47 Notes to Consolidated Financial Statements 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.  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 Tunica 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 quarter of 2005. 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 events in these countries could affect the collectibility of such receivables. Principles of consolidation. The consolidated financial statements include the accounts of the Company and its subsidiaries. Investments 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. 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. Recoveries of accounts previously  written off are recorded when received. An estimated allowance for doubtful accounts is maintained to reduce the Company’s receivables to their carrying amount, which approximates fair value. The allowance is estimated based on  specific review of customer accounts as well as historical collection experience  NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES  AND BASIS OF PRESENTATION