##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 1-3924
 MAXXAM INC.
  Delaware
(State or other jurisdiction 
of incorporation or organization)
    
    95-2078752
(I.R.S. Employer
Identification Number)1330 Post Oak Blvd., Suite 2000
Houston, Texas
(Address of Principal Executive Offices)
    
    77056
(Zip Code)
 (713) 975-7600
 þ o
 o o
   Large accelerated filer o   
    Accelerated filer o
    Non-accelerated filer o
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




---



##### 



TABLE OF CONTENTS
 PagePART I.  FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited):Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Condensed Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures About Market Risk*
    
    
    37Item 4. Controls and Procedures
    
    
    37PART II.  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    38Item 1A. Risk Factors
    
    
    38Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    38Item 6. Exhibits
    
    
    39Signatures
    
    
    40APPENDIX A  GLOSSARY OF DEFINED TERMS
    
    
    41EX-31.1EX-31.2EX-32
  
 *
    
    Indicates items that the Registrant is allowed (and has chosen) to omit under the disclosure
provisions applicable to smaller reporting companies. 2




---



##### Table of Contents



MAXXAM INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions of dollars, except share information)
 September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    10.5
    
    
    $
    59.6Marketable securities and other short-term investments
    
    
    17.4
    
    
    
    2.5Receivables:Trade, net of allowance for doubtful accounts of $1.1 and $0.9,
respectively
    
    
    1.6
    
    
    
    1.5Other
    
    
    1.3
    
    
    
    1.4Real estate inventory
    
    
    2.8
    
    
    
    2.7Prepaid expenses and other current assets
    
    
    6.6
    
    
    
    6.8Restricted cash
    
    
    1.5
    
    
    
    0.5Total current assets
    
    
    41.7
    
    
    
    75.0Property, plant and equipment, net of accumulated depreciation of $116.1
and $108.8, respectively
    
    
    206.8
    
    
    
    210.4Real estate inventory
    
    
    61.3
    
    
    
    58.1Deferred income taxes
    
    
    41.6
    
    
    
    41.6Deferred financing costs
    
    
    3.8
    
    
    
    4.2Investments in limited partnerships
    
    
    0.1
    
    
    
    0.5Investments in joint ventures
    
    
    
    
    
    
    3.8Other long-term assets and investments
    
    
    3.0
    
    
    
    3.1Restricted cash and certificates of deposit
    
    
    3.3
    
    
    
    3.6$
    361.6
    
    
    $
    400.3Liabilities and Stockholders DeficitCurrent liabilities:Accounts payable
    
    $
    3.2
    
    
    $
    5.4Short-term borrowings and current maturities of long-term debt
    
    
    6.3
    
    
    
    6.1Accrued interest
    
    
    1.0
    
    
    
    0.9Accrued compensation and related benefits
    
    
    2.6
    
    
    
    1.8Accrued defense costs
    
    
    3.0
    
    
    
    6.1Accrued taxes
    
    
    1.8
    
    
    
    1.2Deferred income
    
    
    3.3
    
    
    
    2.9Other accrued liabilities
    
    
    6.1
    
    
    
    7.1Total current liabilities
    
    
    27.3
    
    
    
    31.5Long-term debt, less current maturities
    
    
    202.6
    
    
    
    205.7Accrued pension and other postretirement benefits
    
    
    18.9
    
    
    
    19.4Other noncurrent liabilities
    
    
    45.0
    
    
    
    46.5Losses in excess of investment in Debtors
    
    
    484.2
    
    
    
    484.2Total liabilities
    
    
    778.0
    
    
    
    787.3Commitments and contingenciesStockholders deficit:Preferred stock, $0.50 par value; 2,500,000 shares authorized; Class A $0.05
Non-Cumulative Participating Convertible Preferred Stock, $0.75 liquidation
preference, 668,964 shares issued and 668,119 shares outstanding
    
    
    0.3
    
    
    
    0.3Common stock, $0.50 par value; 13,000,000 shares authorized; 10,063,359
shares
issued; 4,559,637 shares outstanding
    
    
    5.0
    
    
    
    5.0Additional paid in capital
    
    
    225.3
    
    
    
    225.3Accumulated deficit
    
    
    (466.5
    )
    
    
    (435.3
    )Accumulated other comprehensive loss
    
    
    (12.7
    )
    
    
    (14.5
    )Treasury stock, at cost (shares held; preferred  845; common  5,503,722)
    
    
    (167.8
    )
    
    
    (167.8
    )Total stockholders deficit
    
    
    (416.4
    )
    
    
    (387.0
    )$
    361.6
    
    
    $
    400.3
  3




---



##### Table of Contents



MAXXAM INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions of dollars, except per share information)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)Sales:Real estate
    
    $
    7.4
    
    
    $
    8.3
    
    
    $
    22.2
    
    
    $
    26.9Racing
    
    
    10.8
    
    
    
    13.0
    
    
    
    30.3
    
    
    
    36.5Corporate
    
    
    
    
    
    
    2.4
    
    
    
    
    
    
    
    5.318.2
    
    
    
    23.7
    
    
    
    52.5
    
    
    
    68.7Cost and expenses:Cost of sales and operations:Real estate
    
    
    3.2
    
    
    
    3.7
    
    
    
    9.7
    
    
    
    12.9Racing
    
    
    10.5
    
    
    
    12.7
    
    
    
    29.8
    
    
    
    34.4Corporate
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    5.1Selling, general and administrative expenses
    
    
    7.1
    
    
    
    10.4
    
    
    
    21.3
    
    
    
    26.7Depreciation, depletion and amortization
    
    
    2.6
    
    
    
    4.1
    
    
    
    7.6
    
    
    
    10.0Proceeds on involuntary conversion and net
insurance recoveries
    
    
    
    
    
    
    
    
    
    
    (4.5
    )
    
    
    Settlement of Wilson actions
    
    
    
    
    
    
    
    
    
    
    4.0
    
    
    
    23.4
    
    
    
    31.9
    
    
    
    67.9
    
    
    
    89.1Operating income (loss):Real estate
    
    
    (0.2
    )
    
    
    (0.4
    )
    
    
    0.1
    
    
    
    (3.3
    )Racing
    
    
    (2.2
    )
    
    
    (3.9
    )
    
    
    (2.4
    )
    
    
    (7.4
    )Corporate
    
    
    (2.8
    )
    
    
    (3.5
    )
    
    
    (13.1
    )
    
    
    (8.3
    )Forest products
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    (1.4
    )(5.2
    )
    
    
    (8.2
    )
    
    
    (15.4
    )
    
    
    (20.4
    )Other income (expense):Investment, interest and other income (expense), net
    
    
    0.9
    
    
    
    (0.6
    )
    
    
    (3.3
    )
    
    
    (6.4
    )Interest expense
    
    
    (3.9
    )
    
    
    (4.0
    )
    
    
    (11.8
    )
    
    
    (12.1
    )Amortization of deferred financing costs
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    (0.5
    )
    
    
    (0.5
    )Loss before income taxes
    
    
    (8.4
    )
    
    
    (13.0
    )
    
    
    (31.0
    )
    
    
    (39.4
    )Provision for income taxes
    
    
    (0.1
    )
    
    
    (52.4
    )
    
    
    (0.2
    )
    
    
    (52.6
    )Net loss
    
    $
    (8.5
    )
    
    $
    (65.4
    )
    
    $
    (31.2
    )
    
    $
    (92.0
    )Basic net loss per common and common equivalent share
    
    $
    (1.86
    )
    
    $
    (14.34
    )
    
    $
    (6.84
    )
    
    $
    (19.39
    )Diluted net loss per common and common equivalent share
    
    $
    (1.86
    )
    
    $
    (14.34
    )
    
    $
    (6.84
    )
    
    $
    (19.39
    )Weighted average shares outstanding  Basic and Diluted
    
    
    4,559,637
    
    
    
    4,561,237
    
    
    
    4,559,637
    
    
    
    4,744,398
  4




---



##### Table of Contents



MAXXAM INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of dollars)
 Nine Months EndedSeptember 30,2009
    
    
    2008(Unaudited)Cash flows from operating activities:Net loss
    
    $
    (31.2
    )
    
    $
    (92.0
    )Adjustments to reconcile net loss to net cash used for
operating activities:Depreciation, depletion and amortization
    
    
    7.6
    
    
    
    10.0Non-cash stock-based compensation benefit
    
    
    (0.4
    )
    
    
    (6.0
    )Net losses from investments
    
    
    
    
    
    
    7.8Amortization of deferred financing costs
    
    
    0.5
    
    
    
    0.5Equity losses in joint ventures, including write-offs
    
    
    4.6
    
    
    
    0.3Gain on involuntary conversion of property
    
    
    (0.7
    )
    
    
    Deferred taxes
    
    
    
    
    
    
    51.7Increase (decrease) in cash resulting from changes in:Receivables
    
    
    0.2
    
    
    
    Inventories
    
    
    (0.1
    )
    
    
    0.1Prepaid expenses and other assets
    
    
    0.2
    
    
    
    (0.3
    )Accounts payable
    
    
    (2.2
    )
    
    
    (0.3
    )Other accrued liabilities
    
    
    (2.2
    )
    
    
    6.3Long-term assets and long-term liabilities
    
    
    (5.4
    )
    
    
    (2.0
    )Other
    
    
    (0.1
    )
    
    
    Net cash used for operating activities
    
    
    (29.2
    )
    
    
    (23.9
    )Cash flows from investing activities:Proceeds on involuntary conversion of property
    
    
    0.7
    
    
    
    Maturities of marketable securities and other investments
    
    
    2.4
    
    
    
    11.6Sales of marketable securities and other investments
    
    
    3.1
    
    
    
    31.9Purchases of marketable securities and other investments
    
    
    (18.9
    )
    
    
    (9.1
    )Net contributions to restricted cash
    
    
    (0.7
    )
    
    
    Capital expenditures
    
    
    (3.8
    )
    
    
    (2.4
    )Net cash provided by (used for) investing activities
    
    
    (17.2
    )
    
    
    32.0Cash flows from financing activities:Principal payments on long-term debt
    
    
    (4.2
    )
    
    
    (3.8
    )Borrowings under long-term debt
    
    
    1.4
    
    
    
    Treasury stock purchases
    
    
    
    
    
    
    (20.1
    )Net proceeds from refundable deposits
    
    
    0.1
    
    
    
    0.4Net cash used for financing activities
    
    
    (2.7
    )
    
    
    (23.5
    )Net decrease in cash and cash equivalents
    
    
    (49.1
    )
    
    
    (15.4
    )Cash and cash equivalents at beginning of the period
    
    
    59.6
    
    
    
    67.8Cash and cash equivalents at end of the period
    
    $
    10.5
    
    
    $
    52.4Supplemental disclosure of cash flow information:Interest paid
    
    $
    11.7
    
    
    $
    12.1
  5




---



##### Table of Contents



MAXXAM INC. AND SUBSIDIARIES
 
 CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
      Bankruptcy Cases
 6




---



##### Table of Contents



Use of Estimates and Assumptions
   (i)
    
    the ultimate outcome of the Bankruptcy Casesdiscussed in Note 10,(ii)
    
    recoveries, if any, from insurers related to the Wilson actionsdiscussed in Note 9,(iii)
    
    the ultimate outcome of the tax examinations
discussed in Note 7,(iv)
    
    estimates used to determine projected pension obligations and the expected value of pension plan assets,(v)
    
    projected future cash flows and estimated fair values used in the evaluation of
long-lived assets for possible impairment, and(vi)
    
    the value of the Companys investment portfolio.
 Financial Instruments
   Subsequent Events
  2. New Accounting Standards
  7




---



##### Table of Contents



8




---



##### Table of Contents



3. Segment Information and Other Items
    9




---



##### Table of Contents



ReportableSegments
    
    
    
    
    
    
    
    
    
    ConsolidatedReal Estate
    
    Racing
    
    MGI
    
    Corporate
    
    Total(In millions of dollars)Investment, interest and
other income for the
three months ended:September 30, 2009
    
    $
    0.4
    
    
    $
    
    
    
    $
    
    
    
    $
    0.5
    
    
    $
    0.9September 30, 2008
    
    
    (0.3
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    
    
    
    
    (0.6
    )Investment, interest and
other income for the
nine months ended:September 30, 2009
    
    $
    (3.5
    )      (1)
    
    $
    
    
    
    $
    
    
    
    $
    0.2
    
    
    $
    (3.3
    )September 30, 2008
    
    
    (1.3
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    (4.8
    )
    
    
    (6.4
    )Selling, general and
administrative expense
for the three months ended:September 30, 2009
    
    $
    2.4
    
    
    $
    1.9
    
    
    $
    
    
    
    $
    2.8
    (2)
    
    $
    7.1September 30, 2008
    
    
    2.7
    
    
    
    2.4
    
    
    
    0.4
    
    
    
    4.9
    (2)
    
    
    10.4Selling, general and
administrative expense
for the nine months ended:September 30, 2009
    
    $
    6.4
    
    
    $
    5.9
    
    
    $
    
    
    
    $
    13.0
    (2) (3)
    
    $
    25.3September 30, 2008
    
    
    10.1
    
    
    
    6.8
    
    
    
    1.4
    
    
    
    8.4
    (2)
    
    
    26.7Operating income (loss) for the
three months ended:September 30, 2009
    
    $
    (0.2
    )
    
    $
    (2.2
    )
    
    $
    
    
    
    $
    (2.8
    )          (2)
    
    $
    (5.2
    )September 30, 2008
    
    
    (0.4
    )
    
    
    (3.9
    ) (4)
    
    
    (0.4
    )
    
    
    (3.5
    )          (2)
    
    
    (8.2
    )Operating income (loss) for the
nine months ended:September 30, 2009
    
    $
    0.1
    
    
    $
    (2.4
    ) (5)
    
    $
    
    
    
    $
    (13.1
    )      (2) (3)
    
    $
    (15.4
    )September 30, 2008
    
    
    (3.3
    )
    
    
    (7.4
    ) (4)
    
    
    (1.4
    )
    
    
    (8.3
    )          (2)
    
    
    (20.4
    )Interest expense for the
three months ended (6):September 30, 2009
    
    $
    4.0
    
    
    $
    
    
    
    $
    
    
    
    $
    0.1
    
    
    $
    4.1September 30, 2008
    
    
    4.1
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    4.2Interest expense for the
nine months ended (6):September 30, 2009
    
    $
    12.2
    
    
    $
    
    
    
    $
    
    
    
    $
    0.1
    
    
    $
    12.3September 30, 2008
    
    
    12.5
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    12.6
 
 Table and Notes continued on next page 10




---



##### Table of Contents



ReportableSegments
    
    
    
    
    
    
    
    
    
    ConsolidatedReal Estate
    
    Racing
    
    MGI
    
    Corporate
    
    Total(In millions of dollars)Depreciation, depletion
and amortization for the
three months ended:September 30, 2009
    
    $
    2.0
    
    
    $
    0.6
    
    
    $
    
    
    
    $
    
    
    
    $
    2.6September 30, 2008
    
    
    2.3
    
    
    
    1.8
    (4)
    
    
    
    
    
    
    
    
    
    
    4.1Depreciation, depletion
and amortization for the
nine months ended:September 30, 2009
    
    $
    6.0
    
    
    $
    1.5
    
    
    $
    
    
    
    $
    0.1
    
    
    $
    7.6September 30, 2008
    
    
    7.2
    
    
    
    2.7
    (4)
    
    
    
    
    
    
    0.1
    
    
    
    10.0Loss before income taxes
for the three months ended:September 30, 2009
    
    $
    (3.8
    )
    
    $
    (2.2
    )
    
    $
    
    
    
    $
    (2.4
    )
    
    $
    (8.4
    )September 30, 2008
    
    
    (4.8
    )
    
    
    (4.2
    )      (4)
    
    
    (0.4
    )
    
    
    (3.6
    )
    
    
    (13.0
    )Loss before income taxes
for the nine months ended:September 30, 2009
    
    $
    (15.6
    )      (1)
    
    $
    (2.4
    )      (5)
    
    $
    
    
    
    $
    (13.0
    )      (3)
    
    $
    (31.0
    )September 30, 2008
    
    
    (17.1
    )
    
    
    (7.7
    )      (4)
    
    
    (1.4
    )
    
    
    (13.2
    )      (7)
    
    
    (39.4
    )Capital expenditures
for the nine months ended:September 30, 2009
    
    $
    0.2
    
    
    $
    3.6
    
    
    $
    
    
    
    $
    
    
    
    $
    3.8September 30, 2008
    
    
    0.7
    
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    2.4Total assets as of:September 30, 2009
    
    $
    255.4
    
    
    $
    35.2
    
    
    $
    
    
    
    $
    71.0
    
    
    $
    361.6December 31, 2008
    
    
    267.3
    
    
    
    38.1
    
    
    
    
    
    
    
    94.9
    
    
    
    400.3
 
 (1)
    
    Includes an impairment charge of $4.1 million related to RMCAL recognized in the
second quarter of 2009 (see Note 5).(2)
    
    Includes stock-based compensation benefit of $0.1 million and $0.4 million for the
three months and nine months ended September 30, 2009, respectively, and a benefit of $4.4
million and $6.0 million for the three months and nine months ended September 30, 2008,
respectively.(3)
    
    Includes $4.0 million for settlement of the Wilson actions(see Note 9).(4)
    
    Includes a write-off of $1.3 million during the three months ended September 30,
2008 representing the estimated net book value of the property damaged or destroyed by
Hurricane Ike (see Note 14).(5)
    
    Includes an aggregate of $4.5 million of insurance recoveries during the nine months ended September 30, 2009
related to the damage at Sam Houston Race Park caused by Hurricane Ike (see Note 14).(6)
    
    Interest expense includes amortization of deferred financing costs.(7)
    
    Includes a $3.7 million impairment charge related to the Companys auction rate securities. 11




---



##### Table of Contents



4. Cash, Cash Equivalents and Marketable Securities
  September 30,
    
    
    December 31,2009
    
    
    2008Current:Cash and cash equivalents
    
    $
    10.5
    
    
    $
    59.6Marketable securities  other
    
    
    17.4
    
    
    
    2.5Restricted cash
    
    
    1.5
    
    
    
    0.5Total current
    
    
    29.4
    
    
    
    62.6Non-Current:Marketable securities  auction rate securities(1)
    
    
    1.8
    
    
    
    1.5Restricted cash and certificates of deposit
    
    
    3.3
    
    
    
    3.6Total non-current
    
    
    5.1
    
    
    
    5.134.5
    
    
    
    67.7Less: restricted amounts
    
    
    (4.8
    )
    
    
    (4.1
    )Total unrestricted cash, cash equivalents and marketable securities
    
    $
    29.7
    
    
    $
    63.6
 
 (1)
    
    Included in other long-term assets and investments on the Condensed Consolidated
Balance Sheets. Cash Equivalents
   Restricted Cash
  September 30,
    
    
    December 31,2009
    
    
    2008Funds held in escrow for the PCCI Notes (see Note 6)
    
    $
    1.0
    
    
    $
    3.3Certificate of deposit  insurance collateral (see Note 6)
    
    
    2.0
    
    
    
    Horsemen custodial accounts
    
    
    
    
    
    
    0.2Other
    
    
    1.8
    
    
    
    0.6Total restricted cash
    
    $
    4.8
    
    
    $
    4.1
 12




---



##### Table of Contents



Marketable Securities
  September 30, 2009Carrying
    
    
    Aggregate
    
    
    Gross Gains
    
    
    Gross LossesValue
    
    
    Fair Value
    
    
    in AOCL
    
    
    in AOCLDebt securities  Corporate Bonds:Maturities of less than one year
    
    $
    7.3
    
    
    $
    7.3
    
    
    $
    0.1
    
    
    $
    Maturities of one to five years
    
    
    0.3
    
    
    
    0.3
    
    
    
    
    
    
    
    Maturities of greater than five years
    
    
    1.6
    
    
    
    1.6
    
    
    
    0.2
    
    
    
    Equity securities and mutual fund investments
    
    
    8.2
    
    
    
    8.2
    
    
    
    0.1
    
    
    
    Auction rate securities
    
    
    1.8
    
    
    
    1.8
    
    
    
    0.3
    
    
    
    Total
    
    $
    19.2
    
    
    $
    19.2
    
    
    $
    0.7
    
    
    $
    
 December 31, 2008Carrying
    
    
    Aggregate
    
    
    Gross Gains
    
    
    Gross LossesValue
    
    
    Fair Value
    
    
    in AOCL
    
    
    in AOCLEquity securities and other investments
    
    $
    2.5
    
    
    $
    2.5
    
    
    $
    
    
    
    $
    (1.3
    )Auction rate securities
    
    
    1.5
    
    
    
    1.5
    
    
    
    
    
    
    
    Total
    
    $
    4.0
    
    
    $
    4.0
    
    
    $
    
    
    
    $
    (1.3
    )
 Fair Value Hierarchy
       Fair Value Measurements as ofSeptember 30, 2009Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Description:Short-term marketable securities
    
    $
    17.4
    
    
    $
    17.4
    
    
    $
    
    
    
    $
    Auction rate securities
    
    
    1.8
    
    
    
    
    
    
    
    
    
    
    
    1.8Total
    
    $
    19.2
    
    
    $
    17.4
    
    
    $
    
    
    
    $
    1.8
 13




---



##### Table of Contents



Auction RateSecuritiesCarrying value as of January 1, 2009
    
    $
    1.5Settlements
    
    
    Impairment charge included in the
Consolidated Statement of Operations
    
    
    Amount included in Accumulated
Other Comprehensive Income (Loss)
    
    
    0.3Carrying value as of September 30, 2009
    
    $
    1.8
   5. Investments in Joint Ventures
 RMCAL Development LP (Mirada Villas)
   FireRock, LLC
  14




---



##### Table of Contents



6. Debt
  September 30,
    
    
    December 31,2009
    
    
    20087.56% Lakepointe Notes due June 8, 2021
    
    $
    108.6
    
    
    $
    110.07.03% Motel Notes due May 1, 2018
    
    
    39.8
    
    
    
    41.46.08% Beltway Notes due November 9, 2024
    
    
    26.7
    
    
    
    27.27.12% PCCI Notes due December 20, 2030
    
    
    27.4
    
    
    
    27.7Prime + 0.5% EN Facility due October 29, 2011
    
    
    2.0
    
    
    
    0.6Other notes and contracts, primarily secured by receivables, buildings,
real estate and equipment
    
    
    4.4
    
    
    
    4.9Total principal outstanding
    
    
    208.9
    
    
    
    211.8Less: Short-term borrowings and current maturities
    
    
    (6.3
    )
    
    
    (6.1
    )$
    202.6
    
    
    $
    205.7
 Letters of Credit
  Loan Covenants
  PCCI Notes
  7. Income Taxes
   15




---



##### Table of Contents



8. Employee Benefit Plans
  Pension Benefits
    
    
    Medical/Life
    
    
    Pension Benefits
    
    
    Medical/LifeThree Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Components of net periodic benefit costs:Service cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    
    
    
    $
    0.1
    
    
    $
    0.1Interest cost
    
    
    0.5
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    1.4
    
    
    
    1.4
    
    
    
    0.1
    
    
    
    0.1Expected return on assets
    
    
    (0.5
    )
    
    
    (0.6
    )
    
    
    
    
    
    
    
    
    
    
    (1.5
    )
    
    
    (1.7
    )
    
    
    
    
    
    
    Recognized net actuarial loss
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.1
    )Net periodic benefit costs
    
    
    0.1
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    (0.3
    )
    
    
    0.1
    
    
    
    0.1Curtailments, settlements and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted net periodic benefit costs
    
    $
    0.1
    
    
    $
    (0.1
    )
    
    $
    
    
    
    $
    
    
    
    $
    0.1
    
    
    $
    (0.3
    )
    
    $
    0.1
    
    
    $
    0.1
  9. Contingencies
  Shareholder Litigation
 Alan R. Kahn v. Charles E. Hurwitz, et al. James L. and Eleanor A. Gayner v. Charles E. Hurwitz, et al.
 16




---



##### Table of Contents



Forest Products Related Litigation
 Cave, Cook and Johnson actions
 Cook action Cave action Cook action Cave action Cook action Johnson action Cave Cook actions Johnson action Cave, Cook and Johnson
 Wilson actions
 Wilson state action Wilson federal action Wilson actions qui tam Wilson state
action Wilson federal action
 Wilson actions
 Wilson actions Wilson actions
 17




---



##### Table of Contents



Forest Products
 Bankruptcy Proceedings
 Bankruptcy Cases
 Other Matters
  10.Investment in Palco
 Deconsolidation of Palco and its Subsidiaries and Potential Impact on the Company
  Bankruptcy Cases Bankruptcy Cases Bankruptcy Cases
 Bankruptcy Cases
  18




---



##### Table of Contents



Bankruptcy Filings
 Bankruptcy Cases
 Filing of Plans of Reorganization
   Plan Confirmation and Related Proceedings
  Bankruptcy Cases
 Settlement Agreement
   19




---



##### Table of Contents



11. Stock-Based Compensation Plans
   Nine Months EndedSeptember 30,2009
    
    2008Expected volatility
    
    
    51
    %
    
    
    33
    %Expected dividends
    
    
    
    
    
    
    Expected term (in years)
    
    
    7.34
    
    
    
    7.14Risk-free rate
    
    
    2.3
    %
    
    
    3.0
    %
   20




---



##### Table of Contents



Weighted AverageWeighted Average

    
    

    Remaining Contractual
    
    
    Aggregate  Fair ValueOptions
    
    
    Exercise Price
    
    

Term (in years)
    
    
    (in millions)Balance at January 1, 2009
    
    
    1,052,182
    
    
    $
    21.04Granted
    
    
    3,000
    
    
    
    11.73Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (34,300
    )
    
    
    55.37Balance at September 30, 2009
    
    
    1,020,882
    
    
    $
    19.86
    
    
    
    4.62
    
    
    $
    0.1Exercisable at September 30, 2009
    
    
    754,797
    
    
    $
    19.82
    
    
    
    3.37
    
    
    $
    0.1
  12. Per Share Information
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008 (1)
    
    
    2009
    
    
    2008 (1)Weighted average number of common shares outstanding-basic:
    
    
    4,559,637
    
    
    
    4,561,237
    
    
    
    4,559,637
    
    
    
    4,744,398Effect of dilution (2):Conversion of Class A Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average number of common shares
outstanding-diluted
    
    
    4,559,637
    
    
    
    4,561,237
    
    
    
    4,559,637
    
    
    
    4,744,398
 
 (1)
    
    In March 2008, MAXXAM Parent purchased 687,480 shares of its Common Stock from two
affiliated institutional holders in a privately negotiated transaction for an aggregate cost
of $20.1 million.(2)
    
    The Company had a loss for the three months and nine months ended September 30,
2009 and 2008. The Class A Preferred Stock and options were therefore not included in the
computation of earnings per share for the period as the effect would be anti-dilutive. If the
Company was required to include dilutive shares in its per share calculations, the number of
dilutive shares of Class A Preferred Stock for the three months and nine months ended
September 30, 2009 and 2008 would be 668,119 and 668,119, respectively, and the number of
dilutive options for the three months ended September 30, 2009 and 2008 would be 1,700 and
104,265, respectively, and the number of dilutive options for the nine months ended September
30, 2009 and 2008 would be 567 and 34,755, respectively. 21




---



##### Table of Contents



13. Comprehensive Loss
 The following table sets forth comprehensive loss (in millions):
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net loss
    
    $
    (8.5
    )
    
    $
    (65.4
    )
    
    $
    (31.2
    )
    
    $
    (92.0
    )Other comprehensive loss:Change in unrealized
gain (loss) on
available-for-sale
investments
    
    
    0.3
    
    
    
    (1.2
    )
    
    
    1.1
    
    
    
    0.4Total comprehensive loss
    
    $
    (8.2
    )
    
    $
    (66.6
    )
    
    $
    (30.1
    )
    
    $
    (91.6
    )
 14. Damage to SHRP Facility
   Property Damage
  Business Interruption
   22




---



##### Table of Contents



Three Months EndedDecember 31,
    
    
    March 31,
    
    
    June 30,
    
    
    September 30,
    
    
    Cumulative2008
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    CumulativeProperty damage
    
    $
    4.8
    
    
    $
    
    
    
    $
    0.7
    
    
    $
    
    
    
    $
    0.7
    
    
    $
    5.5Business interruption
    
    
    0.8
    
    
    
    1.4
    
    
    
    1.8
    
    
    
    
    
    
    
    3.2
    
    
    
    4.0Claims preparation
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    0.6
    
    
    
    0.6Net impact reflected in the
statement of operations
    
    $
    5.6
    
    
    $
    1.4
    
    
    $
    3.1
    
    
    $
    
    
    
    $
    4.5
    
    
    $
    10.1Cash received
    
    $
    6.2
    
    
    $
    1.1
    
    
    $
    2.8
    
    
    $
    
    
    
    $
    3.9
    
    
    $
    10.1Recoveries received but
not yet recognized
    
    $
    0.6
    
    
    $
    0.3
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  23




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  This Quarterly Report on Form 10-Q contains statements which constitute forward-looking
statements within the meaning of the PSLRA. These statements appear in a number of places in this
report. Such statements can be identified by the use of forward-looking terminology such as
believes, expects, may, estimates, should, could, plans, intends, projects,
seeks, or anticipates or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy or objectives. Readers are cautioned that any such
forward-looking statements are not guarantees of future performance and involve significant risks
and uncertainties. Actual results could vary materially from the forward-looking statements as a
result of various factors. These factors include the effectiveness of managements strategies and
decisions, general economic and business conditions, developments in technology, the ability to
obtain financing, new or modified statutory, environmental or regulatory requirements, litigation
developments, and changing prices and market conditions. This Form 10-Q and the Form 10-K identify
other factors which could cause differences between such forward-looking statements and actual
results. No assurance can be given that these are all of the factors that could cause actual
results to vary materially from the forward-looking statements.
 Results of Operations
 This section contains statements which constitute forward-looking statements within the
meaning of the PSLRA. See the second paragraph of this Item 2 for cautionary information with
respect to such forward-looking statements.
     24




---



##### Table of Contents



Consolidated Operations
 Selected Operational Data
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In millions of dollars)Sales
    
    $
    18.2
    
    
    $
    23.7
    
    
    $
    52.5
    
    
    $
    68.7Costs and expenses
    
    
    (23.4
    )
    
    
    (31.9
    )
    
    
    (67.9
    )
    
    
    (89.1
    )Operating loss
    
    
    (5.2
    )
    
    
    (8.2
    )
    
    
    (15.4
    )
    
    
    (20.4
    )Other income (expense)
    
    
    0.9
    
    
    
    (0.6
    )
    
    
    (3.3
    )
    
    
    (6.4
    )Interest expense, including amortization of
deferred financing costs
    
    
    (4.1
    )
    
    
    (4.2
    )
    
    
    (12.3
    )
    
    
    (12.6
    )Loss before income taxes
    
    
    (8.4
    )
    
    
    (13.0
    )
    
    
    (31.0
    )
    
    
    (39.4
    )Provision for income taxes
    
    
    (0.1
    )
    
    
    (52.4
    )
    
    
    (0.2
    )
    
    
    (52.6
    )Net loss
    
    $
    (8.5
    )
    
    $
    (65.4
    )
    
    $
    (31.2
    )
    
    $
    (92.0
    )Revenues by segment as a percentage of total:Real estate
    
    
    40.7
    %
    
    
    35.0
    %
    
    
    42.3
    %
    
    
    39.2
    %Racing
    
    
    59.3
    %
    
    
    54.9
    %
    
    
    57.7
    %
    
    
    53.1
    %Corporate
    
    
    0.0
    %
    
    
    10.1
    %
    
    
    0.0
    %
    
    
    7.7
    %100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 Overview of Results of Operations
 Sales
   25




---



##### Table of Contents



Operating Loss
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In millions of dollars)Costs related to Wilson actionsand related matters (see
Note 9)
    
    $
    (0.1
    )
    
    $
    (8.1
    )
    
    $
    (7.8
    )
    
    $
    (8.1
    )SHRP net insurance recoveries (see Note 14)
    
    
    
    
    
    
    
    
    
    
    4.5
    
    
    
    SHRP Hurricane Ike damaged property write-off (see Note 3)
    
    
    
    
    
    
    (1.3
    )
    
    
    
    
    
    
    (1.3
    )Stock-based compensation
    
    
    0.1
    
    
    
    4.4
    
    
    
    0.4
    
    
    
    6.0Corporate expenses, excluding costs related to Wilson actions
    
    
    (2.8
    )
    
    
    0.2
    
    
    
    (5.7
    )
    
    
    (6.2
    )Operating losses at subsidiaries
    
    
    (2.4
    )
    
    
    (3.4
    )
    
    
    (6.8
    )
    
    
    (10.8
    )Operating losses
    
    $
    (5.2
    )
    
    $
    (8.2
    )
    
    $
    (15.4
    )
    
    $
    (20.4
    )
 Other Income (expense)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In millions of dollars)Money market accounts and other investments
    
    $
    0.2
    
    
    $
    0.3
    
    
    $
    0.6
    
    
    $
    1.4Auction rate securities
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (3.7
    )Marketable securities
    
    
    0.2
    
    
    
    0.6
    
    
    
    (0.5
    )
    
    
    (2.0
    )Investments in limited partnerships
    
    
    
    
    
    
    (0.9
    )
    
    
    
    
    
    
    (1.5
    )Joint ventures
    
    
    0.3
    
    
    
    (0.3
    )
    
    
    (4.1
    )
    
    
    (0.2
    )Other
    
    
    0.2
    
    
    
    (0.2
    )
    
    
    0.7
    
    
    
    (0.4
    )Investment and other income (expense), net
    
    $
    0.9
    
    
    $
    (0.6
    )
    
    $
    (3.3
    )
    
    $
    (6.4
    )
  Provision for Income Taxes
  Real Estate Operations
 Industry Overview and Selected Operational Data
  26




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In millions of dollars)Sales:Real estate:Fountain Hills
    
    $
    
    
    
    $
    0.5
    
    
    $
    
    
    
    $
    1.9Mirada
    
    
    0.4
    
    
    
    
    
    
    
    0.4
    
    
    
    0.5Palmas
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    0.6Total
    
    
    0.4
    
    
    
    0.9
    
    
    
    0.4
    
    
    
    3.0Resort, commercial and other:Fountain Hills
    
    
    0.6
    
    
    
    0.4
    
    
    
    1.9
    
    
    
    2.2Palmas
    
    
    1.8
    
    
    
    2.4
    
    
    
    6.0
    
    
    
    7.8Commercial lease properties
    
    
    4.6
    
    
    
    4.6
    
    
    
    13.8
    
    
    
    13.8Other
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    0.1Total
    
    $
    7.0
    
    
    $
    7.4
    
    
    $
    21.8
    
    
    $
    23.9Total sales
    
    $
    7.4
    
    
    $
    8.3
    
    
    $
    22.2
    
    
    $
    26.9Operating income (loss):Fountain Hills
    
    $
    (0.9
    )
    
    $
    (0.4
    )
    
    $
    (2.3
    )
    
    $
    (1.6
    )Mirada
    
    
    0.3
    
    
    
    
    
    
    
    0.2
    
    
    
    (0.2
    )Palmas
    
    
    (2.8
    )
    
    
    (2.9
    )
    
    
    (7.1
    )
    
    
    (9.7
    )Commercial lease properties
    
    
    3.3
    
    
    
    3.2
    
    
    
    9.8
    
    
    
    9.7Other
    
    
    (0.1
    )
    
    
    (0.3
    )
    
    
    (0.5
    )
    
    
    (1.5
    )Total operating income (loss)
    
    $
    (0.2
    )
    
    $
    (0.4
    )
    
    $
    0.1
    
    
    $
    (3.3
    )Investment, interest and other income:Equity in earnings (losses) from
real estate joint ventures
    
    $
    
    
    
    $
    (0.4
    )
    
    $
    (4.6
    )
    
    $
    (0.3
    )Other
    
    
    0.4
    
    
    
    0.1
    
    
    
    1.1
    
    
    
    (1.0
    )$
    0.4
    
    
    $
    (0.3
    )
    
    $
    (3.5
    )
    
    $
    (1.3
    )Interest expense and amortization of
deferred financing costs
    
    
    (4.0
    )
    
    
    (4.1
    )
    
    
    (12.2
    )
    
    
    (12.5
    )Loss before income taxes
    
    $
    (3.8
    )
    
    $
    (4.8
    )
    
    $
    (15.6
    )
    
    $
    (17.1
    )
 27




---



##### Table of Contents



Sales and Operating Income (Loss)
  Other Income (expense)
  Racing Operations
 Industry Overview and Selected Operational Data
    28




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In millions of dollars)Number of live racing days:Sam Houston Race Park
    
    
    26
    
    
    
    30
    
    
    
    54
    
    
    
    77Valley Race Park
    
    
    
    
    
    
    
    
    
    
    70
    
    
    
    71Handle:Sam Houston Race Park:On-track handle
    
    $
    26.3
    
    
    $
    27.9
    
    
    $
    81.7
    
    
    $
    90.9Off-track handle
    
    
    6.1
    
    
    
    6.4
    
    
    
    9.5
    
    
    
    79.1Total
    
    $
    32.4
    
    
    $
    34.3
    
    
    $
    91.2
    
    
    $
    170.0Valley Race Park:On-track handle
    
    $
    3.2
    
    
    $
    3.4
    
    
    $
    13.2
    
    
    $
    13.2Off-track handle
    
    
    
    
    
    
    
    
    
    
    2.7
    
    
    
    3.0Total
    
    $
    3.2
    
    
    $
    3.4
    
    
    $
    15.9
    
    
    $
    16.2Sales:Sam Houston Race Park:Gross pari-mutuel
commissions
    
    $
    6.0
    
    
    $
    6.3
    
    
    $
    18.3
    
    
    $
    22.2Concert revenues
    
    
    1.1
    
    
    
    3.3
    
    
    
    2.2
    
    
    
    4.1Other revenues
    
    
    2.8
    
    
    
    2.6
    
    
    
    5.9
    
    
    
    6.4Total
    
    
    9.9
    
    
    
    12.2
    
    
    
    26.4
    
    
    
    32.7Valley Race Park:Gross pari-mutuel
commissions
    
    
    0.8
    
    
    
    0.7
    
    
    
    3.2
    
    
    
    3.1Other revenues
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.7
    
    
    
    0.7Total
    
    
    0.9
    
    
    
    0.8
    
    
    
    3.9
    
    
    
    3.8Total sales
    
    $
    10.8
    
    
    $
    13.0
    
    
    $
    30.3
    
    
    $
    36.5Operating loss:Sam Houston Race Park
    
    $
    (1.9
    )
    
    $
    (3.5
    )(1)
    
    $
    (1.8
    )(2)
    
    $
    (6.6
    )(1)Valley Race Park
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    (0.4
    )
    
    
    (0.5
    )Other
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    (0.3
    )Total operating loss
    
    $
    (2.2
    )
    
    $
    (3.9
    )
    
    $
    (2.4
    )
    
    $
    (7.4
    )Loss before income taxes
    
    $
    (2.2
    )
    
    $
    (4.2
    )
    
    $
    (2.4
    )
    
    $
    (7.7
    )
 
 (1)
    
    Includes a write-off of $1.3 million during the three months and nine months ended
September 30, 2008 representing the estimated net book value of the property damaged or
destroyed by Hurricane Ike (see Notes 3 and 14).(2)
    
    Includes an aggregate of $4.5 million of insurance recoveries during the nine months
ended September 30, 2009 related to the damage at Sam Houston Race Park caused by Hurricane
Ike (see Note 14). Sales and Operating Loss
  29




---



##### Table of Contents



Other Items Not Directly Related to Industry Segments
 Corporate
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In millions of dollars)Revenue
    
    $
    
    
    
    $
    2.4
    
    
    $
    
    
    
    $
    5.3Cost of goods sold
    
    
    
    
    
    
    (1.0
    )
    
    
    
    
    
    
    (5.1
    )Income from lumber sale
    
    
    
    
    
    
    1.4
    
    
    
    
    
    
    
    0.2Corporate expenses, excluding costs related to
Wilson actions
    
    
    (2.8
    )
    
    
    (1.2
    )
    
    
    (5.7
    )
    
    
    (6.4
    )Costs related to Wilson actionsand related matters
    
    
    (0.1
    )
    
    
    (8.1
    )
    
    
    (7.8
    )
    
    
    (8.1
    )Stock-based compensation
    
    
    0.1
    
    
    
    4.4
    
    
    
    0.4
    
    
    
    6.0Operating loss
    
    
    (2.8
    )
    
    
    (3.5
    )
    
    
    (13.1
    )
    
    
    (8.3
    )Investment, interest and other income (expense)
    
    
    0.4
    
    
    
    (0.1
    )
    
    
    0.1
    
    
    
    (4.9
    )Loss before income taxes
    
    $
    (2.4
    )
    
    $
    (3.6
    )
    
    $
    (13.0
    )
    
    $
    (13.2
    )Revenue and Cost of Goods SoldCorporate revenue and cost of goods sold in 2008 resulted from a non-recurring lumber sale to
a third party described in Note 10. A $0.2 million gain was recognized on the transaction,
representing the purchase price of $5.3 million less the cost of $5.1 million.Operating LossCorporate operating losses represent general and administrative expenses that are not
specifically attributable to the Companys industry segments and include stock-based compensation
expense. In April 2009, the Company agreed to settle the Wilson actions. The Corporate segments
operating losses for the nine months ended September 30, 2009 include $6.2 million of additional
defense and settlement costs related to these matters (see Note 9).MGIThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008(In millions of dollars)Operating loss
    
    $
    
    
    
    $
    (0.4
    )
    
    $
    
    
    
    $
    (1.4
    )Loss before income taxes
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    (1.4
    )
 Operating Loss
  Financial Condition and Investing and Financing Activities
 This section contains statements which constitute forward-looking statements within the
meaning of the PSLRA. See the second paragraph of this Item 2 for cautionary information with
respect to such forward-looking statements.
 Overview
   30




---



##### Table of Contents



Bankruptcy Cases
  31




---



##### Table of Contents



Cash Flow
  Real Estate
    
    
    Racing
    
    
    MGI
    
    
    Corporate
    
    
    Total(In millions of dollars)Debt and credit facilities
(excluding intercompany
notes)Short-term borrowings and
current maturities of
long-term debt:September 30, 2009
    
    $
    6.2
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    
    
    
    $
    6.3December 31, 2008
    
    
    5.9
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    6.1Long-term debt, excluding
current maturities and
discounts:September 30, 2009
    
    $
    202.0
    
    
    $
    0.6
    
    
    $
    
    
    
    $
    
    
    
    $
    202.6December 31, 2008
    
    
    205.0
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    205.7Cash, cash equivalents,
marketable securities
and other investmentsSeptember 30, 2009Current restricted amounts
    
    $
    0.1
    
    
    $
    0.4
    
    
    $
    
    
    
    $
    1.0
    
    
    $
    1.5Other current amounts
    
    
    2.9
    
    
    
    2.1
    
    
    
    
    
    
    
    22.9
    
    
    
    27.93.0
    
    
    
    2.5
    
    
    
    
    
    
    
    23.9
    
    
    
    29.4Long-term unrestricted investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.9
    
    
    
    1.9Long-term restricted
amounts
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    2.1
    
    
    
    3.3$
    4.2
    
    
    $
    2.5
    
    
    $
    
    
    
    $
    27.9
    
    
    $
    34.6Changes in cash and cash
equivalentsCapital expenditures for the nine months
ended:September 30, 2009
    
    $
    0.2
    
    
    $
    3.6
    
    
    $
    
    
    
    $
    
    
    
    $
    3.8September 30, 2008
    
    
    0.7
    
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    2.4Net proceeds from dispositions of property
and investments for the nine months ended:September 30, 2009
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    September 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Borrowings (repayments) of debt and
credit facilities,
net of financing costs, for the nine
months ended:September 30, 2009
    
    $
    (2.7
    )
    
    $
    (0.1
    )
    
    $
    
    
    
    $
    
    
    
    $
    (2.8
    )September 30, 2008
    
    
    (3.7
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (3.8
    )Dividends, advances (including interest
paid)
and tax sharing payments received (paid)
for the nine months ended:September 30, 2009
    
    $
    4.8
    
    
    $
    
    
    
    $
    
    
    
    $
    (4.8
    )
    
    $
    September 30, 2008
    
    
    8.6
    
    
    
    6.0
    
    
    
    
    
    
    
    (14.6
    )
    
    
    
 32




---



##### Table of Contents



Operating Activities
 Wilson actions
  Investing Activities
  Financing Activities
  MAXXAM Parent
  Bankruptcy Cases
   33




---



##### Table of Contents



Real Estate Operations
   Racing Operations
   MGI
 Bankruptcy Cases Bankruptcy
Cases
 Off-Balance Sheet Arrangements
  Trends
 Real Estate Operations
  34




---



##### Table of Contents



Racing Operations
    Critical Accounting Policies and Estimates
  New Accounting Pronouncements
   35




---



##### Table of Contents



36




---



##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  37




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
     Wilson
actions
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    38




---



##### Table of Contents



ITEM 6. EXHIBITS
 a. Exhibits:
 * 31.1
    
    Section 302 Certification of Chief Executive Officer* 31.2
    
    Section 302 Certification of Chief Financial Officer* 32
    
    Section 906 Certification of Chief Executive Officer and Chief Financial Officer
 
 *
    
    Included with this filing 39




---



##### Table of Contents



SIGNATURES
  MAXXAM INC.Date: November 16, 2009
    By:
    /S/      M. EMILY MADISONM. Emily MadisonVice President, Finance
(Principal Accounting Officer and
Principal Financial Officer) 40




---



##### Table of Contents



APPENDIX A
 Glossary of Defined Terms
 Bankruptcy Cases
 Bankruptcy Code
 Bankruptcy Court
 Beltway Assets
 Beltway Notes
 Cave action Steve Cave, et al. v. Gary Clark, et al.
 Class A Preferred Stock
 Common Stock
 Company
 Confirmation Order
 Cook action Alan Cook, et al. v. Gary Clark, et al.
 Debtors
 EN Facility
 ERISA
 FASB
 Fifth Circuit
 Filing Date
 FireRock, LLC
 Fountain Hills
 Indenture Trustee
 Johnson action Edyth Johnson, et al. v. Charles E. Hurwitz, an individual,
MAXXAM Inc., et al.
 Joint Plan
 Lakepointe Assets
 41




---



##### Table of Contents



Lakepointe Notes
 Laredo LLC
 Marathon
 MAXXAM
 MAXXAM Entities
 MAXXAM Parent
 MGHI
 MGI
 Mirada
 Motel Assets
 Motel Notes
 MRC
 MRC/Marathon Plan
 Newco
 Noteholder Plan
 Palco
 Palco Debtors
 Palco Pension Plan
 Palmas
 PBGC
 PBGC Agreement
 PCCI
 PCCI Notes
 PDMPI
 PSLRA
 Racing Commission
 42




---



##### Table of Contents



Reverse Stock Split
 RMCAL
 Sam Houston Race Park
 Scopac
 Scopac Timber Notes
 SEC
 Settlement Agreement
 SHRP
 TDF
 Timber Noteholders
 Valley Race Park
 Wilson federal action United States of America ex rel. Richard Wilson and
Chris Maranto v. MAXXAM Inc., et al.
 Wilson state action State of California ex rel. Richard Wilson and Chris
Maranto v. MAXXAM Inc., et al.
 Wilson actions Wilson federal action Wilson state action
 43