20 Management’s Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Key Performance Indicators We generate a majority of our net revenues and operating income from our Las Vegas Strip resorts. In 2004, over 75% of our net revenues and operating income was generated by wholly-owned Las Vegas Strip resorts. We believe that we own the premier casino resorts on the Las Vegas Strip, and a main focus of our strategy is to continually reinvest in these resorts to maintain that competitive advantage. Our concentration on the Las Vegas Strip exposes us to certain risks outside of our  control, such as competition from other Las Vegas Strip resorts as well as new or expanded resorts in Las Vegas, including Wynn Las Vegas expected to open in 2005, and the impact from potential expansion of gaming in California. This concentra- tion also exposes us to risks related to tourism and the general economy, including national and global economic conditions and terrorist attacks or other global events. Our results of operations do not tend to be seasonal in nature, though a variety of factors can affect the results of any interim period, including the timing of major Las Vegas conventions, the amount and timing of marketing and special events for our high-end customers, and the level of play during major holidays, including New Year and Chinese New Year. Most of our revenue is essentially cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit cards. Our resorts, like many in the industry, generate significant operating cash flow. Our industry is capital intensive and we rely heavily on the ability of our resorts to generate  operating cash flow to repay debt financing, fund maintenance capital  expenditures and provide excess cash for future development. We operate in one segment, the operation of casino resorts, which includes offering gaming, hotel, dining, entertainment, retail and other resort amenities. Slightly over half of our net revenues are derived from gaming activities, a lower percentage than many of our competitors, as our operating philosophy is to provide a complete resort experience for our guests, including non-gaming amenities which command premium prices based on their quality. At December 31, 2004, our operations consisted of 11 wholly-owned casino resorts and 50% investments in two other casino resorts, including: As a resort-based company, our operating results are highly dependent on the  volume of customers at our resorts, which in turn impacts the price we can charge for our hotel rooms and other amenities. We also generate a significant portion of our operating income from the high-end gaming segment, which can cause  variability in our results. Key performance indicators related to revenue are: • Gaming revenue indicators – table games drop and slot handle (volume  indicators); “win” or “hold” percentage, which is not fully controllable by us. Our normal table games win percentage is in the range of 18% to 22% of table games drop and our normal slot win percentage is in the range of 6% to 7% of slot handle;  • Hotel revenue indicators – hotel occupancy (volume indicator); average daily rate (“ADR”, price indicator); revenue per available room (“REVPAR”), a summary measure of hotel results, combining ADR and occupancy rate. Las Vegas, Nevada: Bellagio, MGM Grand Las Vegas, The Mirage, TI, New York- New York, Boardwalk, and Monte Carlo (50% owned). Other: The Primm Valley Resorts (Buffalo Bill’s, Primm Valley Resort and Whiskey Pete’s) in Primm, Nevada; Beau Rivage in Biloxi, Mississippi; MGM Grand Detroit; Borgata (50% owned) in Atlantic City, New Jersey.