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              [html]<thead><tr><td>ACCOUNTING PRINCIPLES ADOPTED IN 2004</td><td>December 35.2006, with optional application to components diaposed of or classified as hed for eads within that fixcal year. We did not apply EITF 0.15 to orar sale of MGM Grand Auntalia, but if we had spplied EITF 0.9 – 15 we relib weall have c</td></tr></thead><tbody><tr><td>Taxation on Foreign. EarningsIncember 2006, the staff of the Financial Accounting Standards Board (“ FASB ”) issued FASB Staff Position 109 - 2, “ Accounting and Disclosure Guidance for the</td><td>Foreign Repatriation Provision within the American Jobs Creation Act of 2004 * (“ FSP 109 – 2 ”). FSP 109 – 2 allows us additional time beyond rhe financial reporting</td></tr><tr><td>RECENTLY ISSUED ACCOUNTING STANDARDS</td><td>period in which the Act was enacted to evaluate the effects of the Act on our plans for reparriation of unremitted earnings. Under SFAS 109, we did not historically</td></tr><tr><td>Stock - based Compensation</td><td>record a provision for U. S. Federal or State income taxes on undistributed earnings of foreign subsidiaties because such earnings were considered to be indefinely</td></tr><tr><td>“ Share - Based Payment ” (“ SFAS 123 ( R )”). Under the original standard, SFAS No. 123, “ Accounting for Stock - Based Compensation ” (“ SFAS 123 ”), companies had the</td><td>reinvested in the operations of foreign subsidiaties. Upon the sale of MGM Grand</td></tr><tr><td>option of recording stock options issued to employees at fair value or intrinsic value,</td><td>Australia, we did provide deferred taxes of $ 11 million on the basis that the</td></tr><tr><td>which generally leads to no expense being recorded. Most companies, including us,</td><td>proceeds would be reparriated without the benefit of the 85 percent one - time deduction provided by the Act. The Act may allow a special one - time deduction</td></tr><tr><td>opted to use this intrinsic value method and make required disclosures of fair va expense. SFAS 125 ( R ) eliminates this intrinsic value alternative. SFAS 125 ( R ) is</td><td>85 percent of certain reparriated foreign earnings ; however, additional clarifying</td></tr><tr><td>effective for us on July 1.2005, at which time all future share - based payments must</td><td>language is necessary to ensure we qualify for the deduction. The potential benefit to us of the reparriation provisions of the Act is SP million.</td></tr><tr><td>be recorded at fair value. Transition methods are discussed below.</td></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr><tr></tr></tbody>
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