The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 — ORGANIZATION
Organization.
MGM Resorts International (together with its consolidated subsidiaries, unless otherwise indicated or unless the context requires otherwise, the “Company”) is a Delaware corporation that acts largely as a holding company and, through subsidiaries, owns and operates casino resorts.
The Company owns and operates the following integrated casino, hotel and entertainment resorts in Las Vegas, Nevada: Bellagio, MGM Grand Las Vegas, The Mirage, Mandalay Bay, Luxor, New York-New York, Park MGM, Excalibur and Circus Circus Las Vegas. Operations at MGM Grand Las Vegas include management of The Signature at MGM Grand Las Vegas, a condominium-hotel consisting of three towers. The Company operates and, along with local investors, owns MGM Grand Detroit in Detroit, Michigan, MGM National Harbor in Prince George’s County, Maryland, and MGM Springfield in Springfield, Massachusetts. The Company also owns and operates Borgata located on Renaissance Pointe in the Marina area of Atlantic City, New Jersey, Empire City in Yonkers, New York, MGM Northfield Park in Northfield Park, Ohio, and the following resorts in Mississippi: Beau Rivage in Biloxi and Gold Strike in Tunica. Additionally, the Company owns The Park, a dining and entertainment district located between New York-New York and Park MGM, Shadow Creek, an exclusive world-class golf course located approximately ten miles north of its Las Vegas Strip resorts, Primm Valley Golf Club at the California/Nevada state line and Fallen Oak golf course in Saucier, Mississippi.
MGM Growth Properties LLC (“MGP”), a consolidated subsidiary of the Company, is organized as an umbrella partnership REIT (commonly referred to as an UPREIT) structure in which substantially all of its assets are owned by and substantially all of its businesses are conducted through MGM Growth Properties Operating Partnership LP (the “Operating Partnership”). MGP has two classes of authorized and outstanding voting common shares (collectively, the “shares”): Class A shares and a single Class B share. The Company owns MGP’s Class B share, which does not provide its holder any rights to profits or losses or any rights to receive distributions from operations of MGP or upon liquidation or winding up of MGP. MGP’s Class A shareholders are entitled to one vote per share, while the Company, as the owner of the Class B share, is entitled to an amount of votes representing a majority of the total voting power of MGP’s shares so long as the Company and its controlled affiliates’ (excluding MGP) aggregate beneficial ownership of the combined economic interests in MGP and the Operating Partnership does not fall below 30%. The Company and MGP each hold Operating Partnership units representing limited partner interests in the Operating Partnership. The general partner of the Operating Partnership is a wholly-owned subsidiary of MGP. The Operating Partnership units held by the Company are exchangeable into Class A shares of MGP on a one-to-one basis, or cash at the fair value of a Class A share. The determination of settlement method is at the option of MGP’s independent conflicts committee. The Company and MGP’s ownership interest percentage in the Operating Partnership have varied based upon the transactions that MGP has completed, as discussed in Note 10. As of March 31, 2019, the Company owned 69.8% of the Operating Partnership units, and MGP held the remaining 30.2% ownership interest in the Operating Partnership.
Pursuant to a master lease agreement between a subsidiary of the Company (the “tenant”) and a subsidiary of the Operating Partnership (the “landlord”), the tenant leases the real estate assets of The Mirage, Mandalay Bay, Luxor, New York-New York, Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, Empire City, MGM National Harbor, and MGM Northfield Park (beginning April 1, 2019) from the landlord.
In January 2019, the Company acquired the real property and operations associated with the Empire City Casino's race track and casino ("Empire City"). Subsequently, MGP acquired the developed real property associated with Empire City from the Company and Empire City was added to the existing master lease between the Company and MGP. Refer to Note 3 for additional information.
In March 2019, the Company entered into an amendment to the existing master lease with respect to investments made by the Company related to improvements at Park MGM and NoMad Las Vegas. Additionally,
in April 2019, the Company acquired the membership interests of Northfield Park Associates, LLC (“Northfield”), the entity that owned the operating assets associated with Hard Rock Rocksino Northfield Park (rebranded to MGM Northfield Park upon the Company’s acquisition), from MGP, and MGP retained the associated real estate assets. MGM Northfield Park was then added to the existing master lease between the Company and MGP. Refer to Note 12 for additional information on these transactions.
7
The Company has an approximate 56% controlling interest in MGM China, which owns MGM Grand Paradise, S.A. (“MGM Grand Paradise”). MGM Grand Paradise owns and operates the MGM Macau resort and casino and MGM Cotai, an integrated casino, hotel and entertainment resort located on the Cotai Strip in Macau, as well as the related gaming subconcession and land concessions. In March 2019, MGM Grand Paradise and its concessionaire, Sociedade de Jogos de Macau, S.A (“SJMSA”)
entered into a Sub-Concession Extension Contract (the "Extension Agreement"), pursuant to which the gaming sub-concession of MGM Grand Paradise, which was due to expire on March 31, 2020, has been extended to June 26, 2022, which coincides with the current expiration date of all the other concessionaires and sub-concessionaires.
In connection with the extension, MGM Grand Paradise paid the government of Macau approximately $25 million upon signing of the Extension Agreement as contract premium for such extension. In addition, in March 2019, MGM Grand Paradise also executed the MGM SJM Agreement with SJMSA, pursuant to which MGM Grand Paradise paid SJMSA an amount of approximately $2 million in connection with the extension of the sub-concession.
The Company owns 50% of and manages CityCenter Holdings, LLC (“CityCenter”), located between Bellagio and Park MGM. The other 50% of CityCenter is owned by Infinity World Development Corp, a wholly owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity. CityCenter consists of Aria, an integrated casino, hotel and entertainment resort; and Vdara, a luxury condominium-hotel. See Note 4 for additional information related to CityCenter.
The Company and a subsidiary of Anschutz Entertainment Group, Inc. (“AEG”) each own 42.5% of the Las Vegas Arena Company, LLC (“Las Vegas Arena Company”), the entity which owns the T-Mobile Arena, and Athena Arena, LLC owns the remaining 15%. The Company also manages the T-Mobile Arena. Additionally, the Company leases the MGM Grand Garden Arena, located adjacent to the MGM Grand Las Vegas, to the Las Vegas Arena Company. See Note 4 for additional information regarding the Company’s investment in the Las Vegas Arena Company.
The Company has three reportable segments: Las Vegas Strip Resorts, Regional Operations and MGM China. See Note 11 for additional information about the Company’s segments.
NOTE 2 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation.
As permitted by the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the Company’s 2018 annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s interim financial statements. The results for such periods are not necessarily indicative of the results to be expected for the full year.
Principles of consolidation.
Management has determined that MGP is a variable interest entity (“VIE”) because the Class A equity investors as a group lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance. The Company has determined that it is the primary beneficiary of MGP and consolidates MGP because (i) its ownership of MGP’s single Class B share entitles it to a majority of the total voting power of MGP’s shares, and (ii) the exchangeable nature of the Operating Partnership units owned provide the Company
the right to receive benefits from MGP that could potentially be significant to MGP. The Company has recorded
MGP’s ownership interest in the Operating Partnership of 30.2% as of March 31, 2019 as noncontrolling interest in the Company’s consolidated financial statements. As of March 31, 2019 and December 31, 2018, on a consolidated basis, MGP had total assets of $12.3 billion and $11.0 billion, respectively, primarily related to its real estate investments, and total liabilities of $5.6 billion and $5.1 billion, respectively, primarily related to its indebtedness.
Revenue recognition.
The Company’s revenue contracts with customers consist of casino wager transactions, hotel room sales, food and beverage transactions, entertainment shows, and retail transactions.
For casino wager transactions that include incentives earned by customers under the Company’s loyalty programs, the Company allocates a portion of net win based upon the standalone selling price of such incentive (less estimated breakage). This allocation is deferred and recognized as revenue when the customer redeems the incentive. When redeemed, revenue is recognized in the department that provides the goods or service. Redemption of loyalty incentives at third party outlets are deducted from the loyalty liability and amounts owed are paid to the third party, with any discount received recorded as other revenue. During the three months ended March 31, 2019 and 2018, commissions and incentives provided to gaming customers were $602 million and $540 million, respectively.
After allocating revenue to other goods and services provided as part of casino wager transactions, the Company records the residual amount to casino revenue.
8
Contract and Contract-Related Liabilities.
There may be a difference between the timing of cash receipts from the customer and the recognition of revenue, resulting in a contract or contract-related liability. The Company generally has three types of liabilities related to contracts with customers: (1) outstanding chip liability, which represents the amounts owned in exchange for gaming chips held by a customer, (2) loyalty program obligations, which represents the deferred allocation of revenue relating to loyalty program incentives earned, as discussed above, and (3) customer advances and other, which is primarily funds deposited by customers before gaming play occurs (“casino front money”) and advance payments on goods and services yet to be provided such as advance ticket sales and deposits on rooms and convention space or for unpaid wagers. These liabilities are generally expected to be recognized as revenue within one year of being purchased, earned, or deposited and are recorded within “Other accrued liabilities” on the Company’s consolidated balance sheets.
The following table summarizes the activity related to contract and contract-related liabilities:
|
Outstanding Chip Liability
|
|
|
Loyalty Program
|
|
|
Customer Advances and Other
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
(in thousands)
|
|
Balance at January 1
|
$
|
323,811
|
|
|
$
|
597,753
|
|
|
$
|
113,293
|
|
|
$
|
91,119
|
|
|
$
|
667,285
|
|
|
$
|
539,626
|
|
Balance at March 31
|
|
307,912
|
|
|
|
779,242
|
|
|
|
119,033
|
|
|
|
93,459
|
|
|
|
613,764
|
|
|
|
492,599
|
|
Increase / (decrease)
|
$
|
(15,899
|
)
|
|
$
|
181,489
|
|
|
$
|
5,740
|
|
|
$
|
2,340
|
|
|
$
|
(53,521
|
)
|
|
$
|
(47,027
|
)
|
Revenue by source.
The Company presents the revenue earned disaggregated by the type or nature of the good or service (casino, room, food and beverage, and entertainment, retail and other) and by relevant geographic region within Note 11.
Leases.
The Company determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.
For leases with terms greater than twelve months, the operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The initial measurement of the operating lease ROU assets also include any prepaid lease payments and are reduced by any previously accrued deferred rent. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company uses its incremental borrowing rate to discount the lease payments based on the information available at commencement date. Many of the Company’s leases include fixed rental escalation clauses that are factored into the determination of lease payments. Lease terms include options to extend or terminate the lease when it is reasonably certain that such option will be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term.
The Company is a lessor under certain of its lease arrangements. Lease revenues earned by the Company from third-party tenants are classified within the line item corresponding to the type or nature of the tenant’s good or service. During the three months ended March 31, 2019 and 2018, lease revenues from third-party tenants include $12 million and $13 million recorded within food and beverage revenue, respectively, and $22 million and $21 million recorded within entertainment, retail, and other revenue for the same such periods, respectively.
Recently issued accounting standards.
In February 2016, the FASB issued ASC 842 “Leases (Topic 842)”, which replaces the existing guidance in Topic 840, “Leases”, (“ASC 842”). ASC 842 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. ASC 842 requires a dual approach for lessee accounting under which a lessee would classify and account for its lease agreements as either finance or operating. Both finance and operating leases will result in the lessee recognizing a ROU asset and a corresponding lease liability. For finance leases, the lessee will recognize interest expense associated with the lease liability and depreciation expense associated with the ROU asset; and for operating leases, the lessee will recognize straight-line rent expense. The Company adopted ASC 842 on January 1, 2019 utilizing the simplified transition method and accordingly did not recast comparative period financial information. The Company elected the basket of transition practical expedients which includes not needing to reassess: (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) direct costs for any existing leases. As a result of adoption, the Company recognized $656 million of operating ROU assets and $580 million of operating lease liabilities as of January 1, 2019.
Prior to the adoption of ASC 842 on January 1, 2019, the master lease between subsidiaries of MGM and MGP was accounted for as a failed sale of the real estate assets due to the subsidiaries’ investments in the Operating Partnership, which constituted continuing involvement. As such, the real estate assets were reflected in the balance sheets of the applicable MGM subsidiaries as well as the associated finance lease liability. In connection with the adoption of ASC 842, the sale and leaseback of the real estate assets under the master lease now qualify as a passed sale and are determined to be operating leases. Accordingly, the real estate assets are
9
now only reflected on the balance sheet of MGP and the MGM subsidiaries have recorded operating lease liabilities and operating ROU assets. The master lease and its related accounting eliminates in consolidation.
NOTE 3 — ACQUISITIONS
Empire City
On January 29, 2019, the Company acquired the real property and operations associated with Empire City for total consideration of approximately $865 million, plus customary working capital and other adjustments (“Empire City Acquisition”). The fair value of consideration paid included the issuance of approximately $266 million of the Company’s common stock, the incurrence of a new bridge facility, and the remaining balance in cash. If Empire City is awarded a license for live table games on or prior to December 31, 2022 and the Company accepts such license by December 31, 2024, the Company will pay additional consideration of $50 million. The acquisition expands the Company’s presence in the northeast region and greater New York City market. Subsequent to the Company’s acquisition, MGP acquired the developed real property associated with Empire City from the Company and Empire City was added to the existing master lease between the Company and MGP. See Note 12 for additional information.
The Company recognized 100% of the assets and liabilities of Empire City at fair value on the date of acquisition. Under the acquisition method, the fair value was allocated to the assets acquired and liabilities assumed in the transaction. The Company estimated fair value using both level 2 inputs, which are observable inputs for similar assets, and level 3 inputs, which are unobservable inputs. The allocation of fair value for substantially all of the assets and liabilities is preliminary and may be adjusted up to one year after the acquisition. Specifically, as of March 31, 2019, the Company is finalizing valuation work related to the assets and liabilities assumed as well as asset classes that comprise the property and equipment acquired.
The following table sets forth the preliminary purchase price allocation (in thousands):
Fair value of assets acquired and liabilities assumed:
|
|
|
|
Property and equipment
|
$
|
645,733
|
|
Cash and cash equivalents
|
|
63,197
|
|
Racing and gaming license
|
|
128,000
|
|
Other intangible assets
|
|
51,000
|
|
Goodwill
|
|
183,312
|
|
Other assets
|
|
24,420
|
|
Deferred income taxes
|
|
(145,328
|
)
|
Other liabilities
|
|
(85,689
|
)
|
|
$
|
864,645
|
|
The Company recognized the identifiable intangible assets at fair value. The estimated fair values of the intangible assets were preliminarily determined using methodologies under the income approach based on significant inputs that were not observable. The gaming license and trade name, which is included within other intangibles above, are indefinite-lived intangible assets and the customer lists acquired, included within other intangibles above, is amortized over its estimated useful life of four years. The goodwill is primarily attributable to the synergies expected to arise after the acquisition.
Consolidated results.
For the period from January 29, 2019 through March 31, 2019, Empire City’s net revenue was $37 million, operating income was $4 million and net income was $11 million. Pro forma results of operations for the acquisition have not been presented because it is not material to the consolidated results of operations.
Northfield
On July 6, 2018, MGP completed its acquisition of 100% of the membership interests of Northfield. The financial results of Northfield have been included in the consolidated financial statements from the date of acquisition. As of March 31, 2019, the Company is finalizing valuation work related to the asset classes that comprise the property and equipment acquired.
In April 2019, the Company subsequently acquired the membership interests of Northfield from MGP, and MGP retained the associated real estate assets. MGM Northfield Park was then added to the existing master lease between the Company and MGP. Refer to Note 12 for additional information.
10
NOTE 4 — INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
Investments in and advances to unconsolidated affiliates consisted of the following:
|
March 31,
|
|
|
December 31,
|
|
|
2019
|
|
|
2018
|
|
|
(In thousands)
|
|
CityCenter Holdings, LLC – CityCenter (50%)
|
$
|
575,686
|
|
|
$
|
589,965
|
|
Las Vegas Arena Company, LLC (42.5%)
|
|
74,607
|
|
|
|
73,540
|
|
Other
|
|
80,703
|
|
|
|
69,362
|
|
|
$
|
730,996
|
|
|
$
|
732,867
|
|
The Company recorded its share of net income from unconsolidated affiliates, including adjustments for basis differences, as follows:
|
Three Months Ended
|
|
|
March 31,
|
|
|
2019
|
|
|
2018
|
|
|
(In thousands)
|
|
Income from unconsolidated affiliates
|
$
|
38,749
|
|
|
$
|
31,766
|
|
Preopening and start-up expenses
|
|
—
|
|
|
|
(3,321
|
)
|
Non-operating items from unconsolidated affiliates
|
|
(18,165
|
)
|
|
|
(9,010
|
)
|
|
$
|
20,584
|
|
|
$
|
19,435
|
|
CityCenter distributions.
In March 2019, CityCenter paid a $64 million dividend, of which the Company received its 50% share, or approximately $32 million.
NOTE 5 — LONG-TERM DEBT
Long-term debt consisted of the following:
|
March 31,
|
|
|
December 31,
|
|
|
2019
|
|
|
2018
|
|
|
(In thousands)
|
|
Senior credit facility
|
$
|
1,070,000
|
|
|
$
|
750,000
|
|
Operating Partnership senior credit facility
|
|
2,349,500
|
|
|
|
2,819,125
|
|
MGM China credit facility
|
|
2,287,904
|
|
|
|
2,433,562
|
|
$850 million 8.625% senior notes, due 2019
|
|
—
|
|
|
|
850,000
|
|
$500 million 5.25% senior notes, due 2020
|
|
500,000
|
|
|
|
500,000
|
|
$1,000 million 6.75% senior notes, due 2020
|
|
1,000,000
|
|
|
|
1,000,000
|
|
$1,250 million 6.625% senior notes, due 2021
|
|
1,250,000
|
|
|
|
1,250,000
|
|
$1,000 million 7.75% senior notes, due 2022
|
|
1,000,000
|
|
|
|
1,000,000
|
|
$1,250 million 6% senior notes, due 2023
|
|
1,250,000
|
|
|
|
1,250,000
|
|
$1,050 million 5.625% Operating Partnership senior notes, due 2024
|
|
1,050,000
|
|
|
|
1,050,000
|
|
$1,000 million 5.75% senior notes, due 2025
|
|
1,000,000
|
|
|
|
1,000,000
|
|
$500 million 4.50% Operating Partnership senior notes, due 2026
|
|
500,000
|
|
|
|
500,000
|
|
$500 million 4.625% senior notes, due 2026
|
|
500,000
|
|
|
|
500,000
|
|
$750 million 5.75% Operating Partnership senior notes, due 2027
|
|
750,000
|
|
|
|
—
|
|
$350 million 4.50% Operating Partnership senior notes, due 2028
|
|
350,000
|
|
|
|
350,000
|
|
$0.6 million 7% debentures, due 2036
|
|
552
|
|
|
|
552
|
|
|
|
14,857,956
|
|
|
|
15,253,239
|
|
Less: Premiums, discounts, and unamortized debt issuance costs, net
|
|
(124,579
|
)
|
|
|
(121,823
|
)
|
|
|
14,733,377
|
|
|
|
15,131,416
|
|
Less: Current portion
|
|
(2,548
|
)
|
|
|
(43,411
|
)
|
|
$
|
14,730,829
|
|
|
$
|
15,088,005
|
|
|
|
|
|
|
|
|
|
11
Debt due within one year of the March 31, 2019 and December 31, 2018 balance sheets was classified as long-term as the Company had both the intent and ability to refinance current maturities on a long-term basis under its revolving senior credit facilities, with the exception that $3 million and $43 million related to MGM China’s term loan amortization payments in excess of available borrowings under the MGM China revolving credit facility were classified as current at March 31, 2019 and December 31, 2018, respectively.
Senior credit facility.
At March 31, 2019
, the Company’s senior credit facility consisted of a $750 million term loan A facility and a $1.5 billion revolving facility
. At March 31, 2019, $320 million was drawn on the revolving credit facility.
At March 31, 2019, the interest rate on the term loan A was 4.75% and the interest rate on the revolving credit facility was 4.66%. The Company was in compliance with its credit facility covenants at March 31, 2019.
Operating Partnership senior credit facility.
At March 31, 2019, the Operating Partnership senior credit facility consisted of a $470 million term loan A facility, a $1.79 billion term loan B facility, and a $1.35 billion revolving credit facility. At March 31, 2019, $85 million was drawn on the revolving credit facility. At March 31, 2019, the interest rates on the term loan A facility and the term loan B facility were both 4.5%, and the interest rate on the revolving credit facility was 4.41%. The Operating Partnership was in compliance with its credit facility covenants at March 31, 2019.
The Operating Partnership is party to interest rate swaps to mitigate the interest rate risk inherent in its senior secured term loan B facility. As of March 31, 2019, the Operating Partnership pays a weighted average fixed rate of 1.844% on total notional amount of $1.2 billion and the variable rate received resets monthly to the one-month LIBOR with no minimum floor. In December 2018, the Operating Partnership entered into additional interest rate swaps that have a notional amount of $400 million on which it will pay a fixed rate of 2.735% with the variable rate received resetting monthly to the one-month LIBOR with a floor of 0%. Such interest rate swaps will become effective on December 31, 2019. As of March 31, 2019, and December 31, 2018, the derivative financial instruments have been designated as cash flow hedges and qualify for hedge accounting.
MGM China credit facility.
At March 31, 2019, the MGM China credit facility consisted of $1.7 billion of term loans and a $1.0 billion revolving credit facility
. MGM China permanently repaid $99 million of the term loan facilities in the three months ended March 31, 2019 in accordance with the scheduled amortization. At March 31, 2019, $599 million was drawn on the revolving credit facility. At March 31, 2019, the interest rates on the term loans and the revolving credit facility were 4.16% and 4.11%, respectively. MGM China was in compliance with its credit facility covenants at March 31, 2019.
Bridge Facility.
In connection with the Empire City transaction, the Company borrowed $246 million under a bridge facility, which was subsequently assumed by the Operating Partnership. The Operating Partnership repaid the bridge facility with a combination of cash on hand and a draw on its revolving credit facility, which was subsequently repaid with proceeds from its offering of its 5.75% senior notes due 2027, discussed below.
Senior Notes.
In April 2019, the Company issued $1.0 billion in aggregate principal amount of 5.50% senior notes due 2027. The Company primarily used the net proceeds from the offering to fund the purchase of $639 million in aggregate principal amount of its outstanding 6.75% senior notes due 2020 and $233 million in aggregate principal amount of its outstanding 5.25% senior notes due 2020 through cash tender offers.
In February 2019, the Company repaid its $850 million 8.625% notes due 2019.
Operating Partnership senior notes.
In January 2019, the Operating Partnership issued $750 million in aggregate principal amount of 5.75% senior notes due 2027.
Fair value of long-term debt.
The estimated fair value of the Company’s long-term debt was $15.2 billion and $15.1 billion at March 31, 2019 and December 31, 2018, respectively. Fair value was estimated using quoted market prices for the Company’s senior notes and senior credit facilities.
NOTE 6 — INCOME TAXES
For interim income tax reporting the Company estimates its annual effective tax rate and applies it to its year-to-date ordinary income. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur. The Company’s effective income tax rate was a provision of 51.9% for the three months ended March 31, 2019 compared to a benefit of 47.2% in the prior year quarter.
The Company recognizes deferred income tax assets, net of applicable reserves, related to net operating losses, tax credit carryforwards and certain temporary differences. The Company recognizes future tax benefits to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied.
MGM Grand Paradise was previously granted an exemption from the Macau 12% complementary tax on gaming profits through March 31, 2020 and, given the Extension Agreement entered into during the quarter, intends to apply for an extension of such exemption to June 26, 2022 to run concurrent with its extended sub-concession. Competitors of MGM Grand Paradise have received additional extensions of their complementary tax exemptions through June 26, 2022, which runs concurrent with the end of the term of their gaming concessions.
The Company believes MGM Grand Paradise should also be entitled to such extension in order to ensure
12
non-discriminatory treatment among gaming concessionaires and sub-concessionaires, a requirement under Macanese law.
Based upon these developments, the Company re-measured the net deferred tax liability of MGM Grand Paradise assuming that it will receive an additional extension of its complementary tax exemption through June 26, 2022. This change in assumption resulted in a
n
et
increase in deferred tax liabilities in the amount of
$
35
million
, due to an increase in the valuation allowance on certain net operating loss deferred tax assets partially offset by a reduction in certain intangible deferred tax liabilities,
and a corresponding income tax expense for the three months ended
March 31, 2019.
The Company recorded a $10 million increase in its valuation allowance on its foreign tax credit carryovers (“FTCs”) and a corresponding increase in its income tax expense for the three months ended March 31, 2019 based upon a revision of certain assumptions impacting the valuation allowance. The FTCs are attributable to the Macau Special Gaming Tax, which is 35% of gross gaming revenue in Macau. Significant judgment is required in assessing the need for a valuation allowance and future changes to these assumptions could result in material changes in the valuation allowance with a corresponding impact on the provision for income taxes in the period including such change.
Further, the Empire City Acquisition required a re-measurement of existing state deferred tax liabilities resulting in a $10 million increase in deferred tax liabilities and a corresponding income tax expense for the three months ended March 31, 2019.
NOTE 7 — LEASES
The Company leases the land underlying certain of its properties, real estate, and various equipment under operating and, to a lesser extent, finance lease arrangements. The Company’s master lease agreement with a subsidiary of MGP for certain real estate assets is eliminated in consolidation and, accordingly is not included within the disclosures below; refer to Note 12 for further discussion of the master lease.
Lease expense for the three months ended March 31, 2019 includes operating lease cost of $24 million. Other information related to the Company’s operating leases was as follows (in thousands, except for lease term and discount rate information):
|
March 31,
|
|
|
2019
|
|
Supplemental balance sheet information
|
(In thousands)
|
|
Operating lease right-of-use assets
|
$
|
641,912
|
|
Operating lease obligation - short-term (recorded within "Other accrued liabilities")
|
$
|
62,946
|
|
Operating lease obligation - long-term
|
|
510,951
|
|
Total operating lease liabilities
|
$
|
573,897
|
|
|
|
|
|
Weighted-average remaining lease term (years)
|
37
|
|
Weighted-average discount rate (%)
|
7
|
|
|
Three Months Ended
|
|
|
March 31, 2019
|
|
Supplemental cash flows information
|
(In thousands)
|
|
Cash paid for amounts included in the measurement of lease liabilities - operating cash outflows
from operating leases
|
$
|
17,365
|
|
Maturities of operating lease liabilities were as follows:
Year ending December 31,
|
(In thousands)
|
|
2019 (excluding the three months ended March 31, 2019)
|
$
|
64,292
|
|
2020
|
|
86,977
|
|
2021
|
|
67,637
|
|
2022
|
|
53,833
|
|
2023
|
|
51,691
|
|
Thereafter
|
|
1,419,575
|
|
Total future minimum lease payments
|
|
1,744,005
|
|
Less: Amount of lease payments representing interest
|
|
(1,170,108
|
)
|
Total
|
$
|
573,897
|
|
13
NOTE 8 — COMMITMENTS AND CONTINGENCIES
October 1 litigation.
The Company and/or certain of its subsidiaries have been named as defendants in a number of lawsuits related to the October 1, 2017 shooting in Las Vegas. The matters involve in large degree the same legal and factual issues, each case being filed on behalf of individuals who are seeking damages for emotional distress, physical injury, medical expenses, economic damages and/or wrongful death. Lawsuits were first filed in October 2017 and include actions originally filed in the District Court of Clark County, Nevada and in the Superior Court of Los Angeles County, California. In June 2018, the Company removed to federal court all actions that remained pending in California and Nevada state courts. The Company also initiated declaratory relief actions in federal courts in various districts against individuals who had sued or stated an intent to sue. Additional lawsuits related to this incident may be filed in the future.
Since February of 2019, the Company and counsel representing plaintiffs in all pending matters and purporting to represent substantially all claimants known to the Company (collectively, the “Claimants”) have been, and continue to be, engaged in mediation efforts to resolve these matters. After multiple mediation sessions over several months, progress has been made, and while mediation is ongoing, the Company believes it is reasonably possible that a settlement will be reached. The related litigation is stayed pending mediation (the “Mediation Stay”) and the Company agreed to toll the statute of limitations to May 15, 2020, with respect to the Claimants. Although the Company continues to believe it is not legally responsible for the perpetrator’s criminal acts, in the interest of avoiding protracted litigation and the related impact on the community, the Company believes it is reasonably possible that continued mediation communications will result in a settlement with respect to the Claimants of approximately $735 million, subject to and depending on obtaining a minimum level of participation with escalators based on greater participation increasing the amount payable up to $800 million in the event of 100% participation. The Company has $751 million of insurance coverage available to fund this potential settlement, which the Company’s insurers have agreed to fund. The Company intends for substantially all Claimants to be covered by the settlement, however, it remains possible that certain Claimants may not join the settlement and/or additional claims may be asserted. The foregoing determination was made in accordance with generally accepted accounting principles, as codified in ASC 450-20, and is not an admission of any liability on the part of the Company or any of its affiliates.
If such a settlement is not consummated, the Mediation Stay will be lifted and the Company is currently unable to reliably predict the future developments in, outcome of, and economic costs and other consequences of any such litigation related to this matter. The Company will continue to investigate the factual and legal defenses, and evaluate these matters based on subsequent events, new information and future circumstances. The Company intends to defend against any such lawsuits and ultimately believes it should prevail, but litigation of this type is inherently unpredictable. Although there are significant procedural, factual and legal issues to be resolved that could significantly affect the Company’s belief as to the possibility of liability, the Company currently believes that it is reasonably possible that it could incur liability in connection with certain of these lawsuits. The foregoing determination was made in accordance with generally accepted accounting principles, as codified in ASC 450-20, and is not an admission of any liability on the part of the Company or any of its affiliates. Given that these cases would be in the early stages, and in light of the uncertainties surrounding them, the Company does not currently possess sufficient information to determine a range of reasonably possible liability. The insurance carriers have not expressed a reservation of rights or coverage defense that affects the Company’s evaluation of potential losses in connection with these claims. The Company’s general liability insurance coverage provides, as part of the contractual “duty to defend”, payment of legal fees and associated costs incurred to defend covered lawsuits that are filed arising from the October 1, 2017 shooting in Las Vegas. Payment of such fees and costs is in addition to (and not limited by) the limits of the insurance policies and does not erode the total liability coverage available.
Other litigation.
The Company is a party to various legal proceedings, most of which relate to routine matters incidental to its business. Management does not believe that the outcome of such proceedings will have a material adverse effect on the Company’s financial position, results of operations or cash flows
.
Other guarantees.
The Company and its subsidiaries are party to various guarantee contracts in the normal course of business, which are generally supported by letters of credit issued by financial institutions. The Company’s senior credit facility limits the amount of letters of credit that can be issued to $250 million, the Operating Partnership’s senior credit facility limits the amount to $75 million, and MGM China’s credit facility limits the amount to $100 million. At March 31, 2019, $12 million in letters of credit were outstanding under the Company’s senior credit facility. No letters of credit were outstanding under the Operating Partnership’s senior credit facility or MGM China’s credit facility at March 31, 2019. The amount of available borrowings under each of the credit facilities are reduced by any outstanding letters of credit.
In connection with the Extension Agreement, MGM Grand Paradise is required to provide a bank guarantee in an amount not less than $101 million to the government of Macau within three months from the date of signing of the Extension Agreement to warrant the fulfillment of labor debts upon the expiration of the Extension Agreement in June 2022.
14
NOTE 9 — INCOME PER SHARE OF COMMON STOCK
The table below reconciles basic and diluted income per share of common stock. Diluted net income attributable to common stockholders includes adjustments for redeemable noncontrolling interests and the potentially dilutive effect on the Company’s equity interests in MGP and MGM China due to shares outstanding under their respective stock compensation plans. Diluted weighted-average common and common equivalent shares include adjustments for potential dilution of share-based awards outstanding under the Company’s stock compensation plan.
|
Three Months Ended
|
|
|
March 31,
|
|
|
2019
|
|
|
2018
|
|
|
(In thousands)
|
|
Numerator:
|
|
|
|
|
|
|
|
Net income attributable to MGM Resorts International
|
$
|
31,297
|
|
|
$
|
223,444
|
|
Adjustment related to redeemable noncontrolling interests
|
|
(3,825
|
)
|
|
|
(4,598
|
)
|
Net income available to common stockholders - basic
|
|
27,472
|
|
|
|
218,846
|
|
Potentially dilutive effect due to MGP and MGM China stock compensation plans
|
|
(52
|
)
|
|
|
(165
|
)
|
Net income attributable to common stockholders - diluted
|
$
|
27,420
|
|
|
$
|
218,681
|
|
Denominator:
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic
|
|
534,219
|
|
|
|
564,832
|
|
Potential dilution from share-based awards
|
|
3,287
|
|
|
|
7,138
|
|
Weighted-average common and common equivalent shares - diluted
|
|
537,506
|
|
|
|
571,970
|
|
Antidilutive share-based awards excluded from the calculation of diluted
earnings per share
|
|
1,929
|
|
|
|
170
|
|
NOTE 10 — STOCKHOLDERS’ EQUITY
Empire City transaction.
As further discussed in Note 12, in January 2019, MGP acquired the developed real property associated with Empire City from the Company for consideration that included the issuance of approximately 13 million Operating Partnership units to a subsidiary of the Company. The Company adjusted the carrying value of the noncontrolling interests for the change in noncontrolling interests ownership percentage of the Operating Partnership’s net assets, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive income. Subsequent to the Empire City transaction, the Company indirectly owned 74.6% of the partnership units in the Operating Partnership.
MGP Class A share issuance.
In January 2019, MGP completed an offering of approximately 20 million of its Class A shares. In connection with the offering, the Operating Partnership issued 20 million Operating Partnership units to MGP. The Company has adjusted the carrying value of the noncontrolling interests as a result of MGP’s Class A share issuance to adjust for the change in noncontrolling interests ownership percentage of the Operating Partnership’s net assets, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive income. Subsequent to MGP’s issuance of the incremental shares, the Company indirectly owned 69.7% of the partnership units in the Operating Partnership.
Park MGM Lease Transaction.
As further discussed in Note 12, in March 2019, the Company and MGP completed the Park MGM Lease Transaction for which consideration included the issuance of approximately 1 million Operating Partnership units to a subsidiary of the Company. The Company has adjusted the carrying value of the noncontrolling interests for the change in noncontrolling interests ownership percentage of the Operating Partnership’s net assets, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive income. Subsequent to the issuance of the incremental shares, the Company indirectly owned 69.8% of the partnership units in the Operating Partnership.
Northfield OpCo transaction
. As further discussed in Note 12, in April 2019, the Company acquired the membership interests of Northfield from MGP for consideration of approximately 9 million Operating Partnership units that were ultimately redeemed by the Operating Partnership and MGP retained the real estate assets. The Company will account for such transaction, which reduces its ownership in the Operating Partnership to 68.8%, within the second quarter 2019.
MGM Resorts International dividends.
On April 29, 2019 the Company’s Board of Directors approved a quarterly dividend of $0.13 per share that will be payable on June 14, 2019 to holders of record on June 10, 2019.
15
MGM Resorts International stock repurchase program.
In May 2018, the Company’s Board of Directors authorized a $2.0 billion stock repurchase program and completed the previously announced $1.0 billion stock repurchase program. Under each stock repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated agreements. Repurchases of common stock may also be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The timing, volume and nature of stock repurchases will be at the sole discretion of management, dependent on market conditions, applicable securities laws, and other factors, and may be suspended or discontinued at any time
.
There were no repurchases made during the three months ended March 31, 2019. The remaining availability under the $2.0 billion stock repurchase program was approximately $1.4 billion as of March 31, 2019.
During the three months ended March 31, 2018, the Company repurchased 10 million shares of its common stock at $36.24 per share for an aggregate amount of $362 million. Repurchased shares were retired.
Accumulated other comprehensive income.
Changes in accumulated other comprehensive income attributable to MGM Resorts International are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency Translation
|
|
|
Cash Flow
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
Hedges
|
|
|
Other
|
|
|
Total
|
|
|
(In thousands)
|
|
Balance, January 1, 2019
|
$
|
(18,872
|
)
|
|
$
|
9,144
|
|
|
$
|
1,172
|
|
|
$
|
(8,556
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
(12,405
|
)
|
|
|
(11,476
|
)
|
|
|
—
|
|
|
|
(23,881
|
)
|
Amounts reclassified from accumulated other comprehensive income (loss) to interest expense
|
|
—
|
|
|
|
(1,847
|
)
|
|
|
—
|
|
|
|
(1,847
|
)
|
Empire City MGP transaction
|
|
—
|
|
|
|
—
|
|
|
|
195
|
|
|
|
195
|
|
MGP Class A share issuance
|
|
—
|
|
|
|
—
|
|
|
|
(774
|
)
|
|
|
(774
|
)
|
Park MGM Transaction
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
|
|
16
|
|
Other
|
|
—
|
|
|
|
—
|
|
|
|
23
|
|
|
|
23
|
|
Other comprehensive income (loss), net of tax
|
|
(12,405
|
)
|
|
|
(13,323
|
)
|
|
|
(540
|
)
|
|
|
(26,268
|
)
|
Less: Other comprehensive (income) loss attributable to noncontrolling interest
|
|
5,499
|
|
|
|
4,717
|
|
|
|
—
|
|
|
|
10,216
|
|
Balance, March 31, 2019
|
$
|
(25,778
|
)
|
|
$
|
538
|
|
|
$
|
632
|
|
|
$
|
(24,608
|
)
|
NOTE 11 — SEGMENT INFORMATION
The Company’s management views each of its casino resorts as an operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate and their management and reporting structure.
The Company has aggregated its operating segments into the following reportable segments: Las Vegas Strip Resorts, Regional Operations and MGM China.
Las Vegas Strip Resorts
. Las Vegas Strip Resorts consists of the following casino resorts: Bellagio, MGM Grand Las Vegas (including The Signature), Mandalay Bay (including Delano and Four Seasons), The Mirage, Luxor, New York-New York (including the Park), Excalibur, Park MGM (including NoMad Las Vegas) and Circus Circus Las Vegas.
Regional Operations.
Regional Operations consists of the following casino resorts: MGM Grand Detroit in Detroit, Michigan; Beau Rivage in Biloxi, Mississippi; Gold Strike Tunica in Tunica, Mississippi; Borgata in Atlantic City, New Jersey; MGM National Harbor in Prince George’s County, Maryland; MGM Springfield in Springfield, Massachusetts (upon commencing operations in August 2018); and Empire City in Yonkers, New York (upon acquisition in January 2019).
MGM China.
MGM China consists of MGM Macau and MGM Cotai.
The Company’s operations related to investments in unconsolidated affiliates, MGM Northfield Park (as the operations were owned by MGP until April 1, 2019), and certain other corporate operations and management services have not been identified as separate reportable segments; therefore, these operations are included in “Corporate and other” in the following segment disclosures to reconcile to consolidated results.
16
The Company’s management utilizes Adjusted Property EBITDA as the primary profit measure
for
its reportable segments
and underlying operating segments
. Adjusted Property EBITDA is a measure defined as Adjusted EBITDA before corporate expense and stock compensation expense, which are not allocated to each
operating segment, and before rent expense related to the master lease with MGP that eliminates in consolidation
. Adjusted EBITDA is a measure defined as earnings before interest and other non-operating income (expense), taxes, dep
reciation and amortization,
preopening and start-up expenses
,
restructuring costs (which represents costs related to severance, accelerated stock compensation expense, and consulting fees directly related to the operating model component of the MGM 2020 Plan),
and property transactions, net.
The following tables present the Company’s segment information:
|
Three Months Ended
|
|
|
March 31,
|
|
|
2019
|
|
|
2018
|
|
|
(In thousands)
|
|
Net revenue
|
|
|
|
|
|
|
|
Las Vegas Strip Resorts
|
|
|
|
|
|
|
|
Casino
|
$
|
324,704
|
|
|
$
|
372,820
|
|
Rooms
|
|
468,852
|
|
|
|
448,597
|
|
Food and beverage
|
|
365,522
|
|
|
|
339,509
|
|
Entertainment, retail and other
|
|
269,110
|
|
|
|
271,178
|
|
|
|
1,428,188
|
|
|
|
1,432,104
|
|
Regional Operations
|
|
|
|
|
|
|
|
Casino
|
|
574,156
|
|
|
|
467,877
|
|
Rooms
|
|
71,798
|
|
|
|
71,049
|
|
Food and beverage
|
|
117,879
|
|
|
|
95,165
|
|
Entertainment, retail and other
|
|
40,112
|
|
|
|
32,477
|
|
|
|
803,945
|
|
|
|
666,568
|
|
MGM China
|
|
|
|
|
|
|
|
Casino
|
|
663,565
|
|
|
|
550,595
|
|
Rooms
|
|
33,564
|
|
|
|
19,834
|
|
Food and beverage
|
|
30,713
|
|
|
|
20,737
|
|
Entertainment, retail and other
|
|
6,362
|
|
|
|
4,695
|
|
|
|
734,204
|
|
|
|
595,861
|
|
Reportable segment net revenues
|
|
2,966,337
|
|
|
|
2,694,533
|
|
Corporate and other
|
|
210,574
|
|
|
|
127,704
|
|
|
$
|
3,176,911
|
|
|
$
|
2,822,237
|
|
Adjusted Property EBITDA
|
|
|
|
|
|
|
|
Las Vegas Strip Resorts
|
$
|
403,527
|
|
|
$
|
449,154
|
|
Regional Operations
|
|
206,574
|
|
|
|
167,213
|
|
MGM China
|
|
190,790
|
|
|
|
151,751
|
|
Reportable segment Adjusted Property EBITDA
|
|
800,891
|
|
|
|
768,118
|
|
|
|
|
|
|
|
|
|
Other operating income (expense)
|
|
|
|
|
|
|
|
Corporate and other
|
|
(61,056
|
)
|
|
|
(66,724
|
)
|
Preopening and start-up expenses
|
|
(3,287
|
)
|
|
|
(66,917
|
)
|
Property transactions, net
|
|
(8,776
|
)
|
|
|
(5,898
|
)
|
Depreciation and amortization
|
|
(316,414
|
)
|
|
|
(268,822
|
)
|
Restructuring
|
|
(41,098
|
)
|
|
|
—
|
|
Operating income
|
|
370,260
|
|
|
|
359,757
|
|
Non-operating income (expense)
|
|
|
|
|
|
|
|
Interest expense, net of amounts capitalized
|
|
(216,120
|
)
|
|
|
(167,909
|
)
|
Non-operating items from unconsolidated affiliates
|
|
(18,165
|
)
|
|
|
(9,010
|
)
|
Other, net
|
|
1,693
|
|
|
|
(1,916
|
)
|
|
|
(232,592
|
)
|
|
|
(178,835
|
)
|
Income before income taxes
|
|
137,668
|
|
|
|
180,922
|
|
Benefit (provision) for income taxes
|
|
(71,511
|
)
|
|
|
85,379
|
|
Net income
|
|
66,157
|
|
|
|
266,301
|
|
Less: Net income attributable to noncontrolling interests
|
|
(34,860
|
)
|
|
|
(42,857
|
)
|
Net income attributable to MGM Resorts International
|
$
|
31,297
|
|
|
$
|
223,444
|
|
17
NOTE 12 — RELATED PARTY TRANSACTIONS
MGM China
Ms. Ho, Pansy Catilina Chiu King (“Ms. Ho”) is a member of the Board of Directors of, and holds a minority ownership interest in, MGM China.
MGM Branding and Development Holdings, Ltd. (together with its subsidiary MGM Development Services, Ltd., “MGM Branding and Development”), an entity included in the Company’s consolidated financial statements in which Ms. Ho indirectly holds a noncontrolling interest, is party to a brand license agreement and a development services agreement with MGM China, for which the related amounts are eliminated in consolidation. Entities owned by Ms. Ho received distributions in connection with her ownership of a noncontrolling interest in MGM Branding and Development Holdings, Ltd. of $5 million and $10 million during the three months ended March 31, 2019 and 2018, respectively.
MGP
As described in Note 1, pursuant to the master lease,
the tenant leases the real estate assets of The Mirage, Mandalay Bay, Luxor, New York-New York, Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, Empire City, MGM National Harbor, and MGM Northfield Park (beginning April 1, 2019) from the landlord.
Subsequent to the Company completing its acquisition of Empire City in January 2019, MGP acquired the developed real property associated with Empire City from the Company for consideration of approximately $634 million, which included the assumption of debt of approximately $246 million, which was immediately repaid, and the remaining paid through the issuance of Operating Partnership units. The real estate assets of Empire City are leased to the Company pursuant to an amendment to the master lease, increasing the annual rent payment to MGP by $50 million, prorated for the remainder of the lease year. Consistent with the master lease terms, 90% of this rent will be fixed and contractually grow at 2% per year until 2022. In addition, the master lease provides the landlord with a right of first offer with respect to certain undeveloped land adjacent to the property to the extent the Company develops additional gaming facilities, which the landlord may exercise should the Company elect to sell this property in the future.
On March 7, 2019, the tenant entered into an amendment to the existing master lease with respect to investments made by the Company related to the Park MGM and NoMad Las Vegas property (the “Park MGM Lease Transaction”). In connection with the transaction, the Company received consideration of $638 million, of which approximately $606 million was paid in cash and the remaining paid through the issuance of Operating Partnership units. Additionally, the annual rent payment to MGP was increased by $50 million, prorated for the remainder of the lease year. Consistent with the master lease terms, 90% of this rent will be fixed and contractually grow at 2% per year until 2022.
Additionally, on April 1, 2019, the Company acquired the membership interests of Northfield from MGP, which held the operations of Northfield, for fair value of consideration of approximately $301 million consisting of approximately 9 million Operating Partnership units that were ultimately redeemed by the Operating Partnership, and MGP retained the associated real estate assets. The Company then rebranded the property to MGM Northfield Park, which was then added to the existing master lease between the landlord and tenant, increasing the annual rent payment to MGP by $60 million. Consistent with the master lease terms, 90% of this rent will be fixed and contractually grow at 2% per year until 2022.
The addition of Empire City and the Park MGM Lease Transaction in January 2019 and March 2019, respectively, increased annual rent payments associated with the master lease for the third lease year to $870 million from $770 million.
In connection with the commencement of the fourth lease year on April 1, 2019, as well as the addition of MGM Northfield Park on April 1, 2019, annual rent payments under the master lease increased to $946 million from $870 million. The master lease contains customary events of default and financial covenants. The Company was in compliance with all applicable covenants as of March 31, 2019.
All intercompany transactions, including transactions under the master lease and those described above, have been eliminated in the Company’s consolidation of MGP. The public ownership of MGP’s Class A shares is recognized as non-controlling interests in the Company’s consolidated financial statements.
18
NOTE 13 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION
As of March 31, 2019, all of the Company’s principal debt arrangements are guaranteed by each of its material domestic subsidiaries, other than MGP and the Operating Partnership, MGM Grand Detroit, MGM National Harbor, MGM Springfield, and each of their respective subsidiaries. The Company’s international subsidiaries, including MGM China and its subsidiaries, are not guarantors of such indebtedness. Separate condensed financial statement information for the subsidiary guarantors and non-guarantors as of March 31, 2019 and December 31, 2018 and for the three months ended March 31, 2019 and 2018 are presented below. Within the Condensed Consolidating Statements of Cash Flows, the Company has presented net changes in intercompany accounts as investing activities if the applicable entities have a net asset in intercompany accounts and as a financing activity if the applicable entities have a net intercompany liability balance.
Certain of the Company’s subsidiaries collectively own Operating Partnership units and each subsidiary accounts for its respective investment under the equity method within the condensed consolidating financial information presented below. Prior to the adoption of ASC 842 on January 1, 2019, for these subsidiaries, such investment constituted continuing involvement, and accordingly, the sale and leaseback of the real estate assets under the master lease did not qualify for sale-leaseback accounting. The real estate assets were reflected in the balance sheets of the applicable MGM subsidiaries. In addition, such subsidiaries recognized finance liabilities within “Other long-term obligations” related to rent payments due under the master lease and recognized the related interest expense component of such payments. These real estate assets were also reflected on the balance sheet of the MGP subsidiary that received such assets. The condensed consolidating financial information presented below therefore included the accounting for such activity within the respective columns presented and in the elimination column. In connection with the adoption of ASC 842, the sale and leaseback of the real estate assets under the master lease now qualify as a passed sale and are determined to be operating leases. As such, the real estate assets, finance liabilities, and related interest expense component of rent payments are no longer reflected in the results of the applicable MGM subsidiaries. Instead, the real estate assets are now only reflected on the balance sheet of the MGP subsidiary that received such assets and the MGM subsidiaries have recorded operating lease liabilities and operating ROU assets with the related rental payment reflected within “general and administrative” expense within the condensed consolidating financial information.
19
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
|
At March 31, 2019
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
MGP
|
|
|
Other
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
(In thousands)
|
|
Current assets
|
$
|
97,072
|
|
|
$
|
1,191,305
|
|
|
$
|
96,294
|
|
|
$
|
831,700
|
|
|
$
|
(9,236
|
)
|
|
$
|
2,207,135
|
|
Property and equipment, net
|
|
—
|
|
|
|
5,410,421
|
|
|
|
11,073,152
|
|
|
|
4,723,488
|
|
|
|
(10,623
|
)
|
|
|
21,196,438
|
|
Investments in subsidiaries
|
|
23,226,988
|
|
|
|
3,825,369
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(27,052,357
|
)
|
|
|
—
|
|
Investments in the MGP Operating Partnership
|
|
—
|
|
|
|
4,009,946
|
|
|
|
—
|
|
|
|
800,043
|
|
|
|
(4,809,989
|
)
|
|
|
—
|
|
Investments in and advances to unconsolidated affiliates
|
|
—
|
|
|
|
674,971
|
|
|
|
—
|
|
|
|
31,025
|
|
|
|
25,000
|
|
|
|
730,996
|
|
Intercompany accounts
|
|
—
|
|
|
|
7,923,254
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(7,923,254
|
)
|
|
|
—
|
|
Other non-current assets
|
|
69,974
|
|
|
|
9,408,598
|
|
|
|
1,157,239
|
|
|
|
7,175,104
|
|
|
|
(10,798,563
|
)
|
|
|
7,012,352
|
|
|
$
|
23,394,034
|
|
|
$
|
32,443,864
|
|
|
$
|
12,326,685
|
|
|
$
|
13,561,360
|
|
|
$
|
(50,579,022
|
)
|
|
$
|
31,146,921
|
|
Current liabilities
|
$
|
141,224
|
|
|
$
|
1,651,470
|
|
|
$
|
215,806
|
|
|
$
|
1,071,687
|
|
|
$
|
(267,509
|
)
|
|
$
|
2,812,678
|
|
Intercompany accounts
|
|
7,745,873
|
|
|
|
—
|
|
|
|
425
|
|
|
|
176,956
|
|
|
|
(7,923,254
|
)
|
|
|
—
|
|
Deferred income taxes, net
|
|
1,150,071
|
|
|
|
145,328
|
|
|
|
34,642
|
|
|
|
266,610
|
|
|
|
(29,720
|
)
|
|
|
1,566,931
|
|
Long-term debt, net
|
|
7,528,352
|
|
|
|
569
|
|
|
|
4,939,702
|
|
|
|
2,262,206
|
|
|
|
—
|
|
|
|
14,730,829
|
|
Other non-current liabilities
|
|
42,310
|
|
|
|
8,745,547
|
|
|
|
419,193
|
|
|
|
2,332,678
|
|
|
|
(10,820,448
|
)
|
|
|
719,280
|
|
Total liabilities
|
|
16,607,830
|
|
|
|
10,542,914
|
|
|
|
5,609,768
|
|
|
|
6,110,137
|
|
|
|
(19,040,931
|
)
|
|
|
19,829,718
|
|
Redeemable noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
99,338
|
|
|
|
—
|
|
|
|
99,338
|
|
MGM Resorts International stockholders' equity
|
|
6,786,204
|
|
|
|
21,899,513
|
|
|
|
4,679,335
|
|
|
|
4,959,652
|
|
|
|
(31,538,500
|
)
|
|
|
6,786,204
|
|
Noncontrolling interests
|
|
—
|
|
|
|
1,437
|
|
|
|
2,037,582
|
|
|
|
2,392,233
|
|
|
|
409
|
|
|
|
4,431,661
|
|
Total stockholders' equity
|
|
6,786,204
|
|
|
|
21,900,950
|
|
|
|
6,716,917
|
|
|
|
7,351,885
|
|
|
|
(31,538,091
|
)
|
|
|
11,217,865
|
|
|
$
|
23,394,034
|
|
|
$
|
32,443,864
|
|
|
$
|
12,326,685
|
|
|
$
|
13,561,360
|
|
|
$
|
(50,579,022
|
)
|
|
$
|
31,146,921
|
|
|
At December 31, 2018
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
MGP
|
|
|
Other
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
(In thousands)
|
|
Current assets
|
$
|
304,741
|
|
|
$
|
1,178,696
|
|
|
$
|
78,222
|
|
|
$
|
972,820
|
|
|
$
|
(7,701
|
)
|
|
$
|
2,526,778
|
|
Property and equipment, net
|
|
—
|
|
|
|
13,564,979
|
|
|
|
10,526,520
|
|
|
|
6,392,014
|
|
|
|
(9,753,625
|
)
|
|
|
20,729,888
|
|
Investments in subsidiaries
|
|
22,419,282
|
|
|
|
3,401,031
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(25,820,313
|
)
|
|
|
—
|
|
Investments in the MGP Operating Partnership
|
|
—
|
|
|
|
3,434,602
|
|
|
|
—
|
|
|
|
831,494
|
|
|
|
(4,266,096
|
)
|
|
|
—
|
|
Investments in and advances to unconsolidated affiliates
|
|
—
|
|
|
|
678,748
|
|
|
|
—
|
|
|
|
29,119
|
|
|
|
25,000
|
|
|
|
732,867
|
|
Intercompany accounts
|
|
—
|
|
|
|
7,135,263
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(7,135,263
|
)
|
|
|
—
|
|
Other non-current assets
|
|
67,214
|
|
|
|
917,537
|
|
|
|
346,565
|
|
|
|
4,932,872
|
|
|
|
(43,015
|
)
|
|
|
6,221,173
|
|
|
$
|
22,791,237
|
|
|
$
|
30,310,856
|
|
|
$
|
10,951,307
|
|
|
$
|
13,158,319
|
|
|
$
|
(47,001,013
|
)
|
|
$
|
30,210,706
|
|
Current liabilities
|
$
|
154,484
|
|
|
$
|
1,617,675
|
|
|
$
|
189,247
|
|
|
$
|
1,224,752
|
|
|
$
|
(237,276
|
)
|
|
$
|
2,948,882
|
|
Intercompany accounts
|
|
6,932,325
|
|
|
|
—
|
|
|
|
307
|
|
|
|
202,631
|
|
|
|
(7,135,263
|
)
|
|
|
—
|
|
Deferred income taxes, net
|
|
1,097,654
|
|
|
|
—
|
|
|
|
33,634
|
|
|
|
240,970
|
|
|
|
(29,720
|
)
|
|
|
1,342,538
|
|
Long-term debt, net
|
|
8,055,472
|
|
|
|
570
|
|
|
|
4,666,949
|
|
|
|
2,365,014
|
|
|
|
—
|
|
|
|
15,088,005
|
|
Other non-current liabilities
|
|
39,019
|
|
|
|
7,210,897
|
|
|
|
215,664
|
|
|
|
2,247,584
|
|
|
|
(9,453,924
|
)
|
|
|
259,240
|
|
Total liabilities
|
|
16,278,954
|
|
|
|
8,829,142
|
|
|
|
5,105,801
|
|
|
|
6,280,951
|
|
|
|
(16,856,183
|
)
|
|
|
19,638,665
|
|
Redeemable noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
102,250
|
|
|
|
—
|
|
|
|
102,250
|
|
MGM Resorts International stockholders' equity
|
|
6,512,283
|
|
|
|
21,481,714
|
|
|
|
4,279,535
|
|
|
|
4,383,581
|
|
|
|
(30,144,830
|
)
|
|
|
6,512,283
|
|
Noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
1,565,971
|
|
|
|
2,391,537
|
|
|
|
—
|
|
|
|
3,957,508
|
|
Total stockholders' equity
|
|
6,512,283
|
|
|
|
21,481,714
|
|
|
|
5,845,506
|
|
|
|
6,775,118
|
|
|
|
(30,144,830
|
)
|
|
|
10,469,791
|
|
|
$
|
22,791,237
|
|
|
$
|
30,310,856
|
|
|
$
|
10,951,307
|
|
|
$
|
13,158,319
|
|
|
$
|
(47,001,013
|
)
|
|
$
|
30,210,706
|
|
20
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) INFORMATION
|
Three Months Ended March 31, 2019
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
MGP
|
|
|
Other
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
(In thousands)
|
|
Net revenues
|
$
|
—
|
|
|
$
|
1,936,286
|
|
|
$
|
271,264
|
|
|
$
|
1,172,785
|
|
|
$
|
(203,424
|
)
|
|
$
|
3,176,911
|
|
Equity in subsidiaries' earnings
|
|
259,299
|
|
|
|
40,097
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(299,396
|
)
|
|
|
—
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino and hotel operations
|
|
2,459
|
|
|
|
1,104,372
|
|
|
|
44,929
|
|
|
|
721,638
|
|
|
|
(11,023
|
)
|
|
|
1,862,375
|
|
General and administrative
|
|
16,485
|
|
|
|
522,007
|
|
|
|
5,920
|
|
|
|
188,949
|
|
|
|
(208,249
|
)
|
|
|
525,112
|
|
Corporate expense
|
|
58,775
|
|
|
|
53,007
|
|
|
|
13,029
|
|
|
|
4,625
|
|
|
|
—
|
|
|
|
129,436
|
|
Preopening and start-up expenses
|
|
—
|
|
|
|
1,214
|
|
|
|
—
|
|
|
|
2,073
|
|
|
|
—
|
|
|
|
3,287
|
|
Property transactions, net
|
|
—
|
|
|
|
7,814
|
|
|
|
1,113
|
|
|
|
(204
|
)
|
|
|
53
|
|
|
|
8,776
|
|
Depreciation and amortization
|
|
—
|
|
|
|
101,646
|
|
|
|
75,009
|
|
|
|
141,162
|
|
|
|
(1,403
|
)
|
|
|
316,414
|
|
|
|
77,719
|
|
|
|
1,790,060
|
|
|
|
140,000
|
|
|
|
1,058,243
|
|
|
|
(220,622
|
)
|
|
|
2,845,400
|
|
Income from unconsolidated affiliates
|
|
—
|
|
|
|
37,055
|
|
|
|
—
|
|
|
|
1,694
|
|
|
|
—
|
|
|
|
38,749
|
|
Operating income
|
|
181,580
|
|
|
|
223,378
|
|
|
|
131,264
|
|
|
|
116,236
|
|
|
|
(282,198
|
)
|
|
|
370,260
|
|
Interest expense, net of amounts capitalized
|
|
(126,653
|
)
|
|
|
(208
|
)
|
|
|
(63,948
|
)
|
|
|
(25,311
|
)
|
|
|
—
|
|
|
|
(216,120
|
)
|
Other non-operating, net
|
|
18,626
|
|
|
|
85,214
|
|
|
|
1,709
|
|
|
|
2,464
|
|
|
|
(124,485
|
)
|
|
|
(16,472
|
)
|
Income before income taxes
|
|
73,553
|
|
|
|
308,384
|
|
|
|
69,025
|
|
|
|
93,389
|
|
|
|
(406,683
|
)
|
|
|
137,668
|
|
Provision for income taxes
|
|
(42,256
|
)
|
|
|
(5
|
)
|
|
|
(2,661
|
)
|
|
|
(26,589
|
)
|
|
|
—
|
|
|
|
(71,511
|
)
|
Net income
|
|
31,297
|
|
|
|
308,379
|
|
|
|
66,364
|
|
|
|
66,800
|
|
|
|
(406,683
|
)
|
|
|
66,157
|
|
Less: Net income attributable to noncontrolling interests
|
|
—
|
|
|
|
(1,437
|
)
|
|
|
(19,955
|
)
|
|
|
(13,061
|
)
|
|
|
(407
|
)
|
|
|
(34,860
|
)
|
Net income attributable to MGM Resorts International
|
$
|
31,297
|
|
|
$
|
306,942
|
|
|
$
|
46,409
|
|
|
$
|
53,739
|
|
|
$
|
(407,090
|
)
|
|
$
|
31,297
|
|
Net income
|
$
|
31,297
|
|
|
$
|
308,379
|
|
|
$
|
66,364
|
|
|
$
|
66,800
|
|
|
$
|
(406,683
|
)
|
|
$
|
66,157
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
(6,906
|
)
|
|
|
(6,906
|
)
|
|
|
—
|
|
|
|
(12,405
|
)
|
|
|
13,812
|
|
|
|
(12,405
|
)
|
Unrealized loss on cash flow hedges
|
|
(8,606
|
)
|
|
|
—
|
|
|
|
(15,612
|
)
|
|
|
—
|
|
|
|
10,895
|
|
|
|
(13,323
|
)
|
Other comprehensive loss
|
|
(15,512
|
)
|
|
|
(6,906
|
)
|
|
|
(15,612
|
)
|
|
|
(12,405
|
)
|
|
|
24,707
|
|
|
|
(25,728
|
)
|
Comprehensive income
|
|
15,785
|
|
|
|
301,473
|
|
|
|
50,752
|
|
|
|
54,395
|
|
|
|
(381,976
|
)
|
|
|
40,429
|
|
Less: Comprehensive income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
(15,238
|
)
|
|
|
(9,406
|
)
|
|
|
—
|
|
|
|
(24,644
|
)
|
Comprehensive income attributable to MGM Resorts International
|
$
|
15,785
|
|
|
$
|
301,473
|
|
|
$
|
35,514
|
|
|
$
|
44,989
|
|
|
$
|
(381,976
|
)
|
|
$
|
15,785
|
|
21
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
|
Three Months Ended March 31, 2019
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
MGP
|
|
|
Other
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
(In thousands)
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
$
|
(107,623
|
)
|
|
$
|
782,436
|
|
|
$
|
(439,533
|
)
|
|
$
|
164,502
|
|
|
$
|
—
|
|
|
$
|
399,782
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, net of construction payable
|
|
—
|
|
|
|
(108,690
|
)
|
|
|
(12
|
)
|
|
|
(74,550
|
)
|
|
|
—
|
|
|
|
(183,252
|
)
|
Dispositions of property and equipment
|
|
—
|
|
|
|
273
|
|
|
|
—
|
|
|
|
68
|
|
|
|
—
|
|
|
|
341
|
|
Acquisition of Empire City Casino, net of cash acquired
|
|
—
|
|
|
|
(535,681
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(535,681
|
)
|
Investments in unconsolidated affiliates
|
|
—
|
|
|
|
(9,558
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9,558
|
)
|
Distributions from unconsolidated affiliates
|
|
—
|
|
|
|
31,850
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31,850
|
|
Intercompany accounts
|
|
—
|
|
|
|
(787,991
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
787,991
|
|
|
|
—
|
|
Other
|
|
—
|
|
|
|
(3,500
|
)
|
|
|
—
|
|
|
|
(27,011
|
)
|
|
|
—
|
|
|
|
(30,511
|
)
|
Net cash used in investing activities
|
|
—
|
|
|
|
(1,413,297
|
)
|
|
|
(12
|
)
|
|
|
(101,493
|
)
|
|
|
787,991
|
|
|
|
(726,811
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net borrowings (repayments) under bank credit facilities – maturities of 90 days or less
|
|
320,000
|
|
|
|
245,950
|
|
|
|
(715,575
|
)
|
|
|
(140,142
|
)
|
|
|
—
|
|
|
|
(289,767
|
)
|
Issuance of long-term debt
|
|
—
|
|
|
|
—
|
|
|
|
750,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
750,000
|
|
Retirement of senior notes
|
|
(850,000
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(850,000
|
)
|
Debt issuance costs
|
|
(128
|
)
|
|
|
—
|
|
|
|
(9,983
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(10,111
|
)
|
Issuance of MGM Growth Properties common stock in public offering
|
|
—
|
|
|
|
—
|
|
|
|
571,838
|
|
|
|
—
|
|
|
|
—
|
|
|
|
571,838
|
|
MGM Growth Properties Class A share issuance costs
|
|
—
|
|
|
|
—
|
|
|
|
(23,447
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(23,447
|
)
|
MGP dividends paid to consolidated subsidiaries
|
|
—
|
|
|
|
—
|
|
|
|
(87,322
|
)
|
|
|
—
|
|
|
|
87,322
|
|
|
|
—
|
|
Dividends paid to common shareholders
|
|
(69,799
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(69,799
|
)
|
Distributions to noncontrolling interest owners
|
|
—
|
|
|
|
—
|
|
|
|
(31,733
|
)
|
|
|
(14,806
|
)
|
|
|
—
|
|
|
|
(46,539
|
)
|
Intercompany accounts
|
|
523,231
|
|
|
|
407,838
|
|
|
|
—
|
|
|
|
(55,756
|
)
|
|
|
(875,313
|
)
|
|
|
—
|
|
Other
|
|
(5,073
|
)
|
|
|
(2,198
|
)
|
|
|
—
|
|
|
|
(53
|
)
|
|
|
—
|
|
|
|
(7,324
|
)
|
Net cash provided by (used in) financing activities
|
|
(81,769
|
)
|
|
|
651,590
|
|
|
|
453,778
|
|
|
|
(210,757
|
)
|
|
|
(787,991
|
)
|
|
|
24,851
|
|
Effect of exchange rate on cash
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,180
|
)
|
|
|
—
|
|
|
|
(1,180
|
)
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) for the period
|
|
(189,392
|
)
|
|
|
20,729
|
|
|
|
14,233
|
|
|
|
(148,928
|
)
|
|
|
—
|
|
|
|
(303,358
|
)
|
Balance, beginning of period
|
|
259,738
|
|
|
|
389,601
|
|
|
|
59,817
|
|
|
|
817,606
|
|
|
|
—
|
|
|
|
1,526,762
|
|
Balance, end of period
|
$
|
70,346
|
|
|
$
|
410,330
|
|
|
$
|
74,050
|
|
|
$
|
668,678
|
|
|
$
|
—
|
|
|
$
|
1,223,404
|
|
22
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) INFORMATION
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
MGP
|
|
|
Other
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
(In thousands)
|
|
Net revenues
|
$
|
—
|
|
|
$
|
1,889,793
|
|
|
$
|
215,839
|
|
|
$
|
932,947
|
|
|
$
|
(216,342
|
)
|
|
$
|
2,822,237
|
|
Equity in subsidiaries' earnings
|
|
328,267
|
|
|
|
44,535
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(372,802
|
)
|
|
|
—
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino and hotel operations
|
|
2,715
|
|
|
|
1,050,019
|
|
|
|
—
|
|
|
|
582,979
|
|
|
|
(503
|
)
|
|
|
1,635,210
|
|
General and administrative
|
|
2,350
|
|
|
|
310,850
|
|
|
|
22,499
|
|
|
|
104,690
|
|
|
|
(22,499
|
)
|
|
|
417,890
|
|
Corporate expense
|
|
39,301
|
|
|
|
50,407
|
|
|
|
10,481
|
|
|
|
5,352
|
|
|
|
(6,032
|
)
|
|
|
99,509
|
|
Preopening and start-up expenses
|
|
—
|
|
|
|
6,742
|
|
|
|
—
|
|
|
|
60,175
|
|
|
|
—
|
|
|
|
66,917
|
|
Property transactions, net
|
|
—
|
|
|
|
5,142
|
|
|
|
4,086
|
|
|
|
756
|
|
|
|
(4,086
|
)
|
|
|
5,898
|
|
Depreciation and amortization
|
|
—
|
|
|
|
156,647
|
|
|
|
68,991
|
|
|
|
112,148
|
|
|
|
(68,964
|
)
|
|
|
268,822
|
|
|
|
44,366
|
|
|
|
1,579,807
|
|
|
|
106,057
|
|
|
|
866,100
|
|
|
|
(102,084
|
)
|
|
|
2,494,246
|
|
Income from unconsolidated affiliates
|
|
—
|
|
|
|
31,632
|
|
|
|
—
|
|
|
|
134
|
|
|
|
—
|
|
|
|
31,766
|
|
Operating income
|
|
283,901
|
|
|
|
386,153
|
|
|
|
109,782
|
|
|
|
66,981
|
|
|
|
(487,060
|
)
|
|
|
359,757
|
|
Interest expense, net of amounts capitalized
|
|
(109,558
|
)
|
|
|
(137
|
)
|
|
|
(49,230
|
)
|
|
|
(8,984
|
)
|
|
|
—
|
|
|
|
(167,909
|
)
|
Other non-operating, net
|
|
15,772
|
|
|
|
(107,950
|
)
|
|
|
(1,152
|
)
|
|
|
(46,687
|
)
|
|
|
129,091
|
|
|
|
(10,926
|
)
|
Income before income taxes
|
|
190,115
|
|
|
|
278,066
|
|
|
|
59,400
|
|
|
|
11,310
|
|
|
|
(357,969
|
)
|
|
|
180,922
|
|
Benefit (provision) for income taxes
|
|
33,329
|
|
|
|
—
|
|
|
|
(1,231
|
)
|
|
|
53,281
|
|
|
|
—
|
|
|
|
85,379
|
|
Net income
|
|
223,444
|
|
|
|
278,066
|
|
|
|
58,169
|
|
|
|
64,591
|
|
|
|
(357,969
|
)
|
|
|
266,301
|
|
Less: Net income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
(15,830
|
)
|
|
|
(27,027
|
)
|
|
|
—
|
|
|
|
(42,857
|
)
|
Net income attributable to MGM Resorts International
|
$
|
223,444
|
|
|
$
|
278,066
|
|
|
$
|
42,339
|
|
|
$
|
37,564
|
|
|
$
|
(357,969
|
)
|
|
$
|
223,444
|
|
Net income
|
$
|
223,444
|
|
|
$
|
278,066
|
|
|
$
|
58,169
|
|
|
$
|
64,591
|
|
|
$
|
(357,969
|
)
|
|
$
|
266,301
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
(13,368
|
)
|
|
|
(13,368
|
)
|
|
|
—
|
|
|
|
(24,152
|
)
|
|
|
26,736
|
|
|
|
(24,152
|
)
|
Unrealized gain on cash flow hedges
|
|
9,498
|
|
|
|
—
|
|
|
|
16,355
|
|
|
|
—
|
|
|
|
(11,997
|
)
|
|
|
13,856
|
|
Other comprehensive income (loss)
|
|
(3,870
|
)
|
|
|
(13,368
|
)
|
|
|
16,355
|
|
|
|
(24,152
|
)
|
|
|
14,739
|
|
|
|
(10,296
|
)
|
Comprehensive income
|
|
219,574
|
|
|
|
264,698
|
|
|
|
74,524
|
|
|
|
40,439
|
|
|
|
(343,230
|
)
|
|
|
256,005
|
|
Less: Comprehensive income attributable to noncontrolling interests
|
|
—
|
|
|
|
—
|
|
|
|
(20,188
|
)
|
|
|
(16,243
|
)
|
|
|
—
|
|
|
|
(36,431
|
)
|
Comprehensive income attributable to MGM Resorts International
|
$
|
219,574
|
|
|
$
|
264,698
|
|
|
$
|
54,336
|
|
|
$
|
24,196
|
|
|
$
|
(343,230
|
)
|
|
$
|
219,574
|
|
23
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Subsidiaries
|
|
|
MGP
|
|
|
Other
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
(In thousands)
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
$
|
(157,092
|
)
|
|
$
|
237,173
|
|
|
$
|
145,224
|
|
|
$
|
352,359
|
|
|
$
|
—
|
|
|
$
|
577,664
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, net of construction payable
|
|
—
|
|
|
|
(181,743
|
)
|
|
|
(177
|
)
|
|
|
(236,704
|
)
|
|
|
—
|
|
|
|
(418,624
|
)
|
Dispositions of property and equipment
|
|
—
|
|
|
|
220
|
|
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
225
|
|
Investments in unconsolidated affiliates
|
|
—
|
|
|
|
(2,503
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,503
|
)
|
Intercompany accounts
|
|
—
|
|
|
|
(102,195
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
102,195
|
|
|
|
—
|
|
Other
|
|
—
|
|
|
|
(9,937
|
)
|
|
|
—
|
|
|
|
(1,538
|
)
|
|
|
—
|
|
|
|
(11,475
|
)
|
Net cash used in investing activities
|
|
—
|
|
|
|
(296,158
|
)
|
|
|
(177
|
)
|
|
|
(238,237
|
)
|
|
|
102,195
|
|
|
|
(432,377
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less
|
|
516,875
|
|
|
|
—
|
|
|
|
(8,375
|
)
|
|
|
(128,465
|
)
|
|
|
—
|
|
|
|
380,035
|
|
Retirement of senior notes
|
|
—
|
|
|
|
(2,265
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,265
|
)
|
Debt issuance costs
|
|
—
|
|
|
|
—
|
|
|
|
(4,544
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,544
|
)
|
MGP dividends paid to consolidated subsidiaries
|
|
—
|
|
|
|
—
|
|
|
|
(81,956
|
)
|
|
|
—
|
|
|
|
81,956
|
|
|
|
—
|
|
Dividends paid to common shareholders
|
|
(67,999
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(67,999
|
)
|
Distributions to noncontrolling interest owners
|
|
—
|
|
|
|
—
|
|
|
|
(29,777
|
)
|
|
|
(17,603
|
)
|
|
|
—
|
|
|
|
(47,380
|
)
|
Purchases of common stock
|
|
(362,400
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(362,400
|
)
|
Intercompany accounts
|
|
111,580
|
|
|
|
26,042
|
|
|
|
—
|
|
|
|
46,529
|
|
|
|
(184,151
|
)
|
|
|
—
|
|
Other
|
|
(8,297
|
)
|
|
|
(2,793
|
)
|
|
|
—
|
|
|
|
(1,407
|
)
|
|
|
—
|
|
|
|
(12,497
|
)
|
Net cash provided by (used in) financing activities
|
|
189,759
|
|
|
|
20,984
|
|
|
|
(124,652
|
)
|
|
|
(100,946
|
)
|
|
|
(102,195
|
)
|
|
|
(117,050
|
)
|
Effect of exchange rate on cash
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,830
|
)
|
|
|
—
|
|
|
|
(2,830
|
)
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) for the period
|
|
32,667
|
|
|
|
(38,001
|
)
|
|
|
20,395
|
|
|
|
10,346
|
|
|
|
—
|
|
|
|
25,407
|
|
Balance, beginning of period
|
|
26,870
|
|
|
|
311,043
|
|
|
|
259,722
|
|
|
|
902,360
|
|
|
|
—
|
|
|
|
1,499,995
|
|
Balance, end of period
|
$
|
59,537
|
|
|
$
|
273,042
|
|
|
$
|
280,117
|
|
|
$
|
912,706
|
|
|
$
|
—
|
|
|
$
|
1,525,402
|
|
24