management, the States

of Nevada and California, and local governmental units. The Company believes

that adequate water for the Primm Properties is available, however, there can

be no assurances that the future needs will be within the current permitted

allowance. There can be no assurances that any future requests for additional

water will be approved, or that no further requirements will be imposed by

governmental agencies on the Primadonna's use and delivery of water to the

Primm Properties.



Primadonna Resorts and its properties are subject to a first priority deed

of trust securing bank financing of up to $350 million of which $233.7 million

was outstanding as of December 31, 1998, and which bears interest based on

LIBOR or the bank reference rate, and which is due June 2002.



Item 3. Legal Proceedings



On April 5, 1996, a lawsuit was filed in the Superior Court of California,

County of Los Angeles by Sheldon Gordon and Randy Brant against the Company.

The suit alleged that the Company breached an oral joint venture agreement to

have real estate developers Gordon/Brant design and develop a retail and

entertainment center at the portion of MGM Grand Las Vegas which fronts the

Strip. Plaintiffs claimed the alleged oral agreement was formed on essentially

the terms set forth in an earlier letter which provided it could not be relied

upon for any reason, and that no binding agreement would exist until an

Operating Agreement had been duly executed by the Company. They sued for

$350,000 in costs advanced in anticipation of the project being constructed,

as well as for damages of approximately $100 million from lost profits that

would have resulted upon completion, and damage to their reputations.

Management believes that the claims are wholly without merit and does not

expect that the lawsuit will have a material adverse effect on the Company's

financial condition or results of operations. On July 8, 1996, the

jurisdiction of the lawsuit was transferred to the U.S. District Court for the

District of Nevada. On June 13, 1997, the Company filed a motion for summary

judgment on the grounds that no



18

enforceable contract exists between the parties. The District Court granted

the Company's motion for summary judgment and, in March 1998, entered judgment

in favor of the Company. The Plaintiffs appealed the judgment entered against

them to the U.S. Court of Appeals for the Ninth Circuit, and briefing on the

Plaintiffs' appeal was completed. On March 5, 1999, upon both parties'

stipulation, a voluntary dismissal of the appeal was granted by the U.S. Court

of Appeals.



A subsidiary of the Company is a defendant in an adversary proceeding

against MGM Dist. Inc., (formerly MGM Desert Inn, Inc.) in Bankruptcy Case,

pending in the United States Bankruptcy Court for the Central District of

California. The adversary complaint, which was filed on December 12, 1997,

alleges that the debtor, Ken Mizuno, transferred approximately $1.1 million to

MGM Desert Inn, Inc. in 1988 and 1989, in payment of casino debts of various

individuals. The complaint alleges these transfers were fraudulent conveyances

and seeks damages against the Company in an amount not less than approximately

$1.1 million. The Company answered the complaint on January 30, 1998, denying

the allegations thereof and asserting the complaint failed to state a claim

upon which relief could be granted. Also on January 30, 1998, the Company

filed a motion to transfer venue to the United States Bankruptcy Court in the

District of Nevada. On February 12, 1998, the Plaintiff indicated his intent

to file an amended adversary complaint asserting that Mr. Mizuno's payment of

his own casino debt at the Desert Inn in the approximate amount of $20 million

also constituted a fraudulent conveyance. On July 20, 1998, the Bankruptcy

Court entered an order granting the Company's motion for dismissal for failure

to state a claim based on statute of limitations grounds. The plaintiff's

motion for reconsideration in Bankruptcy Court was denied on November 11,

1998. The plaintiff has since filed a Notice of Appeal to the District Court

from the Bankruptcy Court's order granting the Company's motion for dismissal

and the Bankruptcy Court's denial of the motion for reconsideration. The

Company intends to vigorously defend this action.



On April 26, 1994, a purported class action lawsuit was filed in the United

States District Court, Middle District of Florida, against 41 manufacturers,

distributors and casino operators of video poker and electronic slot machines,

including the Company ("Poulos"). On May 10, 1994, a complaint alleging

substantially identical claims was filed by another plaintiff in the United

States District Court, Middle District of Florida, against 48 manufacturers,

distributors and casino operators of video poker and electronic slot machines,

including the Company and most of the other major hotel-casino companies

("Ahern"). On September 26, 1995, a complaint alleging substantially identical

claims was filed by another plaintiff in the United States District Court for

Nevada, against 45 operators, manufacturers, and distributors of video poker

and electronic slot machines, including the Company ("Schreier"). The

complaints allege that the defendants have engaged in a course of fraudulent

and misleading conduct intended to induce persons to play such games based on

a false belief concerning how the gaming machines operate, as well as the

extent to which there is an opportunity to win. The three lawsuits have been

consolidated into a single action, and discovery with respect to

jurisdictional issues is currently in progress ("Poulos/Ahern/Schreier"). On

December 9, 1994, the Florida Court ordered the case be transferred to the

United States District Court for the District of Nevada. On April 17, 1996,

the federal district court in Las Vegas, Nevada, dismissed the purported class

action suit, and gave the claimants until May 31, 1996 to file amended

complaints. On May 31, 1996 the plaintiffs filed an amended complaint, and

also filed a motion to substitute Brenda McElmore for Mr. Ahern as one of the

class representatives. The motion was not opposed by the Company. On July 12,

1996, the plaintiffs filed a motion seeking to lift the December 30, 1994 stay

of discovery and seeking leave to add additional defendants. The defendants

(including the Company) have opposed those motions, and no hearing date has

been set on these motions. By order dated August 17, 1996, the Case was

transferred to Judge Ezra of the United States District Court of Hawaii, and

assigned the new Case No. CV- S-94-1126-DAE (RJJ)-BASE FILE. The plaintiffs,

Poulos/Ahern/Schreier had until February 14, 1997 to file one consolidated

complaint, which was done. The defendants (including the Company) appointed a

steering committee to file consolidated pleadings in response to the

consolidated complaint. On February 14, 1997, the parties filed a case

management order. The defendants filed a motion to dismiss on March 21, 1997.

On December 19, 1997, the Court granted a motion to dismiss one of the

complaints, the balance of the motions were denied. A motion to dismiss

certain parts of the consolidated complaint was granted, and all other

remaining motions were denied. The plaintiffs filed a second consolidated

amended complaint of January 9, 1998, with essentially the same allegations as

in the earlier Consolidated Case. The defendants (including the Company)



19

filed their answer on February 11, 1998. The parties have submitted an updated

case management order which has been approved, in part, by the court. On March

18, 1998, the plaintiffs filed a motion for class certification. On March 19,

1998, the Magistrate Judge granted the defendants' motion seeking to bifurcate

discovery into "class" and "merits" phases, and to stay merits discovery

pending a decision on plaintiffs motion for class certification. Class

discovery was completed on July 17, 1998; however, plaintiffs have filed a

motion to compel further discovery from the defendants. The Magistrate Judge

has recommended denial of that motion, and the plaintiffs have sought review

of that recommendation by the Judge. The defendants will oppose the review

sought by the plaintiffs. If that motion is granted, defendants could be

required to provide additional documents and information to plaintiffs. On

August 7, 1998, the defendants filed their opposition to the class

certification. The plaintiffs reply memorandum was filed on August 25, 1998,

and the matter has been submitted for decision. The stay of merits discovery

remains in effect until the court decides the motion for class certification.



On July 15, 1997, Yolanda Manuel, the non-custodial parent of Sherrice

Iverson, filed suit in the State of Nevada, in Case No. A375879, identifying

herself as the child's "personal representative." During the early morning

hours of May 25, 1997, Sherrice Iverson, a seven year-old female, was

assaulted and killed in the women's arcade restroom at Primm Valley Resort &

Casino. An eighteen year-old male, Jeremy Strohmeyer, has been convicted of

her murder. The complaint alleges negligence on the part of Primadonna Resorts

and seeks compensatory and punitive damages. On October 15, 1997, Primadonna

Resorts moved to dismiss the complaint and asked, in the alternative, for

partial summary judgment. While the motion was pending, Manuel filed for

letters testamentary regarding Sherrice Iverson on November 12, 1997 in Los

Angeles, receiving "Special Powers" to settle the lawsuit. On December 3,

1997, Ms. Manuel and Primadonna Resorts entered into a stipulation that would

allow for the withdrawal of the Primadonna Resorts' motion to dismiss in

exchange for dismissal of the second claim for relief, pertaining to

"Negligence Per Se," and for the substitution of the correct name of the

Primadonna Resorts. An answer to the Manuel complaint was filed on behalf of

Primadonna Resorts on February 3, 1998, together with a Crossclaim against

Jeremy Strohmeyer and a Third-Party Complaint against David Cash, a young man

who allegedly witnessed all or part of the murder and sexual assault of

Sherrice Iverson by Strohmeyer. On November 25, 1997, other heirs, Leroy

Iverson (father) and Harold Jordan (brother), filed a lawsuit in Department I

of the District Court, Clark County, Nevada. This second complaint was served

on March 31, 1998, but contained numerous errors which were brought to the

attention of Iverson's and Jordan's counsel. Thereafter, an Amended Complaint

was filed on behalf of Iverson and Jordan on August 5, 1998. Primadonna

Resorts responded by filing demands for Iverson and Jordan to post additional

non-resident security bonds in the amount of $500.00 per Defendant and per

Plaintiff. The Plaintiff subsequently filed their non-resident cost bonds in

the amount of $3,000.00. Primadonna Resorts filed an Answer, Counterclaims

against Iverson and Jordan, and Crossclaims against Strohmeyer and Cash. The

Crossclaims are currently in the process of being served upon Strohmeyer and

Cash. With respect to Primadonna's Crossclaim and Third-Party Complaint

against Strohmeyer and Cash in the Manuel case, Primadonna has taken a default

against Strohmeyer for his failure to respond to the Crossclaim. Cash

attempted to file an Answer, in proper person, to Primadonna's Third-Party

Complaint. However, Cash's "Answer" was filed after Primadonna had defaulted

him and, therefore, the court ruled that he must file an appropriate Motion to

lift the default before he is permitted to Answer the Third-Party Complaint.

To date, Cash has not filed a Motion and, therefore, he has not properly

answered in the Manuel case. There have been significant discussions for

Manuel and Iverson regarding mediation and possible settlement; however, no

agreements have been reached between the parties. Counsel for all parties have

exchanged lists of documents and possible witnesses that they believe will be

used or called at trial. On December 17, 1998, the Discovery commissioner

ordered both Primadonna and Manuel to produce additional documents that were

the subject of a dispute between these parties. Counsel for the Primadonna,

Manuel and Iverson have agreed to stipulate to consolidate the two lawsuits

into one action for the purpose of discovery and trial.



On January 4, 1999, Primadonna Resorts was served with a lawsuit in the

Eighth Judicial District Court of Clark County, Nevada entitled: Michael

Shapiro v. Primadonna Resorts, Inc., MGM Grand, Inc., Gary E. Primm, Robert E.

Armstrong, Michael B. Graves, Sigmund Rogich, Gary R. Sitzmann and George C.

Swarts (Case No. A395831). The complaint purports to be a class action filed

on behalf of holders of Primadonna common stock



20

and alleges that the merger consideration is inadequate and did not result

from an auction process. The complaint seeks unspecified damages and

injunctive relief. On February 22, 1999, Primadonna Resorts was served with a

second lawsuit by Mr. Shapiro in the United States District Court, District of

Nevada entitled: Michael Shapiro v. Primadonna Resorts, Inc., MGM Grand, Inc.,

Robert E. Armstrong, Madison B. Graves II, Gary E. Primm, Sigmund Rogich, H.

Martin Rosa, Gary R. Sitzmann, Gregory B. Primm, Roger B. Primm, Janet Primm

Rosa, and George C. Swarts (Case No. CV-S-99-00199-JBR(RJJ)). The claim

purports to be a class action filed on behalf of holders of Primadonna Resorts

common stock and alleges sufficient information on which to base a vote for

merger was not provided, and that the information provided was false and

misleading. The complaint seeks unspecified damages and injunctive relief.



On February 18, 1999, Primadonna Resorts was served with a lawsuit in the

Eighth Judicial District Court of Clark County, Nevada entitled: Sharei

Yeshua, Inc. v. Primadonna Resorts, Inc., MGM Grand, Inc., Gary E. Primm,

Robert E. Armstrong, Michael B. Graves, Sigmund Rogich, Gary R. Sitzmann and

George C. Swarts (Case No. A398673). The complaint purports to be a class

action filed on behalf of holders of Primadonna common stock and alleges that

the merger consideration is inadequate and did not result from an auction

process. The complaint seeds unspecified damages and injunctive relief.



Item 4. Submission of Matters to a Vote of Security Holders



None



Executive Officers of the Registrant



J. Terrence Lanni (age 56) has served as Chairman of the Company since July

1995, Chairman of the Executive Committee and Chief Executive Officer of the

Company since June 1995. He also served as President of the Company from June

1995 to July 1995. Prior thereto, he was President and Chief Operating Officer

of Caesars World, Inc. from April 1981 to February 1995.



Alex Yemenidjian (age 43) has served as President of the Company since July

1995 and as Chief Operating Officer of the Company since June 1995. He also

served as Chief Financial Officer of the Company from May 1994 to January

1998, as Executive Vice President of the Company from June 1992 to July 1995,

as Chairman of the Executive Committee from January 1991 to June 1992, and as

President and Chief Operating Officer of the Company from March 1990 to

January 1991. He also served as an executive of Tracinda from January 1990 to

January 1997, and since February 1999.



Daniel M. Wade (age 46) has served as Executive Vice President of the

Company since October 1998, and for the five years prior thereto most recently

serving as President and Chief Operating Officer for MGM Grand Hotel, Inc.



James J. Murren (age 37) has served as Executive Vice President and Chief

Financial Officer of the Company since January 1998, and for the five years

prior thereto most recently serving as Managing Director and Co-Director of

research for Deutsche Morgan Grenfell.



Scott Langsner (age 45) has served as Secretary/Treasurer of the Company

since July 1987.



Edward J. Jenkins (age 54) has served as Vice President of the Company since

October 1995. From July 1992 to October 1995, he served as Vice President,

Security, for Caesars World, Inc. He previously was a 30-year veteran of the

FBI, holding various management positions at Bureau offices throughout the

United States.



21

PART II



Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters



The Company's Common Stock is listed on the New York Stock Exchange.

For price information with respect to such Common Stock, see page 51

of the Company's 1998 Annual Report to Stockholders, which information

is incorporated herein by this reference.



As of March 11, 1999, there were approximately 2,797 record holders of

the Company's Common Stock.



The Company has not paid any dividends to date on the Common Stock. The

declaration of dividends (which is within the discretion of the

Company's Board of Directors) will depend on the earnings, financial

position and capital requirements of the Company and other relevant

factors existing at the time. See the Company's 1998 Annual Report to

Stockholders which is incorporated herein by reference.



Item 6.  Selected Financial Data



The information set forth on page 1 of the Company's 1998 Annual

Report to Stockholders is incorporated herein by this reference.



Item 7.  Management's Discussion and Analysis of Financial Condition and Results

of Operations



The information set forth on pages 23 to 28 of the Company's 1998

Annual Report to Stockholders is incorporated herein by this

reference.



Item 8.  Financial Statements and Supplementary Data



The consolidated balance sheets as of December 31, 1998 and 1997 and

the consolidated statements of operations, stockholders' equity, and

cash flows for each of the three years in the period ended December

31, 1998 with the Report of Independent Public Accountants contained

on pages 29 to 49 of the Company's 1998 Annual Report to Stockholders

are incorporated herein by reference.



Item 9.  Disagreements on Accounting and Financial Disclosure



None.



22

PART III



Item 10.  Directors and Executive Officers of the Registrant



Item 11.  Executive Compensation



Item 12.  Security Ownership of Certain Beneficial Owners and Management



Item 13.  Certain Relationships and Related Transactions



Information called for by PART III (Items 10, 11, 12, and 13) has been

omitted, as the Company intends to file with the Securities and

Exchange Commission not later than 120 days after the end of its

fiscal year, a definitive Proxy Statement pursuant to regulation 14A,

except that the information regarding the Company's executive

officers called for by Item 10 of PART III has been included in PART

I of this Form 10-K under the heading "Executive Officers of the

Registrant."



PART IV



Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K



(a) The financial statements and schedule listed in the accompanying

index to Financial Statements at Page 26 herein are filed as part of

this Form 10-K.



(b) Form 8-Ks filed on November 12, 1998 and December 9, 1998.



(c) Exhibits



The exhibits listed in the accompanying Exhibit Index on Pages 29 to

31 are filed as part of this Form 10-K.



(d) The financial statements for the Company's Unconsolidated

Affiliate are set forth in Exhibit 99 hereto and incorporated herein

by this reference.



23

SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities

Exchange Act of 1934, the Registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.



MGM GRAND, INC.



By /s/    J. Terrence Lanni

_____________________________________

J. Terrence Lanni

Chairman and Chief Executive Officer

(Principal Executive Officer)



By /s/    Alex Yemenidjian

_____________________________________

Alex Yemenidjian

President and Chief Operating

Officer



Dated: March 18, 1999



Pursuant to the requirements of the Securities Exchange Act of 1934, this

report has been signed by the following persons on behalf of the Registrant

and in the capacities and on the dates indicated.



<TABLE>

<CAPTION>

Signature                           Title                    Date

---------                           -----                    ----

<S>                                  <C>                           <C>

/s/ J. Terrence Lanni           Chairman of the Board, Chief    March 18, 1999

____________________________________  Executive Officer, and

J. Terrence Lanni            Director



/s/ Alex Yemenidjian           President, Chief Operating      March 18, 1999

____________________________________  Officer, and Director

Alex Yemenidjian



/s/ James J. Murren            Executive Vice President,       March 18, 1999

____________________________________  Chief Financial Officer,

James J. Murren             and Director



/s/ James D. Aljian            Director                        March 18, 1999

____________________________________

James D. Aljian



/s/ Fred Benninger            Director                        March 18, 1999

____________________________________

Fred Benninger



/s/ Terry N. Christensen         Director                        March 18, 1999

____________________________________

Terry N. Christensen



Director                        March   , 1999

____________________________________

Glenn A. Cramer

</TABLE>



24

<TABLE>

<CAPTION>

Signature                           Title                    Date

---------                           -----                    ----

<S>                                  <C>                           <C>

Director                        March   , 1999

____________________________________

Willie D. Davis



Director                        March   , 1999

____________________________________

Alexander M. Haig, Jr.



/s/ Kirk Kerkorian            Director                        March 18, 1999

____________________________________

Kirk Kerkorian



Director                        March   , 1999

____________________________________

Walter M. Sharp



/s/ Jerome B. York            Director                        March 18, 1999

____________________________________

Jerome B. York

</TABLE>



25

INDEX TO FINANCIAL STATEMENTS

(Item 14(a))



<TABLE>

<CAPTION>

Annual

Report to   Form

Stockholders 10-K

Page     Page

------------ ----

<S>                                                          <C>          <C>

Report of Independent Public Accountants....................      49

Consolidated Statements of Operations--For the years ended

December 31, 1998, 1997, 1996..............................      29

Consolidated Balance Sheets as of December 31, 1998 and

1997.......................................................      30

Consolidated Statements of Cash Flows--For the years ended

December 31, 1998, 1997, 1996..............................      31

Consolidated Statements of Stockholders' Equity--For the

years ended December 31, 1998, 1997, and 1996..............      32

Notes to Consolidated Financial Statements..................      33

Selected Quarterly Financial Results (unaudited)............      50

Report of Independent Public Accountants on Supplemental

Schedule...................................................               27

Schedule II--Valuation and Qualifying Accounts..............               28

</TABLE>



All other schedules have been omitted either as inapplicable or not required

under the instructions contained in Regulation S-X, or because the information

is included in the financial statements or the notes thereto.



26

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTAL SCHEDULE



To MGM Grand, Inc.:



We have audited in accordance with generally accepted auditing standards,

the consolidated financial statements included in MGM Grand, Inc.'s (the

"Company") Annual Report to stockholders incorporated by reference in this

Form 10-K, and have issued our report thereon dated February 1, 1999. Our

audits were made for the purpose of forming an opinion on those statements

taken as a whole. The supplemental Schedule II as shown on page 28 is the

responsibility of the Company's management and is presented for purposes of

complying with the Securities and Exchange Commission's rules and is not part

of the basic consolidated financial statements. This schedule has been

subjected to the auditing procedures applied in the audits of the basic

consolidated financial statements and, in our opinion, fairly states in all

material respects the financial data required to be set forth therein in

relation to the basic consolidated financial statements taken as a whole.



ARTHUR ANDERSEN LLP



Las Vegas, Nevada

February 1, 1999



27

MGM GRAND, INC. AND SUBSIDIARIES



SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS



Years Ended December 31, 1998, 1997, and 1996

(In thousands)



<TABLE>

<CAPTION>

Additions

Balance   Charged          Balance

at     to Costs  Amounts at End

Beginning    and    Written   of

Description                of Period Expenses    Off   Period

-----------                --------- --------- ------- -------

<S>                                       <C>       <C>       <C>     <C>

FOR THE YEAR ENDED DECEMBER 31, 1998:

Allowance for doubtful accounts and

discounts...............................  $27,023   $40,455  $30,647 $36,831

FOR THE YEAR ENDED DECEMBER 31, 1997:

Allowance for doubtful accounts and

discounts...............................  $35,432   $31,814  $40,223 $27,023

FOR THE YEAR ENDED DECEMBER 31, 1996:

Allowance for doubtful accounts and

discounts...............................  $33,072   $38,635  $36,275 $35,432

</TABLE>



28

EXHIBIT INDEX



<TABLE>

<CAPTION>

Exhibit

Number                                Description

-------                               -----------



<C>     <S>

2       Agreement and Plan of Merger, dated as of December 2, 1998, among the

Company, MGM Acquisition Corp. And Primadonna Resorts, Inc.

(incorporated by reference to Appendix A to the Company's Proxy

Statement/Prospectus dated February 1, 1999).



3(1)    Certificate of Incorporation of Company, as amended (incorporated by

reference to Exhibit 3(1) to Registration Statement No. 33-3305 and to

Exhibit 3(a) to the Company's Annual Report on Form 10-K for the

fiscal year ended December 31, 1997 (the "1997 10-K")).



3(2)    Bylaws of Company, as amended (incorporated by reference to Exhibit

3(2) to Registration Statement No. 33-30337).



4(1)    Indenture, dated as of February 2, 1998, among the Company, as issuer,

the Guarantor Parties thereto, as guarantors, and PNC Bank, National

Association, as Trustee (incorporated by reference to Exhibit 4(1) to

the Company's Current Report on Form 8-K, dated February 23, 1998 (the

"Form 8-K")).



4(2)    Schedule setting forth material details of the Indenture, among MGM

Grand, Inc., as Issuer, the Guarantors Parties thereto and U.S. Trust

Company of California, N.A., dated as of February 6, 1998

(incorporated by reference to Exhibit 4(2) to the Form 8-K).



*10(1)  MGM Grand, Inc. Nonqualified Stock Option Plan (incorporated by

reference to Exhibit 10(1) to the Company's Annual Report on Form 10-K

for the fiscal year ended December 31, 1996 (the "1996 10-K")).



*10(2)  MGM Grand, Inc. Incentive Stock Option Plan (incorporated by reference

to Exhibit 10(2) to the 1996 10-K).



10(3)   Amended and Restated Loan Agreement, dated as of July 17, 1997, as

amended, between the Company, as Borrower, MGM Grand Atlantic City,

Inc., as Co-Borrower, Bank of America NT&SA, as Administrative Agent,

and the banks named therein (incorporated by reference to Exhibit 10

to the Company's Current Report on Form 8-K dated July 23, 1997,

Exhibit 10(3)(a) to the 1997 10-K and Exhibit 10(3)(b) to the 1997 10-

K).



*10(4)  Letter Agreements, dated January 3, 1991 and February 9, 1993, between

the Company and Alex Yemenidjian (incorporated by reference to Exhibit

10(19) of the Company's Annual Report on Form 10-K for the fiscal year

ended December 31, 1992 (the "1992 10-K")).



*10(5)  Letter Agreement, dated February 9, 1993, between the Company and Fred

Benninger (incorporated by reference to Exhibit 10(20) of the 1992 10-

K).



10(6)   Operating Agreement of New York-New York Hotel, LLC by and between MGM

Grand, Inc. and PRMA Las Vegas, Inc. dated as of December 26, 1994

(incorporated by reference to Exhibit 10(16) to the Company's Annual

Report on Form 10-K for the fiscal year ended December 31, 1994 (the

"1994 10-K")).



10(7)   Contribution Agreement with Joint Escrow instructions by and among

PRMA Las Vegas, Inc. and the Company and New York-New York Hotel, LLC

dated as of December 26, 1994 (incorporated by reference to the 1994

10-K).



10(8)   Construction/Revolving Loan Agreement dated as of September 15, 1995

among New York-New York Hotel, LLC and the banks named therein

(incorporated by reference to Exhibit 10(18) to the Company's Annual

Report on Form 10-K for the fiscal year ended December 31, 1995 (the

"1995 10-K").



</TABLE>





29

EXHIBIT INDEX--(Continued)



<TABLE>

<CAPTION>

Exhibit

Number                                Description

-------                               -----------



<C>     <S>

10(9)   Completion Guaranty dated as of September 15, 1995 by the Company and

Primadonna Resorts, Inc. (incorporated by reference to Exhibit 10(19)

to the 1995 10-K).



10(10)  Keep Well Agreement dated as of September 15, 1995 by the Company and

Primadonna Resorts, Inc. (incorporated by reference to Exhibit 10(20)

to the 1995 10-K).



10(11)  Agreement for Purchase of Shares between MGM Grand Australia PTY LTD

("MGM Grand Australia"), the Company and the Vendors (as defined

therein) dated as of June 30, 1995 (incorporated by reference to

Exhibit 10(21) to the 1995 10-K).



10(12)  Loan Agreement between MGM Grand Australia and the banks named therein

dated September 6, 1995 (incorporated by reference to Exhibit 10(22)

to the 1995 10-K).



10(13)  MGM Grand, Inc. Continuing Guaranty dated as of September 1, 1995

(incorporated by reference to Exhibit 10(23) to the 1995 10-K).



10(14)  Option Deed dated as of June 30, 1995 between the Shareholders named

therein, the Company and the persons named therein (incorporated by

reference to Exhibit 10(24) to the 1995 10-K).



*10(26) Letter Agreement dated April 13, 1995 between the Company and J.

Terrence Lanni (incorporated by reference to Exhibit 10(26) to the

1995 10-K).



*10(27) Letter Agreement dated October 10, 1995 between the Company and Edward

Jenkins (incorporated by reference to Exhibit 10(27) to the 1996 10-

K).



*10(28) MGM Grand, Inc. 1997 Nonqualified Stock Option Plan (incorporated by

reference to Exhibit 4.1 to the Company's Registration Statement on

Form S-8 (File No. 333-42729) (the "Form S-8")).



*10(29) MGM Grand, Inc. 1997 Incentive Stock Option Plan (incorporated by

reference to Exhibit 4.2 to the Form S-8).



*10(30) Annual Performance Based Incentive Plan for Executive Officers

(incorporated by reference to Appendix 1 to the Company's Proxy

Statement dated March 28, 1997).



*10(31) Letter Agreement dated April 22, 1997, between the Company and

Alejandro Yemenidjian (incorporated by reference to Exhibit 10(31) to

the 1997 10-K).



*10(32) Letter Agreement dated January 16, 1998, between the Company and James

Murren (incorporated by reference to Exhibit 10(32) to the 1997 10-K).



*10(33) Letter Agreement dated December 9, 1998, between the Company and Scott

Langsner.



*10(34) Letter Agreement dated April 1, 1998 between the Company and J.

Terrence Lanni.



*10(35) Amended and Restated Ground Lease Agreement dated July 1, 1993 between

Primm South Real Estate Company and The Primadonna Corporation

(incorporated by reference to Exhibit 10.11 to the Annual Report on

Form 10-K of Primadonna Resorts, Inc. for the fiscal year ended

December 31, 1997 (the "Primadonna 1997 10-K")).



*10(36) Amended and Restated Split-Dollar Agreement between The Primadonna

Corporation, Gary E. Primm and Robert E. Armstrong, Trustee of the

1992 Primm Children's Trust U/A dated December 22, 1992 (the

"Trustee") dated as of December 22, 1998.



*10(37) Split-Dollar Collateral Assignment, dated December 22, 1998, between

The Primadonna Corporation, Robert E. Armstrong, as trustee of the

1992 Primm Children's Trust U/A dated December 22, 1992, and John

Hancock, as insurer.

</TABLE>



- --------

* Management contract or compensatory plan.



30

EXHIBIT INDEX--(Continued)



<TABLE>

<CAPTION>

Exhibit

Number                                Description

-------                               -----------



<C>     <S>

10(38)  Credit Agreement dated June 5, 1997 by and among Primadonna Resorts,

Inc. and The Primadonna Corporation as "Borrowers," and Wells Fargo

Bank, as "Agent Bank" for a consortium of sixteen participating banks

listed therein as "Lenders" (without schedules or exhibits)

(incorporated by reference to Exhibit 10.29 to the Form 10-Q of

Primadonna Resorts, Inc. for the period ended June 30, 1997).



*10(39) First Amendment to the Amended and Restated Ground Lease Agreement and

Consent and Waiver, dated August 25, 1997 by and among The Primadonna

Corporation and Primm South Real Estate Company (incorporated by

reference to Exhibit 10.31 to the Primadonna 1997 10-K).



10(39)  Assumption and Consent Agreement, dated December 18, 1997, by and

among Primadonna Resorts, Inc. and The Primadonna Corporation, as

"Borrowers," and Wells Fargo Bank, as "Agent Bank" for a consortium of

sixteen participating banks listed therein as "Lenders" (without

schedules or exhibits) (incorporated by reference to Exhibit 10.32 to

the Primadonna 1997 10-K).



10(40)  Assumption and Consent Agreement, dated June 3, 1998, by and among

Primadonna Resorts, Inc. and The Primadonna Corporation, as

"Borrowers," and Wells Fargo Bank, as "Agent Bank" for a consortium of

participating banks listed therein as "Assuming Lenders" (without

exhibit or schedules) (incorporated by reference to Exhibit 10.33 to

the Form 10-Q of Primadonna Resorts, Inc. for the period ended June

30, 1998).



10(41)  Amended and Restated Development Agreement among the City of Detroit

and The Economic Development Corporation of the City of Detroit and

MGM Grand Detroit, LLC for the City of Detroit Casino Development

Project dated as of April 9, 1998.



10(42)  First Amendment to the Amended and Restated Development Agreement

dated June 25, 1998.



10(43)  Letter dated January 26, 1999 from MGM Grand Detroit, LLC to the City

of Detroit and The Economic Development Corporation of the City of

Detroit.



13      The Company's 1998 Annual Report to Stockholders.



21      List of Subsidiaries.



23      Consent of Independent Public Accountants.



27      Financial Data Schedule for the period ending December 31, 1998.



99      Unconsolidated Affiliate Financial Statements.

</TABLE>

- --------

* Management contract or compensatory plan.



31