----

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|   | FORM 10-Q |   |
|--------|-----------|--------|

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

|   | OR |
|--------|----|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| Delaware(State or other jurisdictionof incorporation or organization)                 |   | 95-2078752(I.R.S. EmployerIdentification Number) |
|---------------------------------------------------------------------------------------|--------|--------------------------------------------------|
|                                                                                  |   |                                             |
| 1330 Post Oak Blvd., Suite 2000Houston, Texas(Address of Principal Executive Offices) |   | 77056(Zip Code)                                  |

| Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company x |
|---------------------------|---------------------|-------------------------|-----------------------------|

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|                                                                       | TABLE OF CONTENTS                                                                    |   |
|----------------------------------------------------------------------------|--------------------------------------------------------------------------------------|--------|
|                                                                       |                                                                                 | Page   |
| PART I. – FINANCIAL INFORMATION                                      |                                                                                 |
|                                                                       |                                                                                 |   |
|                                                                       |                                                                                 |   |
|     Item 1.                                                 | Financial Statements (unaudited):                                                    | 3      |
|                                                                       | Condensed Consolidated Balance Sheets                                                | 4      |
|                                                                       | Condensed Consolidated Statements of Operations                                      | 5      |
|                                                                       | Condensed Consolidated Statements of Cash Flows                                      | 6      |
|                                                                       | Condensed Notes to Unaudited Consolidated Financial Statements                       |   |
|                                                                       |                                                                                 |   |
|     Item 2.                                                 | Management's Discussion and Analysis of Financial Condition andResults of Operations | 22     |
|                                                                       |                                                                                 |   |
|     Item 3.                                                 | Quantitative and Qualitative Disclosures About Market Risk                           | *      |
|                                                                       |                                                                                 |   |
|     Item 4.                                            | Controls and Procedures                                                              | 33     |
|                                                                       |                                                                                 |   |
|                                                                       |                                                                                 |   |
| PART II. – OTHER INFORMATION                                         |                                                                                 |
|                                                                       |                                                                                 |   |
|                                                                       |                                                                                 |   |
| Item 1.                                                                    | Legal Proceedings                                                                    | 33     |
| Item 1A.                                                                   | Risk Factors                                                                         | 33     |
| Item 2.                                                                    | Unregistered Sales of Equity Securities and Use of Proceeds                          | 34     |
|             Item 3. | Defaults Upon Senior Securities                                                      | 34     |
| Item 4.                                                                    | Submission of Matter to a Vote of Security Holders                                   | 34     |
| Item 6.                                                                    | Exhibits                                                                             | 34     |
| Signatures                                                                 |                                                                                 | 36     |
|                                                                       |                                                                                 |   |
|                                                                       |                                                                                 |   |
| APPENDIX A – GLOSSARY OF DEFINED TERMS                               | 37                                                                                   |

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Table of Contents

| MAXXAM INC. AND SUBSIDIARIES                                                                                                                                                                                            |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                    |   |   |   |   |   |   |
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                                                                                   |   |
| (In millions of dollars, except share information)                                                                                                                                                                      |   |
|                                                                                                                                                                                                                    |   |   |   |   |   |   |
|                                                                                                                                                                                                                    |   | June 30,2009 |   |   | December 31,2008 |   |
|                                                                                                                                                                                                                    |   | (Unaudited) |   |
|                                                                                                                                                                                                                    |   |   |   |   |   |   |
| Assets                                                                                                                                                                                                                  |   |   |   |   |   |   |
| Current assets:                                                                                                                                                                                                         |   |   |   |   |   |   |
| Cash and cash equivalents                                                                                                                                                                                               |   | $ | 18.4 |   |   | $ | 59.6 |   |
| Marketable securities and other short-term investments                                                                                                                                                                  |   |   | 14.6 |   |   |   | 2.5 |   |
| Receivables:                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Trade, net of allowance for doubtful accounts of $1.0 and $0.9, respectively                                                                                                                                            |   |   | 1.7 |   |   |   | 1.5 |   |
| Other                                                                                                                                                                                                                   |   |   | 1.4 |   |   |   | 1.4 |   |
| Real estate inventory                                                                                                                                                                                                   |   |   | 2.7 |   |   |   | 2.7 |   |
| Prepaid expenses and other current assets                                                                                                                                                                               |   |   | 7.1 |   |   |   | 6.8 |   |
| Restricted cash                                                                                                                                                                                                         |   |   | 1.4 |   |   |   | 0.5 |   |
| Total current assets                                                                                                                                                                                                    |   |   | 47.3 |   |   |   | 75.0 |   |
| Property, plant and equipment, net of accumulated depreciation of $113.6and $108.8, respectively                                                                                                                        |   |   | 209.0 |   |   |   | 210.4 |   |
| Real estate inventory                                                                                                                                                                                                   |   |   | 60.5 |   |   |   | 58.1 |   |
| Deferred income taxes                                                                                                                                                                                                   |   |   | 42.0 |   |   |   | 41.6 |   |
| Deferred financing costs                                                                                                                                                                                                |   |   | 3.9 |   |   |   | 4.2 |   |
| Investments in limited partnerships                                                                                                                                                                                     |   |   | 0.2 |   |   |   | 0.5 |   |
| Investments in joint ventures                                                                                                                                                                                           |   |   | - |   |   |   | 3.8 |   |
| Other long-term assets and investments                                                                                                                                                                                  |   |   | 3.3 |   |   |   | 3.1 |   |
| Restricted cash and certificates of deposit                                                                                                                                                                             |   |   | 4.1 |   |   |   | 3.6 |   |
|                                                                                                                                                                                                                    |   | $ | 370.3 |   |   | $ | 400.3 |   |
| Liabilities and Stockholders’ Deficit                                                                                                                                                                             |   |   |   |   |   |   |   |   |
| Current liabilities:                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
| Accounts payable                                                                                                                                                                                                        |   | $ | 3.2 |   |   | $ | 5.4 |   |
| Short-term borrowings and current maturities of long-term debt                                                                                                                                                          |   |   | 6.3 |   |   |   | 6.1 |   |
| Accrued interest                                                                                                                                                                                                        |   |   | 0.8 |   |   |   | 0.9 |   |
| Accrued compensation and related benefits                                                                                                                                                                               |   |   | 2.3 |   |   |   | 1.8 |   |
| Accrued defense costs                                                                                                                                                                                                   |   |   | 2.7 |   |   |   | 6.1 |   |
| Accrued taxes                                                                                                                                                                                                           |   |   | 1.2 |   |   |   | 1.2 |   |
| Deferred income                                                                                                                                                                                                         |   |   | 2.1 |   |   |   | 2.9 |   |
| Other accrued liabilities                                                                                                                                                                                               |   |   | 8.3 |   |   |   | 7.1 |   |
| Total current liabilities                                                                                                                                                                                               |   |   | 27.7 |   |   |   | 31.5 |   |
| Long-term debt, less current maturities                                                                                                                                                                                 |   |   | 203.6 |   |   |   | 205.7 |   |
| Accrued pension and other postretirement benefits                                                                                                                                                                       |   |   | 18.8 |   |   |   | 19.4 |   |
| Other noncurrent liabilities                                                                                                                                                                                            |   |   | 45.1 |   |   |   | 46.5 |   |
| Losses in excess of investment in Debtors                                                                                                                                                                               |   |   | 484.2 |   |   |   | 484.2 |   |
| Total liabilities                                                                                                                                                                                                       |   |   | 778.6 |   |   |   | 787.3 |   |
| Commitments and contingencies                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Stockholders’ deficit:                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Preferred stock, $0.50 par value; 2,500,000 shares authorized; Class A $0.05Non-Cumulative Participating Convertible Preferred Stock, $0.75 liquidationpreference, 668,964 shares issued and 668,119 shares outstanding |   |   | 0.3 |   |   |   | 0.3 |   |
|                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
| Common stock, $0.50 par value; 13,000,000 shares authorized; 10,063,359 sharesissued; 4,559,637 shares outstanding                                                                                                      |   |   | 5.0 |   |   |   | 5.0 |   |
| Additional paid in capital                                                                                                                                                                                              |   |   | 225.3 |   |   |   | 225.3 |   |
| Accumulated deficit                                                                                                                                                                                                     |   |   | (458.0 | ) |   |   | (435.3 | ) |
| Accumulated other comprehensive loss                                                                                                                                                                                    |   |   | (13.1 | ) |   |   | (14.5 | ) |
| Treasury stock, at cost (shares held; preferred – 845; common – 5,503,722)                                                                                                                                  |   |   | (167.8 | ) |   |   | (167.8 | ) |
| Total stockholders’ deficit                                                                                                                                                                                       |   |   | (408.3 | ) |   |   | (387.0 | ) |
|                                                                                                                                                                                                                    |   | $ | 370.3 |   |   | $ | 400.3 |   |

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| MAXXAM INC. AND SUBSIDIARIES                                    |                       |
|-----------------------------------------------------------------|----------------------------|
|                                                            |                       |   |   |   |   |   |   |   |   |   |   |   |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                 |                       |
| (In millions of dollars, except per share information)          |                       |
|                                                            |                       |   |   |   |   |   |   |   |   |   |   |   |
|                                                            | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|                                                            | 2009                       |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |
|                                                            | (Unaudited)                |   |
|                                                            |                       |   |   |   |   |   |   |   |   |   |   |   |
| Sales:                                                          |                       |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                                                     |                       | $ | 7.4 |   |   | $ | 9.7 |   |   | $ | 14.8 |   |   | $ | 18.6 |   |
| Racing                                                          |                       |   | 11.2 |   |   |   | 10.7 |   |   |   | 19.5 |   |   |   | 23.5 |   |
| Corporate                                                       |                       |   | - |   |   |   | 2.9 |   |   |   | - |   |   |   | 2.9 |   |
|                                                            |                       |   | 18.6 |   |   |   | 23.3 |   |   |   | 34.3 |   |   |   | 45.0 |   |
|                                                            |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost and expenses:                                              |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales and operations:                                   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                                                     |                       |   | 3.3 |   |   |   | 5.0 |   |   |   | 6.5 |   |   |   | 9.2 |   |
| Racing                                                          |                       |   | 10.8 |   |   |   | 10.7 |   |   |   | 19.3 |   |   |   | 21.7 |   |
| Corporate                                                       |                       |   | - |   |   |   | 4.1 |   |   |   | - |   |   |   | 4.1 |   |
| Selling, general and administrative expenses                    |                       |   | 7.1 |   |   |   | 5.5 |   |   |   | 14.2 |   |   |   | 16.3 |   |
| Depreciation, depletion and amortization                        |                       |   | 2.5 |   |   |   | 3.1 |   |   |   | 5.0 |   |   |   | 5.9 |   |
| Proceeds on involuntary conversion and net insurance recoveries |                       |   | (3.1 | ) |   |   | - |   |   |   | (4.5 | ) |   |   | - |   |
| Settlement of Wilson actions                                    |                       |   | - |   |   |   | - |   |   |   | 4.0 |   |   |   | - |   |
|                                                            |                       |   | 20.6 |   |   |   | 28.4 |   |   |   | 44.5 |   |   |   | 57.2 |   |
|                                                            |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss):                                        |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                                                     |                       |   | 0.2 |   |   |   | (1.7 | ) |   |   | 0.3 |   |   |   | (2.9 | ) |
| Racing                                                          |                       |   | 0.5 |   |   |   | (2.7 | ) |   |   | (0.2 | ) |   |   | (3.5 | ) |
| Corporate                                                       |                       |   | (2.7 | ) |   |   | (0.2 | ) |   |   | (10.3 | ) |   |   | (4.8 | ) |
| Forest products                                                 |                       |   | - |   |   |   | (0.5 | ) |   |   | - |   |   |   | (1.0 | ) |
|                                                            |                       |   | (2.0 | ) |   |   | (5.1 | ) |   |   | (10.2 | ) |   |   | (12.2 | ) |
|                                                            |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                                         |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment, interest and other income (expense), net            |                       |   | (4.0 | ) |   |   | (3.2 | ) |   |   | (4.2 | ) |   |   | (5.8 | ) |
| Interest expense                                                |                       |   | (4.0 | ) |   |   | (4.0 | ) |   |   | (7.9 | ) |   |   | (8.1 | ) |
| Amortization of deferred financing costs                        |                       |   | (0.1 | ) |   |   | (0.2 | ) |   |   | (0.3 | ) |   |   | (0.3 | ) |
| Loss before income taxes                                        |                       |   | (10.1 | ) |   |   | (12.5 | ) |   |   | (22.6 | ) |   |   | (26.4 | ) |
| Provision for income taxes                                      |                       |   | (0.1 | ) |   |   | (0.2 | ) |   |   | (0.1 | ) |   |   | (0.2 | ) |
| Net loss                                                        |                       | $ | (10.2 | ) |   | $ | (12.7 | ) |   | $ | (22.7 | ) |   | $ | (26.6 | ) |
|                                                            |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic net loss per common and common equivalent share           |                       | $ | (2.24 | ) |   | $ | (2.78 | ) |   | $ | (4.98 | ) |   | $ | (5.50 | ) |
|                                                            |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted net loss per common and common equivalent share         |                       | $ | (2.24 | ) |   | $ | (2.78 | ) |   | $ | (4.98 | ) |   | $ | (5.50 | ) |
|                                                            |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding - Basic and Diluted         |                       |   | 4,559,637 |   |   |   | 4,561,237 |   |   |   | 4,559,637 |   |   |   | 4,836,984 |   |

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| MAXXAM INC. AND SUBSIDIARIES                                                |   |
|-----------------------------------------------------------------------------|--------|
|                                                                        |   |   |   |   |   |   |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                             |   |
| (In millions of dollars)                                                    |   |
|                                                                        |   |   |   |   |   |   |
|                                                                        |   | Six Months EndedJune 30, |   |
|                                                                        |   | 2009 |   |   | 2008 |   |
|                                                                        |   | (Unaudited) |   |
| Cash flows from operating activities:                                       |   |   |   |   |   |   |
| Net loss                                                                    |   | $ | (22.7 | ) |   | $ | (26.6 | ) |
| Adjustments to reconcile net loss to net cash used foroperating activities: |   |   |   |   |   |   |   |   |
| Depreciation, depletion and amortization                                    |   |   | 5.0 |   |   |   | 5.9 |   |
| Non-cash stock-based compensation expense                                   |   |   | 0.3 |   |   |   | (1.6 | ) |
| Net losses from investments                                                 |   |   | 0.8 |   |   |   | 6.9 |   |
| Amortization of deferred financing costs                                    |   |   | 0.3 |   |   |   | 0.3 |   |
| Equity (income) losses in joint ventures                                    |   |   | 4.6 |   |   |   | (0.1 | ) |
| Gain on involuntary conversion of property                                  |   |   | (0.7 | ) |   |   | - |   |
| Increase (decrease) in cash resulting from changes in:                      |   |   |   |   |   |   |   |   |
| Receivables                                                                 |   |   | (0.2 | ) |   |   | 0.6 |   |
| Inventories                                                                 |   |   | - |   |   |   | (0.9 | ) |
| Prepaid expenses and other assets                                           |   |   | (0.3 | ) |   |   | 0.2 |   |
| Accounts payable                                                            |   |   | (2.2 | ) |   |   | (2.7 | ) |
| Accrued taxes                                                               |   |   | (0.4 | ) |   |   | (0.3 | ) |
| Other accrued liabilities                                                   |   |   | (2.7 | ) |   |   | 3.0 |   |
| Long-term assets and long-term liabilities                                  |   |   | (5.6 | ) |   |   | (1.8 | ) |
| Net cash used for operating activities                                      |   |   | (23.8 | ) |   |   | (17.1 | ) |
|                                                                        |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                       |   |   |   |   |   |   |   |   |
| Proceeds on involuntary conversion of property                              |   |   | 0.7 |   |   |   | - |   |
| Maturities of marketable securities and other investments                   |   |   | - |   |   |   | 11.6 |   |
| Sales of marketable securities and other investments                        |   |   | 2.5 |   |   |   | 26.5 |   |
| Purchases of marketable securities and other investments                    |   |   | (13.8 | ) |   |   | (9.1 | ) |
| Net proceeds from (contributions to) restricted cash                        |   |   | (1.4 | ) |   |   | 0.6 |   |
| Capital expenditures                                                        |   |   | (3.6 | ) |   |   | (2.1 | ) |
| Net cash provided by (used for) investing activities                        |   |   | (15.6 | ) |   |   | 27.5 |   |
|                                                                        |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                       |   |   |   |   |   |   |   |   |
| Principal payments on long-term debt                                        |   |   | (2.9 | ) |   |   | (2.5 | ) |
| Borrowings under long-term debt                                             |   |   | 1.0 |   |   |   | - |   |
| Treasury stock purchases                                                    |   |   | - |   |   |   | (20.1 | ) |
| Net proceeds from refundable deposits                                       |   |   | 0.1 |   |   |   | 0.4 |   |
| Net cash used for financing activities                                      |   |   | (1.8 | ) |   |   | (22.2 | ) |
|                                                                        |   |   |   |   |   |   |   |   |
| Net decrease in cash and cash equivalents                                   |   |   | (41.2 | ) |   |   | (11.8 | ) |
| Cash and cash equivalents at beginning of the period                        |   |   | 59.6 |   |   |   | 67.8 |   |
| Cash and cash equivalents at end of the period                              |   | $ | 18.4 |   |   | $ | 56.0 |   |
|                                                                        |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                           |   |   |   |   |   |   |   |   |
| Interest paid                                                               |   | $ | 8.0 |   |   | $ | 8.1 |   |

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NOTES

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Table of Contents

| (i)   | the ultimate outcome of the Bankruptcy Cases discussed in Note 10, |
|-----------------|--------------------------------------------------------------------|

| (ii)   | recoveries, if any, from insurers related to the Wilson actions discussed 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. |
|------------------|--------------------------------------------------------|

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|                                                                  |   |   Reportable  Segments |   |   |          |   |   |       |   |   |   Consolidated |   |
|-----------------------------------------------------------------------|--------|----------------------------------|--------|--------|---------------|--------|--------|------------|--------|--------|---------------------|--------|
|                                                                  |   |    Real Estate         |   |   |   Racing |   |   |   MGI |   |   |   Corporate    |   |   |   Total |   |
|                                                                  |   | (In millions of dollars)         |   |
| Investment, interest andother income for thethree months ended:       |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |
| June 30, 2009                                                         |   | $                                | (3.9   | )(1)   |          | $      | -      |       |   | $      | -                   |   |   | $ | (0.1 | ) |   | $ | (4.0 | ) |
| June 30, 2008                                                         |   |                             | (1.2   | )      |          |   | -      |       |   |   | -                   |   |   |   | (2.0 | ) |   |   | (3.2 | ) |
|                                                                  |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Investment, interest andother income for thesix months ended:         |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                         |   | $                                | (3.9   | )(1)   |          | $      | -      |       |   | $      | -                   |   |   | $ | (0.3 | ) |   | $ | (4.2 | ) |
| June 30, 2008                                                         |   |                             | (1.0   | )      |          |   | -      |       |   |   | -                   |   |   |   | (4.8 | ) |   |   | (5.8 | ) |
|                                                                  |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Selling, general andadministrative expensefor the three months ended: |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                         |   | $                                | 2.0    |   |          | $      | 2.5    |       |   | $      | -                   |   |   | $ | 2.6 |  (2) |   | $ | 7.1 |   |
| June 30, 2008                                                         |   |                             | 3.9    |   |          |   | 2.2    |       |   |   | 0.5                 |   |   |   | (1.1 | )(2) |   |   | 5.5 |   |
|                                                                  |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Selling, general andadministrative expensefor the six months ended:   |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                         |   | $                                | 4.0    |   |          | $      | 4.0    |       |   | $      | -                   |   |   | $ | 10.2 |  (2)(3) |   | $ | 18.2 |   |
| June 30, 2008                                                         |   |                             | 7.4    |   |          |   | 4.4    |       |   |   | 1.0                 |   |   |   | 3.5 |  (2) |   |   | 16.3 |   |
|                                                                  |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Operating income (loss) for thethree months ended:                    |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                         |   | $                                | 0.2    |   |          | $      | 0.5    |  (4)  |   | $      | -                   |   |   | $ | (2.7 | )(2)(3) |   | $ | (2.0 | ) |
| June 30, 2008                                                         |   |                             | (1.7   | )      |          |   | (2.7   | )          |   |   | (0.5                | )      |   |   | (0.2 | )(2) |   |   | (5.1 | ) |
|                                                                  |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Operating income (loss) for thesix months ended:                      |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                         |   | $                                | 0.3    |   |          | $      | (0.2   | )(4)       |   | $      | -                   |   |   | $ | (10.3 | )(2)(3) |   | $ | (10.2 | ) |
| June 30, 2008                                                         |   |                             | (2.9   | )      |          |   | (3.5   | )          |   |   | (1.0                | )      |   |   | (4.8 | )(2) |   |   | (12.2 | ) |
|                                                                  |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Interest expense for thethree months ended (5):                       |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                         |   | $                                | (4.1   | )      |          | $      | -      |       |   | $      | -                   |   |   | $ | - |   |   | $ | (4.1 | ) |
| June 30, 2008                                                         |   |                             | (4.2   | )      |          |   | -      |       |   |   | -                   |   |   |   | - |   |   |   | (4.2 | ) |
|                                                                  |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Interest expense for thesix months ended (5):                         |   |                             |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                         |   | $                                | (8.2   | )      |          | $      | -      |       |   | $      | -                   |   |   | $ | - |   |   | $ | (8.2 | ) |
| June 30, 2008                                                         |   |                             | (8.4   | )      |          |   | -      |       |   |   | -                   |   |   |   | - |   |   |   | (8.4 | ) |

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Table of Contents

|                                                               |   |    Reportable  Segments |   |   |          |   |   |       |   |   |   Consolidated |   |
|--------------------------------------------------------------------|--------|----------------------------------------|--------|--------|---------------|--------|--------|------------|--------|--------|---------------------|--------|
|                                                               |   |   Real Estate                     |   |   |   Racing |   |   |   MGI |   |   |   Corporate    |   |   |   Total |   |
|                                                               |   | (In millions of dollars)               |   |
| Depreciation, depletionand amortization for thethree months ended: |   |                                   |   |   |          |   |   |       |   |   |                |   |   |   |   |
| June 30, 2009                                                      |   | $                                      | 1.9    |   |          | $      | 0.5    |       |   | $      | -                   |   |   | $ | 0.1 |   |   | $ | 2.5 |   |
| June 30, 2008                                                      |   |                                   | 2.5    |   |          |   | 0.5    |       |   |   | -                   |   |   |   | 0.1 |   |   |   | 3.1 |   |
|                                                               |   |                                   |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Depreciation, depletionand amortization for thesix months ended:   |   |                                   |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                      |   | $                                      | 4.0    |   |          | $      | 0.9    |       |   | $      | -                   |   |   | $ | 0.1 |   |   | $ | 5.0 |   |
| June 30, 2008                                                      |   |                                   | 4.9    |   |          |   | 0.9    |       |   |   | -                   |   |   |   | 0.1 |   |   |   | 5.9 |   |
|                                                               |   |                                   |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Loss before income taxesfor the three months ended:                |   |                                   |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                      |   | $                                      | (7.8   | )(1)   |          | $      | 0.5    |  (4)  |   | $      | -                   |   |   | $ | (2.8 | ) |   | $ | (10.1 | ) |
| June 30, 2008                                                      |   |                                   | (7.1   | )      |          |   | (2.7   | )          |   |   | (0.5                | )      |   |   | (2.2 | ) |   |   | (12.5 | ) |
|                                                               |   |                                   |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Loss before income taxesfor the six months ended:                  |   |                                   |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                      |   | $                                      | (11.8  | )(1)   |          | $      | (0.2   | )(4)       |   | $      | -                   |   |   | $ | (10.6 | )(3) |   | $ | (22.6 | ) |
| June 30, 2008                                                      |   |                                   | (12.3  | )      |          |   | (3.5   | )          |   |   | (1.0                | )      |   |   | (9.6 | ) |   |   | (26.4 | ) |
|                                                               |   |                                   |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Capital expendituresfor the six months ended:                      |   |                                   |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                      |   | $                                      | 0.1    |   |          | $      | 3.5    |       |   | $      | -                   |   |   | $ | - |   |   | $ | 3.6 |   |
| June 30, 2008                                                      |   |                                   | 0.5    |   |          |   | 1.6    |       |   |   | -                   |   |   |   | - |   |   |   | 2.1 |   |
|                                                               |   |                                   |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| Total assets as of:                                                |   |                                   |   |   |          |   |   |       |   |   |                |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                      |   | $                                      | 258.5  |   |          | $      | 37.7   |       |   | $      | -                   |   |   | $ | 74.1 |   |   | $ | 370.3 |   |
| December 31, 2008                                                  |   |                                   | 267.3  |   |          |   | 38.1   |       |   |   | -                   |   |   |   | 94.9 |   |   |   | 400.3 |   |

| (1) | Includes an impairment charge of $4.1 million related to RMCAL (see Note 5). |
|-----|------------------------------------------------------------------------------|

| (2) | Includes stock-based compensation expense of $0.5 million and a benefit of $0.3 million for the three months and six months ended June 30, 2009, respectively, and a benefit of $3.4 million and $1.6 million for the three months and six months ended June 30, 2008, respectively. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes $4.0 million for settlement of the Wilson actions (see Note 9). |
|-----|--------------------------------------------------------------------------|

| (4) | Includes an aggregate $3.1 million and $4.5 of insurance recoveries during the three months and six months ended June 30, 2009, respectively, related to the damage at Sam Houston Race Park caused by Hurricane Ike (see Note 14). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Interest expense includes amortization of deferred financing costs. |
|-----|---------------------------------------------------------------------|

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|                                                                |   | June 30,2009 |   |   | December 31,2008 |   |
|---------------------------------------------------------------------|--------|--------------|--------|--------|------------------|--------|
| Current:                                                            |   |         |   |   |             |   |
| Cash and cash equivalents                                           |   | $            | 18.4   |   |             | $      | 59.6 |   |
| Marketable securities - other                                       |   |         | 14.6   |   |             |   | 2.5 |   |
| Restricted cash                                                     |   |         | 1.4    |   |             |   | 0.5 |   |
| Total current                                                       |   |         | 34.4   |   |             |   | 62.6 |   |
|                                                                |   |         |   |   |             |   |   |   |
| Non-Current:                                                        |   |         |   |   |             |   |   |   |
| Marketable securities - auction rate securities (1)                 |   |         | 1.7    |   |             |   | 1.5 |   |
| Restricted cash and certificates of deposit                         |   |         | 4.1    |   |             |   | 3.6 |   |
| Total non-current                                                   |   |         | 5.8    |   |             |   | 5.1 |   |
|                                                                |   |         | 40.2   |   |             |   | 67.7 |   |
| Less:  restricted amounts                                 |   |         | (5.5   | )      |             |   | (4.1 | ) |
| Total unrestricted cash, cash equivalents and marketable securities |   | $            | 34.7   |   |             | $      | 63.6 |   |

| (1) | Included in other long-term assets and investments on the Condensed Consolidated Balance Sheets. |
|-----|--------------------------------------------------------------------------------------------------|

|                                                                                 |   | June 30,2009 |   |   | December 31,2008 |   |
|--------------------------------------------------------------------------------------|--------|--------------|--------|--------|------------------|--------|
|                                                                                 |   |         |   |   |             |   |
| Funds held in escrow for the Palmas Country Club, Inc. notes  (see Note 6) |   | $            | 1.8    |   |             | $      | 3.3 |   |
| Certificate of deposit - insurance collateral (see Note 6)                           |   |         | 2.0    |   |             |   | - |   |
| Horsemen custodial accounts                                                          |   |         | -      |   |             |   | 0.2 |   |
| Other                                                                                |   |         | 1.7    |   |             |   | 0.6 |   |
| Total restricted cash                                                                |   | $            | 5.5    |   |             | $      | 4.1 |   |

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|                                          | June 30, 2009     |   |
|-----------------------------------------------|-------------------|--------|
|                                          | CarryingValue     |   | AggregateFair Value |   | Net Gainsin AOCL |   | Net Lossesin AOCL |   |
|                                          |              |   |   |   |   |   |   |   |   |   |   |   |
| Debt securities - Corporate Bonds:            |              |   |   |   |   |   |   |   |   |   |   |   |
| Maturities of less than one year              | $            |   | 6.4 |   |  $ |   | 6.4 |   | $  |   | - |   | $  |   | - |   |
| Maturities of one to five years               |              |   | 1.0 |   |   |   | 1.0 |   |   |   | - |   |   |   | - |   |
| Maturities of greater than five years         |              |   | 1.6 |   |   |   | 1.6 |   |   |   | 0.2 |   |   |   | - |   |
| Equity securities and mutual fund investments |              |   | 5.6 |   |   |   | 5.6 |   |   |   | - |   |   |   | (0.3 | ) |
| Auction rate securities                       |              |   | 1.7 |   |   |   | 1.7 |   |   |   | 0.2 |   |   |   | - |   |
| Total                                         | $            |   | 16.3 |   | $  |   | 16.3 |   | $  |   | 0.4 |   | $  |   | (0.3 | ) |
|                                          |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          | December 31, 2008 |   |
|                                          | CarryingValue     |   | AggregateFair Value |   | Net Gainsin AOCL |   | Net Lossesin AOCL |   |
|                                          |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities and other investments       | $                 |   | 2.5 |   |  $ |   | 2.5 |   | $ |   | - |   | $ |   | (1.3 | ) |
| Auction rate securities                       |              |   | 1.5 |   |   |   | 1.5 |   |   |   | - |   |   |   | - |   |
| Total                                         | $                 |   | 4.0 |   | $ |   | 4.0 |   | $ |   | - |   |  $ |   | (1.3 | ) |

|   | Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|                             |   | Fair Value Measurements as ofJune 30, 2009 |   |
|----------------------------------|--------|--------------------------------------------|--------|
|                             |   | Total                                      |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|                             |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Description:                     |   |                                       |   |   |   |   |   |   |   |   |   |   |
|                             |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Short-term marketable securities |   | $                                          | 14.6   |   |   | $ | 14.6 |   |   | $ | - |   |   | $ | - |   |
|                             |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Auction rate securities          |   |                                       | 1.7    |   |   |   | - |   |   |   | - |   |   |   | 1.7 |   |
|                             |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                            |   | $                                          | 16.3   |   |   | $ | 14.6 |   |   | $ | - |   |   | $ | 1.7 |   |

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|                                                                  |   | Auction Rate Securities |   |
|-----------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                  |   |                    |   |
| Carrying value as of January 1, 2009                                  |   | $                       | 1.5    |   |
| Settlements                                                           |   |                    | -      |   |
| Impairment charge included in theConsolidated Statement of Operations |   |                    | -      |   |
| Amount included in AccumulatedOther Comprehensive Income (Loss)       |   |                    | 0.2    |   |
| Carrying value as of June 30, 2009                                    |   | $                       | 1.7    |   |

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|                                                                                             |   | June 30,2009 |   |   | December 31,2008 |   |
|--------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|------------------|--------|
|                                                                                             |   |         |   |   |             |   |
| 7.56% Lakepointe Notes due June 8, 2021                                                          |   | $            | 109.1  |   |             | $      | 110.0 |   |
| 7.03% Motel Notes due May 1, 2018                                                                |   |         | 40.4   |   |             |   | 41.4 |   |
| 6.08% Beltway Notes due November 9, 2024                                                         |   |         | 26.9   |   |             |   | 27.2 |   |
| 7.12% PCCI Notes due December 20, 2030                                                           |   |         | 27.4   |   |             |   | 27.7 |   |
| Prime + 0.5% EN Facility due October 29, 2011                                                    |   |         | 1.6    |   |             |   | 0.6 |   |
| Other notes and contracts, primarily secured by receivables, buildings,real estate and equipment |   |         | 4.5    |   |             |   | 4.9 |   |
| Total principal outstanding                                                                      |   |         | 209.9  |   |             |   | 211.8 |   |
|                                                                                             |   |         |   |   |             |   |   |   |
| Less:  Short-term borrowings and current maturities                                    |   |         | (6.3   | )      |             |   | (6.1 | ) |
|                                                                                             |   | $            | 203.6  |   |             | $      | 205.7 |   |

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|                                      |   | Pension Benefits            |   |   | Medical/Life              |   |   | Pension Benefits |   |   | Medical/Life |   |
|-------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|--------|------------------|--------|--------|--------------|--------|
|                                      |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|                                      |   | 2009                        |   |   | 2008                      |   |   | 2009             |   |   | 2008         |   |   | 2009 |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |
|                                      |   |                        |   |   |                      |   |   |             |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Components of net periodic benefit costs: |   |                        |   |   |                      |   |   |             |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service cost                              |   | $                           | -      |   |                      | $      | -      |             |   | $      | 0.1          |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 0.1 |   |   | $ | - |   |
| Interest cost                             |   |                        | 0.4    |   |                      |   | 0.4    |             |   |   | 0.1          |   |   |   | 0.1 |   |   |   | 0.9 |   |   |   | 0.9 |   |   |   | 0.1 |   |   |   | 0.1 |   |
| Expected return on assets                 |   |                        | (0.4   | )      |                      |   | (0.5   | )                |   |   | -            |   |   |   | - |   |   |   | (1.0 | ) |   |   | (1.1 | ) |   |   | - |   |   |   | - |   |
| Recognized net actuarial loss             |   |                        | -      |   |                      |   | -      |             |   |   | -            |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Amortization of prior service costs       |   |                        | -      |   |                      |   | -      |             |   |   | (0.1         | )      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (0.1 | ) |   |   | - |   |
| Net periodic benefit costs                |   |                        | -      |   |                      |   | (0.1   | )                |   |   | 0.1          |   |   |   | 0.1 |   |   |   | - |   |   |   | (0.2 | ) |   |   | 0.1 |   |   |   | 0.1 |   |
| Curtailments, settlements and other       |   |                        | -      |   |                      |   | -      |             |   |   | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Adjusted net periodic benefit costs       |   | $                           | -      |   |                      | $      | (0.1   | )                |   | $      | 0.1          |   |   | $ | 0.1 |   |   | $ | - |   |   | $ | (0.2 | ) |   | $ | 0.1 |   |   | $ | 0.1 |   |

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Table of Contents

|   | Deconsolidation of Palco and its Subsidiaries and Potential Impact on the Company |
|--------|-----------------------------------------------------------------------------------|

----

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----

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|                     |   | Six Months EndedJune 30, |
|--------------------------|--------|--------------------------|
|                     |   |                     | 2009 |   |   | 2008 |
|                     |   |                     |   |   |   |   |
| Expected volatility      |   |                     | 48% |   |   | 25% |
| Expected dividends       |   |                     | - |   |   | - |
| Expected term (in years) |   |                     |            7.34 |   |   |            7.31 |
| Risk-free rate           |   |                     | 2.54% |   |   | 3.30% |

|                         |   | Options |      |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Contractual Term (in years) |   |   | Aggregate Fair Value (in millions) |   |
|------------------------------|--------|---------|-----------|--------|---------------------------------|--------|--------|--------------------------------------------------------|--------|--------|------------------------------------|--------|
|                         |   |    |      |   |                            |   |   |                                                   |   |   |                               |   |
| Balance at January 1, 2009   |   |    | 1,052,182 |   |                            | $      | 21.04  |                                                   |   |   |                               |   |   |   |
| Granted                      |   |    | 3,000     |   |                            |   | 11.73  |                                                   |   |   |                               |   |   |   |
| Exercised                    |   |    |  -   |   |                            |   | -      |                                                   |   |   |                               |   |   |   |
| Forfeited or expired         |   |    | ( 34,300  | )      |                            |   | 55.37  |                                                   |   |   |                               |   |   |   |
| Balance at June 30, 2009     |   |    | 1,020,882 |   |                            | $      | 19.86  |                                                   |   |   | 4.88                               |   |   | $ | 0.2 |   |
| Exercisable at June 30, 2009 |   |    | 754,797   |   |                            | $      | 19.82  |                                                   |   |   | 3.62                               |   |   | $ | 0.2 |   |

|                                                         |   | Three Months EndedJune 30, |      |   | Six Months EndedJune 30, |   |
|--------------------------------------------------------------|--------|----------------------------|-----------|--------|--------------------------|--------|
|                                                         |   | 2009                       |      |   | 2008 (1)                 |   |   | 2009 |   |   | 2008 (1) (2) |   |
|                                                         |   |                       |      |   |                     |   |   |   |   |   |   |   |
| Weighted average number of common shares outstanding-basic:  |   |                       | 4,559,637 |   |                     |   | 4,561,237 |   |   |   | 4,559,637 |   |   |   | 4,836,984 |   |
|                                                         |   |                       |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Effect of dilution (3):                                      |   |                       |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |   |   | 4,836,984 |   |

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| (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) | In the second quarter of 2008, a mathematical error was discovered in the calculation of the weighted average number of shares used to determine basic and diluted shares outstanding for the first quarter of 2008.  As a result, earnings per share for the three months ended March 31, 2008 was incorrectly reported as a loss of $2.58 per share, rather than a loss of $2.72 per share. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The Company had a loss for the three months and six months ended June 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 Stockfor the three months and six months ended June 30, 2009 and 2008 would be 668,119 and 668,119, respectively, and the number of dilutive options for the three months ended June 30, 2009 and 2008 would be 10,285 and 278,247, respectively, and the number of dilutive options for the six months ended June 30, 2009 and 2008 would be 5,143 and 139,124, respectively. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                               |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|--------------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                                               |   | 2009                       |   |   | 2008                     |   |   | 2009 |   |   | 2008 |   |
|                                                               |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Net loss                                                           |   | $                          | (10.2  | )      |                     | $      | (12.7 | ) |   | $ | (22.7 | ) |   | $ | (26.6 | ) |
| Other comprehensive loss:                                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Change in unrealized gain (loss) on available-for-sale investments |   |                       | (0.7   | )      |                     |   | 0.2 |   |   |   | (0.8 | ) |   |   | 0.2 |   |
| Total comprehensive loss                                           |   | $                          | (9.5   | )      |                     | $      | (12.5 | ) |   | $ | (21.9 | ) |   | $ | (26.4 | ) |

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Table of Contents

|                          |   | Three Months Ended |   |   |          |   |
|-------------------------------|--------|--------------------|--------|--------|---------------|--------|
|                          |   | June 30,2009       |   |   | March 31,2009 |   |   | December 31,2008 |   |   | 2009 |   |   | Inception toDate |   |
|                          |   |               |   |   |          |   |   |   |   |   |   |   |   |   |   |
| Property damage               |   | $                  | 0.7    |   |          | $      | - |   |   | $ | 4.8 |   |   | $ | 0.7 |   |   | $ | 5.5 |   |
| Business interruption         |   |               | 1.8    |   |          |   | 1.4 |   |   |   | 0.8 |   |   |   | 3.2 |   |   |   | 4.0 |   |
| Claims preparation            |   |               | 0.6    |   |          |   | - |   |   |   | - |   |   |   | 0.6 |   |   |   | 0.6 |   |
|                          |   |               |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net impact reflected in the   |   |               |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| statement of operations       |   | $                  | 3.1    |   |          | $      | 1.4 |   |   | $ | 5.6 |   |   | $ | 4.5 |   |   | $ | 10.1 |   |
|                          |   |               |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash received                 |   | $                  | 2.8    |   |          | $      | 1.1 |   |   | $ | 6.2 |   |   | $ | 3.9 |   |   | $ | 10.1 |   |
|                          |   |               |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recoveries not yet recognized |   | $                  | -      |   |          | $      | 0.3 |   |   | $ | 0.6 |   |   | $ | - |   |   | $ | - |   |

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Table of Contents

| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------------|

|                                                                 |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|----------------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                                                 |   | 2009                       |   |   | 2008                     |   |   | 2009 |   |   | 2008 |   |
|                                                                 |   | (In millions of dollars)   |
|                                                                 |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Sales                                                                |   | $                          | 18.6   |   |                     | $      | 23.3 |   |   | $ | 34.3 |   |   | $ | 45.0 |   |
| Costs and expenses                                                   |   |                       | (20.6  | )      |                     |   | (28.4 | ) |   |   | (44.5 | ) |   |   | (57.2 | ) |
| Operating loss                                                       |   |                       | (2.0   | )      |                     |   | (5.1 | ) |   |   | (10.2 | ) |   |   | (12.2 | ) |
| Other income (expense)                                               |   |                       | (4.0   | )      |                     |   | (3.2 | ) |   |   | (4.2 | ) |   |   | (5.8 | ) |
| Interest expense, including amortization of deferred financing costs |   |                       | (4.1   | )      |                     |   | (4.2 | ) |   |   | (8.2 | ) |   |   | (8.4 | ) |
| Loss before income taxes                                             |   |                       | (10.1  | )      |                     |   | (12.5 | ) |   |   | (22.6 | ) |   |   | (26.4 | ) |
| Provision for income taxes                                           |   |                       | (0.1   | )      |                     |   | (0.2 | ) |   |   | (0.1 | ) |   |   | (0.2 | ) |
| Net loss                                                             |   | $                          | (10.2  | )      |                     | $      | (12.7 | ) |   | $ | (22.7 | ) |   | $ | (26.6 | ) |
|                                                                 |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Revenues by segment as a percentage of total:                        |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                                                          |   |                       | 39.8   | %      |                     |   | 41.6 | % |   |   | 43.1 | % |   |   | 41.3 | % |
| Racing                                                               |   |                       | 60.2   | %      |                     |   | 45.9 | % |   |   | 56.9 | % |   |   | 52.2 | % |
| Corporate                                                            |   |                       | -      |   |                     |   | 12.5 | % |   |   | - |   |   |   | 6.5 | % |
|                                                                 |   |                       | 100.0  | %      |                     |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |

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Table of Contents

|                                                |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|-----------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                                |   | 2009                       |   |   | 2008                     |   |   | 2009 |   |   | 2008 |   |
|                                                |   | (In millions of dollars)   |
|                                                |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Money market accounts and other investments         |   | $                          | 0.5    |   |                     | $      | 0.5 |   |   | $ | 0.8 |   |   | $ | 1.1 |   |
| Auction rate securities                             |   |                       | -      |   |                     |   | (1.9 | ) |   |   | - |   |   |   | (3.7 | ) |
| Marketable securities                               |   |                       | (0.3   | )      |                     |   | (2.1 | ) |   |   | (0.6 | ) |   |   | (2.6 | ) |
| Investments in limited partnerships                 |   |                       | -      |   |                     |   | 0.4 |   |   |   | - |   |   |   | (0.6 | ) |
| Joint ventures                                      |   |                       | (4.4   | )      |                     |   | 0.1 |   |   |   | (4.6 | ) |   |   | 0.1 |   |
| Other                                               |   |                       | 0.2    |   |                     |   | (0.2 | ) |   |   | 0.2 |   |   |   | (0.1 | ) |
| Investment interest and other income (expense), net |   | $                          | (4.0   | )      |                     | $      | (3.2 | ) |   | $ | (4.2 | ) |   | $ | (5.8 | ) |

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Table of Contents

|                                                          |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|---------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                                          |   | 2009                       |   |   | 2008                     |   |   | 2009 |   |   | 2008 |   |
|                                                          |   | (In millions of dollars)   |
|                                                          |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Sales:                                                        |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Real estate:                                                  |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Fountain Hills                                                |   | $                          | -      |   |                     | $      | 0.9 |   |   | $ | - |   |   | $ | 1.4 |   |
| Mirada                                                        |   |                       | -      |   |                     |   | 0.5 |   |   |   | - |   |   |   | 0.5 |   |
| Palmas                                                        |   |                       | -      |   |                     |   | 0.1 |   |   |   | - |   |   |   | 0.2 |   |
| Total                                                         |   |                       | -      |   |                     |   | 1.5 |   |   |   | - |   |   |   | 2.1 |   |
|                                                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Resort, commercial and other:                                 |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Fountain Hills                                                |   |                       | 0.7    |   |                     |   | 0.8 |   |   |   | 1.3 |   |   |   | 1.8 |   |
| Palmas                                                        |   |                       | 2.0    |   |                     |   | 2.7 |   |   |   | 4.2 |   |   |   | 5.4 |   |
| Commercial lease properties                                   |   |                       | 4.6    |   |                     |   | 4.6 |   |   |   | 9.2 |   |   |   | 9.2 |   |
| Other                                                         |   |                       | 0.1    |   |                     |   | 0.1 |   |   |   | 0.1 |   |   |   | 0.1 |   |
| Total                                                         |   | $                          | 7.4    |   |                     | $      | 8.2 |   |   | $ | 14.8 |   |   | $ | 16.5 |   |
|                                                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total sales                                                   |   | $                          | 7.4    |   |                     | $      | 9.7 |   |   | $ | 14.8 |   |   | $ | 18.6 |   |
|                                                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss):                                      |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Fountain Hills                                                |   | $                          | (0.5   | )      |                     | $      | (0.3 | ) |   | $ | (1.4 | ) |   | $ | (1.2 | ) |
| Mirada                                                        |   |                       | (0.1   | )      |                     |   | (0.1 | ) |   |   | (0.1 | ) |   |   | (0.2 | ) |
| Palmas                                                        |   |                       | (2.2   | )      |                     |   | (3.8 | ) |   |   | (4.3 | ) |   |   | (6.8 | ) |
| Commercial lease properties                                   |   |                       | 3.2    |   |                     |   | 3.2 |   |   |   | 6.5 |   |   |   | 6.5 |   |
| Other                                                         |   |                       | (0.2   | )      |                     |   | (0.7 | ) |   |   | (0.4 | ) |   |   | (1.2 | ) |
| Total operating income (loss)                                 |   | $                          | 0.2    |   |                     | $      | (1.7 | ) |   | $ | 0.3 |   |   | $ | (2.9 | ) |
|                                                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Investment, interest and other income:                        |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Equity in earnings (losses) from real estate joint ventures   |   | $                          | (4.4   | )      |                     | $      | 0.1 |   |   | $ | (4.6 | ) |   | $ | 0.1 |   |
| Other                                                         |   |                       | 0.5    |   |                     |   | (1.3 | ) |   |   | 0.7 |   |   |   | (1.1 | ) |
|                                                          |   | $                          | (3.9   | )      |                     | $      | (1.2 | ) |   | $ | (3.9 | ) |   | $ | (1.0 | ) |
|                                                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense and amortization of deferred financing costs |   |                       | (4.1   | )      |                     |   | (4.2 | ) |   |   | (8.2 | ) |   |   | (8.4 | ) |
|                                                          |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Loss before income taxes                                      |   | $                          | (7.8   | )      |                     | $      | (7.1 | ) |   | $ | (11.8 | ) |   | $ | (12.3 | ) |

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Table of Contents

|                              |   | Three Months EndedJune 30, |   |      | Six Months EndedJune 30, |   |
|-----------------------------------|--------|----------------------------|--------|-----------|--------------------------|--------|
|                              |   | 2009                       |   |      | 2008                     |   |   | 2009 |   |   | 2008 |   |
|                              |   | (In millions of dollars)   |
|                              |   |                       |   |      |                     |   |   |   |   |   |   |   |
| Number of live racing days:       |   |                       |   |      |                     |   |   |   |   |   |   |   |
| Sam Houston Race Park             |   |                       | 28     |      |                     |   | 6 |   |   |   | 28 |   |   |   | 47 |   |
| Valley Race Park                  |   |                       | 5      |      |                     |   | 5 |   |   |   | 70 |   |   |   | 71 |   |
|                              |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| Handle:                           |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| Sam Houston Race Park:            |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| On-track handle                   |   | $                          | 29.5   |      |                     | $      | 32.0 |   |   | $ | 55.4 |   |   | $ | 63.0 |   |
| Off-track handle                  |   |                       | 3.4    |      |                     |   | 6.0 |   |   |   | 3.4 |   |   |   | 72.7 |   |
| Total                             |   | $                          | 32.9   |      |                     | $      | 38.0 |   |   | $ | 58.8 |   |   | $ | 135.7 |   |
|                              |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| Valley Race Park:                 |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| On-track handle                   |   | $                          | 4.2    |      |                     | $      | 4.0 |   |   | $ | 10.0 |   |   | $ | 9.8 |   |
| Off-track handle                  |   |                       | 0.2    |      |                     |   | 0.3 |   |   |   | 2.7 |   |   |   | 3.0 |   |
| Total                             |   | $                          | 4.4    |      |                     | $      | 4.3 |   |   | $ | 12.7 |   |   | $ | 12.8 |   |
|                              |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| Sales:                            |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| Sam Houston Race Park:            |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| Gross pari-mutuel commissions     |   | $                          | 6.6    |      |                     | $      | 7.1 |   |   | $ | 12.3 |   |   | $ | 15.9 |   |
| Concert revenues                  |   |                       | 1.0    |      |                     |   | 0.8 |   |   |   | 1.1 |   |   |   | 0.8 |   |
| Other revenues                    |   |                       | 2.6    |      |                     |   | 1.7 |   |   |   | 3.1 |   |   |   | 3.8 |   |
| Total                             |   |                       | 10.2   |      |                     |   | 9.6 |   |   |   | 16.5 |   |   |   | 20.5 |   |
| Valley Race Park:                 |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| Gross pari-mutuel commissions     |   |                       | 0.9    |      |                     |   | 0.9 |   |   |   | 2.4 |   |   |   | 2.4 |   |
| Other revenues                    |   |                       | 0.1    |      |                     |   | 0.2 |   |   |   | 0.6 |   |   |   | 0.6 |   |
| Total                             |   |                       | 1.0    |      |                     |   | 1.1 |   |   |   | 3.0 |   |   |   | 3.0 |   |
| Total sales                       |   | $                          | 11.2   |      |                     | $      | 10.7 |   |   | $ | 19.5 |   |   | $ | 23.5 |   |
|                              |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss):          |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| Sam Houston Race Park             |   | $                          | 0.7    |  (1) |                     | $      | (2.5 | ) |   | $ | 0.1 |  (1) |   | $ | (3.1 | ) |
| Valley Race Park                  |   |                       | (0.2   | )         |                     |   | (0.2 | ) |   |   | (0.2 | ) |   |   | (0.3 | ) |
| Other                             |   |                       | -      |      |                     |   | - |   |   |   | (0.1 | ) |   |   | (0.1 | ) |
| Total operating income (loss)     |   | $                          | 0.5    |      |                     | $      | (2.7 | ) |   | $ | (0.2 | ) |   | $ | (3.5 | ) |
|                              |   |                       |   |      |                     |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before income taxes |   | $                          | 0.5    |      |                     | $      | (2.7 | ) |   | $ | (0.2 | ) |   | $ | (3.5 | ) |

| (1) | Includes recoveries from insurance of $3.1 million and $4.5 million for the three months and six months ended June 30, 2009, respectively. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

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|                                            |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|-------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                            |   | 2009                       |   |   | 2008                     |   |   | 2009 |   |   | 2008 |   |
|                                            |   | (In millions of dollars)   |
|                                            |   |                       |   |   |                     |   |   |   |   |   |   |   |
|                                            |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Revenue                                         |   | $                          | -      |   |                     | $      | 2.9 |   |   | $ | - |   |   | $ | 2.9 |   |
| Cost of goods sold                              |   |                       | -      |   |                     |   | (4.1 | ) |   |   | - |   |   |   | (4.1 | ) |
| Loss on lumber sale                             |   |                       | -      |   |                     |   | (1.2 | ) |   |   | - |   |   |   | (1.2 | ) |
| Corporate expenses, including legal fees        |   |                       | (2.2   | )      |                     |   | (2.4 | ) |   |   | (6.6 | ) |   |   | (5.2 | ) |
| Settlement of Wilson actions                    |   |                       | -      |   |                     |   | - |   |   |   | (4.0 | ) |   |   | - |   |
| Stock-based compensation                        |   |                       | (0.5   | )      |                     |   | 3.4 |   |   |   | 0.3 |   |   |   | 1.6 |   |
| Operating loss                                  |   |                       | (2.7   | )      |                     |   | (0.2 | ) |   |   | (10.3 | ) |   |   | (4.8 | ) |
| Investment, interest and other income (expense) |   |                       | (0.1   | )      |                     |   | (2.0 | ) |   |   | (0.3 | ) |   |   | (4.8 | ) |
| Loss before income taxes                        |   | $                          | (2.8   | )      |                     | $      | (2.2 | ) |   | $ | (10.6 | ) |   | $ | (9.6 | ) |

|                     | Three Months EndedJune 30, |   | Six Months EndedJune 30, |   |
|--------------------------|----------------------------|--------|--------------------------|--------|
|                     | 2009                       |   | 2008                     |   | 2009 |   | 2008 |   |
|                     | (In millions of dollars)   |
|                     |                       |   |                     |   |   |   |   |   |   |   |   |   |
| Operating loss           |                       | $      | -                        |   |   | $ | (0.5) |   |   | $ | - |   |   | $ | (1.0) |   |
| Loss before income taxes |                       |   | -                        |   |   |   | (0.5) |   |   |   | - |   |   |   | (1.0) |   |

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Table of Contents

|                                                                                                           |   | Real Estate              |   |   | Racing |   |   | MGI    |   |   | Corporate |   |   | Total  |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|
|                                                                                                           |   | (In millions of dollars) |   |
|                                                                                                           |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |
| Debt and credit facilities(excluding intercompanynotes)                                                        |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |
| Short-term borrowings andcurrent maturities oflong-term debt:                                                  |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |
| June 30, 2009                                                                                                  |   | $                        | 6.1    |   |   | $      | 0.2    |   |   | $      | -         |   |   | $      | -      |   |   | $ | 6.3 |   |
| December 31, 2008                                                                                              |   |                     | 5.9    |   |   |   | 0.2    |   |   |   | -         |   |   |   | -      |   |   |   | 6.1 |   |
|                                                                                                           |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| Long-term debt, excludingcurrent maturities anddiscounts:                                                      |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                                                                  |   | $                        | 203.0  |   |   | $      | 0.6    |   |   | $      | -         |   |   | $      | -      |   |   | $ | 203.6 |   |
| December 31, 2008                                                                                              |   |                     | 205.0  |   |   |   | 0.7    |   |   |   | -         |   |   |   | -      |   |   |   | 205.7 |   |
|                                                                                                           |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| Cash, cash equivalents,marketable securitiesand other investments                                              |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                                                                  |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| Current restricted amounts                                                                                     |   | $                        | -      |   |   | $      | 0.4    |   |   | $      | -         |   |   | $      | 1.0    |   |   | $ | 1.4 |   |
| Other current amounts                                                                                          |   |                     | 3.6    |   |   |   | 3.7    |   |   |   | -         |   |   |   | 25.7   |   |   |   | 33.0 |   |
|                                                                                                           |   |                     | 3.6    |   |   |   | 4.1    |   |   |   | -         |   |   |   | 26.7   |   |   |   | 34.4 |   |
|                                                                                                           |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| Long-term unrestricted investments                                                                             |   |                     | -      |   |   |   | -      |   |   |   | -         |   |   |   | 1.9    |   |   |   | 1.9 |   |
| Long-term restrictedamounts                                                                                    |   |                     | 2.0    |   |   |   | -      |   |   |   | -         |   |   |   | 2.1    |   |   |   | 4.1 |   |
|                                                                                                           |   | $                        | 5.6    |   |   | $      | 4.1    |   |   | $      | -         |   |   | $      | 30.7   |   |   | $ | 40.4 |   |
|                                                                                                           |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| Changes in cash and cashequivalents                                                                            |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
|                                                                                                           |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| Capital expenditures for the six months ended:                                                                 |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                                                                  |   | $                        | 0.1    |   |   | $      | 3.5    |   |   | $      | -         |   |   | $      | -      |   |   | $ | 3.6 |   |
| June 30, 2008                                                                                                  |   |                     | 0.5    |   |   |   | 1.6    |   |   |   | -         |   |   |   | -      |   |   |   | 2.1 |   |
|                                                                                                           |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| Net proceeds from dispositions of propertyand investments for the six months ended:                            |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                                                                  |   | $                        | -      |   |   | $      | -      |   |   | $      | -         |   |   | $      | -      |   |   | $ | - |   |
| June 30, 2008                                                                                                  |   |                     | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | - |   |
|                                                                                                           |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| Borrowings (repayments) of debt and credit facilities,net of financing costs, for the six months ended:        |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                                                                  |   | $                        | (1.8   | )      |   | $      | (0.1   | )      |   | $      | -         |   |   | $      | -      |   |   | $ | (1.9 | ) |
| June 30, 2008                                                                                                  |   |                     | (2.5   | )      |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | (2.5 | ) |
| Dividends, advances (including interest paid)and tax sharing payments received (paid)for the six months ended: |   |                     |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                                                                  |   | $                        | 4.0    |   |   | $      | -      |   |   | $      | -         |   |   | $      | (4.0   | ) |   | $ | - |   |
| June 30, 2008                                                                                                  |   |                     | 6.6    |   |   |   | 4.0    |   |   |   | -         |   |   |   | (10.6  | ) |   |   | - |   |

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QUANTITATIVE

CONTROL

LEGAL

RISK 

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UNREGISTERED

DEFAULTS

SUBMISSION

EXHIBITS

|   | 10.1 | Amendment, dated March 31, 2009, to the Company’s Executive Bonus Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 3, 2009) |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.2 | 2009 Bonus Criteria adopted on March 31, 2009 for the MAXXAM Chief Executive Officer under the Company’s Executive Bonus Plan , (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 7, 2009) |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 10.3 | 2009 Bonus Criteria adopted on March 31, 2009 for the MAXXAM President under the Company’s Executive Bonus Plan (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 7, 2009) |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4 | Amendment, dated April 30, 2009, to the Company’s 2002 Omnibus Employee Incentive Plan (incorporated herein by reference to Appendix B-1 to the Company’s Schedule 14A filed on April 24, 2009) |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                 * | 10.5 | Form of Rights Agreement under the Company’s 1994 Omnibus Employee Incentive Plan (relating to the grant of stock options with tandem stock appreciation rights) |
|----------------------------------------------------------------------------------------------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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SIGNATURES

|                                                                                   |                                           | MAXXAM INC.                                                                                      |
|----------------------------------------------------------------------------------------|------------------------------------------------|------------------------------------------------------------------------------------------------------------|
| Date:           August 11, 2009 |         By: | /S/      M. EMILY MADISON                                                    |
|                                                                                   |                                           | M. Emily MadisonVice President, Finance(Principal Accounting Officer andPrincipal Financial Officer)  |

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APPENDIX A

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