Management’s Discussion and Analysis of Financial Condition and Results of Operations 26 $12 million in 2004. The increase is due to the full year of Borgata’s results, offset by a reduction to state income taxes in the fourth quarter of 2004. Borgata received a notice of refund of certain state tax credits and recorded a benefit for amounts earned in 2003 and 2004, which had previously been fully reserved. Our share of the adjustment was $12 million. We expect our share of the benefit of these tax credits to positively impact this line item by approximately $8 million per year for the next three years. The following table summarizes information related to our income taxes: The effective income tax rate in 2004 was higher than in 2003 primarily due to the accrual of additional state deferred taxes related to capital investments in New Jersey, non-deductible costs related to a Michigan ballot initiative, overseas development costs for which no tax benefit was provided, and the reversal of a greater amount of tax reserves in 2003 compared to 2004 ($13 million in 2003 versus $6 million in 2004)  as a result of completion of audits and the expiration of statutes of limitations. The  effective income tax rate in 2003 was lower than in 2002 primarily due to the reversal of tax reserves in 2003. Excluding the reversal, our effective income tax rate was approximately the same in both periods. In 2004, taxes paid increased from prior years, primarily due to increased book income and the full utilization of tax credit carryforwards in 2003. Except for 2003, when we made payments to settle IRS audits of prior years, taxes paid have generally been  significantly lower than our income tax provision. This is primarily due to accelerated tax depreciation and the utilization of tax credit carryforwards. We utilized the last of these credits in 2003, which resulted in the increase in our cash paid for taxes in 2004. We are evaluating the impact of provisions of the American Jobs Creation Act of 2004 (the “Act”) that provide for a special one-time tax deduction of 85 percent  on certain repatriated earnings of foreign subsidiaries. Additional guidance from Congress and/or the United States Treasury Department will be necessary for us to complete our evaluation, as it is not clear at this time whether the Act will provide  a benefit to us. We will complete our evaluation as soon as practicable following the issuance of guidance and adjust our taxes accordingly, if necessary. We have not yet repatriated the net proceeds from the sale of MGM Grand Australia pending our evaluation. Nonetheless, we provided in 2004 deferred U.S. income taxes of $11 million on the basis that such proceeds would be repatriated without the benefit of the 85 percent one-time deduction. Such amount was included in the provision for income taxes on discontinued operations for 2004.  We considered the earnings of our Australia operations permanently reinvested  prior to the sale of such operations. If guidance is issued that indicates our planned repatriation qualifies for the one- time deduction, we will recognize a tax benefit of approximately $7 million as part of continuing operations in the quarter in which such guidance is issued. If no such guidance is issued within the applicable timeframe, then we will attempt to  permanently reinvest the proceeds in another foreign jurisdiction, such as Macau.  In such case, we would recognize a tax benefit of $11 million as part of continuing operations in the quarter in which the reinvestment is made. We currently do not have a plan to reinvest the proceeds in such manner. Y ear Ended December 31 (In thousands) 2004 2003 2002 Income from continuing operations  before income tax . . . . . . . . . . . . . . . . . . . . . . . $ 555,815 $ 343,660 $ 457,927 Income tax provision . . . . . . . . . . . . . . . . . . . . . . 205,959 113,387 168,451 Effective income tax rate . . . . . . . . . . . . . . . . . . . 37.1% 33.0% 36.8% Cash paid for income taxes . . . . . . . . . . . . . . . . . $ 128,393 $ 94,932 $ 44,579