Notes to Consolidated Financial Statements 47
On June 16, 2004, the Company announced that it had entered into a definitive
merger agreement with Mandalay Resort Group (“Mandalay”), a publicly traded
company, under which the Company will acquire Mandalay for $71.00 in cash for
each share of common stock of Mandalay. Mandalay owns and operates eleven
properties in Nevada, including Mandalay Bay, Luxor, Excalibur, Circus Circus, 
and Slots-A-Fun in Las Vegas, Circus Circus-Reno in Reno, Colorado Belle and
Edgewater in Laughlin, Gold Strike and Nevada Landing in Jean, and Railroad Pass
in Henderson. Mandalay also owns and operates Gold Strike, a hotel/casino in
T unica County, Mississippi. In addition, Mandalay owns a 50% interest in Silver
Legacy in Reno, a 50% interest in Monte Carlo in Las Vegas, a 50% interest in
Grand Victoria, a riverboat in Elgin, Illinois, and a 53.5% interest in MotorCity in
Detroit, Michigan. The total consideration is approximately $8.1 billion, including
equity value of approximately $4.8 billion, convertible debentures with a 
redemption value of approximately $574 million, the assumption or repayment of
other outstanding Mandalay debt with a fair value of approximately $2.6 billion as
of December 31, 2004, and $100 million of estimated transaction costs. The 
transaction is structured as a merger of one of the Company’s wholly-owned 
subsidiaries with and into Mandalay. The transaction will be accounted for as a 
purchase and is anticipated to close during the first quar ter of 2005.
NOTE 2 — SIGNIFICANT A CCOUNTING POLICIES 
AND BASIS OF PRESENT ATION
Principles of consolidation. The consolidated financial statements include the
accounts of the Company and its subsidiaries. I nvestments in unconsolidated 
affiliates which are 50% or less owned are accounted for under the equity method.
All significant intercompany balances and transactions have been eliminated in 
consolidation. The Company’s operations are primarily in one segment – operation
of casino resorts. Other operations, and foreign operations, are not material.
Management’s use of estimates.The consolidated financial statements have been
prepared in conformity with accounting principles generally accepted in the United
States of America. Those principles require the Company’s management to make
estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses during the 
reporting period. Actual results could differ from those estimates.
Cash and cash equivalents. Cash and cash equivalents include investments and
interest bearing instruments with maturities of three months or less at the date of
acquisition. Such investments are carried at cost which approximates market value.
Effective December 31, 2004, the Company is recording book overdraft balances
resulting from its cash management program as accounts payable, and has 
reclassified prior period balances to conform to this presentation. 
Accounts receivable and credit risk. Financial instruments that potentially subject
the Company to concentrations of credit risk consist principally of casino accounts
receivable. The Company issues markers to approved casino customers following
background checks and investigations of creditworthiness. At December 31, 2004, a
substantial portion of the Company’s receivables were due from customers residing
in foreign countries. Business or economic conditions or other significant ev ents in
these countries could affect the collectibility of such r eceivables.
Trade receivables, including casino and hotel receivables, are typically non-interest
bearing and are initially recorded at cost. Accounts are written off when manage-
ment deems the account to be uncollectible. R ecoveries of accounts previously 
written off are recorded when received. An estimated allowance for doubtful