SECURITIES AND EXCHANGE COMMISSION
(Mark One)
[X]
| | | | | |
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31,
20182021
[ ]
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to Commission File No. 001-10362
MGM Resorts InternationalResorts International
(Exact name of Registrant as specified in its charter)
DELAWARE
| | 88-0215232
| | | | | | |
Delaware | | 88-0215232 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S. Employer
Identification Number) |
3600 Las Vegas Boulevard South - Las Vegas, Nevada 89109
(Address of principal executive office) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading Symbol(s) | | | Name of each exchange
| |
| Common Stock, $0.01 Par Value | MGM | | | New York Stock Exchange | (NYSE) |
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X ☒ No ☐ Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No X ☒ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X ☒ No ☐ Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes X ☒ No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K:
☐ Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer X | ☒ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
Emerging Growth Company___growth company | ☐ | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ___☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐No X ☒ The aggregate market value of the Registrant’s Common Stock held by non-affiliates of the Registrant as of June 30,
20182021 (based on the closing price on the New York Stock Exchange Composite Tape on June 30,
2018)2021) was
$15.6$17.5 billion.
Shares of common stock held by each officer and director and by each person who owns 10% or more of the outstanding common shares have been excluded. As of February
22, 2019, 536,916,60923, 2022, 439,172,269 shares of Registrant’s Common Stock, $0.01 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive Proxy Statement for its
20182022 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.
TABLE OF CONTENTS
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PART I |
Item 1. | | |
Item 1A. | | 11
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Item 1B. | | 24
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Item 2. | | 25
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Item 3. | | 26
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Item 4. | | 26
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PART II |
Item 5. | | 27
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Item 6. | | 29
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Item 7. | | 31
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Item 7A. | | 51
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Item 8. | | 52
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| | 55
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| | 60
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| | 101
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Item 9. | | 102
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Item 9A. | | 102
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Item 9B. | | 103
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PART III
Item 9C. | | |
PART III |
| Item 10. | | 103
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Item 11. | | 103
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Item 12. | | 103
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Item 13. | | 103
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Item 14. | | 103
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PART IV |
Item 15. | | 104
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Item 16. | | 110
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| | 111
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MGM Resorts International is referred to as the “Company,” “MGM Resorts,” or the “Registrant,” and together with its subsidiaries may also be referred to as “we,” “us” or “our.” MGM China Holdings Limited together with its subsidiaries is referred to as “MGM China.” Except where the context indicates otherwise, “MGP” refers to MGM Growth Properties LLC together with its consolidated subsidiaries.
MGM Resorts International is a Delaware corporation incorporated in 1986 that acts largely as a holding company and, through subsidiaries, owns and operates integrated casino, hotel, and entertainment resorts across the United States and in Macau.
MGM Growth Properties LLC (“MGP”), a consolidated subsidiary of the Company which completed its initial public offering in April 2016, 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”). 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 (which was branded as Monte Carlo prior to May 2018), Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, and MGM National Harbor from the landlord. See Note 1 in the accompanying consolidated financial statements for information regarding MGP and the Operating Partnership, which we consolidate in our financial statements, and Note 17 in the accompanying consolidated financial statements for information regarding the master lease with MGP.
We believe we
own or invest inoperate several of the finest casino resorts in the world and we continually reinvest in our resorts to maintain our competitive advantage. We make significant investments in our resorts through newly remodeled hotel rooms, restaurants, entertainment and nightlife offerings, as well as other new features and amenities. We believe we operate the highest quality resorts in each of the markets in which we operate. Ensuring our resorts are the premier resorts in their respective markets requires capital investments to maintain the best possible experiences for our guests.
Business Developments
In August 2016, we completed the acquisition of Boyd Gaming Corporation’s
MGM Growth Properties LLC (“Boyd Gaming”MGP”) ownership interest in Borgata, at which time Borgata became, is a consolidated subsidiary of ours. Subsequently, MGP acquired Borgata’sthe Company. Substantially all of its assets are owned by and substantially all of its businesses are conducted through its subsidiary MGM Growth Properties Operating Partnership LP (the “Operating Partnership”). As of December 31, 2021, we lease the real property from us. In December 2016, we openedestate assets of The Mirage, Luxor, New York-New York, Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, Empire City, MGM National Harbor, MGM Northfield Park, and MGM Springfield pursuant to a master lease agreement between a subsidiary of ours and a subsidiary of the Operating Partnership. See Note 1 in October 2017,the accompanying consolidated financial statements for information regarding MGP also acquiredand the long-term leasehold interestOperating Partnership, which we consolidate in our financial statements, and Note 18 in the accompanying consolidated financial statements for information regarding the master lease with MGP, which eliminates in consolidation.
We lease the real property associatedestate assets of Bellagio pursuant to a lease agreement between a subsidiary of ours and a venture that is 5% owned by such subsidiary and 95% owned by a subsidiary of Blackstone Real Estate Income Trust, Inc. (“BREIT”, and such venture, the “Bellagio BREIT Venture”). We lease the real estate assets of Mandalay Bay and MGM Grand Las Vegas pursuant to a lease agreement between a subsidiary of ours and a venture that is 50.1% owned by a subsidiary of the Operating Partnership and 49.9% owned by a subsidiary of BREIT (such venture, the “MGP BREIT Venture”). We lease the real estate assets of Aria (including Vdara) pursuant to a lease agreement between a subsidiary of ours and funds managed by The Blackstone Group Inc. ("Blackstone"). Refer to Note 11 for further discussion of these leases.
Business Developments
In recent years, in furtherance of our vision to be the world’s premier gaming entertainment company, we have implemented an asset-light business model, which has involved a comprehensive review of our owned real estate assets to find opportunities to monetize those assets efficiently and allow unlocked capital to be redeployed towards balance sheet improvements, new growth opportunities, and to return value to our shareholders. At the same time, we have continued to focus on key growth opportunities that align with
MGM National Harbor from us.In February 2018,our vision, particularly by investing in U.S. online sports betting and iGaming through BetMGM, expanding our digital capabilities, and seeking to diversify our Asia operations with development efforts in Japan.
As part of that business strategy, we
opened MGM Cotai, anhave sought, and executed on, opportunities to invest in our growth areas, divest our real estate assets, and acquire, or enter into venture transactions with respect to the operations of integrated casino, hotel, and entertainment
resort onresorts, including through the
Cotai Strip in Macau, and in August 2018, we opened MGM Springfield in Springfield, Massachusetts.following transactions:
•In July 2018, we and Entain plc (“Entain”) formed BetMGM, LLC (“BetMGM”), a venture that is owned 50% by each party. In connection with its formation, we provided BetMGM with exclusive access to all of our domestic landbased and online sports betting, major tournament poker, and online gaming operations and Entain provided BetMGM with exclusive access to its technology in the United States.
•In January 2019, we acquired the real property and operations associated with Empire City Casino's racetrack and casino ("Empire City") for total consideration of approximately $865 million. Subsequently, MGP completed its previously announced acquisitionacquired
Empire City’s developed real property from us and Empire City was added to the master lease between us and MGP. Refer to Note 4 and Note 18 for additional information.
•In March 2019, we entered into an amendment to the master lease between us and MGP with respect to improvements made by us related to the rebranding of the membership interestsPark MGM and NoMad Las Vegas property (the “Park MGM Transaction”). Refer to Note 18 for additional information on this transaction, which eliminates in consolidation.
•Additionally, in November 2019, Bellagio BREIT Venture was formed, which acquired the Bellagio real estate assets from us for total consideration of Northfield Park Associates, LLC (“Northfield”$4.25 billion, and leased such assets back to us pursuant to a lease agreement. Refer to Note 11 for additional information relating to the lease and Note 12 for the guarantee entered into in connection with the transaction.
•In December 2019, we completed the sale of Circus Circus Las Vegas and adjacent land for $825 million. See Note 16 for additional information related to this transaction.
•On February 14, 2020, we completed a series of transactions (collectively the “MGP BREIT Venture Transaction”), an Ohio limited liability company that owns pursuant to which the real estate assets of MGM Grand Las Vegas and operationsMandalay Bay (including Mandalay Place) were contributed to the newly formed MGP BREIT Venture in exchange for total consideration of $4.6 billion. See Note 1 for further discussion on the Hard Rock Rocksino Northfield Park from Milstein Entertainment LLCtransaction and Note 12 for a purchase price of approximately $1.1 billion (“Northfield Acquisition”). Simultaneouslythe guarantee entered into in connection with the closetransaction.
•In connection with the MGP BREIT Venture Transaction, MGP BREIT Venture entered into a lease with us for the real estate assets of Mandalay Bay and MGM Grand Las Vegas. Additionally, the transaction,master lease with MGP was modified to remove the Mandalay Bay property and the annual cash rent under the MGP master lease was reduced by $133 million, as further discussed in Note 18. Refer to Note 11 for additional information relating to the lease.
•Also, on January 14, 2020, we, the Operating Partnership, and MGP entered into a newwaiver agreement pursuant to which approximately 30 million Operating Partnership units that we held were redeemed for $700 million on May 18, 2020 and approximately 24 million Operating Partnership units that we held were redeemed for $700 million on December 2, 2020. As a result, the waiver terminated in accordance with an affiliateits terms. Refer to Note 1 for further information regarding this transaction, which eliminates in consolidation.
•On March 4, 2021, we delivered a notice of Hard Rock Café International (STP), Inc.redemption to continue to serve asMGP covering approximately 37 million Operating Partnership units that we held which was satisfied with aggregate cash proceeds of approximately $1.2 billion, using cash on hand together with the managerproceeds from MGP's issuance of the property.In September 2018,Class A shares. See Note 13 for information regarding this transaction, which eliminates in consolidation.
•On August 4, 2021, we entered into an agreement with VICI Properties, Inc. (“VICI”) and MGP whereby VICI will acquire MGP in a stock-for-stock transaction (such transaction, the “VICI Transaction”). Pursuant to acquire allthe agreement, MGP Class A shareholders will receive 1.366 shares of newly issued VICI stock in exchange for each MGP Class A share outstanding and we will receive 1.366 units of the new VICI operating assetspartnership (“VICI OP”) in exchange for each Operating Partnership unit held by us. In connection with the exchange, VICI OP will redeem the majority of Northfield (“Northfield OpCo”) from MGPour VICI OP units for approximately $275 million, subject to customary purchase price adjustments. Northfieldcash consideration of $4.4 billion. MGP’s Class B share that is held by us will be added tocancelled. As part of the existingtransaction, we will enter into an amended and restated master lease between us and MGP.with VICI. The transaction is expected to close in the first half of 2019,2022, subject to customary closing conditions.In December 2018,conditions, regulatory approvals, and approval by VICI stockholders (which was obtained on October 29, 2021). Refer to Note 1 for further information.
•On September 26, 2021, we entered into an agreement with MGP whereby MGP will pay usto acquire the operations of The Cosmopolitan of Las Vegas ("The Cosmopolitan") for cash consideration of approximately $638 million for renovations undertaken by us regarding$1.625 billion, subject to customary working capital adjustments. Additionally, the Park MGM and NoMad Las Vegas property (the “Park MGM Lease Transaction”). Additionally, at closing, the partiesCompany will enter into an amendment toa lease agreement for the existing master lease.real estate assets of The Cosmopolitan. The transaction is expected to close in the first quarterhalf of 2019 and is2022, subject to regulatory approvals and other customary closing conditions.In January 2019, Refer to Note 1 for further information.
•On September 27, 2021, we completed our previously announcedthe acquisition of the real property and operations associated with Empire City Casino's race track and casino50% ownership interest in CityCenter Holdings, LLC ("Empire City"CityCenter") held by Infinity World Development Corp ("Infinity World"), a wholly owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity, for cash consideration of approximately $864 million, subject$2.125 billion. Refer to customary working capital and other adjustments. Subsequently, MGP acquired Empire City’s real property from usNote 4 for fair value of consideration of
approximately $634 million. In connection withadditional information on this transaction,acquisition.
•On September 28, 2021, we entered into an amendment to the existing master lease for our subsidiary to lease backsold the real estate assets of Empire CityAria (including Vdara) to funds managed by Blackstone for cash consideration of $3.89 billion and entered into a lease through which the real property is leased back to a subsidiary of the Company. Refer to Note 11 for discussion of the lease agreement.
•On September 28, 2021, we announced that we, together with our venture partner, ORIX Corporation ("ORIX"), were selected by Osaka as the region’s integrated resort partner. In December 2021, we and ORIX formed a venture, through which we will bid to develop one of Japan's first integrated resorts.
•On October 29, 2021, MGP acquired the real estate assets of MGM Springfield from us for cash consideration of $400 million and MGM Springfield was added to the landlord. In addition, pursuantMGP master lease between us and MGP through which MGP leases back the real property to a subsidiary of ours. Transactions with MGP, including transactions under the MGP master lease, have been eliminated in our consolidation of MGP. Refer to Note 18 for further discussion of the master lease amendment,with MGP.
•On December 13, 2021, we agreedentered into an agreement to provide MGP a rightsell the operations of first offer with respectThe Mirage to an affiliate of Seminole Hard Rock Entertainment, Inc. ("Hard Rock") for cash consideration of $1.075 billion, subject to certain undeveloped land adjacentpurchase price adjustments. Upon closing, the master lease between us and VICI (or MGP in the event that the VICI Transaction is terminated) will be amended and restated to reflect a $90 million reduction in annual cash rent. The transaction is expected to close during the second half of 2022, subject to certain closing conditions, including, but not limited to, the propertyconsummation or termination of the VICI Transaction and receipt of regulatory approvals. Refer to Note 1 for further information.
For additional information relating to our acquisitions, divestitures, venture transactions, and other arrangements, including those referred to above, see “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations,” as well as the extent that we develop additional gaming facilitiesnotes to our consolidated financial statements specified above.
Financial Impact of COVID-19. See “Item 7. Management's Discussion and chooseAnalysis of Financial Condition and Results of Operations — Description of our business and key performance indicators — Financial Impact of COVID-19” for more information about the effect of the COVID-19 pandemic on our business and our recovery. For a discussion of the risks to sell or transfer such property in the future.our business resulting from COVID-19, see “Item 1A. Risk Factors — Risks Related to Our Business, Industry, and Market Conditions.”
Most of our revenue is cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit cards. We rely
heavily on the ability of our resorts to generate operating cash flow to fund capital expenditures, provide excess cash flow for future development, acquisitions or investments, and repay debt financings.
Our results of operations do not tend to be seasonal in nature
as all of our casino resorts, except as otherwise described related to the impact of COVID-19, typically operate 24 hours a day, every day of the year, with the exception of Empire City, which operates 20 hours a day, every day of the year, though a variety of factors may affect the results of any interim period, including the timing of major conventions,
Far East baccarat volumes, the amount and timing of marketing and special events for our high-end gaming customers, and the level of play during major holidays, including New Year and Lunar New Year.
While our results do not depend on key individual customers, a significant portion of our operating income is generated from high-end gaming customers, which can cause variability in our results. In addition, our success in marketing to customer groups such as convention customers and the financial health of customer segments such as business travelers or high-end gaming customers from a specific country or region can affect our results.All of our casino resorts operate 24 hours a day, every day of the year, with the exception of our newly acquired Empire City Casino which operates 20 hours a day, every day of the year. At our domestic resorts, ourOur primary casino and hotel operations are owned and managed by us. Other resort amenities may be owned and operated by us, owned by us but managed by third parties for a fee, or leased to third parties. We utilize third-party management for specific expertise in operations of restaurants and nightclubs. Wealso lease space to third-party retail and food and beverage operators, particularly for branding opportunities.
As of December 31, 2021, we have three reportable segments: Las Vegas Strip Resorts, Regional Operations, and MGM China, as generally described below. See Note 17 for detailed financial information about our reportable segments.
Las Vegas Strip Resorts and Regional Operations
Las Vegas Strip Resorts. At December 31, 2018, our Las Vegas Strip Resorts consistedconsists of the following casino resorts:Aria (including Vdara) (upon acquisition in September 2021), Bellagio, MGM Grand Las Vegas (including The Signature), Mandalay Bay (including Delano and Four Seasons), The Mirage, Luxor, New York-New York (including theThe Park), Excalibur, Park MGM (including NoMad Las Vegas) and Circus Circus Las Vegas.Vegas (until the sale of such property in December 2019).
Regional Operations. At December 31, 2018, our Regional Operations consistedconsists 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;
and MGM Springfield in Springfield,
Massachusetts.Massachusetts; Empire City in Yonkers, New York (upon its acquisition in January 2019); and MGM Northfield Park in Northfield Park, Ohio (upon MGM’s acquisition of the operations from MGP in April 2019).
Over half of the net revenue from our
domestic resortsLas Vegas Strip Resorts is
typically derived from non-gaming operations, including hotel, food and beverage, entertainment and other non-gaming
amenities. Weamenities and the majority of the net revenue from our Regional Operations is typically derived from gaming operations. Although our domestic customer mix has changed in the near term as a result of the COVID-19 pandemic, our long-term strategy continues to be to market to different customers and utilize our significant convention and meeting facilities to allow us to maximize hotel occupancy and customer volumes, which also leads to better labor utilization. Our operating results are highly dependent on the volume of customers at our
resorts,properties, which in turn affects the price we can charge for our hotel rooms and other amenities.
Our casino operations feature a variety of slots
and table games, and,
racethrough BetMGM, we offer online sports betting and
sports book wagering.iGaming in certain jurisdictions in the United States. In addition, we
offerprovide our premium players access to high-limit rooms and lounge experiences where players may enjoy an upscale atmosphere.
We own approximately 56% of MGM China, which owns MGM Grand Paradise, S.A. (“MGM Grand Paradise”), the Macau company that owns and operates the MGM Macau and MGM Cotai casino resorts and
holds the related gaming subconcession and land concessions. We believe our ownership interest in MGM China plays an important role in extending our reach internationally and will foster future growth and profitability.
Macau isAlthough visitation during 2020 and 2021 was significantly reduced by the
world’s largest gaming destination in terms of revenue andCOVID-19 pandemic, we expect
the long-term future growth
inof the Asian gaming market to drive additional visitation at MGM Macau and MGM Cotai.
Our current MGM China operations relate to MGM Macau and MGM Cotai, discussed further below. MGM China’s revenues are generated primarily from gaming operations which are conducted under a gaming subconcession held by MGM Grand
Paradise.Paradise, a subsidiary of MGM China. The Macau government has granted three gaming concessions and each of these concessionaires has granted a subconcession. The MGM Grand Paradise gaming subconcession was granted by
SJM Resorts S.A. ("SJMSA", formerly Sociedade de Jogos de Macau, S.A.
),
andwhich expires in
2020.June 2022. The Macau government currently prohibits additional concessions and subconcessions, but does not place a limit on the number of casinos or
gaming areas operated by the concessionaires and subconcessionaires, though additional casinos or gaming areas require government approval prior to commencing operations.
See “Risk Factors — Risks Related to our Macau Operations — The Macau government can terminate MGM Grand Paradise’s subconcession under certain circumstances without compensating MGM Grand Paradise, exercise its redemption right with respect to the subconcession, or refuse to grant MGM Grand Paradise an extension of the subconcession in 2022, or MGM Grand Paradise may be unsuccessful in obtaining a gaming concession when a new public tender is held by the Macau government, any of which would have a material adverse effect on our business, financial condition, results of operations and cash flows.”
As discussed above, gaming in Macau is currently administered by the Macau Government through concessions awarded to three different concessionaires and three subconcessionaires, of which a subsidiary of MGM China, MGM Grand Paradise, is a subconcessionaire. In 2019, the expiration of MGM Grand Paradise's subconcession term was extended from March 31, 2020 to June 26, 2022, consistent with the expiration of the other concessionaires and subconcessionaires. Pursuant to the current Macau gaming law, upon reaching the maximum duration of 20 years, the term of the concessions may be extended one or more times by order of the Chief Executive, which period may not exceed, in total, 5 years. On January 14, 2022, the Macau Government disclosed the content of a bill to amend Macau gaming law, which followed a 45-day public consultation process regarding draft amendment proposals that were issued in September 2021. Under the bill, the existing subconcessions will be discontinued and a maximum of six concessions will be awarded for a term to be specified in the concession contract that may not exceed 10 years and which may be extended by three years under certain circumstances. The bill is subject to debate and approval by the Macau Legislative Assembly. The approval of the new gaming law bill will precede the public tender for the awarding of new gaming concessions and to date the Macau Government has provided no indication as to whether the public tender will take place before expiry of the existing gaming concessions and subconcessions but acknowledged that it could consider the extension of the existing concessions and subconcessions beyond their current term if the public tender is held at a later date. Unless MGM Grand Paradise's gaming subconcession is extended or legislation with regard to reversion of casino premises is amended, the casino area premises and gaming-related equipment subject to reversion will automatically be transferred to the Macau Government upon expiration, and MGM Grand Paradise will cease to generate any revenues from such gaming operations. In addition, certain events relating to the loss, termination, rescission, revocation or modification of MGM Grand Paradise’s gaming subconcession in Macau, where such events have a material adverse effect on the financial condition, business, properties, or results of operations of MGM China, taken as a whole, may result in a special put option triggering event under MGM China’s senior notes and an event of default under MGM China’s revolving credit facilities. MGM
China continues to closely monitor developments regarding the retendering process or concession extensions including the issuance of guidance by the Macau Government. MGM China intends to respond proactively to all relevant Macau Government requirements when known relating to the retendering process. We cannot provide any assurance that the gaming subconcession will be extended beyond the current term or that we will be able to obtain a gaming concession in a public tender; however, management believes that MGM Grand Paradise will be successful in obtaining a gaming concession when a public tender is held.
We
have additional business activities including our investments in unconsolidated affiliates, and certain other corporate and management operations, including MGP’s Northfield.operations. Our unconsolidated affiliates include the ventures with BREIT, discussed elsewhere, and BetMGM. In September 2021, we completed the acquisition of the 50% ownership interest in CityCenter Holdings, LLC (“CityCenter”) isheld by Infinity World and now own 100% of the equity interest in CityCenter. Accordingly, we no longer account for our most significant unconsolidated affiliate, whichinterest in CityCenter under the equity method of accounting, and we also manage for a fee.now consolidate CityCenter in our financial statements.
We have provided certain information below about our resorts as of December 31,
2018. Except as otherwise indicated, we own and operate the resorts shown below.2021. | | Number of | | | Approximate | | | | | | | | | |
| | Guestrooms | | | Casino Square | | | | | | | Gaming | |
Name and Location | | and Suites | | | Footage (1) | | | Slots (2) | | | Tables (3) | |
Las Vegas Strip Resorts: | | | | | | | | | | | | | | | | |
Bellagio | | | 3,933 | | | | 155,000 | | | | 1,707 | | | | 147 | |
MGM Grand Las Vegas (4) | | | 6,131 | | | | 160,000 | | | | 1,570 | | | | 127 | |
Mandalay Bay (5) | | | 4,750 | | | | 152,000 | | | | 1,213 | | | | 71 | |
The Mirage | | | 3,044 | | | | 94,000 | | | | 1,189 | | | | 82 | |
Luxor | | | 4,397 | | | | 101,000 | | | | 1,026 | | | | 54 | |
Excalibur | | | 3,981 | | | | 94,000 | | | | 1,153 | | | | 51 | |
New York-New York | | | 2,024 | | | | 81,000 | | | | 1,148 | | | | 66 | |
Park MGM (6) | | | 2,898 | | | | 66,000 | | | | 842 | | | | 56 | |
Circus Circus Las Vegas | | | 3,764 | | | | 95,000 | | | | 1,221 | | | | 36 | |
Subtotal | | | 34,922 | | | | 998,000 | | | | 11,069 | | | | 690 | |
Regional Operations: | | | | | | | | | | | | | | | | |
MGM Grand Detroit (Detroit, Michigan) (7) | | | 400 | | | | 127,000 | | | | 3,324 | | | | 131 | |
Beau Rivage (Biloxi, Mississippi) | | | 1,740 | | | | 81,000 | | | | 1,784 | | | | 81 | |
Gold Strike (Tunica, Mississippi) | | | 1,133 | | | | 48,000 | | | | 1,148 | | | | 65 | |
Borgata (Atlantic City, New Jersey) | | | 2,767 | | | | 160,000 | | | | 2,825 | | | | 183 | |
MGM National Harbor (Prince George's County, Maryland) (8) | | | 308 | | | | 146,000 | | | | 3,137 | | | | 152 | |
MGM Springfield (Springfield, Massachusetts) (9) | | | 252 | | | | 109,000 | | | | 2,444 | | | | 94 | |
Subtotal | | | 6,600 | | | | 671,000 | | | | 14,662 | | | | 706 | |
MGM China: | | | | | | | | | | | | | | | | |
MGM Macau – 55.95% owned (Macau S.A.R.) | | | 585 | | | | 370,000 | | | | 806 | | | | 291 | |
MGM Cotai – 55.95% owned (Macau S.A.R.) | | | 1,362 | | | | 298,000 | | | | 1,218 | | | | 236 | |
Subtotal | | | 1,947 | | | | 668,000 | | | | 2,024 | | | | 527 | |
Other Operations: | | | | | | | | | | | | | | | | |
CityCenter – 50% owned (Las Vegas, Nevada) (10) | | | 5,499 | | | | 139,000 | | | | 1,533 | | | | 126 | |
Hard Rock Rocksino Northfield Park (Northfield, Ohio) (11) | | | — | | | | 65,000 | | | | 2,299 | | | | — | |
Subtotal | | | 5,499 | | | | 204,000 | | | | 3,832 | | | | 126 | |
Grand total | | | 48,968 | | | | 2,541,000 | | | | 31,587 | | | | 2,049 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Location | | Number of Guestrooms and Suites | | Approximate Casino Square Footage(1) | | Slots (2) | | Gaming Tables (3) |
| Las Vegas Strip Resorts: | | | | | | | | |
Aria(4) | | 5,497 | | 142,000 | | 1,316 | | 121 |
| Bellagio | | 3,933 | | 152,000 | | 1,312 | | 146 |
MGM Grand Las Vegas (5) | | 6,071 | | 169,000 | | 1,245 | | 122 |
Mandalay Bay (6) | | 4,750 | | 152,000 | | 990 | | 69 |
| The Mirage | | 3,044 | | 94,000 | | 835 | | 71 |
| Luxor | | 4,397 | | 101,000 | | 819 | | 45 |
| Excalibur | | 3,981 | | 93,000 | | 894 | | 42 |
| New York-New York | | 2,024 | | 81,000 | | 893 | | 54 |
Park MGM (7) | | 2,898 | | 66,000 | | 745 | | 65 |
| Subtotal | | 36,595 | | 1,050,000 | | 9,049 | | 735 |
| Regional Operations: | | | | | | | | |
MGM Grand Detroit (Detroit, Michigan) (8) | | 400 | | 147,000 | | 2,817 | | 140 |
| Beau Rivage (Biloxi, Mississippi) | | 1,740 | | 85,000 | | 1,516 | | 75 |
| Gold Strike Tunica (Tunica, Mississippi) | | 1,109 | | 57,000 | | 1,082 | | 61 |
| Borgata (Atlantic City, New Jersey) | | 2,767 | | 213,000 | | 2,816 | | 163 |
MGM National Harbor (Prince George's County, Maryland) (9) | | 308 | | 150,000 | | 2,123 | | 158 |
MGM Springfield (Springfield, Massachusetts)(10) | | 240 | | 106,000 | | 1,571 | | 52 |
| MGM Northfield Park (Northfield, Ohio) | | — | | 73,000 | | 1,669 | | — |
| Empire City (Yonkers, New York) | | — | | 137,000 | | 4,696 | | — |
| Subtotal | | 6,564 | | 968,000 | | 18,290 | | 649 |
| MGM China: | | | | | | | | |
MGM Macau – 55.95% owned (Macau S.A.R.) | | 585 | | 307,000 | | 1,017 | | 289 |
| MGM Cotai – 55.95% owned (Macau S.A.R.) | | 1,418 | | 298,000 | | 1,026 | | 263 |
| Subtotal | | 2,003 | | 605,000 | | 2,043 | | 552 |
| Grand total | | 45,162 | | 2,623,000 | | 29,382 | | 1,936 |
(1)
| Casino square footage is approximate and includes the gaming floor, race and sports, high limit areas and casino specific walkways, and excludes casino cage and other non-gaming space within the casino area.
|
(2)
| Includes slot machines, video poker machines and other electronic gaming devices.
|
(1)Casino square footage is approximate and includes the gaming floor, race and sports, high limit areas and casino specific walkways, and excludes casino cage and other non-gaming space within the casino area.(3)
| Includes blackjack (“21”), baccarat, craps, roulette and other table games; does not include poker.
|
(2)Includes slot machines, video poker machines and other electronic gaming devices. Also include 172 and 187 gaming devices temporarily out of service due to COVID-19 restrictions at MGM Macau and MGM Cotai, respectively.(4)
| Includes 1,138 rooms at The Signature at MGM Grand Las Vegas.
|
(3)Includes blackjack (“21”), baccarat, craps, roulette and other table games; does not include poker. MGM China gaming tables reflect the permanent table count, excludes temporary tables.(5)
| Includes 1,117 rooms at the Delano and 424 rooms at the Four Seasons Hotel.
|
(4)Includes 1,495 condominium-hotel units at Vdara, which are predominantly utilized as company-owned hotel rooms.(6)
| Includes 293 rooms at NoMad Las Vegas.
|
(5)Includes 1,078 rooms at The Signature at MGM Grand Las Vegas.(7)
| Our local investors have an ownership interest of approximately 3% of MGM Grand Detroit.
|
(6)Includes 1,117 rooms at the Delano and 424 rooms at the Four Seasons Hotel.(8)
| Our local investors have a non-voting economic interest in MGM National Harbor. Refer to Note 2 in the accompanying consolidated financial statements for further description of such interest.
|
(7)Includes 293 rooms at NoMad Las Vegas.(9)
| Our local investor has a 1% ownership interest in MGM Springfield.
|
(8)Our local investors have an ownership interest of approximately 3% of MGM Grand Detroit.
(9)Our local investors have a non-voting economic interest in MGM National Harbor. Refer to Note 2 in the accompanying consolidated financial statements for further description of such interest.
(10)
| Includes Aria with 4,004 rooms. Vdara includes 1,495 condo-hotel units, which are predominantly being utilized as company-owned hotel rooms. The other 50% of CityCenter is owned by Infinity World Development Corp.
|
(10)Our local investor has a non-voting economic interest in MGM Springfield.(11)
| Northfield is owned by MGP and managed by an affiliate of Hard Rock Café International (STP), Inc.
|
More detailed information about each of our operating resorts can be found in Exhibit 99.1 to this Annual Report on Form 10-K, which Exhibit is incorporated herein by reference.
Customers and Competition
Our
casino resortsproperties operate in highly competitive environments. We compete against gaming companies, as well as other hospitality companies in the markets in which we operate, neighboring markets, and in other parts of the world, including non-gaming resort destinations such as Hawaii. Our gaming operations compete to a lesser extent with state-sponsored lotteries, off-track wagering, card parlors,
online gamblingiGaming and other forms of legalized gaming in the United States and internationally. For further discussion of the potential impact of competitive conditions on our business, see
“Risk“Item 1A. Risk Factors — Risks Related to our
Business.”Business, Industry, and Market Conditions — We face significant competition with respect to destination travel locations generally and with respect to our peers in the industries in which we compete,
including increased competition through online sports betting and iGaming, and failure to compete effectively could materially adversely affect our business, financial condition, results of operations and cash flow.”
Our primary methods of successful competition include:
•Locating our resorts in desirable leisure and business travel markets and operating at superior sites within those markets;
•Constructing and maintaining high-quality resorts and facilities, including luxurious guestrooms, state-of-the-art convention facilities and premier dining, entertainment, retail and other amenities;
•Recruiting, training and retaining well-qualified and motivated employees who provide superior customer service;
•Providing unique, “must-see” entertainment attractions; and
•Developing distinctive and memorable marketing, promotional and customer loyalty programs.
Las Vegas Strip Resorts and Regional Operations
Our customers include premium gaming customers; leisure and wholesale travel customers; business travelers, and group customers, including conventions, trade associations, and small meetings. We have a
completediverse portfolio of
resortsproperties, which appeal to the upper end of each market segment and also cater to leisure and value-oriented tour and travel customers. Many of our
resortsproperties have significant convention and meeting space which we utilize to drive business to our
resortsproperties during
mid-weekmidweek and off-peak periods.
Our Las Vegas casino resorts compete for customers with a large number of other hotel casinos in the Las Vegas area, including major hotel casinos on or near the Las Vegas Strip, major hotel casinos in the downtown area, which is about five miles from the center of the Las Vegas Strip, and several major hotel casinos elsewhere in the Las Vegas area. Our Las Vegas Strip Resorts also compete, in part, with each other. Major competitors, including new entrants, have either recently expanded their hotel room capacity
and convention space offerings, or have plans to expand their capacity or construct new resorts in Las Vegas. Also, the growth of gaming in areas outside Las Vegas has increased the competition faced by our operations in Las Vegas.
Outside Nevada, our resorts primarily compete with other hotel casinos in their markets and for customers in surrounding regional gaming markets, where location is a critical factor to success. In addition, we compete with gaming operations in surrounding jurisdictions and other leisure destinations in each region.
The three primary customer bases in the Macau gaming market are VIP
casino gaming operations, main floor gaming operations and slot machine operations. VIP gaming play
ishas historically been sourced both internally and externally. Externally sourced VIP gaming play
iswas obtained through external gaming promoters who
offerassist VIP players
various services, such as extension of credit as well as complimentary hotel, foodwith their travel and
beverage services.entertainment arrangements. Gaming promoters
arehave been compensated through payment of revenue-sharing arrangements and rolling chip turnover-based commissions. In-house VIP players also typically receive a commission based on the program in which they participate. Unlike gaming promoters and in-house VIP players, main floor players do not receive commissions. The profit contribution from the main floor
segment exceedsgaming operations has historically exceeded the VIP
segmentgaming operations due to commission costs paid to gaming promoters.
Gaming revenues from the main gaming floors have grown significantly in recent years and we believe this customer base represents the most potential for sustainable growth in the future. To target premium main floorWe offer amenities to attract players
in order to grow revenue and improve yield, we have introducedsuch as premium gaming lounges and stadium-style electronic table games terminals, which include both table games and slots to
the main floor gaming area. The amenities create a dedicated exclusive gaming space for
the use of premium main floor
players. players’ use, as well as non-gaming amenities, such as The Mansion and MGM Cotai Emerald Villa to attract ultra-high end customers.
VIP gaming at MGM China is conducted by the use of special purpose nonnegotiable gaming chips. Gaming promoters
currently purchase these nonnegotiable chips and in turn they sell these chips to their players. The nonnegotiable chips allow us to track the
amount of wagering conducted by each gaming promoters’ clients in order to determine VIP gaming play. Gaming promoter commissions are currently based on a percentage of the gross table games win or a percentage of the table games turnover they generate. They also receive a complimentary allowance based on a percentage of the table games turnover they generate, which can be applied to hotel rooms, food and beverage and other discretionary customers-related
customer-related expenses. Gaming promoter commissions are recorded as a reduction of casino revenue. In-house VIP commissions are based on a percentage of rolling chip turnover and are recorded as a reduction of casino revenue.
In December 2021, we suspended operations with our primary gaming promoters. In January 2022, the Macau Government disclosed the content of a bill to amend the gaming law which includes some restrictions relating to gaming promoters, including: each gaming promoter can only exercise the activity of gaming promotion for one concessionaire, revenue sharing arrangements between concessionaires and gaming promoters are prohibited, gaming promoters are prohibited from having exclusive operation of casino reserved areas, and gaming promoters are restricted to only providing support to the concessionaires in the promotion of casino gaming activities through commissions. The bill is subject to debate and approval by the Macau Legislative Assembly.
We have focused our business on main floor gaming operations and, accordingly, we do not expect VIP gaming operations to be a significant source of revenue in future years. The majority of MGM China's casino revenue has been provided by main floor gaming operations in recent years and we expect this customer base will be the primary source of growth in the future.
Our key competitors in Macau include five other gaming concessionaires and subconcessionaires. If the Macau government were to grant additional concessions or subconcessions, we would face additional competition which could have a material adverse effect on our financial condition, results of operations or cash flows. Additionally, we face competition at our Macau and Cotai properties from concessionaires who have expanded their operations, primarily on the Cotai Strip.
We encounter competition from major gaming centers located in other areas of Asia and around the world including,
but not limited to, Singapore,
South Korea,
Australia, New Zealand, Malaysia, Vietnam, Cambodia, the Philippines,
Russia, cruise ships in Asia that offer gamingAustralia, and
from unlicensed gaming operations in the region.Las Vegas.
Our marketing efforts are conducted through various means, including our loyalty programs. We advertise on radio, television, internet and billboards and in newspapers and magazines in selected cities throughout the United States and overseas, as well as by direct mail, email and through the use of social media. We also advertise through our regional marketing offices located in major U.S. and foreign cities. Our direct marketing efforts utilize advanced analytic techniques that identify customer preferences and help predict future customer behavior, allowing us to make more relevant offers to customers, influence incremental visits, and help build lasting customer relationships.
M life
MGM Rewards, our customer loyalty program, is a tiered program and allows customers to qualify for benefits across our participating resorts and in both gaming and non-gaming areas, encouraging customers to keep their total spend within our casino resorts.
In January 2022, we redesigned our loyalty program to expand the ways in which our customers can earn benefits. We also offer the Golden Lion Club for gaming focused customers, in addition to M life Rewards, at MGM China. The structured rewards systems based on member value and tier level ensure that customers can progressively access the full range of services that the resorts provide. Our loyalty programs focus on building a rewarding relationship with our customers, encouraging members to increase both visitation and spend.
We strive to be
the recognized globala leader in
the global gaming, entertainment and hospitality
embracing innovationindustry that delivers extraordinary entertainment across a portfolio of properties in the United States and
diversity to inspire excellence. Macau. The quality of our resortsproperties and amenities can be measuredis evidenced by our success in winning numerous awards, both domestic and globally, including several Four and Five Diamond designations from the American Automobile Association, as well as multiple Four and Five Star designations from Forbes Travel Guide as well asand numerous certifications of our Corporate Social Responsibility efforts.Our
In order to achieve our vision of becoming the world's premier gaming entertainment company, we developed our strategic objectives include:plan, which centers on four pillars:
Operational enhancements. Drive continuous improvements in operational performance to support enterprise-wide increases in revenue, market share, cash flow,•Strong People and margins;
Financial strength.Accelerate financial performance through optimal capital structureCulture. Recruit, develop and disciplined investmentretain the best talent. Foster a culture of cash flows;
Corporate social responsibility. Continue to solidify the Company’s reputation as a global leaderdiversity and inclusion. Invest in the principles of Corporate Social Responsibility;
Geographic expansion. Execute•Customer-Centric Model. Leverage a targeted approachcustomer-centric model reinforced by a strong brand and deep customer insights to domestic and international expansion to increase global brand presence; and
Business model innovation. Explore the evolution of the existing business model into new lines of business and key adjacencies.
Technology
Collectively we utilize various types of technology to maximize revenue, drive efficiency in our operations, and serve our customers more effectively. Information Technology continues to automate operations in an effort to control costs related to operations and implement leading edge solutionsprovide unmatched entertainment experiences for all major lines of business. To aid this process, data and analytics are utilized to support making timely and accurate business decisions. A cloud first strategy is applied when possible to enable our technology solution delivery and speed to market. We are also focused on technology to enhance the guest experience. For example, our eCommerce platform provides our guests and business partners a premierdrive top-line growth.
•Operational Excellence. Operating model refinement to maximize operating efficiencies and expand margins. Enhancement of digital experience where they have the abilitycapabilities to create anstrengthen customer loyalty.
all-inclusive experience from accommodations•Disciplined Capital Allocation to dining and entertainment with real time recommendations provided based on the preference.
Employees and Management
We believeMaximize Shareholder Value. Pursuit of targeted, attractive ROI opportunities that knowledgeable, friendly and dedicated employees are a primary success factor in the hospitality industry. Therefore, we invest heavily in recruiting, training, motivating and retaining exceptional employees, and we seek to hire and promote the strongest management team possible. We have numerous programs, both at the corporate and business unit level, designed to achieve these objectives. We believe our internal development programs, such as the MGM Resorts University and various leadership and management training programs, are best in class among our industry peers.
Corporate Social Responsibility
We believe that profitability and social responsibility can be linked for long-term sustainability and profitability in furtherance of value to all our stakeholders – our shareholders, our employees, our customers and our communities. Whether we referalign to our philosophy as Corporate Social Responsibility (“CSR”) or associated Environmentalstrategic vision. Focus on shareholder returns. Fortify balance sheet.
Due to the COVID-19 pandemic and
Social Governance (“ESG”) metrics, we strivethe resulting rapidly changing environment, our strategic direction must allow for flexibility. The strategic plan was developed with the intent to
further two fundamental principles ‒ ethical, legal conduct in the way we conduct our business,regularly revisit, measure, and
integration of social responsibility as a distinct, strategic discipline into the fabric of our culture and sustainable business operations. Through investment of many years of dedicated effort and resources, our evolving CSR approaches – grounded in prudent fiscal management and long-term focused strategies – have advanced us beyond leadership in the gaming and hospitality industry to national recognitionreevaluate for our accomplishments.
Our core values of integrity, inclusion, teamwork and excellence shape our character and culture, the way we do business, and our CSR practices. Four strategic pillars guide our work.
Fostering diversity and inclusion. Our commitment to inclusion translates diversity as a fundamental paradigm of the 21st century global economy into long-term human capital leadership, customer market expansion and competitive business advantage. Inclusion is an important, multi-dimensional business imperative that attracts top talent; drives our culture of respect for humanity; leverages the broad diversity of our employees’ talents to drive excellence in collaboration, innovation and financial performance; fuels expansion of our customer markets and supply chain; and forges stronger ties with our communities around the world.
Investing in community. The communities in which we operate, and our employees live, work and care for their families, are cornerstones of our business and our CSR system. We create economic opportunity for local residents, collaborate to promote educational and develop skills of local workforces, engage local businesses, and stimulate economic development in our communities. We promote responsible gaming practices and tools, such as GameSense, that keep gaming safe and entertaining. Beyond our tax support of public education, infrastructure and services, we make philanthropic and development-related investments in long-term institutions that benefit our employees and customers and elevate the quality of life and culture in our communities.
Caring for one another. We believe caring for less fortunate community neighbors is a deep-rooted part of our culture, and our actions help uplift the communities in which we operate, while simultaneously instilling employee pride and engagement in our business. Through three primary channels – our employee-driven MGM Resorts Foundation, our Employee Volunteer Program and our Corporate Giving Program, we contribute leadership, funding and manpower to an extensive array of nonprofit organizations that provide services, goods and resources indispensable to our communities’ well-being, development and stability. Significantly, in 2018, our U.S. employees invested more than 123,000 hours of voluntary service with community non-profits and achieved a 71% participation level in giving through our MGM Resorts Foundation.
Environmental sustainability. We continue to gain recognition for our comprehensive environmental responsibility initiatives in energy and water conservation, recycling and waste management, sustainable supply chain and green construction. Certain of our casino resorts in Nevada and our casino resort in Michigan were the first in each state to earn certification from Green Key, one of the largest international programs evaluating environmental sustainability in hotel operations. We received certifications at all of our domestic resorts and Aria and Vdara at CityCenter. Aria, Vdara, Bellagio, Delano, Mandalay Bay, and MGM Grand Detroit have all received “Five Green Key,” the highest possible rating. Many major travel service providers recognize the Green Key designation and identify our resorts for their continued commitment to sustainable hotel operations.
In addition, we believe that incorporating the tenets of environmental sustainability in our business decisions advances a platform for innovation and operational efficiency. CityCenter (Aria, Vdara and Veer) is one of the world’s largest private sustainable developments. With six LEED® Gold certifications from the U.S. Green Building Council (the “Council”), CityCenter serves as the
emerging opportunities.
standard for combining luxury and environmental responsibility within the large-scale hospitality industry. Also, MGM National Harbor, The Park, and T-Mobile Arena have all been awarded LEED® Gold certification by the Council.
At MGM China, we incorporate the same commitment to environmental preservation. Our efforts to improve energy efficiency, indoor air quality, and environmental stewardship have resulted in MGM China being included in the Hang Seng Corporate Sustainability Benchmark Index on the Hong Kong Stock Exchange. MGM Cotai has achieved the China Green Building (Macau) Design label from the China Green Building and Energy Saving (Macau) Association.
Development and Leveraging Our Brand and Management Assets
In allocating resources, our financial strategy is focused on managing a proper mix of
investinginvestments in
our existing
resorts, spending onproperties, strategic
developments or initiativesgrowth opportunities, debt repayment and
repaying long-term debt or returning capital to shareholders.shareholder returns. We believe there are reasonable investments for us to make in new initiatives and at our current resorts that will provide profitable returns.
We regularly evaluate
possible expansion and acquisitiontargeted opportunities
that provide an attractive return on investment in domestic and international
markets. Opportunities we evaluate may includemarkets, including the ownership, management and operation of gaming
and other entertainment facilities
in Nevada, or in states other than Nevada, or outside of the United States,and accessing new markets for
iGaming and online sports
and interactive, as well as online gaming.betting. We
also leverage our management expertise and well-recognized brands through strategic partnerships and international expansion opportunities. We feel that several of our brands are well-suited to new projects in both gaming and non-gaming developments. We may undertake these opportunities either alone or in cooperation with one or more third parties.
During 2018,
We continue to invest in our operating model by expanding the footprint of our Centers of Excellence and enabling best in class operations through adjustments within corporate and property business units. In addition, we entered intohave implemented several improvement and cost cutting initiatives comprised of labor, sourcing, and revenue programs that have further improved our operating model and have positioned us as a stronger company.
We have continued to focus on our key growth opportunities of developing an agreementintegrated resort in Japan and investing in BetMGM. In September 2021, we, together with GVC Holdings PLCour venture partner, ORIX, were selected by Osaka as the region’s integrated resort partner. This selection marks an important step in our long-term bid to form Roar Digital LLC,develop one of Japan’s first integrated casino resorts. We are currently working with Osaka to submit an area development plan to the central government during the application period. As it relates to BetMGM, we believe that BetMGM is positioned as a world-classlong-term leader in the U.S. online sports betting and onlineiGaming industries. As part of our commitment to the success of BetMGM, we have integrated our MGM Rewards program with BetMGM and have BetMGM branded on-property sportsbooks and kiosks to drive higher value customers at lower acquisition costs through a robust omni-channel strategy. Further, we continue to explore bringing full-scale commercial gaming platformto Empire City in New York.
Technology
We believe technology, digital and advanced data science/analytics capabilities are critical to optimizing customer experience and loyalty, employee productivity and engagement, operational efficiency and revenue growth. We are focused on using these capabilities to achieve specific goals of creating ‘only at MGM’ differentiation through unique content and experiences, establishing a perennial engagement with our guests for increased loyalty, digital diversification through enhanced e-commerce and seamless integration of the physical integrated resorts business with digital casino and sports betting businesses, creating cross-property experiences and promotions in Las Vegas to provide much better value to the consumer, enhancing our data driven decisioning capabilities in all aspects of our business for faster decision making, and optimizing our operations and employee productivity and experience through digitization.
Environmental & Social Responsibility
At MGM Resorts we have had a long-standing commitment to environmental and social responsibility. For over a decade, we have had a dedicated board committee focused on Corporate Social Responsibility (“CSR”). In 2019, we had bolstered governance of these topics by uniting our key pillars of Diversity and Inclusion, Philanthropy and Community Engagement and Environmental Sustainability under one Executive Committee-level leader who manages the MGM Resorts Social Impact and Sustainability Center of Excellence, reports directly to the Chief Executive Officer and President, and serves as liaison to the CSR and Sustainability board committee. This leader now also oversees the Human Resources function, and is thus able to integrate Environmental, Social and Governance (“ESG”) considerations more deeply into the core culture of our organization.
The year 2021 was a critical one in terms of progress on our ESG initiatives. In May 2021, we published our 2020 Social Impact & Sustainability Report containing our most robust ESG disclosures to date. In this report we showed the significant progress made towards many of our ESG goals that we had announced publicly in prior reports, and we expect to publish a report in 2022 reflecting our progress on these goals during 2021.
Importantly, 2021 saw the opening of the 100MW “MGM Resorts Mega Solar Array” in North Las Vegas. This is the hospitality industry’s largest direct-connect renewable electricity project world-wide and has significantly improved our trajectory to achieve our previously announced carbon reduction goals. In connection with the opening of this array, we enhanced our climate ambition by announcing two new 2030 goals: to cut global total operational carbon emissions by
50%, and source 100% renewable electricity in the United States. The 50/50 ventureUSA. Beyond the environmental benefits associated with the renewable electricity generated, the array will be capitalized with initial commitments of $100 million per partner. Under the agreement, the venture will benefit from the economicsalso help us hedge our electricity costs and reduce our exposure to price volatility risks.
In 2021, we also made substantial progress against our commitment to aligning more of our existing raceESG report disclosures to leading ESG frameworks by publishing our first ever disclosures informed by guidelines of the Global Reporting Initiative (GRI) and sports booksSustainability Accounting Standards Board (SASB) Hotels & Lodging and online gaming operationsCasinos & Gaming Sector Standards.
Our full list of ESG goals and
will have exclusive access to certain U.S. land-basedperformance against them are available in our 2020 Social Impact & Sustainability Report, available at mgmresorts.com/focused. The content on this website and
online sports betting, online real moneyreport is for informational purposes only and
free-to-play casino gaming, major tournament and online poker, and other similar future interactive businesses. The commencement of operationssuch content is
subject to gaming regulatory approvals.Intellectual Property
not incorporated by reference into this Annual Report on Form 10-K.
Trademarks
Our principal intellectual property consists of trademarks for, among others,
Aria, Vdara, Bellagio, The Mirage, Borgata, Mandalay Bay, MGM, MGM Grand, MGM Resorts International, Luxor, Excalibur, New York-New York,
Circus Circus, Beau Rivage and Empire City, all of which have been registered or allowed in various classes in the United States. In addition, we have also registered or applied to register numerous other trademarks in connection with our properties, facilities and development projects in the United States and in various other foreign jurisdictions. These trademarks are brand names under which we market our properties and services. We consider these brand names to be important to our business since they have the effect of developing brand identification. We believe that the name recognition, reputation and image that we have developed attract customers to our facilities. Once granted, our trademark registrations are of perpetual duration so long as they are used and periodically renewed. It is our intent to pursue and maintain our trademark registrations consistent with our goals for brand development and identification, and enforcement of our trademark rights.
Human Capital
We are focused on fostering a people-driven culture exemplified by how we lead and uphold our core values, which in 2021 evolved to: captivate our audience, inspire excellence, champion inclusion, and win together, to create an engaged and diverse workforce. Our long-term people strategy is designed to enhance talent attraction and development to support business objectives, guest experience, community engagement, and financial goals. Our workforce development strategies support local hiring and developing a robust workforce in the local communities in which we operate through veteran support, community training and employment, fulfilling local hiring commitments (where applicable), and through internship and management development programs.
Growth and Development
We invest significant resources to develop the talent needed, now and in the future, to continue to be a premier employer of choice across the gaming, hospitality, and entertainment industries. We are committed to a culture of continuous learning where employees, at all levels, are engaged in developing their knowledge, skills, and abilities and we support the long-term career aspirations of our employees through education and professional/personal development. In 2021, we introduced several new learning and development initiatives focused on a broad range of employee segments. Except as otherwise temporarily impacted due to COVID-19, we offer tuition reimbursement, contribute toward student loan debt repayment, and have partnered with the Nevada System of Higher Education to allow employees to earn a degree online free of charge for all credit hours.
Equity, Diversity, and Inclusion (“ED&I”)
Our approach to ED&I is anchored by our corporate and people strategies and a social impact and sustainability approach that centers on embracing humanity and protecting the planet. A concise framework lays out four strategic pillars to guide our work: invest in people; build an inclusive culture; grow business and customer engagement and supplier diversity; and, enhance marketplace leadership and community relations. As part of our commitment, we have committed to the following four long-range goals: (1) ensure that all employees have equal access to leadership opportunities, (2) spend at least 10% of our biddable procurement with diverse suppliers, (3) expand our Supplier Diversity Mentorship Program to achieve 50 graduates and (4) train 100% of management employees on social impact policies and goals. In connection with each goal, we have established robust key performance indicators, which are tracked and published in our annual Social Impact and Sustainability Report.In addition, we have detailed internal Human Capital workforce reports, which include demographic and diversity data, and are reviewed with the Corporate Social Responsibility and Sustainability Committee of the Board, leadership teams and executive management on a regular basis.
Internally, we use multiple channels to facilitate communication and to continuously advance our core value of inclusiveness. The channels include but are not limited to open forums with executives, employee engagement surveys with detailed action planning, and employee network groups.
Work in the area of equity, diversity and inclusion is advanced through a range of programs and initiatives which include education and training, community partnerships, recruitment and talent development, advocacy, engagement and outreach. Responsibility is driven and led by the Company’s Chief People, Inclusion and Sustainability Officer, who reports directly to the Chief Executive Officer and President, and is supported by a centralized diversity and inclusion team and the Human Resources department.
Health, Safety, and Wellness
In order to promote our culture of overall employee health and wellness we provide benefits, tools and resources to help maintain or improve physical, mental, and financial health. We continue to align benefit offerings to the needs of a diverse workforce across an expanded regional presence and leverage innovative solutions to expand access to health and wellness resources, including the recent addition of a service to help connect LGBTQIA+ people and their loved ones with culturally and clinically competent health care providers.
To ensure our employees' continued health, safety, and wellness in response to COVID-19, we coordinated with medical experts to put in place extensive testing protocols for our employees and required COVID-19 vaccination as a condition of employment for all salaried employees and new hires throughout the United States. As a commitment to our employees impacted by the pandemic, we have maintained benefits eligibility for many employees who were furloughed in 2020 and were unable to work enough hours to qualify for benefits until business conditions improved.
Community Engagement and Philanthropy
Our philanthropic focus centers around: Embracing Humanity and Protecting the Planet. We organize our major programs and initiatives under the pillars of caring for one another and investing in the community. We established the MGM Resorts Foundation in 2002 as an engagement opportunity for employees to contribute to charitable causes, which provides two types of grants (1) the Employee Emergency Grant, which benefits our employees, and (2) the Community Grant, which benefits local communities. We endeavor to care for our communities through volunteerism and philanthropy and encourage all of our employees to volunteer through a variety of programs. In addition, we offer opportunities for our employees to give back to their communities, including through programs such as VolunteerREWARDS, which provides employees with opportunities to earn grant money to their charity of choice based on volunteer hours.
Employees and Labor Relations
As of December 31,
2018,2021, we had approximately
55,00042,000 full-time and 17,000 part-time employees
domestically, of which approximately 6,000 and 3,000, respectively, support the Company’s management agreements with CityCenter.domestically. In addition, we had approximately
11,00010,000 employees at MGM China. We had collective bargaining agreements with unions covering approximately
39,00035,000 of our employees as of December 31,
2018.2021. Collective bargaining agreements
with three unions covering
a substantial number ofmultiple bargaining units at our
employees inRegional Operations and Las Vegas
Strip Resorts are scheduled to expire in
the first half of 2019. We anticipate negotiations for successor contracts with2022. This includes all
three of those unions will beginbargaining units at Gold Strike Tunica in
the first quarter of 2019. In addition,Mississippi, all bargaining units at Borgata in
Atlantic City, our
regional properties, new collectivehotel/food & beverage bargaining
agreements will be negotiated in 2019unit at MGM National Harbor, and
MGM Springfield.all valet operations in Las Vegas (with the exception of The Signature). Negotiations for successor contracts covering those employees are being scheduled as expiration dates approach and will continue throughout 2022. As of December 31,
2018,2021, none of the employees of MGM China are part of a labor union and the
MGM China resorts are not party to any collective bargaining agreements.
In January 2019, we acquired operations in New York that employ approximately 1,000 employees, a portion of which are covered by collective bargaining agreements. We anticipate several of these agreements will be negotiated in 2019. Also, in July 2018, MGP acquired its property in Northfield, Ohio, which continues to be operated (on behalf of MGP) by an affiliate of Hard Rock International (STP), Inc. MGM expects to acquire these operations in the first half of 2019, subject to certain customary closing conditions. The Ohio operation has employees covered by collective bargaining agreements, several of which we anticipate will be negotiated in 2019.
Government Regulation and Licensing
The gaming industry is highly regulated, and we must maintain our licenses and pay gaming taxes to continue our operations. Each of our casinos is subject to extensive regulation under the laws, rules and regulations of the jurisdiction in which it is located.
These laws, rules and regulations generally concern the responsibility, financial stability and character of the owners, managers, and persons with financial interest in the gaming operations. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions.
A more detailed description of the gaming regulations to which we are subject is contained in Exhibit
99.299.1 to this Annual Report on Form 10-K, which Exhibit is incorporated herein by reference.
Our businesses are subject to various federal, state, local and foreign laws and regulations affecting businesses in general. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, smoking, employees, currency transactions, taxation, zoning and building codes (including regulations under
the Americans with Disabilities Act, which requires all public
accommodations to meet certain federal requirements related to access and use by persons with disabilities), construction, land use and marketing and advertising. We also deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering regulations. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our operating results.
In addition, we are subject to certain federal, state and local environmental laws, regulations and ordinances, including the Clean Air Act, the Clean Water Act, the Resource Conservation Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act and the Oil Pollution Act of 1990. Under various federal, state and local laws and regulations, an owner or operator of real property may be held liable for the costs of removal or remediation of certain hazardous or toxic substances or wastes located on its property, regardless of whether or not the present owner or operator knows of, or is responsible for, the presence of such substances or wastes. We have not identified any issues associated with our properties that could reasonably be expected to have an adverse effect on us or the results of our operations.
For a discussion of potential risks to our business relating to regulatory matters, including due to the potential impact of legislative and regulatory changes, please see “Item 1A. Risk Factors — Risks Related to Legal and Regulatory Matters and Changes in Public Policy.”
Cautionary Statement Concerning Forward-Looking Statements
This Form 10-K and our
20182021 Annual Report to Stockholders contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “will,” “may” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make regarding
expected market growth in Macau,the impact of COVID-19 on our business, our ability to reduce expenses and otherwise maintain our liquidity position during the pandemic, our ability to generate significant cash flow,
and execute on ongoing and future
projects, such as MGM 2020,strategic initiatives, including the development of an integrated resort in Japan and
investments we make in online sports betting and iGaming, the
expected resultsclosing of
MGM 2020,the VICI Transaction, The Cosmopolitan transaction, and The Mirage transaction, amounts we will spend
inon capital expenditures and investments,
the opening of strategic resort developments, the estimated costs and components associated with those developments, our expectations with respect to future
share repurchases and cash dividends on our common stock, dividends and distributions we will receive from MGM China
or the Operating Partnership,
or CityCenterour ability to achieve the benefits of our cost savings initiatives, and amounts projected to be realized as deferred tax assets. The foregoing is not a complete list of all forward-looking statements we make.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Therefore, we caution you against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, regional, national or global political, economic, business, competitive, market, and regulatory conditions and the following:
•our substantial indebtedness and significant financial commitments, including the fixed component of our rent payments tounder our triple-net leases and guarantees we provide of the indebtedness of Bellagio BREIT Venture and MGP BREIT Venture could adversely affect our development options and financial results and impact our ability to satisfy our obligations;
•current and future economic, capital and credit market conditions could adversely affect our ability to service or refinance our substantial indebtedness and significant financial commitments, including the fixed components of our rent payments, and to make planned expenditures;
•restrictions and limitations in the agreements governing our senior credit facility and other senior indebtedness could significantly affect our ability to operate our business, as well as significantly affect our liquidity;
•the fact that we are required to pay a significant portion of our cash flows as fixed and percentage rent, under the master lease, which could adversely affect our ability to fund our operations and growth, service our indebtedness and limit our ability to react to competitive and economic changes;
•the VICI Transaction, The Cosmopolitan transaction, and The Mirage transaction each remain subject to the satisfaction of certain closing conditions, including the receipt of certain regulatory approvals, and any anticipated benefits from such transactions may take longer to realize than expected or may not be realized at all;
•potential litigation instituted against us, our transaction counterparties, or our respective directors challenging the VICI Transaction may prevent such transaction from becoming effective within the expected timeframe or at all;
•the global COVID-19 pandemic has continued to materially impact our business, financial results and liquidity, and such impact could worsen and last for an unknown period of time;
•significant competition we face with respect to destination travel locations generally and with respect to our peers in the industries in which we compete;
the fact that our businesses are subject to extensive regulation and the cost of compliance or failure to comply with such regulations could adversely affect our business;
•the impact on our business of economic and market conditions in the jurisdictions in which we operate and in the locations in which our customers reside;
•the possibility that we may not realize all of the anticipated benefits of our cost savings initiatives, including our MGM 2020;
•the fact that our ability to pay ongoing regular dividends is subject to the discretion of our board of directors and certain other limitations;
| •
| our ability to pay ongoing regular dividends is subject to the discretion of our board of directors and certain other limitations;
|
a significant number•All of our domestic gaming facilities are leased and could experience risks associated with leased property, including risks relating to lease termination, lease extensions, charges and our relationship with the lessor, which could have a material adverse effect on our business, financial position or results of operations;
•financial, operational, regulatory or other potential challenges that may arise with respect to MGP, as our solethe lessor for a significant portion of our properties, may adversely impair our operations;
•the fact that MGP has adopted a policy under which certain transactions with us, including transactions involving consideration in excess of $25 million, must be approved in accordance with certain specified procedures;
•the concentration of a significant number of our major gaming resorts on the Las Vegas Strip;
•the fact that we extend credit to a large portion of our customers and we may not be able to collect such gaming receivables;
•the potential occurrence of impairments to goodwill, indefinite-lived intangible assets or long-lived assets which could negatively affect future profits;
•the susceptibility of leisure and business travel, especially travel by air, to global geopolitical events, such as terrorist attacks, other acts of violence, acts of war or hostility or outbreaks of infectious disease (including the COVID-19 pandemic);
•the fact that co-investing in properties or businesses, including our investment in BetMGM, decreases our ability to manage risk;
•the fact that future construction, development, or expansion projects will be subject to significant development and construction risks;
•the fact that our insurance coverage may not be adequate to cover all possible losses that our properties could suffer, our insurance costs may increase and we may not be able to obtain similar insurance coverage in the future;
•the fact that a failure to protect our trademarks could have a negative impact on the value of our brand names and adversely affect our business;
•the fact that a significant portion of our labor force is covered by collective bargaining agreements;
•the sensitivity of our business to energy prices and a rise in energy prices could harm our operating results;
•the potential failure of future efforts to expand through investments in other businesses and properties or through alliances or acquisitions, or to divest some of our properties and other assets;
•the potential that failure to maintain the integrity of our computer systems and internal customer information could result in damage to our reputation and/or subject us to fines, payment of damages, lawsuits or other restrictions on our use or transfer of data;
•the potential reputational harm as a result of increased scrutiny related to our corporate social responsibility efforts;
•extreme weather conditions or climate change may cause property damage or interrupt business;
•the fact that our businesses are subject to extensive regulation and the cost of compliance or failure to comply with such regulations could adversely affect our business;
•the risks associated with doing business outside of the United States and the impact of any potential violations of the Foreign Corrupt Practices Act or other similar anti-corruption laws;
•increases in gaming taxes and fees in the jurisdictions in which we operate;
•our ability to recognize our foreign tax credit deferred tax asset and the variability of the valuation allowance we may apply against such deferred tax asset;
•changes to fiscal and tax policies;
•risks related to pending claims that have been, or future claims that may be brought against us;
•restrictions on our ability to have any interest or involvement in gaming businesses in China, Macau, Hong Kong and Taiwan, other than through MGM China;
•the ability of the Macau government to terminate MGM Grand Paradise’s subconcession under certain circumstances without compensating MGM Grand Paradise, exercise its redemption right with respect to the subconcession, or refuse to grant MGM Grand Paradise an extension of the subconcession in 2020;
the dependence of MGM Grand Paradise upon gaming promoters for a significant portion of gaming revenues in Macau;
changes to fiscal and tax policies;
our ability to recognize our foreign tax credit deferred tax asset and the variability of the valuation allowance we may apply against such deferred tax asset;
extreme weather conditions or climate change may cause property damage or interrupt business;
the concentration of a significant number of our major gaming resorts on the Las Vegas Strip;
the fact that we extend credit to a large portion of our customers and we may not be able to collect such gaming receivables;
the potential occurrence of impairments to goodwill, indefinite-lived intangible assets or long-lived assets which could negatively affect future profits;
the susceptibility of leisure and business travel, especially travel by air, to global geopolitical events, such as terrorist attacks, other acts of violence or acts of war or hostility;
the fact that co-investing in properties, including our investment in CityCenter, decreases our ability to manage risk;
the fact that future construction, development, or expansion projects will be subject to significant development and construction risks;
the fact that our insurance coverage may not be adequate to cover all possible losses that our properties could suffer, our insurance costs may increase and we may not be able to obtain similar insurance coverage in the future;
the fact that a failure to protect our trademarks could have a negative impact on the value of our brand names and adversely affect our business;
the risks associated with doing business outside of the United States and the impact of any potential violations of the Foreign Corrupt Practices Act or other similar anti-corruption laws;
risks related to pending claims that have been, or future claims that may be brought against us;
the fact that a significant portion of our labor force is covered by collective bargaining agreements;
the sensitivity of our business to energy prices and a rise in energy prices could harm our operating results;
the potential that failure to maintain the integrity of our computer systems and internal customer information could result in damage to our reputation and/or subject us to fines, payment of damages, lawsuits or other restrictions on our use or transfer of data;
the potential reputational harm as a result of increased scrutiny related to our corporate social responsibility efforts;
the potential failure of future efforts to expand through investments in other businesses and properties or through alliances or acquisitions, such as the Empire City and Northfield acquisitions, or to divest some of our properties and other assets;
increases in gaming taxes and fees in the jurisdictions in which we operate; and
•the potential for conflicts of interest to arise because certain of our directors and officers are also directors of MGM China, which is a publicly traded company listed on the Hong Kong Stock Exchange.
China.
Any forward-looking statement made by us in this Form 10-K or our
20182021 Annual Report to Stockholders speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. If we update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.
You should also be aware that while we from time to time communicate with securities analysts, we do not disclose to them any material non-public information, internal forecasts or other confidential business information. Therefore, you should not assume that we agree with any statement or report issued by any analyst, irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain projections, forecasts or opinions, those reports are not our responsibility and are not endorsed by us.
Information about our Executive Officers
of the Registrant
The following table sets forth, as of February 27, 2019,25, 2022, the name, age and position of each of our executive officers. Executive officers are elected by and serve at the pleasure of the Board of Directors.
Name
| | Age
| | Position
| | | | | | | | | | |
JamesName
| | Age | | Position |
William J. MurrenHornbuckle | | 57
64 | | Chairman and Chief Executive Officer
and President |
William J. Hornbuckle(1)
| | 61
| | President and Chief Customer Development Officer
|
Corey I. Sanders(1) | | 55
58 | | Chief Operating Officer |
Daniel J. D’Arrigo(1)
Jonathan S. Halkyard | | 50
57 | | Executive Vice President, Chief Financial Officer and Treasurer
|
Phyllis A. James
| | 66
| | Executive Vice President, Chief Diversity and Corporate Responsibility Officer
|
John M. McManus | | 51
54 | | Executive Vice President, General Counsel and Secretary |
Robert C. Selwood
Tilak Mandadi | | 63
58 | | Executive Vice PresidentChief Strategy, Innovation and Chief AccountingTechnology Officer
|
(1)
| On February 21, 2019, the Company announced that Mr. D’Arrigo had voluntarily resigned as Executive Vice President, Chief Financial Officer and Treasurer, effective March 1, 2019, and that Mr. Sanders has been appointed Chief Financial Officer and Treasurer and
Mr. Hornbuckle has been appointed President and Chief Operating Officer, each effective March 1, 2019. |
Mr. Murren has served as Chairman and Chief Executive Officer of the Company since December 2008July 2020 and as President from December 1999 tosince December 2012. He served as Acting Chief Executive Officer from March 2020 to July 2020, as Chief Operating Officer from August 2007 through December 2008. He was Chief Financial Officer from January 1998March 2019 to August 2007 and Treasurer from November 2001 to August 2007.
Mr. Hornbuckle has servedMarch 2020, as President since December 2012 and as Chief Customer Development Officer sincefrom December 2018. He served2018 to February 2019, as Chief Marketing Officer from August 2009 to August 2014 and President and Chief Operating Officer of Mandalay Bay Resort & Casino from April 2005 to August 2009.
Mr. Sanders has served as Chief Operating Officer since
December 2020. Previously, he served as Chief Financial Officer and Treasurer from March 2019 to January 2021, as Chief Operating Officer from September
2010. He served2010 through February 2019, as Chief Operating Officer for the Company’s Core Brand and Regional Properties from August 2009 to September 2010, as Executive Vice President—Operations from August 2007 to August 2009,
and as Executive Vice President and Chief Financial Officer for MGM Grand Resorts from April 2005 to August 2007.
Mr.
D’ArrigoHalkyard has served as
Executive ViceChief Financial Officer and Treasurer since January 2021. Prior to joining the Company, Mr. Halkyard served as President and Chief
Executive Officer of Extended Stay America, Inc. ("Extended Stay") and its paired-share REIT, ESH Hospitality, Inc., from January 2018 through November 2019, as Chief Financial Officer
since August 2007of Extended Stay from January 2015 through December 2017, and as
Treasurer since November 2018 andChief Operating Officer of Extended Stay from September
20092013 through January 2015. Prior to
June 2016. Hejoining Extended Stay, Mr. Halkyard served as
Senior Vice President—FinanceChief Financial Officer of
the CompanyNV Energy, Inc. from
February 2005July 2012 through September 2013 and, prior to
August 2007that, he served in various executive, finance and
as Vice President—Finance of the Company from December 2000 to February 2005.Ms. James has served as Executive Vice President, Chief Diversity and Corporate Responsibility Officermanagerial roles at Caesars Entertainment Inc. since October 2016. Her role1999, including as Chief DiversityFinancial Officer began in 2009. She served as Executive Vice President and Special Counsel—Litigation from July 2010 to October 2016. She served as Senior Vice President, Senior Counsel and then Deputy General Counsel of the Company from March 2002 to July 2010.
2006 through 2012.
Mr. McManus has served as Executive Vice President, General Counsel and Secretary since July 2010. He served as
Senior Vice President, Acting General Counsel
and Secretary of the Company from December 2009 to July
2010. He served2010, as
Senior Vice President, Deputy General Counsel and Assistant Secretary from September 2009 to December 2009. He served as Senior Vice President, Assistant General Counsel and Assistant Secretarya senior member of the
CompanyCompany’s Corporate Legal Department from July 2008 to
September 2009. HeDecember 2009, and he served as counsel to various
MGM operating subsidiaries from May 2001 to July 2008.
Mr.
SelwoodMandadi has
served as Chief Strategy, Innovation and Technology Officer since July 2021. Prior to joining the Company, Mr. Mandadi served as Executive Vice President
of Digital and
Global Chief
AccountingTechnology Officer
since August 2007. Hefor Disney Parks, Experiences and Products, Inc. from March 2013. Prior to joining Disney, Mr. Mandadi served as Senior Vice
President—AccountingPresident of
theDigital for American Express Company from
February 2005July 2006 to
August 2007 and as Vice President—Accounting of the Company from December 2000 to February 2005.March 2013.
We maintain a website at www.mgmresorts.com that includes financial and other information for investors. We provide access to our SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q (including related filings in XBRL format), filed and furnished current reports on Form 8-K, and amendments to those reports on our website, free of charge, through a link to the SEC’s EDGAR database. Through that link, our filings are available as soon as reasonably practicable after we file or furnish the documents with the SEC. These filings are also available on the SEC’s website at www.sec.gov.
Because of the time differences between Macau and the United States, we also use our corporate website as a means of posting important information about MGM China.
References in this document to our website address do not incorporate by reference the information contained on the websites into this Annual Report on Form 10-K.
ITEM 1A.
| ITEM 1A. RISK FACTORS
|
You should be aware that the occurrence of any of the events described in this section and elsewhere in this report or in any other of our filings with the SEC could have a material adverse effect on our business, financial position, results of operations and cash flows. In evaluating us, you should consider carefully, among other things, the risks described below.
Summary of Risk Factors
The following is a summary of the principal risks that could adversely affect our business, operations and financial results.
Risks
RelatingRelated to Our Substantial
IndebtednessFinancial Commitments
•Our substantial indebtedness and significant financial commitments, including the fixed component of our rent payments and guarantees we provide on the indebtedness of Bellagio BREIT Venture and MGP BREIT Venture could adversely affect our operations and financial results and impact our ability to satisfy our obligations.
•Current and future economic, capital and credit market conditions could adversely affect our ability to service our substantial indebtedness and significant financial commitments or make planned expenditures.
•The agreements governing our senior credit facility and other senior indebtedness contain restrictions and limitations that could significantly affect our ability to operate our business, as well as significantly affect our liquidity, and therefore could adversely affect our results of operations.
•We are required to pay a significant portion of our cash flows as rent, which could adversely affect our ability to fund our operations and growth initiatives, service our indebtedness and limit our ability to react to competitive and economic changes.
Risks Related to Our Announced Transactions
•The VICI Transaction, The Cosmopolitan transaction, and The Mirage transaction each remain subject to the satisfaction of certain closing conditions, including the receipt of certain regulatory approvals, and any anticipated benefits from such transactions may take longer to realize than expected or may not be realized at all.
•The potential litigation instituted against us, our transaction counterparties, or our respective directors challenging the VICI Transaction may prevent such transaction from becoming effective within the expected timeframe or at all.
Risks Related to Our Business, Industry, and Market Conditions
•The global COVID-19 pandemic has continued to materially impact our business, financial results and liquidity, and such impact could worsen and last for an unknown period of time.
•We face significant competition with respect to destination travel locations generally and with respect to our peers in the industries in which we compete, including increased competition through online sports betting and iGaming, and failure to compete effectively could materially adversely affect our business, financial condition, results of operations and cash flows.
•Our business is affected by economic and market conditions in the jurisdictions in which we operate and in the locations in which our customers reside.
•We may not realize all of the anticipated benefits of our cost savings initiatives, including those associated with our MGM 2020 Plan.
•Our ability to pay ongoing regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our holding company structure, existing and future debt agreements entered into by us or our subsidiaries and state law requirements.
•All of our domestic gaming facilities are leased and could experience risks associated with leased property, including risks relating to lease termination, lease extensions, charges and our relationship with the lessor, which could have a material adverse effect on our business, financial position or results of operations.
•Paul Salem, our Chairman, Daniel J. Taylor, one of our directors, and Corey Sanders, and John M. McManus, members of our senior management, may have actual or potential conflicts of interest because of their positions at MGP.
•Despite our ability to exercise control over the affairs of MGP as a result of our ownership of the single outstanding Class B share of MGP, MGP has adopted a policy under which certain transactions with us, including transactions involving consideration in excess of $25 million, must be approved in accordance with certain specified procedures, which could affect our ability to execute our operational and strategic objectives.
•Because a significant number of our major gaming resorts are concentrated on the Las Vegas Strip, we are subject to greater risks than a gaming company that is more geographically diversified.
•We extend credit to a large portion of our customers and we may not be able to collect gaming receivables.
•We may incur impairments to goodwill, indefinite-lived intangible assets, or long-lived assets which could negatively affect our future profits.
•Leisure and business travel, especially travel by air, are particularly susceptible to global geopolitical events, such as terrorist attacks, other acts of violence or acts of war or hostility or the outbreak of infectious diseases.
•Co-investing in properties or businesses, including our investment in BetMGM, decreases our ability to manage risk.
•Any of our future construction, development or expansion projects will be subject to significant development and construction risks, which could have a material adverse impact on related project timetables, costs and our ability to complete the projects.
•Our insurance coverage may not be adequate to cover all possible losses that our properties could suffer. In addition, our insurance costs may increase and we may not be able to obtain similar insurance coverage in the future.
•Any failure to protect our trademarks could have a negative impact on the value of our brand names and adversely affect our business.
•A significant portion of our labor force is covered by collective bargaining agreements.
•Our business is particularly sensitive to energy prices and a rise in energy prices could harm our operating results.
•We may seek to expand through investments in other businesses and properties or through alliances or acquisitions, and we may also seek to divest some of our properties and other assets, any of which may be unsuccessful.
•The failure to maintain the integrity of our computer systems and customer information could result in damage to our reputation and/or subject us to fines, payment of damages, lawsuits and restrictions on our use of data.
•We are subject to risks related to corporate social responsibility and reputation.
•We are subject to risks and costs related to climate change.
Risks Related to Legal and Regulatory Matters and Changes in Public Policy
•Our businesses are subject to extensive regulation and the cost of compliance or failure to comply with such regulations may adversely affect our business and results of operations.
•Any violation of the Foreign Corrupt Practices Act or any other similar anti-corruption laws could have a negative impact on us.
•If the jurisdictions in which we operate increase gaming taxes and fees, as well as other taxes and fees, our results could be adversely affected.
•The future recognition of our foreign tax credit deferred tax asset is uncertain, and the amount of valuation allowance we may apply against such deferred tax asset may change materially in future periods.
•We face risks related to pending claims that have been, or future claims that may be, brought against us.
Risks Related to Our Macau Operations
•We have agreed not to have any interest or involvement in gaming businesses in China, Macau, Hong Kong and Taiwan, other than through MGM China.
•The Macau government can terminate MGM Grand Paradise’s subconcession under certain circumstances without compensating MGM Grand Paradise, exercise its redemption right with respect to the subconcession, or refuse to grant MGM Grand Paradise an extension of the subconcession in 2022, or MGM Grand Paradise may be unsuccessful in obtaining a gaming concession when a new public tender is held by the Macau government, any of
which would have a material adverse effect on our business, financial condition, results of operations and cash flows.
•We are subject to risks associated with doing business outside of the United States.
•Conflicts of interest may arise because certain of our directors and officers are also directors of MGM China, the holding company for MGM Grand Paradise which owns and operates MGM Macau and MGM Cotai.
For a more complete discussion of the material risks facing our business, please see below.
Risks Related to Our Substantial Financial Commitments
Our substantial indebtedness and significant financial commitments, including the fixed component of our rent payments and guarantees we provide of the indebtedness of Bellagio BREIT Venture and MGP BREIT Venture could adversely affect our operations and financial results and impact our ability to satisfy our obligations. As of December 31, 2018,2021, we had approximately $15.3$12.9 billion of principal amount of indebtedness outstanding on a consolidated basis, including $750 million of borrowings outstanding and $1.5$4.3 billion of available borrowing capacity under our senior secured credit facility, and $2.4 billion and $2.8 billionoutstanding indebtedness of debt outstanding under the MGM China and the Operating Partnership credit facilities, respectively. In addition, as of December 31, 2018, the Operating Partnership had $1.9and $3.1 billion of senior notes outstanding.outstanding indebtedness of MGM China. Any increase in the interest rates applicable to our existing or future borrowings would increase the cost of our indebtedness and reduce the cash flow available to fund our other liquidity needs. We do not guarantee MGM China’s or the Operating Partnership’s obligations under their respective debt agreements and, to the extent MGM China or the Operating Partnership were to cease to produce cash flow sufficient to service their indebtedness, our ability to make additional investments into such entities is limited by the covenants in our existing senior secured credit facility.
In addition, our substantial indebtedness and significant financial commitments could have important negative consequences on us, including:
•increasing our exposure to general adverse economic and industry conditions;
•limiting our flexibility to plan for, or react to, changes in our business and industry;
•limiting our ability to borrow additional funds for working capital requirements, capital expenditures, debt service requirements, execution of our business strategy (including returning value to our shareholders) or other general operating requirements;
•making it more difficult for us to make payments on our indebtedness; or
•placing us at a competitive disadvantage compared to less-leveraged competitors.
We currently also provide shortfall guarantees of the $3.01 billion and $3.0 billion principal amount of indebtedness (and any interest accrued and unpaid thereon) of Bellagio BREIT Venture and MGP BREIT Venture, respectively. The terms of each guarantee provide that, after the lenders have exhausted certain remedies to collect on the obligations under the underlying indebtedness, we would then be responsible for any shortfall between the value of the collateral and the debt obligation, which amount may be material, and we may not have sufficient cash on hand to fund any such obligation to the extent it is triggered in the future. If we do not have sufficient cash on hand, we may need to raise capital, including incurring additional indebtedness, in order to satisfy our obligation. There can be no assurance that any financing will be available to us, or, if available, will be on terms that are satisfactory to us.
Moreover, our businesses are capital intensive. For our owned, leased and managed resorts to remain attractive and competitive, we must periodically invest significant capital to keep the properties well-maintained, modernized and
refurbished (and, under the master lease we are requiredrefurbished. The leases for our operating properties have fixed rental payments (with annual escalators) and also require us to
spend an aggregate amountapply a percentage of
at least 1% of actual adjusted net revenues
fromgenerated at the
leased properties
subject to
the master lease on capital expenditures at those
properties).properties. Such investments require an ongoing supply of cash and, to the extent that we cannot fund expenditures from cash generated by operations, funds must be borrowed or otherwise obtained. Similarly, development projects, including any potential future development of an integrated resort in Japan,
strategic initiatives, including positioning BetMGM as a leader in online sports betting and iGaming, and acquisitions could require significant capital commitments, the incurrence of additional debt, guarantees of third-party debt or the incurrence of contingent liabilities, any or all of which could have an adverse effect on our business, financial condition,
and results of
operations.operations and cash flows.
Current and future economic, capital and credit market conditions could adversely affect our ability to service or refinance our substantial indebtedness and tosignificant financial commitments or make planned expenditures. Our ability to make payments on our substantial indebtedness and to refinance,other significant financial commitments, including the rent payments under our indebtednessleases, and to fund planned or committed capital expenditures and other investments depends on our ability to generate cash flow, in the future, receive distributions from our unconsolidated affiliates orand subsidiaries including CityCenter,(including MGM China and the Operating Partnership,Partnership), and borrow under our senior secured credit facility or incur new indebtedness. If regionalIn 2020 and national economic conditions deteriorate we could experience decreased2021, the COVID-19 pandemic resulted in significant deterioration to the global economy, and substantial declines in our revenues from operations and expected distributions from our operations attributableunconsolidated affiliates and subsidiaries. We expect that the recent
emergence and global spread of COVID-19 variants may continue to decreases inimpact consumer spending levels in 2022 and couldpotentially thereafter, and if we fail to generate cash sufficient cash to fund our liquidity needs or fail to satisfy the financial and other restrictive covenants in our debt instruments. We cannot assure you that our business will generate sufficient cash flow from operations or continue to receive distributions from our unconsolidated affiliates or subsidiaries, including CityCenter, MGM China and the Operating Partnership. Welease instruments, we cannot assure you that future borrowings will be available to us under our senior secured credit facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We cannot assure youneeds or that we will be able to access the capital markets in the future to borrow additional indebtednessdebt on terms that are favorable to us.us, or at all.
We
In addition, we have a significant amount of indebtedness maturing in
2020,2022, and thereafter. Our ability to
fund or timely refinance and replace our indebtedness
in the future will depend upon the economic and credit market conditions discussed above. If we are unable to
fund or refinance our indebtedness on a timely basis, we might be forced to seek alternate forms of financing, dispose of certain assets or minimize capital expenditures and other investments. There is no assurance that any of these alternatives would be available to us, if at all, on satisfactory terms, on terms that would not be disadvantageous to us, or on terms that would not require us to breach the terms and conditions of our existing or future debt
agreements.
agreements or leases.
| •
| The agreements governing our senior secured credit facility and other senior indebtedness contain restrictions and limitations that could significantly affect our ability to operate our business, as well as significantly affect our liquidity, and therefore could adversely affect our results of operations. Covenants governing our senior secured credit facility and certain of our debt securities restrict, among other things, our ability to:
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The agreements governing our senior credit facility and other senior indebtedness contain restrictions and limitations that could significantly affect our ability to operate our business, as well as significantly affect our liquidity, and therefore could adversely affect our results of operations. Covenants governing our senior secured credit facility and certain of our debt securities restrict, among other things, our ability to:
•pay dividends or distributions, repurchase equity, prepay certain debt or make certain investments;
•sell assets or consolidate with another company or sell all or substantially all of our assets;
•enter into transactions with affiliates;
•allow certain subsidiaries to transfer assets or enter into certain agreements; and
•enter into sale and lease-back transactions.
Our ability to comply with these provisions may be affected by events beyond our control. The breach of any such covenants or obligations not otherwise waived or cured could result in a default under the applicable debt obligations and could trigger acceleration of those obligations, which in turn could trigger cross-defaults under other agreements governing our long-term indebtedness.
In addition, our senior secured credit facility requires us to satisfy certain financial covenants, including a maximum total net leverage ratio, a maximum first lien net leverage ratio and a minimum interest coverage ratio. Any default under our senior
secured credit facility or the indentures governing our other debt could adversely affect our growth, our financial condition, our results of operations and our ability to make payments on our
debt.debt and other financial commitments.
In addition,
MGM Grand Paradise andeach of MGM China
are co-borrowers under an amended and restated credit facility and the Operating Partnership
has issued debt securities and is a borrower under
its senior secured credit
facility,facilities, all of which contain covenants that restrict the respective borrower’s ability to engage in certain
transactions. In particular, these credit agreementstransactions, require
MGM China and the Operating Partnershipthem to satisfy certain financial covenants and impose certain operating and financial restrictions on them and their respective
subsidiaries (including, with respect to MGM China, MGM Grand Paradise).subsidiaries. These restrictions include, among other things, limitations on their ability to pay dividends or distributions to us, incur additional debt, make investments or engage in other businesses, merge or consolidate with other companies, or transfer or sell assets.
We are required to pay a significant portion of our cash flows as fixed and percentage rent, under the master lease, which could adversely affect our ability to fund our operations and growth initiatives, service our indebtedness and limit our ability to react to competitive and economic changes. For the third lease year which commenced on April 1, 2018, As of December 31, 2021 we wereare required to make annual rent payments of $770 million$1.6 billion, in the aggregate, under the master lease. The mastertriple-net lease agreements, which leases are also provides for fixedsubject to annual escalators as described elsewhere in this Annual Report on Form 10-K. The leases also require us to spend a certain amount on capital expenditures at the leased properties. In addition, the leases governing the Bellagio, MGM Grand Las Vegas, Mandalay Bay, Aria (including Vdara) real estate assets require us to comply with certain financial covenants which, if not met, will require us to deposit cash collateral or issue letters of 2% oncredit for the basebenefit of the applicable landlord equal to 1 year of rent inunder the second through sixth yearsMGM Grand Las Vegas and Mandalay Bay lease and the possibility for additional 2% increases thereafter subject toAria lease and 2 years of rent under the tenant meeting an adjusted net revenue to rent ratio, as well as potential increases in percentage rent in year six and every five years thereafter based on a percentage of average actual annual net revenue during the preceding five year period.Bellagio lease. As a result of the foregoing rent and capital expenditure obligations, our ability to fund our own operations, raise capital, make acquisitions, make investments, service our debt and otherwise respond to competitive and economic changes may be adversely affected. For example, our obligations under the master leaseleases may:
•make it more difficult for us to satisfy our obligations with respect to our indebtedness and to obtain additional indebtedness;
•increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;
•require us to dedicate a substantial portion of our cash flow from operations to making rent payments, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, development projects, pay dividends, repurchase shares and other general corporate purposes;
•limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
•restrict our ability to make acquisitions, divestitures and engage in other significant transactions; and
•cause us to lose our rights with respect to all of the propertiesapplicable leased under the master leaseproperties if we fail to pay rent or other amounts or otherwise default on the master lease, given that all of the properties we lease from MGP under the master lease are effectively cross-collateralized as a result of the master lease being a single unitary lease.
leases.
Any of the above factors could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Risks Related to Our Announced Transactions
The VICI Transaction, The Cosmopolitan transaction and The Mirage transaction each remain subject to the satisfaction of certain closing conditions, including the receipt of certain regulatory approvals, and any anticipated benefits from such transactions may take longer to realize than expected or may not be realized at all. Each of the VICI Transaction, The Cosmopolitan transaction and The Mirage transaction is subject to certain closing conditions, which may not be satisfied within the anticipated timeframe or at all. For example, completion of the transactions remains subject to the receipt of certain regulatory approvals. There can be no assurance that any required regulatory approvals will be obtained, and the regulatory authorities from which approvals are required may impose conditions on the consummation of the transaction or require changes to the terms of the transaction or agreements to be entered into in connection with the transaction. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying or impeding the completion of the transactions, which might reduce the anticipated benefits to us of the transaction or have an adverse effect on our business, financial condition and results of operations. The completion of the VICI Transaction is also subject to the satisfaction of additional closing conditions, including, among others, (i) receipt of approval of VICI’s shareholders (which was obtained on October 29, 2021), (ii) the absence of any restraining order, injunction or other judgment, order or decree from any applicable governmental authority prohibiting the consummation of the transaction, (iii) the effectiveness of the registration statement for VICI’s shares to be issued in the VICI Transaction and the authorization for listing of those shares on the New York Stock Exchange, (iv) the absence of a material adverse effect on the parties to the master transaction agreement, (v) the accuracy of each party’s representations and warranties in the master transaction agreement, subject to customary materiality standards, and (vi) compliance of each party with its respective covenants under the master transaction agreement. No assurance can be given that these or any other required conditions to closing will be satisfied. If the conditions precedent to the VICI Transaction are not satisfied, the VICI Transaction will not be completed unless such conditions are validly waived. Such conditions may jeopardize or delay the completion of the transaction or may reduce the anticipated benefits of the transaction.
If any of the transactions are not completed, or are not completed on a timely basis, our business may be adversely affected and, without realizing any of the benefits of having completed such transactions, we may be subject to additional risks, costs and expenses, including, but not limited to, the following:
•we will be required to pay our costs relating to such transactions, such as legal, accounting, financial advisory and printing fees, whether or not the transactions are completed;
•the diversion of time and resources committed by our management to matters relating to the transactions could otherwise have been devoted to pursuing other beneficial opportunities;
•we may be subject to negative publicity or be negatively perceived by the investment or business communities as a result of the failure to consummate any or all of the transactions;
•the price of our shares may decline to the extent that the current market price of our shares reflects a higher price than it otherwise would have based on the assumption that any or all of the transactions will be consummated;
•we would have incurred significant expenses relating to such transactions that we may be unable to recover, including termination fees if applicable; and
•we may be subject to litigation related to the failure to consummate the transactions or to perform our obligations under the respective transaction agreements.
In addition, we entered into the transactions as part of our current growth strategy. Even if the transactions are completed as currently anticipated, there can be no assurances that any anticipated benefits from the transactions will be realized as expected or that such benefits will be achieved within the anticipated time frame or at all. Failure to achieve the anticipated benefits of the transactions could adversely affect our results of operations or cash flows, cause dilution to our earnings per share, decrease or delay any accretive effect of such transactions and negatively impact the price of our common stock.
The potential litigation instituted against us, our transaction counterparties, or our respective directors challenging the proposed VICI Transaction may prevent such transaction from becoming effective within the expected timeframe or at all. Potential litigation related to the VICI Transaction may result in injunctive or other relief prohibiting, delaying or otherwise adversely affecting the parties’ ability to complete the VICI Transaction. One of the conditions to the
VICI Transaction under the master transaction agreement is that no temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any governmental authority of competent jurisdiction prohibiting consummation of the VICI Transaction or any other transactions contemplated by the master transaction agreement shall be in effect. Accordingly, any such injunctive or other relief may prevent the VICI Transaction from becoming effective within the expected timeframe or at all. In addition, defending against such claims may be expensive and divert management’s attention and resources, which could adversely affect our business and the businesses of the counterparties to such transactions.
Risks Related to Our Business, Industry, and Market Conditions
The global COVID-19 pandemic has continued to materially impact our Businessbusiness, financial results and liquidity, and such impact could worsen and last for an unknown period of time.As of the date of this annual report, there continues to be uncertainty around the COVID-19 pandemic, its duration, and its impact on U.S. and global economic activity and consumer behavior. The omicron variant of COVID-19, which appears to be the most transmissible and contagious variant to date, has caused an increase in COVID-19 cases globally. The impact of the omicron variant, or of any other variants that may emerge, cannot be predicted at this time, and could depend on numerous factors, including the availability of vaccines in different parts of the world, vaccination rates among the population, the effectiveness of COVID-19 vaccines against the variants, and the response by governmental bodies to reinstate mandated business closures, orders to “shelter in place,” occupancy limitations, and travel and transportation restrictions. While restrictions have eased throughout 2021, new restrictions to combat the spread of the variants, such as restrictions and bans on travel or transportation, stay-at-home directives, limitations on the size of gatherings, closures of work facilities, schools, public buildings and businesses, cancellation of events, including sporting events, concerts, conferences and meetings, and quarantines and lock-downs may be put into place in the future. In addition, the spread of new variants, including omicron, has had a material impact on domestic and international travel, which has resulted in reduced demand for hotel rooms, convention space and other casino resorts amenities. In Macau, while all of our properties were open during 2021, several travel and entry restrictions were in place in Macau, Hong Kong and mainland China (including the temporary suspension of ferry services between Hong Kong and Macau, the nucleic acid test result certificate and mandatory quarantine requirements for returning residents, for visitors from Hong Kong, Taiwan, and certain regions in mainland China, and bans on entry on other visitors) which significantly impacted visitation to MGM Macau and MGM Cotai. In addition, from time to time during 2021 local COVID-19 cases were identified in Macau. Upon such occurrences, a state of immediate prevention was declared and mass mandatory nucleic acid testing was imposed in Macau, the validity period of negative test results for re-entry into mainland China was shortened and quarantine requirements were imposed, certain events were cancelled or suspended, and in some instances certain entertainment and leisure facilities were closed throughout Macau. Although gaming and hotel operations have remained open during these states of immediate prevention, such measures have had a negative effect on MGM Grand Paradise's operations and it is uncertain whether further closures, including the closure of MGM Grand Paradise's properties, or travel restrictions to Macau will be implemented if additional local COVID-19 cases are identified.
The extent to which the COVID-19 pandemic and new variants continue to impact our business, results of operations, and financial results, including the duration and magnitude of such effects, will depend on numerous evolving factors that we may not be able to accurately predict or assess, including, but not limited to: the duration and scope of the pandemic (and whether there is a, or multiple, further resurgences in the future); the efficacy of the vaccine against existing and new variants of the COVID-19 virus; the adoption rate of vaccines and the ability to effectively and efficiently distribute vaccines domestically and internationally to allow travel to resume to pre-pandemic levels; the negative impact the pandemic has on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence even after travel advisories and restrictions are lifted; our and our business partners' ability to successfully navigate the impacts of the pandemic; actions governments, businesses and individuals take in response to the pandemic (including the rise of variant strains of the virus), such as limiting or banning travel and limiting or banning leisure, casino and entertainment (including sporting events) activities, including the complete or partial closures of our properties; and how quickly economies, travel activity, and demand for gaming, entertainment and leisure activities recovers after the pandemic subsides. We may also face unforeseen liability or be subject to additional obligations as a result of the COVID-19 pandemic, including as a result of claims alleging exposure to COVID-19 in connection with our operations or facilities or to the extent we are subject to a governmental enforcement action as a result of health and safety compliance. The impact of the COVID-19 pandemic may also have the effect of exacerbating many of the other risks described in this section or in any other filings with the SEC. As a result of the foregoing, we cannot predict the ultimate scope, duration and impact the COVID-19 pandemic will have on our results of operations, but it may continue to have a material impact on our business, financial condition, liquidity, results of operations (including revenues and profitability) and stock price.
We face significant competition with respect to destination travel locations generally and with respect to our peers in the industries in which we compete, including increased competition through online sports betting and iGaming, and failure to compete effectively could materially adversely affect our business, financial condition, results of operations and cash flowflows. The hotel, resort, entertainment, and casinogaming industries are highly competitive. We do not believe that our competition is limited to a particular geographic area, and hotel, resort, entertainment, and gaming operations in other states or countries, as well as the increased availability of online sports betting and iGaming, could attract our customers. To the extent that new casinos enter our markets or hotel room capacity is expanded by others in major destination locations, competition will increase. Major competitors, including potential new entrants, may also expand their hotel room capacity, expand their range of amenities, improve their level of service, or construct new resorts in Las Vegas, Macau or in the domestic regional markets in which we operate, all of which could attract our customers. Also, the growth of retail gaming in areas outside Las Vegas including California, has increased the competition faced by our operations in Las Vegas and elsewhere. For instance, local referendums were recently passed to allow retail gaming in Virginia and Nebraska, with active lobbying occurring in additional states. While we believe our principal competitors are major gaming and hospitality resorts with well-established and recognized brands, we also compete against smaller hotel offerings and peer-to-peer inventory sources, which allow travelers to book short-term rentals of homes and apartments from owners. We expect that we will continue to face increased competition from new channels of distribution, innovations in consumer-facing technology platforms and other transformations in the travel industry that could impact our ability to attract and retain customers and related business.
We have also seen significant expansion across the United States in legalized forms of iGaming and online sports betting and expect additional jurisdictions will likely legalize iGaming and online sports betting in the future. We participate in the domestic iGaming and online sports betting market through our venture, BetMGM, which faces significant competition from other industry participants as well as the broader gaming and entertainment industries. If BetMGM is unable to sustain or grow interest in its offerings it may not be able to gain the scale necessary to successfully compete in the growing market and, as a result, we may not receive the anticipated benefits from our investment. In addition, the expansion of iGaming, online sports betting, and other types of gaming may further compete with our land-based operations by reducing customer visitation and spend at our properties.
In addition, competition could increase if changes in gaming restrictions in the United States and elsewhere
result inare enacted, including the addition of new gaming establishments located closer to our customers than our casinos. For example, while our Macau operations compete to some extent with casinos located elsewhere in or near Asia, certain
countriesareas in the region have legalized casino gaming (including Japan) and others (such as Taiwan and Thailand) may legalize casino gaming (or
online gaming)iGaming) in the
future (including, for example, a recent proposal by China to allow gambling on Hainan Island).future. Furthermore, currently MGM Grand Paradise holds one of only six gaming concessions authorized by the Macau government to operate casinos in Macau. If the Macau government were to allow additional competitors to operate in Macau through the grant of additional concessions or if current concessionaires and subconcessionaires open additional facilities, we would face increased competition.
Similarly, as a result of Macau’s Gaming Inspection and Co-ordination Bureau increasing scrutiny and restrictions imposed on gaming promoters, we along with certain other casino operators in Macau, suspended our primary gaming promoters, which has led to substantial declines in revenues from gaming promoters. As a result, we expect competition for the mass market segment amongst Macau operators will grow and if we are unable to maintain and further develop our mass market business and replace revenue previously obtained through use of gaming promoters, our business, financial condition, results of operations and cash flows could be adversely affected.
Most jurisdictions where casino gaming is currently permitted place numerical and/or geographical limitations on the issuance of new gaming licenses. Although a number of jurisdictions in the United States and foreign countries are considering legalizing or expanding casino gaming, in some cases new gaming operations may be restricted to specific locations and we expect that there will be intense competition for any attractive new opportunities (which may include acquisitions of existing properties) that do arise.
Furthermore, certain jurisdictions, including Nevada and New Jersey, have also legalized forms of online gaming and other jurisdictions, including Illinois, have legalized video gaming terminals. Additionally, in May 2018, the United States Supreme Court overturned a federal ban on sports betting that had prohibited single-game gambling in most states, raising the potential for increased competition in sports betting should additional states pass legislation to legalize it. The expansion of online gaming, sports betting, and other types of gaming in these and other jurisdictions may further compete with our operations by reducing customer visitation and spend in our casino resorts.
In addition to competition with other hotels, resorts and casinos, we compete with destination travel locations outside of the markets in which we operate. Our failure to compete successfully in our various markets and to continue to attract customers could adversely affect our business, financial condition, results of operations and cash
flow.flows.
Our businesses are subject to extensive regulationbusiness is affected by economic and market conditions in the cost of compliance or failure to comply with such regulations may adversely affect our business and results of operations. Our ownership and operation of gaming facilities is subject to extensive regulation by the countries, states and provincesjurisdictions in which we operate. These laws, regulationsoperate and ordinances vary from jurisdictionin the locations in which our customers reside. Our business is particularly sensitive to jurisdiction, but generally concernreductions in discretionary consumer spending and corporate spending on conventions, trade shows and business development. Adverse macroeconomic conditions, including inflation, economic contraction, economic uncertainty or the responsibility, financial stabilityperception by our customers of weak or weakening economic conditions may cause a decline in demand for hotels, casino resorts, trade shows and characterconventions, and for the type of the owners and managers of gaming operations as well as persons financially interested or involved in gaming operations. As such, our gaming regulators can require us to disassociate ourselves from suppliers or business partners found unsuitable by the regulators or, alternatively, cease operations in that jurisdiction.luxury amenities we offer. In addition, unsuitable activity on ourchanges in discretionary consumer spending or consumer preferences could be driven by factors such as the increased cost of travel, an unstable job market, perceived or actual disposable consumer income and wealth, outbreaks of contagious diseases or fears of war and acts of terrorism or other
acts of violence. Consumer preferences also evolve over time due to a variety of factors, including demographic changes, which, for instance, have resulted in recent growth in consumer demand for non-gaming offerings. Our success depends in part or on the part of our domestic or foreign unconsolidated affiliates or subsidiaries in any jurisdiction could have a negative effect on our ability to continue operating in other jurisdictions. The regulatory environment in any particular jurisdiction may change inanticipate the futurepreferences of consumers and timely react to these trends, and any such change could have a material adverse effect on our results of operations.For example, recently the U.S. Department of Justice reversed a 2011 opinion that had concluded that the Wire Act of 1961 was limited to gaming relating to sports; the Department of Justice concluded instead that certain of the Wire Act’s provisions apply also to other forms of wagering activity. This may impact our ability to engage in online gaming in the future. In addition, we are subject to various gaming taxes, which are subject to possible increase at any time by various federal, state, local and foreign legislatures and officials. Increases in gaming taxation could also adversely affect our results. For a summary of gaming and other regulations that affect our business, see “Regulation and Licensing” and Exhibit 99.2 to this Annual Report on Form 10-K.
Further, our directors, officers, key employees and investors in our properties must meet approval standards of certain state and foreign regulatory authorities. If state regulatory authorities were to find such a person or investor unsuitable, we would be required to sever our relationship with that person or the investor may be required to dispose of his, her or its interest in the property. State regulatory agencies may conduct investigations into the conduct or associations of our directors, officers, key employees or investors to ensure compliance with applicable standards. Certain public and private issuances of securities and other transactions also require the approval of certain regulatory authorities.
In Macau, current laws and regulations concerning gaming and gaming concessions are, for the most part, fairly recent and there is little precedent on the interpretation of these laws and regulations. These laws and regulations are complex, and a court or administrative or regulatory body may in the future render an interpretation of these laws and regulations, or issue new or modified regulations, that differ from MGM China’s interpretation, which could have a material adverse effect on its business, financial condition and results of operations. In addition, MGM China’s activities in Macau are subject to administrative review and approval by various government agencies. We cannot assure you that MGM China will be able to obtain all necessary approvals, and any such failure to do so may materially affect its long-term business strategy and operations. Macau laws permit redress to the courts with respect to administrative actions; however, to date such redress is largely untested in relation to gaming issues.
In addition to gaming regulations, we are also subject to various federal, state, local and foreign laws and regulations affecting businesses in general. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, smoking, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising. For instance, we are subject to certain federal, state and local environmental laws, regulations and ordinances, including the Clean Air Act, the Clean Water Act, the Resource Conservation Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act and the Oil Pollution Act of 1990. Under various federal, state and local environmental laws and regulations, an owner or operator of real property may be held liable for the costs of removal or remediation of certain hazardous or toxic substances or wastes located on its property, regardless of whether or not the present owner or operator knows of, or is responsible for, the presence of such substances or wastes. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. For example, Illinois has enacted a ban on smoking in nearly all public places, including bars, restaurants, work places, schools and casinos. In addition, effective January 1, 2019, smoking in casinos in Macau, including MGM Macau and MGM Cotai, will only be permitted inside specially ventilated smoking rooms, rather than outside smoking areas or VIP areas. The likelihood or outcome of similar legislation in other jurisdictions and referendums in the future cannot be predicted, though any smoking ban would be expected to negatively impact our financial performance.
Weresults of operations. In particular, Aria, Bellagio and MGM Grand Las Vegas may be affected by economic conditions in the Far East, and all of our Nevada resorts are affected by economic conditions in the United States, and California in particular. A recession, economic slowdown or any other significant economic condition, including inflationary pressures, affecting consumers, corporations, or the supply chain, generally is likely to cause a reduction in visitation to our resorts, which would adversely affect our operating results. In addition, due to the COVID-19 pandemic, our business has also deal with significant amounts of cash in our operationsbeen impacted by labor shortages and are subject to recordkeeping and reporting obligations as required by various anti-money laundering laws and regulations. For instance,global supply chain disruptions. If we are subjectunable to regulation under the Currencyhire and Foreign Transactions Reporting Act of 1970, commonly known as the “Bank Secrecy Act,” which, among other things, requires usretain sufficient employees to report to the Internal Revenue Service (“IRS”) any currency transactions in excess of $10,000 that occur within a 24-hour gaming day, including identification of the individual(s) involved in the currency transaction. We are also required to report certain suspicious activity where we know, suspect or have reason to suspect transactions, among other things, involve funds from illegal activity or are intended to evade federal regulations or avoid reporting requirements or have no business or lawful purpose. In addition, under the Bank Secrecy Act we are subject to various other rules and regulations involving reporting, recordkeeping and retention. Our compliance with the Bank Secrecy Act is subject to periodic examinations by the IRS. Any such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Any violations of the anti-money laundering laws, including the Bank Secrecy Act, or regulations by any ofoperate our properties could have an adverse effect onor procure necessary supplies, our financial condition,business, results of operations or cash flows.
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| Our business is affected by economic and market conditions in the jurisdictions in which we operate and in the locations in which our customers reside. Our business is particularly sensitive to reductions in discretionary consumer spending and corporate spending on conventions, trade shows and business development. Economic contraction, economic uncertainty or the perception by our customers of weak or weakening economic conditions may cause a decline in demand for hotels, casino resorts, trade shows and conventions, and for the type of luxury amenities we offer. In addition, changes in discretionary consumer spending or consumer preferences could be driven by factors such as the increased cost of travel, an unstable job market, perceived or actual disposable consumer income and wealth, outbreaks of contagious diseases or fears of war and acts of terrorism or other acts of violence. Consumer preferences also evolve over time due to a variety of factors, including demographic changes, which, for instance, have resulted in recent growth in consumer demand for non-gaming offerings. Our success depends in part on our ability to anticipate the preferences of consumers and timely react to
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and reputation could be negatively impacted.
| | these trends, and any failure to do so may negatively impact our results of operations. Aria, Bellagio and MGM Grand Las Vegas in particular may be affected by economic conditions in the Far East, and all of our Nevada resorts are affected by economic conditions in the United States, and California in particular. A recession, economic slowdown or any other significant economic condition affecting consumers or corporations generally is likely to cause a reduction in visitation to our resorts, which would adversely affect our operating results. For example, the prior recession and downturn in consumer and corporate spending had a negative impact on our results of operations.
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In addition, since we expect a significant number of customers to come to MGM Macau and MGM Cotai (and, to a lesser extent, our domestic properties) from mainland China, general economic, regulatory, geopolitical and market conditions in China could impact our financial prospects. Any slowdown in economic growth or changes to China’s current restrictions on travel and currency conversion or movements, including continued market impacts from the COVID-19 outbreak and market impacts resulting from China’s recent anti-corruption campaign and related tightening of liquidity provided by non-bank lending entities and cross-border currency monitoring (including increased restrictions on Union Pay withdrawals and other ATM limits on the withdrawal of patacas imposed byand facial recognition technology on ATM machines in Macau to strictly enforce the government)"know your customer" regulations for mainland Chinese bank cardholders), could disrupt the number of visitors from mainland China and/or the amounts they are willing to spend in the casino. Most recently, in July 2017, the Chinese government, along with Macau authorities, implemented new facial recognition technology on ATM machines in Macau to strictly enforce the “know your customer” regulations for mainland Chinese bank cardholders and in November 2017 new rules were adopted to control the cross-border transportation of cash and bearer negotiable instruments.at our properties. It is unclear whether these and other measures will continue to be in effect, become more restrictive, or be readopted in the future. These developments have had, and any future policy developments that may be implemented may have, the effect of reducing the number of visitors to Macau from mainland China, which could adversely impact tourism and the gaming industry in Macau.
Furthermore, our operations in Macau may be impacted by competition for limited labor
resources. Our success in Macau will be impacted byresources and our ability to retain and hire employees. We compete with a large number of casino resorts for a limited number of employees and we anticipate that such competition will grow in light of
the opening of new developments in Macau. While we seek employees from
other countriesoutside of Macau to adequately staff our resorts, certain Macau government policies limit our ability to import labor in certain job classifications (for instance, the Macau government requires that we only hire Macau residents as dealers in our casinos) and any future government policies that freeze or cancel our ability to import labor could cause labor costs to
increase.increase (including limitations on our ability to import labor as a result of temporary travel restrictions adopted as part of the COVID-19 mitigation efforts). Finally, because additional casino projects have commenced operations and other projects are under construction,
the existing transportation infrastructure may need to be expanded to accommodate increased visitation to Macau. If transportation facilities to and from Macau are inadequate to meet the demands of an increased volume of gaming customers visiting Macau, the desirability of Macau as a gaming destination, as well as the results of operations at our
developmentdevelopments in
Cotai, Macau, could be negatively impacted.
We may not realize all of the anticipated benefits of our cost savings initiatives, including those associated with our MGM 2020 Plan. We have undertaken an initiativeAs part of our MGM 2020 Plan, we undertook several initiatives to reduce costs improve efficiencies and further position us for growth. While we believe these initiatives will result in approximately $200 million of annual Adjusted EBITDA benefitgrowth by the end of 2020. In addition, as a result of the COVID-19 pandemic, we implemented several additional cost savings initiatives in 2020 and anto improve our operating model. However, we cannot be sure that we will be able to successfully implement these cost savings initiatives in the time frames contemplated or at all, that we will ultimately be able to realize the expected benefits of these or any other cost savings initiatives, or that any new additional $100 million by the end of 2021, our efforts maycosts or increases in existing expenses will not offset any cost savings. If we fail to achieve expected results. Our MGM 2020 Plan is subject to numerous risksthe anticipated benefits of any current or future cost savings initiatives, our profitability and uncertainties that may change at any time, and, therefore, our actual Adjusted EBITDA benefit may differ materially from what we anticipate.
results of operations could be negatively impacted.
Our ability to pay ongoing regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our holding company structure, existing and future debt agreements entered into by us or our subsidiaries and state law requirements.We During the COVID-19 pandemic we significantly reduced our historic dividend rate. Although we intend to pay ongoing regular quarterly cash dividends on our common stock. However,stock; our board of directors may, in its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely. In addition, our ability to pay dividends is restricted by certain covenants in our credit agreement, and because we are a holding company with no material direct operations, we are dependent on receiving cash from our operating subsidiaries to generate the funds from operations necessary to pay dividends on our common stock. We expect ourOur subsidiaries will continueability to generate significantthe cash flow necessary to maintain quarterly dividend payments on our common stock; however, their ability to generate funds will bestock is subject to their operating results, cash requirements and financial condition,condition. In addition, our subsidiaries’ ability to make distributions to us is subject to any applicable provisions of state law that may limit the amount of funds available to us, and compliance with covenants and financial ratios related to existing or future agreements governing any indebtedness at such subsidiaries and any limitations in other agreements such subsidiaries may have with third parties. In addition, each of the companies in our
corporate chain must manage its assets, liabilities and working capital in order to meet all of their respective cash obligations. As a consequence of these various limitations and restrictions, future dividend payments may be further reduced or eliminated.eliminated in their entirety. Any change in the level of our dividends or the suspension of the payment thereof could adversely affect the market price of our common stock.
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| A significant numberAll of our domestic gaming facilities are leased and could experience risks associated with leased property, including risks relating to lease termination, lease extensions, charges and our relationship with the lessor, which could have a material adverse effect on our business, financial position or results of operations. We lease eleven of our destination resorts and The Park from a subsidiary of MGP pursuant to the master lease. The master lease has a term of ten
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| | years with up to four additional five-year extensions, subject to satisfaction of certain conditions. The master lease is commonly known as a triple-net lease. Accordingly, in addition to rent, we are required to pay the following, among other things: (1) all facility maintenance, (2) all insurance required in connection with the leased properties and the business conducted on the leased properties, (3) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor), (4) all capital expenditures, and (5) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties. We are responsible for paying these expenses notwithstanding the fact that many of the benefits received in exchange for such costs shall accrue in part to MGP as owner of the associated facilities. In addition, if some of our leased facilities should prove to be unprofitable or experience other issues that would warrant ceasing operations, or if we should otherwise decide to exit a particular property, we would remain obligated for lease payments and other obligations under the master lease even if we decided to cease operations at those locations unless we are able to transfer the rights with respect to a particular property in accordance with the requirements of the master lease. Our ability to transfer our obligations under the master lease to a third-party with respect to individual properties, should we decide to withdraw from a particular location, is limited to non-Las Vegas properties and no more than two Las Vegas gaming properties, and is subject to identifying a willing third-party who meets the requirements for a transferee set forth in the master lease. We may be unable to find an appropriate transferee willing to assume the obligations under the master lease with respect to any such property. In addition, we could incur special charges relating to the closing of such facilities including sublease termination costs, impairment charges and other special charges that would reduce our net income and could have a material adverse effect on our business, financial condition and results of operations. Furthermore, our obligation to pay rent as well as the other costs described above is absolute in virtually all circumstances, regardless of the performance of the properties and other circumstances that might abate rent in leases that now place these risks on the tenant, such as certain events of casualty and condemnation.
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Any financial, operational, regulatory or other potential challenges that may arise with respect to MGP, as our sole lessor for a significant portion of our properties, may adversely impair our operations. We lease a substantial number of the properties that we operate and manage, which represents a significant portion of our operations, from MGP under the master lease. If MGP has financial, operational, regulatory or other challenges, there can be no assurance that MGP will be able to comply with its obligations under the master lease or its other agreements with us. Failure on the part of MGP to fulfill its commitments could have a material adverse effect on our business, financial condition andposition or results of operations.
All of our domestic properties are subject to triple-net leases that, in addition to rent, require us to pay: (1) all facility maintenance, (2) all insurance required in connection with the leased properties and the business conducted on the leased properties, (3) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor), (4) all capital expenditures, and (5) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties. We are responsible for paying these expenses notwithstanding the fact that many of the benefits received in exchange for such costs shall accrue in part to the landlords as the owners of the associated facilities. Furthermore, our obligation to pay rent as well as the other costs described above is absolute in virtually all circumstances, regardless of the performance of the properties and other circumstances that might abate rent in leases that now place these risks on the tenant, such as certain events of casualty and condemnation. Finally, our leases limit our ability to cease operations at our properties, subject to certain limited exceptions.
James J. Murren,Paul Salem, our Chairman, Daniel J. Taylor, one of our directors, and William J. Hornbuckle,Corey Sanders, and John M. McManus, members of our senior management, may have actual or potential conflicts of interest because of their positions at MGP. James J. MurrenPaul Salem serves as our Chairman and as the Chairman of MGP. In addition, Daniel J. Taylor, one of our directors, is also a director of MGP, and William J. Hornbuckle,Corey Sanders and John M. McManus, members of our senior management, are also directors of MGP. While we have procedures in place to address such situations and the organizational documents with respect to MGP contain provisions that reduce or eliminate duties (including fiduciary duties) to any MGP shareholder to the fullest extent permitted by law, these overlapping positions could nonetheless create, or appear to create, potential conflicts of interest when our or MGP'sMGP’s management and directors pursue the same corporate opportunities, such as potential acquisition targets, or face decisions that could have different implications for us and MGP. Further, potential conflicts of interest could arise in connection with the resolution of any dispute between us and MGP (or its subsidiaries) regarding the terms of the agreements governing the separation and the relationship, between us and MGP, such as under the master lease. Potential conflicts of interest could also arise if we and MGP enter into any commercial or other adverse arrangements with each other in the future.
Despite our ability to exercise control over the affairs of MGP as a result of our ownership of the single outstanding Class B share of MGP, MGP has adopted a policy under which certain transactions with us, including transactions involving consideration in excess of $25 million, must be approved in accordance with certain specified procedures, which could affect our ability to execute our operational and strategic objectives.We own the single outstanding Class B share of MGP. The Class B Share is a non-economic interest in MGP 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, and which represents a majority of the voting power of MGP’s shares so long as the holder of the Class B share 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%. We, therefore, have the ability to exercise significant control over MGP’s affairs, including control over the outcome of all matters submitted to MGP’s shareholders for approval.
MGP’s operating agreement, however, provides that whenever a potential conflict of interest exists or arises between us or any of our affiliates (other than MGP and its subsidiaries), on the one hand, and MGP or any of its subsidiaries, on the other hand, any resolution or course of action by MGP’s board of directors in respect of such conflict of interest shall be conclusively deemed to be fair and reasonable to MGP if it is (i) approved by a majority of a conflicts committee which consists solely of “independent” directors (which MGP refers to as “Special Approval”) (such independence determined in accordance with the NYSE’s listing standards, the standards established by the Exchange Act to serve on an audit committee of a board of directors and certain additional independence requirements in our operating agreement), (ii) determined by MGP’s board of directors to be fair and reasonable to MGP or (iii) approved by the affirmative vote of the holders of at least a majority of the voting power of MGP’s outstanding voting shares (excluding voting shares owned by us and our affiliates). Furthermore, MGP’s operating agreement provides that any transaction with a value, individually or in
the aggregate, over $25 million between us or any of our affiliates (other than MGP and its subsidiaries), on the one hand, and MGP or any of its subsidiaries, on the other hand (any such transaction (other than the exercise of rights by us or any of our affiliates (other than MGP and its subsidiaries) under any of the material agreements entered into on the closing day of MGP’s formation transactions), a “Threshold Transaction”), shall be permitted only if (i) Special Approval is obtained or (ii) such transaction is approved by the affirmative vote of the holders of at least a majority of the voting power of MGP’s outstanding voting shares (excluding voting shares owned by us and our affiliates).
As a result, certain transactions, including any Threshold Transactions that we may want to pursue with MGP and that could have significant benefit to us may require Special Approval. There can be no assurance that the required approval will be
obtained with respect to these transactions either from a conflicts committee comprised of independent MGP directors or the affirmative vote of a majority of the shares not held by us and our affiliates. The failure to obtain such requisite consent could materially affect our ability and the cost to execute our operational and strategic objectives.
We have agreed notBecause a significant number of our major gaming resorts are concentrated on the Las Vegas Strip, we are subject to have any interest or involvement ingreater risks than a gaming businesses in China, Macau, Hong Kong and Taiwan, other than through MGM China. In connection with the initial public offering of MGM China, the holding company that indirectly owns and operates MGM Macau, we entered intois more geographically diversified. Given that a Deedsignificant number of Non-Compete Undertakings with MGM China and Ms. Ho, Pansy Catilina Chiu King (“Ms. Ho”) pursuant to which weour major resorts are restricted from having any interest or involvement in gaming businesses inconcentrated on the People’s Republic of China, Macau, Hong Kong and Taiwan, other than through MGM China. While gaming is currently prohibited in China, Hong Kong and Taiwan, if it is legalized in the futureLas Vegas Strip, our ability to compete in these locations couldbusiness may be limited until the earliest of (i) March 31, 2020, (ii) the date MGM China’s ordinary shares cease to be listed on The Stock Exchange of Hong Kong Limited or (iii) the date when our ownership of MGM China shares is less than 20% of the then-issued share capital of MGM China.
The Macau government can terminate MGM Grand Paradise’s subconcession under certain circumstances without compensating MGM Grand Paradise, exercise its redemption right with respectsignificantly affected by risks common to the subconcession, or refuseLas Vegas tourism industry. For example, the cost and availability of air services and the impact of any events that disrupt air travel to grant MGM Grand Paradise an extension of the subconcession in 2020, any of which would have a material adverse effect on our business, financial condition, results of operations and cash flows. The Macau government has the right to unilaterally terminate the subconcession in the event of fundamental non-compliance by MGM Grand Paradise with applicable Macau laws or MGM Grand Paradise’s basic obligations under the subconcession contract. MGM Grand Paradise has the opportunity to remedy any such non-compliance with its fundamental obligations under the subconcession contract within a period to be stipulated by the Macau government. Upon such termination, all of MGM Grand Paradise’s casino area premises and gaming-related equipment would be transferred automatically to the Macau government without compensation to MGM Grand Paradise, and we would cease to generate any revenues from these operations. We cannot assure you that MGM Grand Paradise will perform all of its obligations under the subconcession contract in a way that satisfies the requirements of the Macau government.
Furthermore, under the subconcession contract, MGM Grand Paradise is obligated to comply with any laws and regulations that the Macau government might promulgate in the future. We cannot assure you that MGM Grand Paradise will be able to comply with these laws and regulations or that these laws and regulations would notLas Vegas can adversely affect our abilitybusiness. We cannot control the number or frequency of flights to construct or operatefrom Las Vegas, but we rely on air traffic for a significant portion of our Macau businesses. If any disagreement arises between MGM Grand Paradise andvisitors. Reductions in flights by major airlines as a result of higher fuel prices or lower demand, as a result of limitations on travel imposed to address the Macau government regarding the interpretation of,COVID-19 pandemic or MGM Grand Paradise’s compliance with, a provision of the subconcession contract, MGM Grand Paradise will be relying on a consultation and negotiation process with the Macau government. During any consultation or negotiation, MGM Grand Paradise will be obligated to comply with the terms of the subconcession contract as interpreted by the Macau government. Currently, there is no precedent concerning how the Macau government will treat the termination of a concession or subconcession upon the occurrence of any of the circumstances mentioned above. The loss of the subconcession would require us to cease conducting gaming operations in Macau, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.
In addition, the subconcession contract expires on March 31, 2020. Unless the subconcession is extended, or legislation with regard to reversion of casino premises is amended, all of MGM Grand Paradise’s casino premises and gaming-related equipment will automatically be transferred to the Macau government on that date without compensation to us, and we will cease to generate any revenues from such gaming operations. Beginning on April 20, 2017, the Macau government may redeem the subconcession contract by providing us at least one year’s prior notice. In the event the Macau government exercises this redemption right, MGM Grand Paradise is entitled to fair compensation or indemnity. The amount of such compensation or indemnity will be determined based on the amount of gaming and non-gaming revenue generated by MGM Grand Paradise, excluding the convention and exhibition facilities, during the taxable year prior to the redemption, before deducting interest, depreciation and amortization, multiplied byotherwise, can impact the number of remaining years before expiration of the subconcession. We cannot assure you that MGM Grand Paradise will be ablevisitors to renew or extend the subconcession contract on terms favorable to MGM Grand Paradise or at all. We also cannot assure you that if the subconcessionour resorts. Additionally, there is redeemed, the compensation paid to MGM Grand Paradise will be adequate to compensate for the loss of future revenues.
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| MGM Grand Paradise is dependent upon gaming promoters for a significant portion of gaming revenues in Macau. Gaming promoters, who promote gaming and draw high-end customers to casinos, are responsible for a significant portion of MGM Grand Paradise’s gaming revenues in Macau. With the rise in gaming in Macau and the recent reduction in theone principal interstate highway between Las Vegas and Southern California, where a large number of licensed gaming promoters in Macau and in the number of VIP rooms operated by licensed gaming promoters, the competition for relationships with gaming promoters has increased. While MGM Grand Paradise is undertaking initiatives to strengthen relationships with gaming promoters, there can be no assurance that it will be able to maintain, or grow, relationships with gaming promoters. In addition, continued reductions in, and new regulations governing, the gaming promoter segment may result in the closure of additional VIP rooms in Macau, including VIP rooms at MGM Macau and MGM Cotai. If MGM Grand Paradise is unable to maintain or grow relationships with gaming promoters, or if gaming promoters are unable to develop or maintain relationships with our high-end customers (or if, as a result of recent market conditions in Macau, gaming promoters encounter difficulties attracting patrons to come to Macau or experience decreased liquidity limiting their ability to grant credit to patrons), MGM Grand Paradise’s ability to grow gaming revenues will be hampered. Furthermore, if existing VIP rooms at MGM Macau and MGM Cotai are closed there can be no assurance that MGM Grand Paradise will be able to locate acceptable gaming promoters to run such VIP rooms in the future in a timely manner, or at all.
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In addition, the quality of gaming promoters is important to MGM Grand Paradise’s and our reputation and ability to continue to operate in compliance with gaming licenses. While MGM Grand Paradise strives for excellence in associations with gaming promoters, we cannot assure you that the gaming promoters with whom MGM Grand Paradise is or becomes associated will meet the high standards insisted upon. If a gaming promoter falls below MGM Grand Paradise’s standards, MGM Grand Paradise or we may suffer reputational harm or possibly sanctions from gaming regulators with authority over our operations.
We also grant credit lines to certain gaming promoters and any adverse change in the financial performance of those gaming promoters may impact the recoverability of these loans.
We are subject to taxation by various governments and agencies and the rate of taxation in the jurisdictions in which we operate could change in the future.We are subject to tax by various governments and agencies, both in the U.S. and in Macau. Changes in the rates of taxation, the amount of taxes we owe and the time when income is subject to taxation, the Macau income tax exemption or the imposition of foreign withholding taxes could increase our overall rate of taxation. Any of these changes could materially impact our business, financial condition, results of operations and cash flows.
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| The future recognition of our foreign tax credit deferred tax asset is uncertain, and the amount of valuation allowance we may apply against such deferred tax asset may change materially in future periods. We currently have significant deferred tax assets resulting from foreign tax credit carryforwards that are available to reduce potential taxable foreign-sourced income in future periods, including the recapture of overall domestic losses to the extent of U.S. taxable income. We evaluate our foreign tax credit deferred tax asset for recoverability and record a valuation allowance to the extent that we determine it is not more likely than not such asset will be recovered. This evaluation is based on all available evidence, including assumptions concerning future U.S. operating profits and our interpretations of the U.S. Tax Cuts and Jobs Act (the “Tax Act”) based upon guidance issued to date. As a result, significant judgment is required in assessing the possible need for a valuation allowance and changes to our assumptions could result in a material change in the valuation allowance with a corresponding impact on the provision for income taxes in the period including such change.
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Extreme weather conditions or climate change may cause property damage or interrupt business, which could harm our business and results of operations. Certain of our casino properties are located in areascustomers reside. Capacity constraints of that highway or any other traffic disruptions may be subject to extreme weather conditions, including, but not limited to, hurricanes in the United States and severe typhoons in Macau. Such extreme weather conditions may interrupt our operations, damage our properties, and reducealso affect the number of customers who visit our facilities in such areas. In addition, our operations could be adversely impacted by a drought or other cause of water shortage. A severe drought of extensive duration experienced in Las Vegas or in the other regions in which we operate could adversely affect our business and results of operations. Although we maintain both property and business interruption insurance coverage for certain extreme weather conditions, such coverage is subject to deductibles and limits on maximum benefits, including limitation on the coverage period for business interruption, and we cannot assure you that we will be able to fully insure such losses or fully collect, if at all, on claims resulting from such extreme weather conditions. Furthermore, such extreme weather conditions may interrupt or impede access to our affected properties and may cause visits to our affected properties to decrease for an indefinite period, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.
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| Because a significant number of our major gaming resorts are concentrated on the Las Vegas Strip, we are subject to greater risks than a gaming company that is more geographically diversified. Given that a significant number of our major resorts are concentrated on the Las Vegas Strip, our business may be significantly affected by risks common to the Las Vegas tourism industry. For example, the cost and availability of air services and the impact of any events that disrupt air
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| | travel to and from Las Vegas can adversely affect our business. We cannot control the number or frequency of flights to or from Las Vegas, but we rely on air traffic for a significant portion of our visitors. Reductions in flights by major airlines as a result of higher fuel prices or lower demand can impact the number of visitors to our resorts. Additionally, there is one principal interstate highway between Las Vegas and Southern California, where a large number of our customers reside. Capacity constraints of that highway or any other traffic disruptions may also affect the number of customers who visit our facilities.
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We extend credit to a large portion of our customers and we may not be able to collect gaming receivables. We conduct a portion of our gaming activities on a credit basis through the issuance of markers which are unsecured instruments. Table games players typically are issued more markers than slot players, and high-end players typically are issued more markers than patrons who tend to wager lower amounts. High-end gaming is more volatile than other forms of gaming, and variances in win-loss results attributable to high-end gaming may have a significant positive or negative impact on cash flow and earnings in a particular quarter. Furthermore, the loss or a reduction in the play of the most significant of these high-end customers could have an adverse effect on our business, financial condition, results of operations and cash flows. We issue markers to those customers whose level of play and financial resources warrant, in the opinion of management, an extension of credit. In addition, MGM Grand Paradise extends credit to certain gaming promoters and those promoters can extend credit to their customers. Uncollectible receivables from high-end customers and gaming promoters could have a significant impact on our results of operations.
While gaming debts evidenced by markers and judgments on gaming debts are enforceable under the current laws of Nevada, and Nevada judgments on gaming debts are enforceable in all states under the Full Faith and Credit Clause of the U.S. Constitution, other jurisdictions may determine that enforcement of gaming debts is against public policy. Although courts of some foreign nations will enforce gaming debts directly and the assets in the U.S. of foreign debtors may be reached to satisfy a judgment, judgments on gaming debts from United States courts are not binding on the courts of many foreign nations.
Furthermore, we expect that MGM China will be able to enforce its gaming debts only in a limited number of jurisdictions, including Macau. To the extent MGM China gaming customers
and gaming promoters are from other jurisdictions, MGM China may not have access to a forum in which it will be able to collect all of its gaming receivables because, among other reasons, courts of many jurisdictions do not enforce gaming debts and MGM China may encounter forums that will refuse to enforce such debts. Moreover, under applicable law, MGM China remains obligated to pay taxes on uncollectible winnings from customers.
Even where gaming debts are enforceable, they may not be collectible. Our inability to collect gaming debts could have a significant negative impact on our operating results.
We may incur impairments to goodwill, indefinite-lived intangible assets, or long-lived assets which could negatively affect our future profits. We review our goodwill, intangible assets and long-lived assets on an annual basis and during interim reporting periods in accordance with the authoritative guidance. Significant negative trends, reduced estimates of future cash flows, disruptions to our business, slower growth rates or lack of growth have resulted in write-downs and impairment charges in the past and, if one or more of such events occurs in the future, additional impairment charges or write-downs may be required in future periods. If we are required to record additional impairment charges or write-downs, this could have a material adverse impact on our consolidated results of operations.
Leisure and business travel, especially travel by air, are particularly susceptible to global geopolitical events, such as terrorist attacks, other acts of violence or acts of war or hostility or the outbreak of infectious diseases. We are dependent on the willingness of our customers to travel by air. Since most of our customers travel by air to our Las Vegas and Macau properties, any terrorist act or other acts of violence, outbreak of hostilities, escalation of war, or any actual or perceived threat to the security of travel by air, could adversely affect our financial condition, results of operations and cash flows. In addition, the outbreak of infectious diseases, such as COVID-19, has severely disrupted, and is expected to continue to disrupt, domestic and international travel. The COVID-19 pandemic has resulted in governments, public institutions and other organizations imposing or recommending, and businesses and individuals implementing, restrictions on various activities or other actions to combat its spread, such as restrictions and bans on travel or transportation, stay-at-home directives, limitations on the size of gatherings, closures of work facilities, schools, public buildings and businesses,
cancellation of events,including sporting events, concerts, conferences and meetings, and quarantines and lock-downs. Even when those restrictions are removed, consumer willingness to attend large scale conferences may be impacted for the foreseeable future due to continued concerns over safety and social distancing. See “—The global COVID-19 pandemic has continued to materially impact our business, financial results and liquidity, and such impact could worsen and last for an unknown period of time.”
Furthermore, although we have been able to purchase some insurance coverage for certain types of terrorist acts, insurance coverage against physical loss or business interruption resulting from war and some forms of terrorism continues to be unavailable.
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| Co-investing in our properties, including our investment in CityCenter, decreases our ability to manage risk. In addition to acquiring or developing hotels and resorts or acquiring companies that complement our business directly, we have from time to time invested, and expect to continue to invest, as a co-investor. Co-investors often have shared control over the operation of the property.Co-investing in properties or businesses, including our investment in BetMGM, decreases our ability to manage risk. In addition to acquiring or developing hotels and resorts or acquiring companies that complement our business directly, we have from time to time invested, and expect to continue to invest, in properties or businesses as a co-investor. Co-investors often have shared control over the operation of the property or business. Therefore, the operation of such properties or businesses is subject to inherent risk due to the shared nature of the enterprise and the need to reach agreements on material matters. In addition, investments with other investors may involve risks such as the possibility that the co-investor might become bankrupt or not have the financial resources to meet its obligations, or have economic or business interests or goals that are inconsistent with our business interests or goals, or be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives. Consequently, actions by a co-investor might subject hotels and resorts owned by such entities to additional risk. Further, we may be unable to take action without the approval of our co-investors. Alternatively, our co-investors could take actions
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| | binding on the property without our consent. Additionally, should a co-investor become bankrupt, we could become liable for its share of liabilities.
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For instance, CityCenter, which is 50% owned and managed by us, has a significant amount of indebtedness, which could adversely affect its business and its ability to meet its obligations. If CityCenter isobligations, or have economic or business interests or goals that are inconsistent with our business interests or goals, or be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives. Consequently, actions by a co-investor might subject the properties or businesses owned by such entities to additional risk. Further, we may be unable to meettake action without the approval of our co-investors, or our co-investors could take actions binding on the property without our consent. Additionally, should a co-investor become bankrupt, we could become liable for its share of liabilities.
For example, we share control of BetMGM with Entain with all major operating, investing and financial commitmentsactivities requiring the consent of both members. Disagreements between us and Entain could arise in the future, including with respect to the amount and timing of capital contributions. If we and our co-investorEntain are unable to support the future funding requirements, as necessary, such eventof BetMGM, then BetMGM may not have the resources to execute on the development or implementation of its strategies, including funding efforts to increase its market share, which could have adverse financial consequences to us.result in us not receiving the anticipated benefits from our investment. In addition, the agreements governing CityCenter’s indebtedness subject CityCenter and its subsidiariesif we are awarded a concession to significant financialdevelop an integrated casino resort in Japan, we would do so in a consortium with ORIX and other restrictive covenants, including restrictions on itslocal investors. As a result, we could be subject to additional risks related to being unable to directly control development activities or the timing of development completion, which may impact our ability to incur additional indebtedness, place liens upon assets, make distributions to us, make certain investments, consummate certain asset sales, enter into transactions with affiliates (including us) and mergecomplete the project on our anticipated timeline, or consolidate with any other person or sell, assign, transfer, lease, convey or otherwise dispose ofat all, or substantially all of its assets. The CityCenter credit facility also includes certain financial covenants that require CityCenter to maintain a maximum total net leverage ratio (as defined in CityCenter’s credit facility) for each quarter. We cannot be sure that CityCenter will be able to meet this test inwithin the future or that the lenders will waive any failure to meet the test.agreed upon specifications.
Any of our future construction, development or expansion projects will be subject to significant development and construction risks, which could have a material adverse impact on related project timetables, costs and our ability to complete the projects.
Although our business model is primarily asset-light, we intend to continue to evaluate opportunities for future construction, development or expansion projects. Any of our future construction, development or expansion projects,
such as our proposed integrated resort in Japan, will be subject to a number of risks, including:
•lack of sufficient, or delays in the availability of, financing;
•changes to plans and specifications;
•engineering problems, including defective plans and specifications;
•shortages of, and price increases in, energy, materials and skilled and unskilled labor, andlabor;
•pricing inflation, including wage inflation, in key supply markets;
•delays in obtaining or inability to obtain necessary permits, licenses and approvals;
•changes in laws and regulations, or in the interpretation and enforcement of laws and regulations, applicable to gaming, leisure, residential, real estate development or construction projects;
•labor disputes or work stoppages;
•availability of qualified contractors and subcontractors;
•disputes with and defaults by contractors and subcontractors;
•personal injuries to workers and other persons;
•environmental, health and safety issues, including site accidents and the spread of viruses;
•weather interferences or delays;
•fires, typhoons and other natural disasters;
•geological, construction, excavation, regulatory and equipment problems; and
•other unanticipated circumstances or cost increases.
The occurrence of any of these development and construction risks could increase the total costs, delay or prevent the construction, development, expansion or opening or otherwise affect the design and features of any future projects
which we might undertake. In addition, the regulatory approvals associated with our development projects may require us to open future casino resorts by a certain specified time and to the extent we are unable to meet those deadlines, and any such deadlines are not extended, we may lose our regulatory approval to open a casino resort in a proposed jurisdiction, or incur payment penalties in connection with any delays which could have an adverse effect on our
business, financial condition, results of operations and
financial condition.cash flows.
We also make significant capital expenditures to maintain and upgrade our resorts, which may disrupt operations and displace revenue at the properties, including revenue lost while rooms, restaurants and meeting spaces are under renovation and out of service.
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| Our insurance coverage may not be adequate to cover all possible losses that our properties could suffer. In addition, our insurance costs may increase and we may not be able to obtain similar insurance coverage in the future. Although we have “all risk” property insurance coverage for our operating properties, which covers damage caused by a casualty loss (such as fire, natural disasters, acts of war, or terrorism or other acts of violence), each policy has certain exclusions. In addition, our property insurance coverage is in an amount that may be significantly less than the expected replacement cost of rebuilding the facilities if there was a total loss. Our level of insurance coverage also may not be adequate to cover all losses in the event of a major casualty. In addition, certain casualty events, such as labor strikes, nuclear events, acts of war, loss of income due to cancellation of room reservations or conventions due to fear of terrorism or other acts of violence, loss of electrical power due to catastrophic events, rolling blackouts or otherwise, deterioration or corrosion, insect or animal
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| | damage, and pollution, may not be covered at all under our policies. Therefore, certain acts could expose us to substantial uninsured losses.
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Our insurance coverage may not be adequate to cover all possible losses that our properties could suffer. In addition, our insurance costs may increase and we may not be able to obtain similar insurance coverage in the future. Although we have “all risk” property insurance coverage for our operating properties, which covers damage caused by a casualty loss (such as fire, natural disasters, or terrorism or other acts of violence), each policy has certain exclusions. In addition, our property insurance coverage is in an amount that may be significantly less than the expected replacement cost of rebuilding the facilities if there was a total loss. Our level of insurance coverage also may not be adequate to cover all losses in the event of a major casualty. In addition, certain casualty events, such as labor strikes, nuclear events, acts of war, loss of income due to cancellation of room reservations or conventions due to fear of terrorism or other acts of violence, loss of electrical power due to catastrophic events, rolling blackouts or otherwise, deterioration or corrosion, insect or animal damage, and pollution, may not be covered at all under our policies. Therefore, certain acts could expose us to substantial uninsured losses.
In addition to the damage caused to our properties by a casualty loss, we may suffer business disruption as a result of these events or be subject to claims by third parties that may be injured or harmed. While we carry business interruption insurance and general liability insurance, this insurance may not be adequate to cover all losses in any such event.
Furthermore, the leases we entered into in connection with the MGP BREIT Venture Transaction and the Bellagio sale-leaseback transaction require us to maintain specified insurance coverage. We cannot assure you that we will continue to be able to obtain the types and limits of insurance coverage required by these leases and, to the extent such required insurance coverage cannot be obtained at commercially reasonable cost or at all, then we would need to obtain amendments to the leases or face a default by the applicable tenant under the lease, which could have material adverse effect on our business.
We renew our insurance policies
(other than our builder’s risk insurance) on an annual basis. The cost of coverage may become so high that we may need to further reduce our policy limits, further increase our deductibles or
self-insured retentions, or agree to certain exclusions from our coverage.
Any failure to protect our trademarks could have a negative impact on the value of our brand names and adversely affect our business. The development of intellectual property is part of our overall business strategy, and we regard our intellectual property to be an important element of our success. While our business as a whole is not substantially dependent on any one trademark or combination of several of our trademarks or other intellectual property, we seek to establish and maintain our proprietary rights in our business operations through the use of trademarks. We file applications for, and obtain trademarks in, the United States and in foreign countries where we believe filing for such protection is appropriate. Despite our efforts to protect our proprietary rights, parties may infringe our trademarks and our rights may be invalidated or unenforceable. The laws of some foreign countries do not protect proprietary rights to as great an extent as the laws of the United States. Monitoring the unauthorized use of our intellectual property is difficult. Litigation may be necessary to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation of this type could result in substantial costs and diversion of resource. We cannot assure you that all of the steps we have taken to protect our trademarks in the United States and foreign countries will be adequate to prevent imitation of our trademarks by others. The unauthorized use or reproduction of our trademarks could diminish the value of our brand and its market acceptance, competitive advantages or goodwill, which could adversely affect our business.
We are subject to risks associated with doing business outside of the United States. Our operations outside of the United States are subject to risks that are inherent in conducting business under non-United States laws, regulations and customs. In particular, the risks associated with the operation of MGM China or any future operations in which we may engage in any other foreign territories, include:
changes in laws and policies that govern operations of companies in Macau or other foreign jurisdictions;
changes in non-United States government programs;
possible failure by our employees or agents to comply with anti-bribery laws such as the United States Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions;
general economic conditions and policies in China, including restrictions on travel and currency movements;
difficulty in establishing, staffing and managing non-United States operations;
different labor regulations;
changes in environmental, health and safety laws;
outbreaks of diseases or epidemics;
potentially negative consequences from changes in or interpretations of tax laws;
political instability and actual or anticipated military and political conflicts;
economic instability and inflation, recession or interest rate fluctuations; and
uncertainties regarding judicial systems and procedures.
These risks, individually or in the aggregate, could have an adverse effect on our results of operations and financial condition.
We are also exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates. If the United States dollar strengthens in relation to the currencies of other countries, our United States dollar reported income from sources where revenue is denominated in the currencies of other such countries will decrease.
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| Any violation of the Foreign Corrupt Practices Act or any other similar anti-corruption laws could have a negative impact on us. A significant portion of our revenue is derived from operations outside the United States, which exposes us to complex foreign and U.S. regulations inherent in doing cross-border business and in each of the countries in which we transact business. We are subject to compliance with the United States Foreign Corrupt Practices Act (“FCPA”) and other similar anti-corruption laws, which generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business. While our employees and agents are required to comply with these laws, we cannot be sure that our internal policies and procedures will always protect us from violations of these laws, despite our commitment to legal compliance and corporate ethics. Violations of these laws by us or our non-controlled ventures may result in severe criminal and civil sanctions as well as other penalties against us, and the SEC and U.S. Department of Justice continue to vigorously pursue enforcement of the FCPA. The occurrence or allegation
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| | of these types of risks may adversely affect our business, performance, prospects, value, financial condition, and results of operations.
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We face risks related to pending claims that have been, or future claims that may be, brought against us. Claims have been brought against us and our subsidiaries in various legal proceedings, and additional legal and tax claims arise from time to time. We may not be successful in the defense or prosecution of our current or future legal proceedings, which could result in settlements or damages that could significantly impact our business, financial condition, results of operations and reputation. Please see the further discussion in “Legal Proceedings” and Note 11 in the accompanying consolidated financial statements.
A significant portion of our labor force is covered by collective bargaining agreements. Work stoppages and other labor problems could negatively affect our business and results of operations. As of December 31, 2018,2021, approximately 39,00035,000 of our employees are covered by collective bargaining agreements. In January 2019, we acquired operations in New York that employ approximately 1,000 employees, a portion of which are covered by collective bargaining agreements. We anticipate several of these agreements will be negotiated in 2019. Also, in July 2018, MGP acquired its property in Northfield, Ohio, which continues to be operated (on behalf of MGP) by an affiliate of Hard Rock International (STP), Inc. MGM expects to acquire these operations in the first half of 2019, subject to certain customary closing conditions. The Ohio operation has employees covered by collective bargaining agreements, several of which we anticipate will be negotiated in 2019. A prolonged dispute with the covered employees or any labor unrest, strikes or other business interruptions in connection with labor negotiations or others could have an adverse impact on our operations. Further,operations, and adverse publicity in the marketplace related to union messaging could further harm our reputation and reduce customer demand for our services. Also, wage and/or benefit increases resulting from new labor agreements may be significant and could also have an adverse impact on our results of operations. To the extent that our non-union employees join unions,seek union representation or elect union representation, we would have greater exposure to risks associated with representation proceedings, labor problems.negotiations and/or economic impacts of newly negotiated labor agreements. Furthermore, we may have, or acquire in the future, multi-employer plans that are classified as “endangered,” “seriously
“seriously endangered,” or “critical” status. For instance, Borgata’s most significant plan is the Legacy Plan of the NationalUNITE HERE Retirement Fund, (which spun-off into a newly established fund as of January 1, 2018), which has been listed in “critical status” and is subject to a rehabilitation plan. Plans in these classifications must adopt measures to improve their funded status through a funding improvement or rehabilitation plan, which may require additional contributions from employers (which may take the form of a surcharge on benefit contributions) and/or modifications to retiree benefits. In addition, while Borgata has no current intention to withdraw from these plans, a withdrawal in the future could result in the incurrence of a contingent liability that would be payable in an amount and at such time (or over a period of time) that would vary based on a number of factors at the time of (and after) withdrawal. Any such additional costs may be significant.
Our business is particularly sensitive to energy prices and a rise in energy prices could harm our operating results. We are a large consumer of electricity and other energy and, therefore, higher energy prices may have an adverse effect on our results of operations. Accordingly, increases in energy costs may have a negative impact on our operating results. Additionally, higher electricity and gasoline prices that affect our customers may result in reduced visitation to our resorts and a reduction in our revenues.
We may seek to expand through investments in other businesses and properties or through alliances or acquisitions, and we may also seek to divest some of our properties and other assets, any of which may be unsuccessful. We intend to consider strategic and complementary acquisitions and investments in other businesses, properties or other assets. Furthermore, we may pursue any of these opportunities in alliance with third parties, including MGP. Acquisitions and investments in businesses, properties or assets, as well as these alliances, are subject to risks that could affect our business, including risks related to:
•spending cash and incurring debt;
•assuming contingent liabilities;
•unanticipated issues in integrating information, communications and other systems;
•unanticipated incompatibility of purchasing, logistics, marketing and administration methods;
•retaining key employees; and
•consolidating corporate and administrative infrastructures.
We cannot assure you that we will be able to identify opportunities or complete transactions on commercially reasonable terms or at all. In addition, even if we are able to identify any such opportunities and complete transactions, we cannot assure you that we will realize the anticipated synergies and benefits of our acquisitions or that they will be accretive to our results of operations. Our estimates and assumptions regarding expected synergies and benefits of our acquisitions could materially change, including as a result of factors beyond our control, and could delay, decrease or eliminate the expected accretive effect of the acquisitions. In addition, even if we are able to successfully integrate new assets and businesses, the integration of such assets and businesses may result in unanticipated costs, competitive responses, loss of customer or other business relationships and the diversion of management attention, and the expansion of our operations in general, whether through acquisition, development or internal growth, could also cause us to incur substantial costs, including legal, professional and consulting fees.
In addition, we periodically review our business to identify properties or other assets that we believe either are non-core, no longer complement our business, are in markets which may not benefit us as much as other markets or could be sold at significant premiums. From time to time, we may attempt to sell these identified properties and assets. There can be no assurance, however, that we will be able to complete dispositions on commercially reasonable terms or at all.
The failure to maintain the integrity of our computer systems and customer information could result in damage to our reputation and/or subject us to fines, payment of damages, lawsuits and restrictions on our use of data.We collect and process information relating to our employees, guests, and others for various business purposes, including marketing and promotional purposes. The collection and use of personal data are governed by privacy laws and regulations enacted by the various states, the United States and other jurisdictions around the world. Privacy laws and regulations continue to evolve and on occasion may be inconsistent (or conflict) between jurisdictions. Various federal, state and foreign legislative or regulatory bodies may enact or adopt new or additional laws and regulations concerning privacy, data retention, data transfer, and data protection. For example, the European Union has adopted a data protection regulation known as the General Data Protection Regulation, which became fully enforceable in May 2018, that includes operational and compliance requirements with significant penalties for non-compliance. In addition, California has enacted a newcomprehensive privacy law, known as the California Consumer Privacy Act of 2018, which takeswent into effect inon January 1, 2020 and provides some of the strongest privacy requirements in the United States. In addition, new privacy requirements in California, Colorado, and Virginia generally go into effect on January 1, 2023.
Compliance with applicable privacy laws and regulations may increase our operating costs and/or adversely impact our ability to market our products, properties and services to our guests. In addition, non-compliance with applicable
privacy laws and regulations by us (or in some circumstances non-compliance by third parties engaged by us), including accidental loss, inadvertent disclosure, unapproved dissemination or a breach of security on systems storing our data may result in damage to our reputation and/or subject us to fines, payment of damages, lawsuits or restrictions on our use or transfer of data. We rely on proprietary and commercially available systems, software, and tools to provide security for processing of customer and employee information, such as payment card and other confidential or proprietary information. Our data security measures are reviewed and evaluated regularly; however, they might not protect us against increasingly sophisticated and aggressive threats including, but not limited to, computer malware, viruses, hacking and phishing attacks by third parties. In addition, while we maintain cyber risk insurance to assist in the cost of recovery from a significant cyber event, such coverage may not be sufficient.
We also rely extensively on computer systems to process transactions, maintain information and manage our businesses. Disruptions in the availability of our computer systems, through cyber-attacks or otherwise, could impact our ability to service our customers and adversely affect our sales and the results of operations. For instance, there has been an increase in criminal cyber security attacks against companies where customer and company information has been compromised and company data has been destroyed. Our information systems and data, including those we maintain with our third-party service providers,
have been subject to cyber security breaches in the past and may be subject to cyber security breaches in the future. In addition, our third-party information system service providers face risks relating to cyber security similar to ours, and we do not directly control any of such parties’ information security operations. A significant theft, loss or fraudulent use of customer or company data maintained by us or by a third-party service provider could have an adverse effect on our reputation, cause a material disruption to our operations, and result in remediation expenses, regulatory penalties and litigation by customers and other parties whose information was subject to such attacks, all of which could have a material adverse effect on our business, results of operations and cash flows.
We are subject to risks related to corporate social responsibility and reputation. Many factors influence our reputation and the value of our brands including the perception held by our customers, business partners, other key stakeholders and the communities in which we do business. Our business faces increasing scrutiny related to environmental, social and governance activitiesfactors and risk of damage to our reputation and the value of our brands if we fail to act responsibly in a number ofseveral areas such asincluding diversity and inclusion, community engagement and philanthropy, environmental stewardship,sustainability, plastic pollution, climate change, responsible gaming, supply chain management, climate change, workplace conduct, human rights, philanthropy and support for local communities.many others, some of which may be unforeseen. Any harm to our reputation could further impact employee engagement and retention and the willingness of customers and our partners to do business with us, which could have a material adverse effect on our business, results of operations and cash flows.
We may seek to expand through investments in other businesses and properties or through alliances or acquisitions, and we may also seek to divest some of our properties and other assets, any of which may be unsuccessful. We intend to consider strategic and complementary acquisitions and investments in other businesses, properties or other assets. Furthermore, we may pursue any of these opportunities in alliance with third parties, including MGP. Acquisitions and investments in businesses, properties or assets, as well as these alliances, are subject to risks and costs related to climate change. Extreme weather conditions, potentially exacerbated by climate change, may cause property damage or interrupt business, which could harm our business and results of operations. Certain of our properties are located in areas that may be subject to extreme weather conditions, including, but not limited to, hurricanes, floods, tornados, wildfires, and winter storms in the United States and severe typhoons in Macau. Such extreme weather conditions may interrupt our operations or the operations of critical suppliers, damage our properties, and reduce the number of customers who visit our facilities in such areas. In addition, our operations or the operations of critical suppliers could be adversely impacted by a drought or other cause of water stress or shortage. A severe drought of extensive duration experienced in Las Vegas or in the other regions in which we operate or source critical supplies could adversely affect our business. Although we maintain both property and business interruption insurance coverage for certain extreme weather conditions, such coverage is subject to deductibles and limits on maximum benefits, including risks related to:
spending cashlimitation on the coverage period for business interruption, and incurring debt;
assuming contingent liabilities;
unanticipated issues in integrating information, communications and other systems;
unanticipated incompatibility of purchasing, logistics, marketing and administration methods;
retaining key employees; and
consolidating corporate and administrative infrastructures.
Wewe cannot assure you that we will be able to identify opportunitiesfully insure such losses or complete transactions on commercially reasonable terms orfully collect, if at all, or that we will actually realize any anticipated benefitson claims resulting from such acquisitions, investments or alliances. In addition, even if we are able to successfully integrate new assets and businesses, the integration ofextreme weather conditions.
Furthermore, such
assets and businessesextreme weather conditions may result in
unanticipatedreduced availability or increased price volatility of certain critical supplies, may interrupt or impede access to our affected properties, and may cause visits to our affected properties to decrease for an indefinite period. Additionally, many states and municipalities have begun to adopt laws and policies on climate change and emission reduction targets. Changes in federal, state, and local legislation and regulation based on concerns about climate change could result in increased regulatory costs,
competitive responses, loss or customer or other business relationships and the diversion of management attention.In addition, we periodically review our business to identify properties or other assets that we believe either are non-core, no longer complement our business, are in markets which may not benefit us as much as other marketsinclude capital expenditures on our existing properties to ensure compliance with any new or could be sold at significant premiums. From time to time, weupdated regulations, which may attempt to sell these identified properties and assets.potentially adversely affect our operations. There can be no assurance however, that the potential impacts of climate change and severe weather will not have a material adverse effect on our properties, operations or business.
Risks Related to Legal and Regulatory Matters and Changes in Public Policy
Our businesses are subject to extensive regulation and the cost of compliance or failure to comply with such regulations may adversely affect our business and results of operations. Our ownership and operation of gaming facilities is subject to extensive regulation by the countries, states and provinces in which we operate. These laws, regulations and ordinances vary from jurisdiction to jurisdiction, but generally concern the responsibility, financial stability and character of the owners and managers of gaming operations as well as persons financially interested or involved in gaming operations. As such, our gaming regulators can require us to disassociate ourselves from suppliers or business partners found unsuitable by the regulators or, alternatively, cease operations in that jurisdiction. In addition, unsuitable activity on our part or on the part of our domestic or foreign unconsolidated affiliates or subsidiaries in any jurisdiction could have a negative effect on our ability to continue operating in other jurisdictions. The regulatory environment in any particular jurisdiction may change in the future and any such change could have a material adverse effect on our results of operations. Furthermore, our iGaming and online sports betting initiatives may be particularly subject to risks related to potential changes in the regulatory environment as a result of the continued development of regulations in this industry. For example, in 2018, the U.S. Department of Justice (“DOJ”) reversed its previously-issued opinion published in 2011, which stated that interstate transmissions of wire communications that do not relate to a “sporting event or contest” fall outside the purview of the Wire Act of 1961 (“Wire Act”). The DOJ’s updated opinion concluded instead that the Wire Act was not uniformly limited to gaming relating to sporting events or contests and that certain of its provisions apply to non-sports-related wagering activity. In June 2019, a federal district court in New Hampshire ruled that the DOJ’s new interpretation of the Wire Act was erroneous and vacated DOJ’s new opinion. The DOJ appealed the decision of the district court to the U.S. Court of Appeals for the First Circuit. In January 2021, the Court of Appeals essentially affirmed the decision of the district court, and the DOJ did not file a further appeal. For a summary of gaming and other regulations that affect our business, see “Regulation and Licensing” and Exhibit 99.1 to this Annual Report on Form 10-K.
Further, our directors, officers, key employees and investors in our properties must meet approval standards of certain state and foreign regulatory authorities. If state regulatory authorities were to find such a person or investor unsuitable, we would be required to sever our relationship with that person or the investor may be required to dispose of his, her or its interest in the property. State regulatory agencies may conduct investigations into the conduct or associations of our directors, officers, key employees or investors to ensure compliance with applicable standards. Certain public and private issuances of securities, borrowings under credit agreements, guarantees of indebtedness and other transactions also require the approval of certain regulatory authorities.
Macau laws and regulations concerning gaming and gaming concessions are complex, and a court or administrative or regulatory body may in the future render an interpretation of these laws and regulations, or issue new or modified regulations, that differ from MGM China’s interpretation, which could have a material adverse effect on its business, financial condition and results of operations. In addition, MGM Grand Paradise's activities in Macau are subject to administrative review and approval by various government agencies. We cannot assure you that MGM Grand Paradise will be able to complete dispositionsobtain all necessary approvals, and any such failure to do so may materially affect its long-term business strategy and operations. Macau laws permit redress to the courts with respect to administrative actions; however, to date such redress is largely untested in relation to gaming issues.
In addition to gaming regulations, we are also subject to various federal, state, local and foreign laws and regulations affecting businesses in general. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, smoking, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising. For instance, we are subject to certain federal, state and local environmental laws, regulations and ordinances, including the Clean Air Act, the Clean Water Act, the Resource Conservation Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Energy Policy Act, the Safe Drinking Water Act, Renewable Portfolio Standards, the Oil Pollution Act of 1990, and many others. Under various federal, state and local environmental laws and regulations, an owner or operator of real property may be held liable for the costs of removal or remediation of certain hazardous or toxic substances or wastes located on
commercially reasonable termsits property, regardless of whether or
at all.not the present owner or operator knows of, or is responsible for, the presence of such substances or wastes. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. In addition, effective January 1, 2019, smoking in casinos in Macau, including MGM Macau and MGM Cotai, is only permitted inside specially ventilated smoking rooms, rather than outside smoking areas or VIP areas. The likelihood or outcome of similar legislation in other jurisdictions and referendums in the future cannot be predicted, though any smoking ban would be expected to negatively impact our financial performance.
We also deal with significant amounts of cash in our operations and are subject to recordkeeping and reporting obligations as required by various anti-money laundering laws and regulations. For instance, we are subject to regulation under the Currency and Foreign Transactions Reporting Act of 1970, commonly known as the “Bank Secrecy Act”, which, among other things, requires us to report to the Internal Revenue Service (“IRS”) any currency transactions in excess of $10,000 that occur within a 24-hour gaming day, including identification of the individual(s) involved in the currency
transaction. We are also required to report certain suspicious activity where we know, suspect or have reason to suspect transactions, among other things, involve funds from illegal activity or are intended to evade federal regulations or avoid reporting requirements or have no business or lawful purpose. In addition, under the Bank Secrecy Act we are subject to various other rules and regulations involving reporting, recordkeeping and retention. Our compliance with the Bank Secrecy Act is subject to periodic examinations by the IRS. Any such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Any violations of the anti-money laundering laws, including the Bank Secrecy Act, or regulations by any of our properties could have an adverse effect on our financial condition, results of operations or cash flows.
Furthermore, the COVID-19 pandemic has resulted in governments, public institutions and other organizations imposing or recommending restrictions on various activities or other actions to combat its spread. See “—The global COVID-19 pandemic has continued to materially impact our business, financial results and liquidity, and such impact could worsen and last for an unknown period of time.” In addition to the pandemic-related restrictions that resulted in the temporary closures of our properties during 2020, governmental or other COVID-19-related restrictions have been extended or reimposed from time-to-time and new restrictions may be imposed in the future.
Any violation of the Foreign Corrupt Practices Act or any other similar anti-corruption laws could have a negative impact on us. Historically, a significant portion of our revenue was derived from operations outside the United States, which exposes us to complex foreign and U.S. regulations inherent in doing cross-border business and in each of the countries in which we transact business. We are subject to compliance with the United States Foreign Corrupt Practices Act (“FCPA”) and other similar anti-corruption laws, which generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business. While our employees and agents are required to comply with these laws, we cannot be sure that our internal policies and procedures will always protect us from violations of these laws, despite our commitment to legal compliance and corporate ethics. Violations of these laws by us or our non-controlled ventures may result in severe criminal and civil sanctions as well as other penalties against us, and the SEC and U.S. Department of Justice continue to vigorously pursue enforcement of the FCPA. The occurrence or allegation of these types of risks may adversely affect our business, performance, prospects, value, financial condition, and results of operations.
If the jurisdictions in which we operate increase gaming taxes and fees,, as well as other taxes and fees, our results could be adversely affected.State and local authorities raise a significant amount of revenue through taxes and fees, including taxes and fees on gaming activities. From time to time, legislators and government officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming industry. Periods of economic downturn or uncertainty and budget deficits may intensify such efforts to raise revenues through increases in gaming taxes.or other taxes, the imposition of new taxes or changes to tax laws that result in increased taxes to us. If the jurisdictions in which we operate were to increase gamingtaxes, impose new taxes or fees, depending on the magnitude of the increase and any offsetting factors,change existing tax laws, our financial condition and results of operations could be materially adversely affected. For instance,
The future recognition of our foreign tax credit deferred tax asset is uncertain, and the amount of valuation allowance we may apply against such deferred tax asset may change materially in future periods.We currently have significant deferred tax assets resulting from foreign tax credit carryforwards that are available to reduce taxes attributable to potential taxable foreign-sourced income generatedin future periods, including the recapture of overall domestic losses to the extent of 50 percent of U.S. taxable income per year. We evaluate our foreign tax credit deferred tax asset for recoverability and record a valuation allowance to the extent that we determine it is not more likely than not such asset will be recovered. This evaluation is based on all available evidence, including assumptions concerning future U.S. operating profits and foreign source income. As a result, significant judgment is required in assessing the possible need for a valuation allowance and changes to our assumptions could result in a material change in the valuation allowance with a corresponding impact on the provision for income taxes in the period including such change.
We face risks related to pending claims that have been, or future claims that may be, brought against us. Claims have been brought against us and our subsidiaries in various legal proceedings, and additional legal and tax claims arise from time to time. We may not be successful in the defense or prosecution of our current or future legal proceedings, which could result in settlements or damages that could significantly impact our business, financial condition, results of operations and reputation. Please see the further discussion in “Legal Proceedings” and Note 12 in the accompanying consolidated financial statements.
Risks Related to Our Macau Operations
We have agreed not to have any interest or involvement in gaming operationsbusinesses in China, Macau, Hong Kong and Taiwan, other than through MGM China. As a result of the extension of the Macau gaming subconcession, we entered into a First Renewed Deed of Non-Compete Undertakings with MGM China and Ms. Ho, Pansy Catilina Chiu King (“Ms.
Ho”), pursuant to which we are restricted from having any interest or involvement in gaming businesses in the People’s Republic of China, Macau, Hong Kong and Taiwan, other than through MGM China. While gaming is currently prohibited in China, Hong Kong and Taiwan, if it is legalized in the future our ability to compete in these locations could be limited until the earliest of (i) the date MGM China’s ordinary shares cease to be listed on The Stock Exchange of Hong Kong Limited or (ii) the last day of MGM Grand Paradise's subconcession for operation of casino games (or any extension thereof); or (iii) the date when our ownership of MGM China shares is less than 20% of the then-issued share capital of MGM China.
The Macau government can terminate MGM Grand Paradise’s subconcession under certain circumstances without compensating MGM Grand Paradise, exercise its redemption right with respect to the subconcession, or refuse to grant MGM Grand Paradise currentlyan extension of the subconcession in 2022, or MGM Grand Paradise may be unsuccessful in obtaining a gaming concession when a new public tender is held by the Macau government, any of which would have a material adverse effect on our business, financial condition, results of operations and cash flows. The Macau government has the benefitright to unilaterally terminate the subconcession in the event of fundamental non-compliance by MGM Grand Paradise with applicable Macau laws or MGM Grand Paradise’s basic obligations under the subconcession contract. MGM Grand Paradise has the opportunity to remedy any such non-compliance with its fundamental obligations under the subconcession contract within a period to be stipulated by the Macau government. Upon such termination, all of MGM Grand Paradise’s casino area premises and gaming-related equipment would be transferred automatically to the Macau government without compensation to MGM Grand Paradise, and we would cease to generate any revenues from these operations. We cannot assure you that MGM Grand Paradise will perform all of its obligations under the subconcession contract in a way that satisfies the requirements of the Macau government.
Furthermore, under the subconcession contract, MGM Grand Paradise is obligated to comply with any laws and regulations that the Macau government might promulgate in the future. We cannot assure you that MGM Grand Paradise will be able to comply with these laws and regulations or that these laws and regulations would not adversely affect our ability to construct or operate our Macau businesses. If any disagreement arises between MGM Grand Paradise and the Macau government regarding the interpretation of, or MGM Grand Paradise’s compliance with, a provision of the subconcession contract, MGM Grand Paradise will be relying on a consultation and negotiation process with the Macau government. During any consultation or negotiation, MGM Grand Paradise will be obligated to comply with the terms of the subconcession contract as interpreted by the Macau government. Currently, there is no precedent concerning how the Macau government will treat the termination of a corporate tax exemptionconcession or subconcession upon the occurrence of any of the circumstances mentioned above. The loss of the subconcession would require us to cease conducting gaming operations in Macau, which exempts us from payingwould have a material adverse effect on our business, financial condition, results of operations and cash flows.
In addition, the 12% complementary taxsubconcession contract expires on profits generated byJune 26, 2022. Pursuant to the operationcurrent Macau gaming law, upon reaching the maximum duration of casino games. This exemption is effective through March 31, 2020, which also runs concurrent with the end of20 years, the term of the concessions may be extended one or more times by order of the Chief Executive, which period may not exceed, in total, 5 years. On January 14, 2022, the Macau Government disclosed the content of a bill to amend Macau gaming law, which followed a 45-day public consultation process regarding draft amendment proposals that were issued in September 2021. Under the bill, the existing subconcessions will be discontinued and a maximum of six concessions will be awarded for a term to be specified in the concession contract that may not exceed 10 years and which may be extended by three years, under certain circumstances. The bill is subject to debate and approval by the Macau Legislative Assembly. The approval of the new gaming law bill will precede the public tender for the awarding of new gaming concessions and to date the Macau Government has provided no indication as to whether the public tender will take place before expiry of the existing gaming concessions and subconcessions, which is on June 26, 2022, but acknowledged that it could consider the extension of the existing concessions and subconcessions beyond their current term if the public tender is held at a later date. Unless MGM Grand Paradise's gaming subconcession. Duesubconcession is extended, or legislation with regard to reversion of casino premises is amended, the casino area premises and gaming-related equipment subject to reversion will automatically be transferred to the uncertainty concerning taxation afterMacau Government upon expiration, and MGM Grand Paradise will cease to generate any revenues from such gaming operations. In addition, certain events relating to the loss, termination, rescission, revocation or modification of MGM Grand Paradise’s gaming subconcession in Macau, where such events have a material adverse effect on the financial condition, business, properties, or results of operations of MGM China, taken as a whole, may result in a special put option triggering event under MGM China’s senior notes and an event of default under MGM China’s revolving credit facilities. Beginning on April 20, 2017, the Macau government may redeem the subconcession renewal process, wecontract by providing us at least 1 year prior notice. In the event the Macau government exercises this redemption right, MGM Grand Paradise is entitled to fair compensation or indemnity. The amount of such compensation or indemnity will be determined based on the amount of gaming and non-gaming revenue generated by MGM Grand Paradise, excluding the convention and exhibition facilities, during the taxable year prior to the redemption, before deducting interest, depreciation and amortization, multiplied by the number of remaining years before expiration of the subconcession. We cannot assure you that any extensionsMGM Grand Paradise will be able to obtain an extension of the tax exemptionsubconcession contract or be awarded a new gaming concession on terms favorable to MGM Grand Paradise or at all. In
addition, there is uncertainty on the terms associated with any extension, which could include additional fees or other financial commitments that may have an adverse impact on the financial position of MGM Grand Paradise. We also cannot assure you that if the subconcession is redeemed, the compensation paid to MGM Grand Paradise will be granted beyond March 31, 2020.
adequate to compensate for the loss of future revenues.
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| Conflicts of interest may arise because certain of our directors and officers are also directors of MGM China, the holding company for MGM Grand Paradise which owns and operates MGM Macau and MGM Cotai. As a result of the initial public offering of shares of MGM China common stock in 2011, MGM China has stockholders who are not affiliated with us, and we and certain of our officers and directors who also serve as officers and/or directors of MGM China may have conflicting fiduciary obligations to our stockholders and to the minority stockholders of MGM China. Decisions that could have different implications for us and MGM China, including contractual arrangements that we have entered into or may in the future enter into with MGM China, may give rise to the appearance of a potential conflict of interest or an actual conflict of interest.
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We are subject to risks associated with doing business outside of the United States. Our operations outside of the United States are subject to risks that are inherent in conducting business under non-United States laws, regulations and customs. In particular, the risks associated with the operation of MGM China or any future operations in which we may engage in any other foreign territories, include:
•changes in laws and policies that govern operations of companies in Macau or other foreign jurisdictions;
•changes in non-United States government programs;
•possible failure by our employees or agents to comply with anti-bribery laws such as the United States Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions;
•general economic conditions and policies in China, including restrictions on travel and currency movements;
•difficulty in establishing, staffing and managing non-United States operations;
•different labor regulations;
•changes in environmental, health and safety laws;
•outbreaks of diseases or epidemics, including the COVID-19 pandemic;
•potentially negative consequences from changes in or interpretations of tax laws;
•political instability and actual or anticipated military and political conflicts;
•economic instability and inflation, recession or interest rate fluctuations; and
•uncertainties regarding judicial systems and procedures.
These risks, individually or in the aggregate, could have an adverse effect on our business, financial condition, results of operations and cash flows. We are also exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates. If the United States dollar strengthens in relation to the currencies of other countries, our United States dollar reported income from sources where revenue is denominated in the currencies of other such countries will decrease.
Conflicts of interest may arise because certain of our directors and officers are also directors of MGM China, the holding company for MGM Grand Paradise which owns and operates MGM Macau and MGM Cotai. As a result of the initial public offering of shares of MGM China common stock in 2011, MGM China has stockholders who are not affiliated with us, and we and certain of our officers and directors who also serve as officers and/or directors of MGM China may have conflicting fiduciary obligations to our stockholders and to the minority stockholders of MGM China. Decisions that could have different implications for us and MGM China, including contractual arrangements that we have entered into or may in the future enter into with MGM China, may give rise to the appearance of a potential conflict of interest or an actual conflict of interest.
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
None.
None.
ITEM 2.
| ITEM 2. PROPERTIES
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The location and general characteristics of our properties are provided in Part I, Item 1. Business.
Our significant land holdings are described below; unless otherwise indicated, all properties are indirectly owned by us. We also own or lease various other improved and unimproved properties in Las Vegas and other locationsAs detailed in the
United Statesaforementioned section, the majority of our facilities are subject to leases of the underlying real estate assets, which among other things, includes the land underlying the facility and
certain foreign countries.Domestic land holdings
the buildings used in the operations.
The following table lists certain of our
domesticprincipal land
and leasehold holdings
on a consolidated basis as of December 31,
2018, including land and ground leases held by a subsidiary of the Operating Partnership, which we lease pursuant to the terms of the master lease. 2021. | | Approximate
| | | | | | |
| | Approximate |
| Name and Location | | Acres | | Notes
|
Las Vegas Strip Resorts | | | | |
Bellagio
Aria(1) | | 77
| | Approximately two acres of the site are subject to two ground leases.
64 |
Bellagio(2) | | 75 |
MGM Grand Las Vegas(3) | | 102 | | |
Mandalay Bay(3) | | 124 | | |
The Mirage(4) | | 77 | | |
Luxor(4)(5) | | 73 | | Includes 15 acres of land located across the Las Vegas Strip from Luxor.
|
Excalibur(4) | | 51 | | |
New York-New York(4)(6) | | 23 | | Includes three acres of land related to The Park entertainment district development located between Park MGM and New York-New York.
|
Park MGM(4) | | 21 | | |
Circus Circus Las Vegas
Regional Operations | | 102
| | Includes approximately 34 acres of land located north of Circus Circus Las Vegas.
|
Regional Operations
| | | | |
MGM Grand Detroit (Detroit, Michigan)(4)(7) | | 27 | | |
Beau Rivage (Biloxi, Mississippi)(4)(8) | | 42
| | 10 acres are subject to a tidelands lease.
40 |
Gold Strike Tunica (Tunica, Mississippi)(4) | | 24 | | |
MGM National Harbor (Prince George's County, Maryland)(4)(9) | | 23 | | All 23 acres are subject to a ground lease.
|
Borgata (Atlantic City, New Jersey)(4)(10) | | 46 | | 11 acres are subject to ground leases.
|
MGM Springfield (Springfield, Massachusetts)(4) | | 14 | | |
Other
| | | | |
Hard Rock Rocksino
MGM Northfield Park (Northfield, Ohio)(4) | | 113 |
Empire City (Yonkers, New York)(4)(11) | | 97 |
| MGM China | | |
MGM Macau(12) | | 10 |
MGM Cotai(12) | | 18 |
The land and substantially all of the assets of MGM Grand Las Vegas and Bellagio secure the obligations under our senior credit facility. In addition, the senior credit facility is secured by a pledge of the equity or limited liability company interests of the subsidiaries that own MGM Grand Las Vegas and Bellagio.
MGM China
MGM Macau occupies an approximately 10-acre site and MGM Cotai occupies an approximately 18-acre site, both of which are possessed under separate land concession agreements with the Macau government. The MGM China credit facility is secured by MGM Grand Paradise’s interest in the MGM Cotai and MGM Macau land concessions, and MGM China, MGM Grand Paradise and their guarantor subsidiaries have granted a security interest in substantially all of their assets to secure the facility. The credit facility borrowings are non-recourse to us. See Note 9 to the accompanying consolidated financial statements for additional discussion on long-term debt.
Operating Partnership
Pursuant(1)Subject to a master lease agreement between a subsidiary of ours and funds managed by Blackstone.
(2)Subject to a lease agreement between a subsidiary of ours and Bellagio BREIT Venture.
(3)Subject to a master lease agreement between a subsidiary of ours and MGP BREIT Venture.
(4)Subject to a master lease agreement between a subsidiary of ours and a subsidiary of the CompanyOperating Partnership.
(5)58 acres are subject to a master lease agreement between a subsidiary of ours and a subsidiary of the Operating Partnership. We own an additional 15 acres of land located across the Las Vegas Strip from Luxor.
(6)Includes 3 acres of land related to The Park entertainment district development located between Park MGM and New York-New York.
(7)24 acres are subject to a master lease agreement between a subsidiary of ours and a subsidiary of the Operating Partnership.
(8)26 acres are subject to a master lease agreement between a subsidiary of ours and a subsidiary of the Operating Partnership, (the “landlord”),which leases 10 acres pursuant to a tidelands lease with a third party.
(9)All 23 acres are subject to a master lease agreement between a subsidiary of ours and a subsidiary of the real estate assetsOperating Partnership, which leases all 23 acres pursuant to a ground lease with a third party.
(10)37 acres are subject to a master lease agreement between a subsidiary of The Mirage, Mandalay Bay, Luxor, New York-New York, Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata,ours and MGM National Harbora subsidiary of the Operating Partnership, which leases 11 acres pursuant to a ground lease with a third party.
(11)41 acres are leased fromsubject to a master lease agreement between a subsidiary of ours and a subsidiary of the Operating Partnership. We own an additional 56 acres adjacent to the property retained for potential future development.
(12)Subject to separate land concession agreements with the Macau government.
The land and substantially all of the assets of MGP’s properties, includingindicated within the Hard Rock Rocksino Northfield Park,table above, other than MGM National Harbor, and Empire City, and MGM Springfield, secure the obligations under the Operating Partnership’s credit agreement. These borrowings are non-recourse to us. See Note 9 to the accompanying consolidated financial statements for additional discussion on long-term debt.
Other than as described above, none of our properties are subject to any major encumbrance.
ITEM 3.
|
ITEM 3. LEGAL PROCEEDINGS |
October 1 litigation. We and/or certain
See discussion of our subsidiaries have been named as defendantslegal proceedings in a number of lawsuits related to the October 1, 2017 shooting in Las Vegas. The matters involve in large degree the same legalNote 12 – Commitments 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 based on assertions that we and/or certain of our subsidiaries were negligent. We also received letters from attorneys purporting to represent other persons with claims related to the October 1, 2017 shooting. Lawsuits were first filed in October 2017 and include actions filed by multiple individuals Contingencies in the District Court of Clark County, Nevada and in the Superior Court of Los Angeles County, California. Some of the original actions have been voluntarily dismissed, and plaintiffs’ counsel indicate they anticipate re-filing the lawsuits in similar form. In June 2018, we removed to federal court all actions that remained pending in California and Nevada state courts following the voluntary dismissals. Motions to remand have been filed in several cases, and we anticipate that there may be additional motions to remand filed in the future. We 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. In February of 2019, we and plaintiffs’ counsel commenced mediation of these matters. The above-described litigation currently is stayed pending mediation.We are currently unable to reliably predict the future developments in, outcome of, and economic costs and other consequences of pending or future litigation related to this matter. We will continue to investigate the factual and legal defenses, and evaluate these matters based on subsequent events, new information and future circumstances. We intend to defend against these lawsuits and ultimately believe we 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 our belief as to the possibility of liability, we currently believe that it is reasonably possible that we 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 us or any of our affiliates. Given that these cases are in the early stages and in light of the uncertainties surrounding them, we do not currently possess sufficient information to determine a range of reasonably possible liability. In the event we incur any liability, we believe it is unlikely we would incur losses in connection with these claims in excess of our insurance coverage. The insurance carriers have not expressed a reservation of rights or coverage defense that affects our evaluation of potential losses in connection with these claims. In addition, our 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. We are a party to various legal proceedings, most of which relate to routine matters incidental to our business. Management does not believe that the outcome of such proceedings will have a material adverse effect on ouraccompanying consolidated financial position, results of operations or cash flows.
statements.
ITEM 4.
|
ITEM 4. MINE SAFETY DISCLOSURES |
ITEM 5.
|
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “MGM.”
There were approximately
3,6573,294 record holders of our common stock as of February
22, 2019.23, 2022.
The Company implemented a dividend program in February 2017 pursuant to which it has paid regular quarterly dividends.
In the second quarter of 2020 the Company reduced its annual dividend to $0.01 per share in light of the impact of the COVID-19 pandemic on its operations at that time. The Company has maintained an annual dividend of $0.01 per share throughout 2021. The amount, declaration and payment of any future dividends will be subject to the discretion of our Board of Directors who will evaluate our dividend policy from time to time based on factors it deems relevant, and the contractual limitations described below. In addition, as a holding company with no independent operations, our ability to pay dividends will depend upon the receipt of cash from our operating subsidiaries to generate the funds from operations necessary to pay dividends on our common stock. Furthermore, our senior credit facility contains financial covenants and restrictive covenants that could restrict our ability to pay dividends, subject to certain exceptions. In addition, the Operating Partnership and MGM China credit facilities each contain limitations on the ability of the applicable subsidiary under each credit agreement to pay dividends to us. There can be no assurance that we will continue to pay dividends in the future.
Purchases of Equity Securities by the Issuer
The following table provides information about share repurchases made by the Company of its common stock during the quarter ended December 31,
2018:2021: | | | | | | | | | Total Number | | | Dollar Value of | |
| Total | | | | | | | of Shares | | | Shares that May | |
| Number of | | | Average | | | Purchased as | | | Yet be Purchased | |
| Shares | | | Price Paid | | | Part of a Publicly | | | Under the Program | |
Period | Purchased | | | per Share | | | Announced Program | | | (In thousands) | |
October 1, 2018 — October 31, 2018 | | 5,968,406 | | | $ | 25.13 | | | | 5,968,406 | | | $ | 1,389,031 | |
November 1, 2018 — November 30, 2018 | | — | | | $ | — | | | | — | | | $ | 1,389,031 | |
December 1, 2018 — December 31, 2018 | | — | | | $ | — | | | | — | | | $ | 1,389,031 | |
On
| | | | | | | | | | | | | | | | | | | | | | | |
| Period | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of a Publicly Announced Program | | Dollar Value of Shares that May Yet be Purchased Under the Program (In thousands) |
| October 1, 2021 — October 31, 2021 | 1,800,000 | | | $ | 44.51 | | | 1,800,000 | | | $ | 1,897,460 | |
| November 1, 2021 — November 30, 2021 | 3,747,997 | | | $ | 43.71 | | | 3,747,997 | | | $ | 1,733,626 | |
| December 1, 2021 — December 31, 2021 | 11,598,650 | | | $ | 41.67 | | | 11,598,650 | | | $ | 1,250,266 | |
In February 2020, upon substantial completion of the May
10, 2018
the Company announced that its Board of Directors had adopted a $2.0 billion stock repurchase program,
and that the
previously announced $1.0Company’s Board of Directors authorized a $3.0 billion stock repurchase
program had been completed. All repurchases underprogram. Under the stock repurchase program,
are madethe Company may repurchase shares from time to time
at the Company’s discretion 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
repurchasedpurchased when the Company might otherwise be precluded from doing so under insider trading laws.
Repurchases underThe timing, volume and nature of stock repurchases will be at the
programsole discretion of management, dependent on market conditions, applicable securities laws, and other factors, and may be suspended or discontinued at any time. All shares repurchased by the Company during the quarter ended December 31,
20182021 were purchased pursuant to the Company’s publicly announced stock repurchase programs and have been retired.
The graph below matches our cumulative
Five-Year5-year total shareholder return on common stock with the cumulative total returns of the Dow Jones US Total Return index, the S&P 500 index and the Dow Jones US Gambling index. The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends as required by the SEC) from December 31,
20132016 to December 31,
2018.2021. The return shown on the graph is not necessarily indicative of future performance.
The following performance graph shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act, nor shall this information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into a filing.
ITEM 6.
| SELECTED FINANCIAL DATA
|
| | | | | | | | | | | | | | | | | | | | |
| 12/16 | 12/17 | 12/18 | 12/19 | 12/20 | 12/21 |
| | | | | | |
| MGM Resorts International | 100.00 | | 117.48 | | 86.75 | | 121.19 | | 115.78 | | 164.94 | |
| Dow Jones US Total Return | 100.00 | | 121.50 | | 115.45 | | 151.41 | | 182.30 | | 230.61 | |
| S&P 500 | 100.00 | | 121.83 | | 116.49 | | 153.17 | | 181.35 | | 233.41 | |
| Dow Jones US Gambling | 100.00 | | 140.14 | | 97.24 | | 143.49 | | 128.65 | | 112.16 | |
The
following reflects selected historical financial data that should be read in conjunction with “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes theretostock price performance included
elsewhere in this
Annual Report on Form 10-K. The historical results aregraph is not necessarily indicative of
the results of operations to be expected in the future.future stock price performance. | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |
| | (In thousands, except per share data) | |
Net revenues | | $ | 11,763,096 | | | $ | 10,797,479 | | | $ | 9,478,269 | | | $ | 9,179,590 | | | $ | 10,081,984 | |
Operating income (loss) | | | 1,469,486 | | | | 1,712,527 | | | | 2,078,199 | | | | (152,838 | ) | | | 1,323,538 | |
Net income (loss) | | | 583,894 | | | | 2,088,184 | | | | 1,235,846 | | | | (1,037,444 | ) | | | 127,178 | |
Net income (loss) attributable to MGM Resorts International | | | 466,772 | | | | 1,952,052 | | | | 1,100,408 | | | | (445,515 | ) | | | (149,873 | ) |
Earnings per share: | | | | | | | | | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | | | | | | | | | |
Net income (loss) per share | | $ | 0.82 | | | $ | 3.38 | | | $ | 1.94 | | | $ | (0.82 | ) | | $ | (0.31 | ) |
Weighted average common shares | | | 544,253 | | | | 572,253 | | | | 568,134 | | | | 542,873 | | | | 490,875 | |
Diluted: | | | | | | | | | | | | | | | | | | | | |
Net income (loss) per share | | $ | 0.81 | | | $ | 3.34 | | | $ | 1.92 | | | $ | (0.82 | ) | | $ | (0.31 | ) |
Weighted average common shares | | | 549,536 | | | | 578,795 | | | | 573,317 | | | | 542,873 | | | | 490,875 | |
Dividends declared per common share | | $ | 0.48 | | | $ | 0.44 | | | $ | — | | | $ | — | | | $ | — | |
At-year end: | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 30,210,706 | | | $ | 29,160,042 | | | $ | 28,174,400 | | | $ | 25,215,178 | | | $ | 26,593,914 | |
Total debt, including capital leases | | | 15,153,203 | | | | 12,922,712 | | | | 13,000,792 | | | | 12,713,416 | | | | 14,063,563 | |
Stockholders' equity | | | 10,469,791 | | | | 11,611,124 | | | | 9,941,957 | | | | 7,764,427 | | | | 7,628,274 | |
MGM Resorts International stockholders' equity | | | 6,512,283 | | | | 7,577,061 | | | | 6,192,825 | | | | 5,119,927 | | | | 4,090,917 | |
MGM Resorts International stockholders' equity per share | | $ | 12.35 | | | $ | 13.38 | | | $ | 10.79 | | | $ | 9.06 | | | $ | 8.33 | |
Number of shares outstanding | | | 527,480 | | | | 566,276 | | | | 574,124 | | | | 564,839 | | | | 491,292 | |
The following events/transactions affect the year-to-year comparability of the selected financial data presented above:
Acquisitions, Dispositions, and Significant Transactions
In 2015, we recorded a gain of $23 million related to the sale of Circus Circus Reno and our 50% interest in Silver Legacy and associated real property.
36
In 2016, we recorded a $401 million gain for our share of CityCenter’s gain on the sale of the Shops at Crystals (“Crystals”).
In 2016, we received net proceeds of $1.1 billion in connection with MGP’s IPO.
In 2016, we recorded a gain of $430 million on our acquisition of Boyd Gaming’s ownership interest in Borgata on August 1, 2016, and began to consolidate Borgata beginning on that date.
In 2016, we opened MGM National Harbor.
In 2018, we opened MGM Cotai and MGM Springfield; MGP acquired Northfield.
In 2018, we recorded a gain of $45 million related to the sale of our 50% ownership interest in Grand Victoria.
Other
In 2014, we recorded an impairment charge of $29 million related to our investment in Grand Victoria.
In 2015, we recorded a goodwill impairment charge of $1.5 billion at MGM China and a $17 million impairment charge related to our investment in Grand Victoria.
In 2015, we recorded an $80 million gain for our share of CityCenter’s gain resulting from the final resolution of its construction litigation and related settlements.
In 2016, we recorded a $67 million loss on early retirement of debt.
In 2016, we recorded a $152 million expense related to our strategic decision to exit the fully bundled sales system of NV Energy. In 2017, we then recorded a gain of $45 million related to the NV Energy exit fee modification.
In 2017, we recorded a $44 million loss on early retirement of debt.
In 2017, we recorded a gain of $36 million related to the Borgata property tax settlement.
| •
| In 2017, we recorded a $1.4 billion tax benefit related to the enactment of the U.S. Tax Cuts and Jobs Act (“Tax Act”). In 2018, we then recorded a $20 million tax expense related to the Tax Act.
|
In 2018, we received $24 million in business interruption insurance proceeds related to the October 1, 2017 shooting in Las Vegas.
Additionally, on January 1, 2018, we adopted ASC 606, “Revenue from Contracts with Customers (Topic 606)” on a full retrospective basis. Accordingly, financial data as of and for the years ended December 31, 2018, 2017, and 2016, and the income statement data for the years ended December 31, 2018, 2017, 2016 and 2015, reflect such adoption.
ITEM 7.
| ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Executive Overview
This management’s discussion and analysis of financial condition and results of operations includes discussion as of and for the year ended December 31, 2021 compared to December 31, 2020. Discussion of our financial condition and results of operations as of and for the year ended December 31, 2020 compared to December 31, 2019 can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2021.
Description of our business and key performance indicators
Our primary business is the
ownership and operation of casino resorts, which offer gaming, hotel, convention, dining, entertainment, retail and other resort amenities. We
own or invest inoperate several of the finest casino resorts in the world and we continually reinvest in our resorts to maintain our competitive advantage. Most of our revenue is cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit cards. We rely
heavily on the ability of our resorts to generate operating cash flow to fund capital expenditures, provide excess cash flow for future development,
and repay debt
financings.financings, and return capital to our shareholders. We make significant investments in our resorts through newly remodeled hotel rooms, restaurants, entertainment and nightlife offerings, as well as other new features and amenities.
Our results of operations are affected by decisions we make related to our capital allocation, our access to capital and our cost of capital. While we continue to be focused on improving our financial position and returning capital to shareholders, we are also dedicated to capitalizing on strategic development or initiatives.
Our results of operations do not tend to be seasonal in nature, though a variety of factors may affect the results of any interim period, including the timing of major conventions, Far East baccarat volumes, the amount and timing of marketing and special events for our high-end gaming customers, and the level of play during major holidays, including New Year and Lunar New Year. While our results do not depend on key individual customers, a significant portion of our operating income is generated from high-end gaming customers, which can cause variability in our results. In addition, our success in marketing to customer groups such as convention customers and the financial health of customer segments such as business travelers or high-end gaming customers from a specific country or region can affect our results.
Financial Impact of COVID-19
The spread of COVID-19 and developments surrounding the global pandemic have had a significant impact on our business, financial condition, results of operations and cash flows in 2020 and 2021 and may continue to impact our business in 2022 and thereafter. In March 2020, all of our domestic properties were temporarily closed pursuant to state and local government restrictions imposed as a result of COVID-19. Throughout the second and third quarters of 2020, all of our properties that were temporarily closed re-opened to the public, with temporary re-closures and re-openings occurring for certain of our properties or portions thereof into the first quarter of 2021. Upon re-opening, the properties continued to operate without certain amenities and subject to certain occupancy limitations, with restrictions varying by jurisdiction. Beginning in the latter part of the first quarter of 2021 and continuing into the second quarter of 2021, our domestic jurisdictions eased and removed prior operating restrictions, including capacity and occupancy limits, as well as social distancing policies.
Although all of our properties have re-opened, in light of the unpredictable nature of the pandemic, including the emergence and spread of COVID-19 variants, the properties may be subject to new operating restrictions and/or temporary, complete, or partial shutdowns in the future. At this time, we cannot predict whether jurisdictions, states or the federal government will adopt similar or more restrictive measures in the future than in the past, including stay-at-home orders or the temporary closure of all or a portion of our properties as a result of the pandemic.
In Macau, following a temporary closure of our properties on February 5, 2020, operations resumed on February 20, 2020, subject to certain health safeguards, such as limiting the number of seats available at each table game, slot machine spacing, reduced operating hours at a number of restaurants and bars, temperature checks, and mask protection. Although the issuance of tourist visas (including the individual visit scheme) for residents of Zhuhai, Guangdong Province and all other provinces in mainland China to travel to Macau resumed on August 12, 2020, August 26, 2020 and September 23, 2020, respectively, several travel and entry restrictions in Macau, Hong Kong and mainland China remain in place (including the temporary suspension of ferry services between Hong Kong and Macau, the negative nucleic acid test result certificate, and mandatory quarantine requirements for returning residents, for visitors from Hong Kong, Taiwan, and
mainland China, and bans on entry on other visitors), which significantly impacted visitation to our Macau properties. In the third and fourth quarters of 2021, local COVID-19 cases were identified in Macau. Upon such occurrences, a state of immediate prevention was declared and mass mandatory nucleic acid testing was imposed in Macau, the validity period of negative test results for re-entry into mainland China was shortened and quarantine requirements were imposed, certain events were cancelled or suspended, and in some instances, certain entertainment and leisure facilities were closed throughout Macau. Although gaming and hotel operations have remained open during these states of immediate prevention, such measures have had a negative effect on our operations and it is uncertain whether further closures, including the closure of our properties, or travel restrictions to Macau will be implemented if additional local COVID-19 cases are identified.
The Las Vegas Strip segment results of operations are heavily impacted by visitor volume and trends. During the year ended December 31,
2018,2021, Las Vegas visitor volume
decreased 0.2%, Las Vegas Strip REVPAR increased
1% and Las Vegas Strip gaming revenue increased by 2%69% compared to the prior year period according to information published by the Las Vegas Convention and Visitors Authority.
Results of operations for ourThe Las Vegas
Strip Resorts during 2018 were negatively impacted by disruption related tomarket has had the
repositioningaddition of new sporting events and
rebranding of Park MGM, discussed below.Our Regional Operations results are driven and affected by the increasingly competitive jurisdictions that they operate in, includingvenues, the expansion of other jurisdictions that permit gaming. Resultsconvention centers, as well as music and entertainment events, which have positively impacted visitation, along with the easing of COVID-19 related restrictions, as discussed above.
The MGM China segment results of operations
at our Regional Operations were negatively affectedalso are heavily impacted by
visitor volume and trends. During the
opening of two casino resorts in Atlantic City, New Jersey in June 2018, which impacted Borgata’s operating results, and benefitted from the opening of MGM Springfield in August 2018, discussed below.Gross gaming revenue in theyear ended December 31, 2021, Macau marketvisitor arrivals increased 14% in 201831% compared to 2017, primarily as a result of growth on the Cotai Strip. Additionally,prior year period according to statistics published by the Statistics and Census Service of the Macau Government, visitor arrivals increased 10% and overnight visitors increased 7% in 2018 compared to 2017. As a significant number of MGM Macau’s customers are from mainland China, we believe operating results at MGM Macau areas the prior year period was more negatively affected by economic conditionstravel and entry restrictions in mainland China as well as certain policy initiatives enactedMacau than in mainland China and Macau. Despite concerns over the sustainability of economic growth in China, we expect the Macau market to grow oncurrent year period.
For a long-term basis due to further development and penetrationdiscussion of the mainland China marketrisks to our business resulting from COVID-19, please see “Item 1A. Risk Factors — Risks Related to Our Business, Industry, and infrastructure improvements expected to facilitate more convenient travel to and within Macau. We believe recent trends reflect stabilization and growth within the Macau market as gross gaming revenue has increased consistently over the last several years. Additionally,Market Conditions.”
Other Developments
As of December 31, 2021, we
have seen growth due to the opening of MGM Cotai in February 2018.Pursuant to a master lease agreement between the tenant and 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, andEmpire City, MGM National Harbor, from the landlord.MGM Northfield Park, and MGM Springfield pursuant to a master lease agreement with MGP. See Note 1 in the accompanying consolidated financial statements for information regarding MGP and the Operating Partnership, which we consolidate in our financial statements, and Note 17 in the accompanying consolidated financial statements for information regarding the master lease with MGP.statements. All intercompany transactions, including transactions under the master lease with MGP, have been eliminated in consolidation.
As further discussed below, we lease the real estate assets of Bellagio pursuant to a lease agreement with Bellagio BREIT Venture, the real estate assets of Mandalay Bay and MGM Grand Las Vegas pursuant to a lease agreement with MGP BREIT Venture, and the real estate assets of Aria (including Vdara) pursuant to a lease agreement with a fund managed by Blackstone, as further discussed below.
In July 2018, MGP completed its acquisition ofApril 2019, we acquired the membership interests of Northfield Park Associates, LLC (“Northfield”), an Ohio limited liability company that ownsowned the real estate assets and operations of the Hard Rock Rocksino Northfield Park. Simultaneously withPark, from MGP and MGP retained the close ofreal estate assets. We then rebranded the transaction, MGP entered into a new agreement with an affiliate of Hard Rock Café International (STP), Inc.property to continueMGM Northfield Park, and added it to serve as the manager of the property.master lease between us and MGP. See Note 4 and Note 1718 in the accompanying financial statements for information regarding this acquisition,acquisition.
Also, in January 2019, we acquired the real property and operations associated with Empire City Acquisition,in Yonkers, New York for consideration of approximately $865 million. Subsequently, MGP acquired the Northfield OpCo sale,developed real property associated with Empire City from us and Empire City was added to the master lease between us and MGP. In addition, pursuant to the master lease amendment, we agreed to provide MGP a right of first offer with respect to certain undeveloped land adjacent to the property to the extent that we develop additional gaming facilities and choose to sell or transfer such property in the future. See Note 4 and Note 18 in the accompanying consolidated financial statements for information regarding this acquisition.
In March 2019, we entered into an amendment to the master lease between us and MGP with respect to improvements made by us related to the rebranding of the Park MGM
Lease Transaction.and NoMad Las Vegas. See Note 18 in the accompanying financial statements for information regarding this transaction with MGP, which is eliminated in consolidation.
In JanuaryNovember 2019, we announcedcompleted the implementationBellagio transaction, pursuant to which Bellagio BREIT Venture was formed, which acquired the Bellagio real estate assets from us and entered into a lease agreement to lease the real estate assets back to us. The Bellagio lease has an initial term of 30 years with two 10-year renewal periods, exercisable at our option. The initial term of the lease provides for an initial annual rent of $245 million with a fixed 2% escalator for the first 10 years
and, thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3% during the 11th through 20th years and 4% thereafter. In addition, the lease obligates us to spend a specified percentage of net revenues at the property on capital expenditures and that we comply with certain financial covenants, which, if not met, would require us to maintain cash security or provide one or more letters of credit in favor of the landlord in an amount equal to rent for the succeeding 2-year period. In exchange for the contribution of the real estate assets, we received total consideration of $4.25 billion, which consisted of a 5% equity interest in the venture and cash of approximately $4.2 billion. We also provide a shortfall guarantee of the principal amount of indebtedness of Bellagio BREIT Venture (and any interest accrued and unpaid thereon). As a result of the sale, we recorded a gain of approximately $2.7 billion. See Note 1, Note 11, and Note 12 in the accompanying consolidated financial statements for information regarding this transaction, lease agreement, and shortfall guarantee, respectively.
In December 2019, we sold Circus Circus Las Vegas and adjacent land for $825 million, which consisted of $663 million paid in cash and a secured note due 2024 with a face value of $163 million and fair value of $134 million. In connection with our review of the carrying value of assets to be sold due to the offer for sale received during the third quarter of 2019, we recorded a non-cash impairment charge of $219 million. Upon completion of the sale in the fourth quarter, we recorded a loss of $2 million. See Note 1 and Note 16 in the accompanying consolidated financial statements for information regarding this transaction.
In February 2020, we completed the MGP BREIT Venture Transaction pursuant to which the real estate assets of MGM 2020 planGrand Las Vegas and Mandalay Bay (including Mandalay Place) were contributed to further reduce costs, improve efficienciesMGP BREIT Venture, owned 50.1% by the Operating Partnership and position49.9% by a subsidiary of BREIT. In exchange for the contribution of the real estate assets, MGM and MGP received total consideration of $4.6 billion, which was comprised of $2.5 billion of cash, $1.3 billion of the Operating Partnership’s secured indebtedness assumed by MGP BREIT Venture, and the Operating Partnership’s 50.1% equity interest in MGP BREIT Venture. In addition, the Operating Partnership issued approximately 3 million Operating Partnership units to us representing 5% of the equity value of MGP BREIT Venture. We also provide a shortfall guarantee of the principal amount of indebtedness of MGP BREIT Venture (and any interest accrued and unpaid thereon). On the closing date, BREIT also purchased approximately 5 million MGP Class A shares for $150 million. See Note 1, Note 11, and Note 12 in the accompanying consolidated financial statements for information regarding this transaction, lease agreement, and shortfall guarantee, respectively.
In connection with the MGP BREIT Venture Transaction, MGP BREIT Venture entered into a lease with us for growth. We expectthe real estate assets of Mandalay Bay and MGM Grand Las Vegas. The lease has an initial term of 30 years with two 10-year renewal periods, exercisable at our option. The initial term of the lease provides for an initial annual rent of $292 million with a fixed 2% escalator for the first 15 years and, thereafter, an escalator equal to deliver annualized Adjusted EBITDA benefitthe greater of $3002% and the CPI increase during the prior year, subject to a cap of 3%. In addition, the lease obligates us to spend a specified percentage of net revenues at the properties on capital expenditures and that we comply with certain financial covenants, which, if not met, would require us to maintain cash security or provide one or more letters of credit in favor of the landlord in an amount equal to the rent for the succeeding 1-year period. See Note 11 in the accompanying financial statements for information regarding this lease agreement.
In connection with the MGP BREIT Venture Transaction, the master lease with MGP was modified to remove the Mandalay Bay property and the annual cash rent under the MGP master lease was reduced by $133 million, as further discussed in Note 18.
Also, in January 2020, we, the Operating Partnership, and MGP entered into an agreement for the Operating Partnership to waive its right following the closing of the MGP BREIT Venture Transaction to issue MGP Class A shares, in lieu of cash, to us in connection with us exercising our right to require the Operating Partnership to redeem the Operating Partnership units we hold, at a price per unit equal to a 3% discount to the ten day average closing price prior to the date of the notice of redemption. The waiver was effective upon closing of the transaction on February 14, 2020 and was scheduled to terminate on the earlier of February 14, 2022 or upon our receipt of cash proceeds of $1.4 billion as consideration for the redemption of our Operating Partnership units. On May 18, 2020 the Operating Partnership redeemed approximately 30 million Operating Partnership units that we held for $700 million, or $23.10 per unit, and on December 2, 2020, the Operating Partnership redeemed approximately 24 million Operating Partnership units that we held for the remaining $700 million, or $29.78 per unit. As a result, the waiver terminated in accordance with its terms.
In March 2021, we delivered a notice of redemption to MGP covering approximately 37 million Operating Partnership units that we held which was satisfied with aggregate consistingcash proceeds of approximately $1.2 billion, using cash on hand together with the proceeds from MGP's issuance of Class A shares. See Note 13 in the accompanying consolidated financial statements for information regarding this transaction, which eliminates in consolidation.
In August 2021, we entered into an agreement with VICI and MGP whereby VICI will acquire MGP. Pursuant to the agreement, MGP Class A shareholders will receive 1.366 shares of newly issued VICI stock in exchange for each MGP Class A share outstanding and we will receive 1.366 units of the new VICI OP in exchange for each Operating Partnership unit we hold. The fixed exchange ratio represents an agreed upon price of $43 per share of MGP Class A share to the five-day volume weighted average price of VICI stock as of the close of business on July 30, 2021. In connection with the exchange, VICI OP will redeem the majority of our VICI OP units for cash consideration of $4.4 billion, with us retaining an approximate $370 million ownership interest in the VICI OP (based upon the close price of VICI stock as of August 3, 2021). MGP’s Class B share that we hold will be cancelled. As part of the transaction, we will enter into an amended and restated master lease with VICI. The new master lease will have an initial term of 25 years, with three 10-year renewals, and initial annual rent of $860 million, escalating annually at a rate of 2% per annum for the first 10 years and thereafter equal to the greater of 2% and the CPI increase during the prior year subject to a cap of 3%. The transaction is expected to close in the first half of 2022, subject to customary closing conditions, regulatory approvals, and approval by VICI stockholders (which was obtained on October 29, 2021). See “Item 1A. Risk Factors — Risks Related to Our Announced Transactions — The VICI Transaction, The Cosmopolitan transaction, and The Mirage transaction each remain subject to the satisfaction of certain closing conditions, including the receipt of certain regulatory approvals, and any anticipated benefits from such transactions may take longer to realize than expected or may not be realized at all.”
In September 2021, we entered into an agreement to acquire the operations of The Cosmopolitan for cash consideration of $1.625 billion, subject to customary working capital adjustments. Additionally, we will enter into a lease agreement for the real estate assets of The Cosmopolitan. The Cosmopolitan lease will have an initial term of 30 years with three subsequent 10-year renewal periods, exercisable at our option. The initial term of the lease provides for an initial annual cash rent of $200 million with a fixed 2% escalator for the first 15 years, and thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3%. Additionally, the lease will require us to spend a specified percentage of net revenues over a rolling 5-year period at the property on capital expenditures and for us to comply with certain financial covenants, which, if not met, would require us to maintain cash security or one or more letters of credit in favor of the landlord in an amount equal to rent for the succeeding 1-year period. The transaction is expected to close in the first half of 2022, subject to regulatory approvals and other customary closing conditions.
In September 2021, we completed the acquisition of the 50% ownership interest in CityCenter held by Infinity World for cash consideration of $2.125 billion. Upon the endclosing of 2020the transaction, we own 100% of CityCenter and accordingly no longer account for our interest under the equity method of accounting, and we now consolidate CityCenter in our financial statements. See Note 4 in the accompanying consolidated financial statements for information regarding this transaction.
In September 2021, we sold the real estate assets of Aria (including Vdara) for cash consideration of $3.89 billion and entered into a lease pursuant to which we lease back the real property. The lease has an additional $100initial term of 30 years with three 10-year renewal periods, exercisable at our option. The initial term of the lease provides for an initial annual rent of $215 million with a fixed 2% escalator for the first 15 years and, thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3%. In addition, the lease obligates us to spend a specified percentage of net revenues at the properties on capital expenditures and that we comply with certain financial covenants, which, if not met, would require us to maintain cash security or provide a letter of credit in favor of the landlord in an amount equal to the rent for the succeeding 1-year period. See Note 11 in the accompanying consolidated financial statements for information regarding this lease.
In October 2021, MGP acquired the real estate assets of MGM Springfield from us and MGM Springfield was added to the MGP master lease between us and MGP through which we lease back the real property. Transactions with MGP, including transactions under the MGP master lease, have been eliminated in our consolidation of MGP. Refer to Note 18 for further discussion of the master lease with MGP.
In December 2021, we entered into an agreement to sell the operations of The Mirage to an affiliate of Hard Rock for cash consideration of $1.075 billion, subject to certain purchase price adjustments. Pursuant to the agreement, Hard Rock is obligated to use its reasonable best efforts to obtain the requisite antitrust and gaming regulatory approvals. The agreement may be terminated by either party if the endclosing has not occurred on or before December 13, 2022, which date may be extended by either party to March 13, 2023 under certain circumstances. The agreement contemplates a reverse termination fee of 2021. The MGM 2020 plan$322.5 million that is payable by Hard Rock to us in the event that the parties are unable to obtain antitrust or gaming regulatory approval. Upon closing, the master lease between us and VICI (or MGP in the event that the VICI Transaction is terminated) will be amended and restated to reflect a company-wide, business-optimization initiative aimed$90 million reduction in annual cash rent. The transaction is expected to leverage a more centralized organizationclose during the second half of 2022, subject to maximize profitabilitycertain closing conditions, including, but not limited to, the consummation or termination of the VICI Transaction and through key investments in technology, lay the groundwork for our digital transformation to drive revenue growth.receipt of regulatory approvals.
Key Performance Indicators
Key performance indicators related to gaming and hotel revenue are:
•Gaming revenue indicators: table games drop and slots handle (volume indicators); “win” or “hold” percentage, which is not fully controllable by us. Our normal table games hold percentage is in the range of 22% to 26% of table games drop and 18% to 21% of table games drop at our Las Vegas Strip Resorts and Regional Operations, respectively, and our normal slots hold percentage is in the range of 8.5%25.0% to 9%35.0% of slots handletable games drop for Baccarat and 9%19.0% to 9.5%23.0% for non-Baccarat; however, reduced gaming volumes as a result of slots handle atthe COVID-19 pandemic could cause volatility in our Las Vegas Strip Resortshold percentages; and Regional Operations, respectively; and
•Hotel revenue indicators: hotel occupancy (a volume indicator); average daily rate (“ADR,” a price indicator); and revenue per available room (“REVPAR,” a summary measure of hotel results, combining ADR and occupancy rate). Our calculation of ADR, which is the average price of occupied rooms per day, includes the impact of complimentary rooms. Complimentary room rates are determined based on standalone selling price. Because the mix of rooms provided on a complimentary basis, particularly to casino customers, includes a disproportionate suite component, the composite ADR including complimentary rooms is slightly higher than the ADR for cash rooms, reflecting the higher retail value of suites.
Rooms that were out of service during the years ended December 31, 2021 and 2020 as a result of closures due to the COVID-19 pandemic were excluded from the available room count when calculating hotel occupancy and REVPAR.
Additional key performance indicators at MGM China are:
•Gaming revenue indicators: MGM China utilizes “turnover,” which is the sum of nonnegotiable chip wagers won by MGM China calculated as nonnegotiable chips purchased plus nonnegotiable chips exchanged less nonnegotiable chips returned. Turnover provides a basis for measuring VIP casino win percentage. Win for VIP gaming operations at MGM China is typically in the range of 2.7%2.6% to 3.3% of turnover. Win for main floorturnover; however, reduced gaming operations atvolumes as a result of the COVID-19 pandemic could cause volatility in MGM China is typically in the range of 16% to 22% of table games drop.
China’s hold percentages.
The following discussion is based on our consolidated financial statements for the years ended December 31,
2018, 20172021, 2020 and
2016.2019.
Summary
FinancialOperating Results
The following table summarizes our operating results:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (In thousands) | |
Net revenues | | $ | 11,763,096 | | | $ | 10,797,479 | | | $ | 9,478,269 | |
Operating income | | | 1,469,486 | | | | 1,712,527 | | | | 2,078,199 | |
Net income | | | 583,894 | | | | 2,088,184 | | | | 1,235,846 | |
Net income attributable to MGM Resorts International | | | 466,772 | | | | 1,952,052 | | | | 1,100,408 | |
Summary Operating Results
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Net revenues | | $ | 9,680,140 | | | $ | 5,162,082 | | | $ | 12,899,672 | |
| Operating income (loss) | | 2,278,699 | | | (642,434) | | | 3,940,215 |
| Net income (loss) | | 1,208,389 | | | (1,319,907) | | | 2,214,380 |
| Net income (loss) attributable to MGM Resorts International | | 1,254,370 | | | (1,032,724) | | | 2,049,146 |
Our domestic properties were temporarily closed due to COVID-19 on the dates shown below:
| | | | | | | | |
Las Vegas Strip Resorts(1) | Closure Date | Initial Re-opening Date |
| Bellagio | March 17, 2020 | June 4, 2020 |
| MGM Grand Las Vegas | March 17, 2020 | June 4, 2020 |
| New York-New York | March 17, 2020 | June 4, 2020 |
| Excalibur | March 17, 2020 | June 11, 2020 |
| Luxor | March 17, 2020 | June 25, 2020 |
Mandalay Bay(2) | March 17, 2020 | July 1, 2020 |
The Mirage(3) | March 17, 2020 | August 27, 2020 |
Park MGM(2) | March 17, 2020 | September 30, 2020 |
| Regional Operations | | |
| Gold Strike Tunica | March 17, 2020 | May 25, 2020 |
| Beau Rivage | March 17, 2020 | June 1, 2020 |
| MGM Northfield Park | March 14, 2020 | June 20, 2020 |
| MGM National Harbor | March 15, 2020 | June 29, 2020 |
MGM Springfield(4) | March 15, 2020 | July 13, 2020 |
| Borgata | March 16, 2020 | July 26, 2020 |
MGM Grand Detroit(5) | March 16, 2020 | August 7, 2020 |
| Empire City | March 14, 2020 | September 21, 2020 |
| | | | | |
| (1) | Aria was excluded from the table above, as it was not consolidated during 2020. |
| (2) | Park MGM and Mandalay Bay’s hotel tower operations were closed midweek starting November 9, 2020 and November 30, 2020, respectively, and full week hotel tower operations resumed on March 3, 2021. |
| (3) | The Mirage’s hotel tower operations were closed midweek beginning November 30, 2020. The entire property was closed midweek starting January 4, 2021, and re-opened on March 3, 2021. |
| (4) | MGM Springfield’s hotel was re-closed beginning November 2, 2020, and partial hotel operations resumed with midweek closures on March 5, 2021. Full hotel operations resumed on December 13, 2021. |
| (5) | MGM Grand Detroit re-closed on November 17, 2020 and re-opened on December 23, 2020, with the hotel tower operations resuming February 9, 2021. |
Consolidated net revenues
for 2018 increased 9%were $9.7 billion in 2021 compared to
2017 due primarily $5.2 billion in 2020, an increase of 88%. The current year benefited from the inclusion of the net revenues of Aria subsequent to the opening of MGM Cotai on February 13, 2018consolidation in September 2021 and the openingremoval of MGM Springfield on August 24, 2018. Consolidated net revenues for 2017 increased 14% compared to 2016 due primarily to the full year of operationsmandated operational and capacity restrictions at
Borgata and MGM National Harbor,our properties, as well as an increase in
casino revenuetravel, while the prior year was negatively affected by temporary property closures at certain of our Las Vegas Strip Resorts and
rooms revenueRegional Operations for a portion of the year due to the pandemic. At MGM China, the prior year was negatively affected by both property closures in the first quarter and was also more significantly impacted by travel and entry restrictions in Macau than in the current year. These factors resulted in a 111% increase in net revenues at our Las Vegas Strip Resorts,
a 72% increase in net revenues at our Regional Operations, and an
84% increase in
casino revenuenet revenues at MGM
China, as discussed further below.China.
Consolidated operating income
in 2018 decreased 14%was $2.3 billion for the year ended December 31, 2021 compared to
2017. Consolidateda loss of $642 million in 2020, due primarily to the temporary property closures in the prior year as well as the inclusion of the operating income
of Aria subsequent to consolidation in
2018 benefited fromSeptember 2021, as discussed above. The current year included a
$45gain on consolidation of CityCenter, net of $1.6 billion and the prior year included a $1.5 billion gain on REIT transactions, net and $26 million
gain relatedin restructuring costs. In addition, corporate expense decreased $37 million compared to the
sale of Grand Victoria and alsoprior year. Corporate expense in the current year included
$24$34 million in transaction costs, while the prior year included $44 million of
business interruption insurance proceeds primarily at Mandalay Bay. The prior year period included a benefitCEO transition expense and $49 million of
$36October 1 litigation settlement expense. Included in the CEO transition expense is $20 million
related to Borgata’s share of
a property tax settlement from Atlantic City and a benefitstock compensation expense, of
$45which approximately $13 million related to the modification
and accelerated vesting of
outstanding stock compensation awards. Property transactions, net in the
NV Energy exit fee, whichcurrent year included
a gain of $29 million related to a reduction in the
benefit recognized at our Las Vegas Strip Resorts as well as our 50% shareestimate of
the benefit recognized at CityCenter. Consolidated operating income was negatively affected by the ramp up of operations at our recently opened MGM Springfield and MGM Cotai resorts inclusive of depreciation expense associated with the new resorts, disruptioncontingent consideration related to the
rebranding at Park MGM, and an increase in corporate expense discussed below. In addition, preopening and start-up expenses increased as discussed below in “Operating Results – DetailsEmpire City acquisition, a gain of
Certain Charges.” Corporate expense, including share-based compensation for corporate employees, increased to $419$76 million
in 2018 from $357 million in 2017, and included $19 million in transaction costs, MGM China corporate expense of $19 million, and costs incurred related to the corporate brand campaign and the MGM 2020 and finance modernization initiatives. Depreciation and amortization expense related to certain assets at MGM China of $166 million was included in corporate in our non-GAAP reconciliations included herein for 2018. Income from unconsolidated affiliates was $148 million in 2018 compared to $146 million in 2017.Consolidated operating income was $1.7 billion in 2017 and included the impact of the items discussed above as well as a full year of operations at Borgata and MGM National Harbor. Operating income of $2.1 billion in 2016 included a $430 million gain recognized on the Borgata acquisition and a $401 million gain relatedrelating to the sale of Crystalsart, and an other-than-temporary impairment charge of $22 million related to an investment in an unconsolidated affiliate. Property transactions, net in the prior year included a $64 million other-than-temporary non-cash impairment charge on an equity method investment and $17 million related to a loss on production show costs. Depreciation expense decreased $60 million compared to the prior year primarily as a result of certain assets
becoming fully depreciated in the current year at
CityCenter,MGM China, primarily at MGM Cotai. General and administrative expense increased $385 million compared to the prior year due primarily to the prior year reflecting the temporary property closures, the inclusion of rent expense for the Aria lease, which
wascommenced in September 2021, and also due to a full period of rent expense for the MGM Grand Las Vegas and Mandalay Bay lease in the current year, partially offset by
charges of $152 million of NV Energy exit expense associated withrealized benefits from our
strategic decision to exit the fully bundled sales system of NV Energy. Operating income in 2017 also benefitted from a decrease in preopening expense as discussed below in “Operating Results – Details of Certain Charges.” Corporate expense increased to $357 million in 2017 from $313 million in 2016, primarily from a $16 million charge for the Operating Partnership’s share of real estate transfer taxes recorded in connection with the MGM National Harbor transaction, with the remainder of the increase primarily related to corporate brand campaign expenses, legal expenses, and charitable contributions. Income from unconsolidated affiliates was $146 million in 2017 compared to $528 million in 2016, which included the gain related to the sale of Crystals.cost savings initiatives at our domestic properties.
The following table presents a detail by segment of net revenues:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (In thousands) | |
Las Vegas Strip Resorts | | | | | | | | | | | | |
Table games win | | $ | 949,055 | | | $ | 931,508 | | | $ | 909,101 | |
Slots win | | | 1,140,269 | | | | 1,106,192 | | | | 1,100,761 | |
Other | | | 62,249 | | | | 67,150 | | | | 60,620 | |
Less: Incentives | | | (743,840 | ) | | | (668,020 | ) | | | (675,662 | ) |
Casino revenue | | | 1,407,733 | | | | 1,436,830 | | | | 1,394,820 | |
Rooms | | | 1,776,029 | | | | 1,778,869 | | | | 1,762,850 | |
Food and beverage | | | 1,402,378 | | | | 1,410,496 | | | | 1,432,717 | |
Entertainment, retail and other | | | 1,130,532 | | | | 1,119,928 | | | | 1,074,307 | |
Non-casino revenue | | | 4,308,939 | | | | 4,309,293 | | | | 4,269,874 | |
| | | 5,716,672 | | | | 5,746,123 | | | | 5,664,694 | |
Regional Operations | | | | | | | | | | | | |
Table games win | | | 793,754 | | | | 722,966 | | | | 341,090 | |
Slots win | | | 1,947,325 | | | | 1,784,452 | | | | 1,137,719 | |
Other | | | 108,690 | | | | 92,377 | | | | 32,268 | |
Less: Incentives | | | (822,844 | ) | | | (764,992 | ) | | | (493,220 | ) |
Casino revenue | | | 2,026,925 | | | | 1,834,803 | | | | 1,017,857 | |
Rooms | | | 318,017 | | | | 319,049 | | | | 182,809 | |
Food and beverage | | | 428,934 | | | | 410,143 | | | | 235,383 | |
Entertainment, retail and other | | | 160,645 | | | | 145,725 | | | | 84,108 | |
Non-casino revenue | | | 907,596 | | | | 874,917 | | | | 502,300 | |
| | | 2,934,521 | | | | 2,709,720 | | | | 1,520,157 | |
MGM China | | | | | | | | | | | | |
VIP table games win | | | 1,235,387 | | | | 1,099,303 | | | | 1,111,904 | |
Main floor table games win | | | 1,391,454 | | | | 1,044,415 | | | | 990,520 | |
Slots win | | | 284,919 | | | | 180,500 | | | | 161,972 | |
Less: Commissions and incentives | | | (716,616 | ) | | | (582,583 | ) | | | (569,373 | ) |
Casino revenue | | | 2,195,144 | | | | 1,741,635 | | | | 1,695,023 | |
Rooms | | | 118,527 | | | | 54,824 | | | | 57,367 | |
Food and beverage | | | 114,862 | | | | 51,330 | | | | 51,237 | |
Entertainment, retail and other | | | 21,424 | | | | 10,371 | | | | 8,331 | |
Non-casino revenue | | | 254,813 | | | | 116,525 | | | | 116,935 | |
| | | 2,449,957 | | | | 1,858,160 | | | | 1,811,958 | |
Reportable segment net revenues | | | 11,101,150 | | | | 10,314,003 | | | | 8,996,809 | |
Corporate and other | | | 661,946 | | | | 483,476 | | | | 481,460 | |
| | $ | 11,763,096 | | | $ | 10,797,479 | | | $ | 9,478,269 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Las Vegas Strip Resorts | | | | | | |
| Casino | | $ | 1,549,419 | | | $ | 728,254 | | | $ | 1,296,170 | |
| Rooms | | 1,402,712 | | | 662,813 | | | 1,863,521 | |
| Food and beverage | | 1,015,366 | | | 471,529 | | | 1,517,745 | |
| Entertainment, retail and other | | 769,688 | | | 383,189 | | | 1,153,615 | |
| | | 4,737,185 | | | 2,245,785 | | | 5,831,051 | |
| Regional Operations | | | | | | |
| Casino | | 2,721,515 | | | 1,569,193 | | | 2,537,780 | |
| Rooms | | 220,828 | | | 130,945 | | | 316,753 | |
| Food and beverage | | 307,750 | | | 184,153 | | | 494,243 | |
| Entertainment, retail and other | | 142,270 | | | 82,880 | | | 201,008 | |
| | | 3,392,363 | | | 1,967,171 | | | 3,549,784 | |
| MGM China | | | | | | |
| Casino | | 1,057,962 | | | 565,671 | | | 2,609,806 | |
| Rooms | | 66,498 | | | 36,624 | | | 142,306 | |
| Food and beverage | | 68,489 | | | 40,284 | | | 127,152 | |
| Entertainment, retail and other | | 17,812 | | | 14,124 | | | 26,158 | |
| | | 1,210,761 | | | 656,703 | | | 2,905,422 | |
| Reportable segment net revenues | | 9,340,309 | | | 4,869,659 | | | 12,286,257 | |
| Corporate and other | | 339,831 | | | 292,423 | | | 613,415 | |
| | | $ | 9,680,140 | | | $ | 5,162,082 | | | $ | 12,899,672 | |
Las Vegas Strip Resorts casino revenue
decreased 2%was $1.5 billion in
20182021, compared to
2017$728 million in 2020, an increase of 113%, due primarily due to the temporary property closures for a portion of 2020 and removal of mandated operational and capacity restrictions, as well as an increase in customer incentives. Las Vegas Strip Resorts casino revenue increased 3%travel in
2017 comparedthe current year, and the inclusion of the operating results of Aria subsequent to
2016, primarily due to a 2% increaseconsolidation in
table games win.September 2021.
The following table shows key gaming statistics for our Las Vegas Strip Resorts:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (Dollars in millions) | |
Table Games Drop | | $ | 3,857 | | | $ | 3,777 | | | $ | 3,723 | |
Table Games Win % | | | 24.6 | % | | | 24.7 | % | | | 24.4 | % |
Slots Handle | | $ | 12,569 | | | $ | 12,396 | | | $ | 12,437 | |
Slots Hold % | | | 9.1 | % | | | 8.9 | % | | | 8.9 | % |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (Dollars in millions) |
| Table Games Drop | | $ | 3,597 | | | $ | 2,001 | | | $ | 3,526 | |
| Table Games Win | | $ | 885 | | | $ | 470 | | | $ | 789 | |
| Table Games Win % | | 24.6 | % | | 23.5 | % | | 22.4 | % |
| Slots Handle | | $ | 15,089 | | | $ | 6,904 | | | $ | 12,874 | |
| Slots Win | | $ | 1,417 | | | $ | 649 | | | $ | 1,194 | |
| Slots Hold % | | 9.4 | % | | 9.4 | % | | 9.3 | % |
Las Vegas Strip Resorts rooms revenue was
$1.8$1.4 billion in
both 2018 and 2017. Las Vegas Strip Resorts rooms revenue increased 1% in 20172021, compared to
2016$663 million in 2020, an increase of 112%, due primarily to the temporary property closures for a portion of the prior year and removal of mandated operational and capacity restrictions, as
a result of a 2%well as an increase in
REVPAR.travel in the current year, and the inclusion of the operating results of Aria subsequent to consolidation in September 2021.
The following table shows key hotel statistics for our Las Vegas Strip Resorts:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
Occupancy | | | 91 | % | | | 91 | % | | | 93 | % |
Average Daily Rate (ADR) | | $ | 161 | | | $ | 160 | | | $ | 154 | |
Revenue per Available Room (REVPAR) | | | 147 | | | | 146 | | | | 143 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
Occupancy(1) | | 74 | % | | 55 | % | | 91 | % |
| Average Daily Rate (ADR) | | $ | 173 | | | $ | 161 | | | $ | 167 | |
Revenue per Available Room (REVPAR)(1) | | $ | 128 | | | $ | 88 | | | $ | 153 | |
(1)Rooms that were out of service, including full and midweek closures, during the years ended December 31, 2021 and 2020 due to the COVID-19 pandemic were excluded from the available room count when calculating hotel occupancy and REVPAR.
Las Vegas Strip Resorts food and beverage revenue
decreased 1%was $1.0 billion in
20182021, compared to
2017$472 million in 2020, an increase of 115%, due primarily
driven by disruption related to the
rebrandingtemporary closures at certain properties and operational and capacity restrictions in the prior year and removal of
Park MGM and NoMad Las Vegas andthose restrictions in the
closure of certain restaurants, partially offset bycurrent year as well as an increase in
cateringtravel in the current year, and
banquets revenue. Las Vegas Strip Resorts foodthe inclusion of the operating results of Aria subsequent to consolidation in September 2021. However, not all outlets were fully re-opened during the current year and
beverage revenue decreased 2%the properties did not benefit from the removal of mandated operational and capacity restrictions as well as an increase in
2017 compared to 2016travel primarily
due to a decrease related tountil the
rebrandinglatter part of
Park MGM and NoMad Las Vegas.the second quarter of the current year.
Las Vegas Strip Resorts entertainment, retail and other
revenues increased 1%revenue was $770 million in
20182021, compared to
2017 due primarily to$383 million in 2020, an increase
in parking fees and in-room mini bar revenue. Las Vegas Strip Resorts entertainment, retail and other revenues increased 4% in 2017 compared to 2016of 101%, due primarily to the
openingtemporary property closures for a portion of the
Park Theaterprior year and removal of mandated operational and capacity restrictions as well as an increase in
December 2016, parking feestravel in the current year, and
ATM commissions.the inclusion of the operating results of Aria subsequent to consolidation in September 2021. However, venue re-openings and events did not primarily occur until beginning in the latter part of the second quarter of the current year.
Regional Operations casino revenue
increased 10%was $2.7 billion in
20182021, compared to
2017 primarily due to the opening$1.6 billion in 2020, an increase of
MGM Springfield and an 18% increase in both table games win and slots win at MGM National Harbor. Regional Operations casino revenue increased 80% in 2017 compared to 201673%, due primarily to
a fullthe temporary property closures in the prior year
and removal of
contributions from Borgatamandated operational and
MGM National Harbor, comparedcapacity restrictions and, to a
partial year of contributionslesser extent, increase in
2016.travel in the current year.
The following table shows key gaming statistics for our Regional Operations:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (Dollars in millions) | |
Table Games Drop | | $ | 4,038 | | | $ | 3,872 | | | $ | 1,877 | |
Table Games Win % | | | 19.7 | % | | | 18.7 | % | | | 18.2 | % |
Slots Handle | | $ | 21,468 | | | $ | 19,634 | | | $ | 12,590 | |
Slots Hold % | | | 9.1 | % | | | 9.1 | % | | | 9.0 | % |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (Dollars in millions) |
| Table Games Drop | | $ | 3,980 | | | $ | 2,422 | | | $ | 4,226 | |
| Table Games Win | | $ | 788 | | | $ | 488 | | | $ | 827 | |
| Table Games Win % | | 19.8 | % | | 20.1 | % | | 19.6 | % |
| Slots Handle | | $ | 25,566 | | | $ | 14,527 | | | $ | 25,031 | |
| Slots Win | | $ | 2,462 | | | $ | 1,405 | | | $ | 2,363 | |
| Slots Hold % | | 9.6 | % | | 9.7 | % | | 9.4 | % |
Regional Operations rooms revenue
decreased less than 1%was $221 million in
20182021, compared to
2017$131 million in 2020, an increase of 69%, due primarily to
a 2% decrease in REVPAR primarily related to inclement weather and increased competitionthe temporary property closures in the
Atlantic City, New Jersey market, which was partially offset by contributions from MGM Springfield. Regional Operations rooms revenue increased 75% in 2017 compared to 2016 due primarilyprior year and removal of mandated operational and capacity restrictions and, to a
full year of contributions from Borgata and MGM National Harbor, compared to a partial year of contributionslesser extent, increase in
2016.travel in the current year.
Regional Operations food and beverage revenue
increased 5%was $308 million in
20182021, compared to
2017$184 million in 2020, an increase of 67%, due primarily to
contributions from MGM Springfield. Regional Operations foodthe temporary property closures in the prior year and
beverage revenue increased 74%removal of mandated operational and capacity restrictions beginning primarily in
2017 compared to 2016 due primarily to a full yearthe second quarter of
contributions from Borgata and MGM National Harbor, compared to a partial year of contributions in 2016. the current year.
Regional Operations entertainment, retail and other revenue
increased 10%was $142 million in
20182021, compared to
2017$83 million in 2020, an increase of 72%, due primarily to
contributions from MGM Springfieldtemporary property closures in the prior year and
an increaseremoval of mandated operational and capacity restrictions beginning primarily in
revenue from headliner shows at Borgata. Regional Operations entertainment, retail and other revenue increased 73% in 2017 compared to 2016 due primarily to a full yearthe second quarter of
contributions from Borgata and MGM National Harbor, compared to a partial year of contributions in 2016.the current year.
The following table shows key gaming statistics for MGM China:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (Dollars in millions) | |
VIP Table Games Turnover | | $ | 40,599 | | | $ | 34,533 | | | $ | 34,613 | |
VIP Table Games Win % | | | 3.0 | % | | | 3.2 | % | | | 3.2 | % |
Main Floor Table Games Drop | | $ | 7,566 | | | $ | 5,159 | | | $ | 5,256 | |
Main Floor Table Games Win % | | | 18.4 | % | | | 20.2 | % | | | 18.8 | % |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (Dollars in millions) |
| VIP Table Games Turnover | | $ | 8,499 | | | $ | 7,015 | | | $ | 38,071 | |
| VIP Table Games Win | | $ | 272 | | | $ | 213 | | | $ | 1,237 | |
| VIP Table Games Win % | | 3.2 | % | | 3.0 | % | | 3.2 | % |
| Main Floor Table Games Drop | | $ | 4,509 | | | $ | 2,037 | | | $ | 8,252 | |
| Main Floor Table Games Win | | $ | 966 | | | $ | 467 | | | $ | 1,907 | |
| Main Floor Table Games Win % | | 21.4 | % | | 22.9 | % | | 23.1 | % |
MGM China net
revenue increased 32%revenues were $1.2 billion in
20182021, compared to
2017 and benefited from the opening$657 million in 2020, an increase of
MGM Cotai, which contributed $729 million of net revenues. Main floor table games win increased 33% compared to the84%. The prior year
period due towas negatively affected by both property closures in February 2020 and was more significantly impacted by travel and entry restrictions in Macau than in the
opening of MGM Cotai. VIP table games win increased 12% compared to the prior year period due to the opening of VIP junket rooms in September 2018 at MGM Cotai. MGM China net revenue increased 3% in 2017 compared to 2016 primarily as a result of an increase in main floor table games win of 5%, which was partially offset by a 1% decrease in VIP table games win.current year.
Corporate and other revenue includes revenues from other corporate operations, management services and reimbursed costs revenue primarily related to our CityCenter management agreement
and $133 million(which was terminated upon the acquisition of CityCenter in
net revenues from MGP’s Northfield casino, subsequent to its acquisition in July 2018.September 2021). Reimbursed costs revenue represents reimbursement of costs, primarily payroll-related, incurred by us in connection with the provision of management services and was
$425$226 million,
$402$245 million and
$397$437 million for
2018, 20172021, 2020 and
2016,2019, respectively.
Reimbursed costs revenue for the year ended December 31, 2021 decreased compared to the prior year due primarily to the termination of the CityCenter management agreement as discussed above. See below for additional discussion of our share of operating results from unconsolidated affiliates.
Adjusted
EBITDAProperty EBITDAR and Adjusted EBITDAR
The following table presents
a detail of Adjusted EBITDA. Management uses Adjusted Property
EBITDAEBITDAR and Adjusted EBITDAR. Adjusted Property EBITDAR is our reportable segment generally accepted accounting principles (“GAAP”) measure, which we utilize as the primary profit measure for
itsour reportable segments. See
“Non-GAAP Measures”Note 17 to the accompanying consolidated financial statements and “Reportable Segment GAAP measure” below for additional information.
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (In thousands) | |
Adjusted EBITDA | | | | | | | | | | | | |
Las Vegas Strip Resorts | | $ | 1,705,479 | | | $ | 1,780,600 | | | $ | 1,661,921 | |
Regional Operations | | | 759,096 | | | | 731,916 | | | | 399,701 | |
MGM China | | | 568,294 | | | | 535,524 | | | | 529,281 | |
Reportable segment Adjusted Property EBITDA | | | 3,032,869 | | | | 3,048,040 | | | | 2,590,903 | |
Corporate and other | | | (224,800 | ) | | | (213,908 | ) | | | 203,193 | |
| | $ | 2,808,069 | | | $ | 2,834,132 | | | $ | 2,794,096 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Las Vegas Strip Resorts | | $ | 1,738,211 | | | $ | 232,188 | | | $ | 1,643,122 | |
| Regional Operations | | 1,217,814 | | | 343,990 | | | 969,866 | |
| MGM China | | 25,367 | | | (193,832) | | | 734,729 | |
| Corporate and other | | (560,309) | | | (530,843) | | | (331,621) | |
| Adjusted EBITDAR | | $ | 2,421,083 | | | | | |
Las Vegas Strip Resorts
Adjusted Property EBITDA at our
Las Vegas Strip Resorts
decreased 4%Adjusted Property EBITDAR was $1.7 billion in
20182021 compared to
2017 due primarily to a decrease$232 million in
casino revenue, as discussed above, and was also impacted by disruption related to the rebranding of Park MGM, which was partially offset by business interruption insurance proceeds, as discussed above. Adjusted Property EBITDA margin decreased in 2018 by 115 basis points compared to 2017 to 29.8%.Adjusted Property EBITDA at our2020. Las Vegas Strip Resorts Adjusted Property EBITDAR margin increased 7%to 36.7% in 20172021 compared to 2016 due primarily to an10.3% in 2020. The current year benefited from the increase in casino and non-casino revenue, as discussed above. Adjusted Property EBITDA margin increased 165 basis points from 2016 to 31.0% due to an increase in casino and non-casino revenuerevenues, as discussed above, as well as a decrease in general and administrative expense related to payroll costs and utilities.
realized benefits from our cost savings initiatives.
Regional Operations Adjusted Property
EBITDA at ourEBITDAR was $1.2 billion in 2021 compared to $344 million in 2020. Regional Operations
Adjusted Property EBITDAR margin increased
4%to 35.9% in
20182021 compared to
2017 and benefitted17.5% in 2020 as the current year benefited from the
opening of MGM Springfield and an increase in
casino and non-casino revenue,revenues, as discussed
above. Adjusted Property EBITDA margin decreased in 2018 by 114 basis points compared to 2017 to 25.9%, primarily as a result of the ramp up of operations at MGM Springfield,above, as well as
a decrease in Adjusted Property EBITDA margin at Borgata due to a decrease in casino, rooms and food and beverage revenue as a result of inclement weather and increased competition in Atlantic City, New Jersey.Adjusted Property EBITDA atrealized benefits from our Regional Operations increased 83% in 2017 compared to 2016 and benefitted from a full year of operations at Borgata and National Harbor. Adjusted Property EBITDA margin was 27.0% in 2017 compared to 26.3% in 2016.
cost saving initiatives.
MGM China’s Adjusted Property
EBITDA increased 6%EBITDAR was $25 million in
20182021 compared to
2017a loss of $194 million in 2020. The increase was due primarily to the
opening of MGM Cotai. Excluding intercompany license fees of $43 million and $34 million for the years ended December 31, 2018 and 2017, respectively, Adjusted Property EBITDA increased 7% compared to 2017. Adjusted Property EBITDA margin was 23.2%temporary property closures in
2018 compared to 28.8% in 2017, decreasing primarily as a result of the ramp up of operations at MGM Cotai and a decrease in win percentages for both main floor and VIP table games at MGM Macau.MGM China’s Adjusted Property EBITDA increased 1% in 2017 compared to 2016. Excluding intercompany license fees of $34 million for both the years ended December 31, 2017 and 2016, Adjusted Property EBITDA increased 1% compared to 2016. Adjusted Property EBITDA margin was 28.8% in 2017 compared to 29.2% in 2016 and decreased in part as a result of a 7% increase in general and administrative expense.
Corporate and other
Adjusted EBITDA related to corporate and other in 2018 decreased compared to the prior year due primarily to an increase in stock-based compensation, and an increase in corporate expense as described in “Summary Operating Results,” which was partially offset by the inclusion of $45 million of Adjusted Property EBITDA related to MGP’s Northfield casino.
Adjusted EBITDA related to corporate and other in 2017 decreased compared towell as the prior year due to our share of the gain recognizedbeing more significantly impacted by travel and entry restrictions in 2016 from the sale of Crystals at CityCenter, the gain on the acquisition of Borgata in 2016Macau and an increase in stock-based compensation, partially offset by the cessation of equity method accounting for Borgata subsequentother operational restrictions related to the acquisitionpandemic than in the current year. License fee expense was $21 million for 2021 and an increase$11 million in corporate expense as described in “Summary Operating Results.” See “Operating Results – Income from Unconsolidated Affiliates” for further discussion regarding CityCenter.
the prior year.
Operating Results – Details of Certain Charges
Preopening and start-up expenses consisted of the following:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (In thousands) | |
MGM China | | $ | 64,341 | | | $ | 86,970 | | | $ | 27,848 | |
MGM Springfield | | | 60,787 | | | | 22,881 | | | | 26,210 | |
Park MGM rebranding | | | 22,569 | | | | 6,498 | | | | 589 | |
MGM National Harbor | | | 163 | | | | 366 | | | | 77,242 | |
Other | | | 3,532 | | | | 1,760 | | | | 8,186 | |
| | $ | 151,392 | | | $ | 118,475 | | | $ | 140,075 | |
Preopening and start-up expenses increased in 2018 due primarily to an increase in preopening and start-up expenses at MGM Springfield (which opened in August 2018) and at Park MGM as part of the property’s rebranding, which was partially offset by a decrease in preopening at MGM China due to the opening of MGM Cotai in February 2018.
Preopening and start-up expenses decreased in 2017 compared to 2016 due primarily to a decrease in preopening and start-up expenses at MGM National Harbor (as it opened in December 2016), partially offset by an increase in preopening and start-up expenses at MGM China related to MGM Cotai and at Park MGM as part of the property’s rebranding.
Property transactions, net consisted of the following:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | | | | | | | | | | | |
| | (In thousands) | |
Gain on sale of Grand Victoria | | $ | (44,703 | ) | | $ | — | | | $ | — | |
Other property transactions, net | | | 53,850 | | | | 50,279 | | | | 17,078 | |
| | $ | 9,147 | | | $ | 50,279 | | | $ | 17,078 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Loss related to sale of Circus Circus Las Vegas and adjacent land | | $ | — | | | $ | — | | | $ | 220,294 | |
| Other property transactions, net | | (67,736) | | | 93,567 | | | 55,508 | |
| | | $ | (67,736) | | | $ | 93,567 | | | $ | 275,802 | |
See Note
1516 to the accompanying consolidated financial statements for
a discussion of property transactions,
net for the years ended December 31, 2018, 2017 and 2016.net.
Operating Results – Income from Unconsolidated Affiliates
The following table summarizes information related to our
share of operating income from unconsolidated affiliates:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (In thousands) | |
CityCenter | | $ | 138,383 | | | $ | 133,400 | | | $ | 445,852 | |
Borgata (through July 31, 2016) | | | — | | | | — | | | | 61,169 | |
Other | | | 9,307 | | | | 12,822 | | | | 21,266 | |
| | $ | 147,690 | | | $ | 146,222 | | | $ | 528,287 | |
We
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| CityCenter (through September 26, 2021) | | $ | 128,127 | | | $ | (29,753) | | | $ | 128,421 | |
| MGP BREIT Venture | | 155,817 | | | 136,755 | | | — | |
| BetMGM | | (211,182) | | | (61,663) | | | (15,804) | |
| Other | | 12,061 | | | (2,401) | | | 6,904 | |
| | | $ | 84,823 | | | $ | 42,938 | | | $ | 119,521 | |
In September 2021, we completed
ourthe acquisition of
Borgata on August 1, 2016 and therefore began to consolidate Borgata beginning on that date. Prior thereto ourthe 50% ownership interest in
Borgata was accountedCityCenter held by Infinity World and now own 100% of the equity interest in CityCenter. Accordingly, we no longer account for
our interest in CityCenter under the equity
method.method of accounting, and we now consolidate CityCenter in our financial statements.
In 2018,June 2021, CityCenter closed the sale of its Harmon land for $80 million on which it recorded a $30 million gain. We recorded a $50 million gain, which included $15 million of our 50% share of the gain recorded by CityCenter and $35 million representing the reversal of certain basis differences in 2021.
Our share of CityCenter’s operating
results,income, including certain basis difference adjustments, was
$138$128 million
for the current year period through September 26, 2021 compared to
$133our share of CityCenter's operating loss of $30 million in
2017,2020, due primarily
due to
a $12 millionthe temporary property closures in the prior year and removal of mandated operational and capacity restrictions, an increase in travel beginning primarily in the second quarter of the current year, and the gain
onrelated to the sale of
Mandarin Orientalits Harmon land in the current year, as discussed above, partially offset by a shorter comparative period in the current year given that,
as of September 2021, we
recognizedno longer account for our interest in
2018 related toCityCenter under the
reversalequity method of
basis differences in excess of our share of the loss recorded by CityCenter. At Aria, casino revenues decreased 2% in 2018 compared to 2017 due to an increase in incentives and a decrease in table games hold. CityCenter’s non-casino revenues increased 7% in 2018 compared to 2017 primarily related to an increase in food and beverage revenue due in part to an increase in restaurant revenues and an increase in catering and banquets during the year.In 2017, our share of CityCenter’s operating results, including certain basis difference adjustments, was $133 million compared to $446 million in 2016, primarily due to our $401 million share of a gain recognized by CityCenter on the sale of Crystals and the corresponding reversal of certain basis differences in 2016. At Aria, casino revenues increased 11% in 2017 compared to 2016 due to an increase in table games win and slots win. Rooms revenue increased 4% in 2017 compared to 2016 related to an increase in REVPAR and food and beverage revenue increased 6% in 2017 due in part to an increase in catering and banquets during the year.
accounting, as discussed above.
Interest expense. The following table summarizes information related to interest on our long-term debt:expense, net: | | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (In thousands) | |
Total interest incurred | | $ | 821,229 | | | $ | 779,855 | | | $ | 814,731 | |
Interest capitalized | | | (51,716 | ) | | | (111,110 | ) | | | (119,958 | ) |
| | $ | 769,513 | | | $ | 668,745 | | | $ | 694,773 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Total interest incurred | | $ | 800,156 | | | $ | 679,251 | | | $ | 853,007 | |
| Interest capitalized | | (563) | | | (2,871) | | | (5,075) | |
| | | $ | 799,593 | | | $ | 676,380 | | | $ | 847,932 | |
Gross interest expense
was $800 million in
2018 increased $41 million2021 compared to
2017$679 million in 2020. The increase in gross interest expense was due
primarily to an increase in
the average debt outstanding relating to our senior notes and our credit facilities and an increase in the weighted average interest rate of our credit facilities, partially offset by a decrease in amortization of debt issuance costs. Gross interest expense decreased in 2017 compared to 2016 primarily as a result of a decrease in the average debt outstanding related to
our senior notes
due to the issuances by us, the Operating Partnership and
MGM China in 2020 and 2021, partially offset by a decrease in the weighted average interest rate of
ourthe senior notes.
This was partially offset by an increase in the average debt outstanding under our credit facilities and an increase in amortization of debt issuance costs. See Note 9 to the accompanying consolidated financial statements for additional discussion on long-term debt and see “Liquidity and Capital Resources” for additional discussion on issuances and repayments of long-term debt and other sources and uses of cash.
Capitalized
Other, net. Other income, net was $66 million in 2021 compared to other expense, net of $89 million in 2020. The current year included a $28 million net gain on change in fair value of an equity instrument, a $39 million gain on the Operating Partnership’s unhedged interest in 2018 decreased from 2017 due primarily to the substantial completionrate swaps, and $22 million of MGM Cotai in February 2018,interest income, partially offset by an increase$13 million of foreign currency remeasurement losses primarily related to the MGM Springfield project, which was substantially completed in August 2018. Capitalized interest in 2017 decreased from 2016 due primarily to the opening of MGM National Harbor in December 2016, partially offset by the MGM Cotai and MGM Springfield projects.Non-operating items from unconsolidated affiliates. Non-operating expense from unconsolidated affiliates decreased $18China’s U.S. dollar-denominated senior notes. The prior year included a $109 million in 2017 compared to 2016, due primarily to the acquisition of Borgata on August 1, 2016, at which time, we began to consolidate Borgata. Prior thereto, our 50% ownership interest in Borgata was accounted for under the equity method.
Other, net. Other expense in 2018 decreased $30 million compared to 2017 due primarily to the loss incurred on early retirement of debt in 2017 of $44 million related to our early retirement of the 11.375% senior notes due 2018 and the MGM National Harbor credit facility. Other expense in 2017 decreased $24 million compared to 2016 primarily due to the loss on the early retirement of debt in 2016 of $65 million related to our 7.625% senior notes due 2017,and the termination of our 7.5% senior notes due 2016, our 10% senior notes due 2016, and our prior senior creditrevolving facility, offset byas well as an $18 million loss incurred on the loss on early retirement of debt incurredrelated to the Operating Partnership’s repayment of its term loan A facility and its term loan B facility, partially offset by $9 million of foreign currency remeasurement gains primarily related to MGM China’s U.S. dollar-denominated senior notes, and $32 million in 2017 as described above.
interest income.
Income taxes. The following table summarizes information related to our income taxes: | | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (In thousands) | |
Income before income taxes | | $ | 634,006 | | | $ | 960,790 | | | $ | 1,257,589 | |
Benefit (provision) for income taxes | | | (50,112 | ) | | | 1,127,394 | | | | (21,743 | ) |
Effective income tax rate | | | 7.9 | % | | | (117.3 | )% | | | 1.7 | % |
Federal, state and foreign income taxes paid, net of refunds | | $ | (10,100 | ) | | $ | 181,651 | | | $ | 68,236 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Income (loss) before income taxes | | $ | 1,461,804 | | | $ | (1,511,479) | | | $ | 2,846,725 | |
| Benefit (provision) for income taxes | | (253,416) | | | 191,572 | | | (632,345) | |
| Effective income tax rate | | 17.3 | % | | 12.7 | % | | 22.2 | % |
| Federal, state and foreign income taxes paid, net of refunds | | $ | 43,018 | | | $ | 8,543 | | | $ | 28,493 | |
Our effective
tax rate for
20182021 was favorably impacted by the
reduction in the U.S. federal income tax rate from 35% to 21%, the reversal of Macau shareholder dividend tax that was accrued in 2017 upon receipt of the extension of the annual fee arrangement, partially offset by SAB 118 measurement period tax expense related to the U.S. Tax Cuts and Jobs Act (the “Tax Act”). Our effective tax rate in 2017 was favorably impacted by a non-recurring, non-cash income tax benefit of $1.4 billion resulting from the remeasurement of deferred tax assets and liabilities required due to the enactment of the Tax Act, partially offset by the accrual of the Macau shareholder dividend tax. Our effective tax rate in 2016 was favorably impacted by income tax benefits attributable to a decrease in valuation allowance on foreign tax credit (“FTC”) carryovers and permanent exclusion of a portion of the gain on
the Borgata transaction,consolidation of CityCenter partially offset by
income tax expense attributablethe unfavorable impact of losses in Macau that we could not benefit. The effective rate for 2020 was unfavorably impacted by losses in Macau that we could not benefit and adjustments to
the remeasurement ofvaluation allowances for Macau deferred tax
liabilitiesassets and foreign tax credits, partially offset by tax benefit resulting from
carrying back net operating losses to tax years with a
changehigher tax rate than is currently in
assumption concerning renewal of the exemption from the Macau complementary tax on gaming profits.Cash taxes paid decreased in 2018 primarily due to the impact of the Tax Act changes, most notably the increase in the recapture of overall domestic losses from 50 percent of U.S. taxable income to 100 percent of U.S. taxable income, resulting in increased FTC carryover usage. effect.
Cash taxes paid increased in
20172021 compared to
20162020 primarily due to an increase in federal income taxes paid resulting from increased U.S. taxable income
and state income taxes attributable to Borgata, which has been consolidated sincefollowing the
August 2016 acquisitionrecovery of
Boyd Gaming’s interest in the
company.Non-GAAP Measures
business from the impacts of COVID-19.
Reportable Segment GAAP measure
“Adjusted EBITDA”Property EBITDAR” is our reportable segment GAAP measure, which we utilize as the primary profit measure for our reportable segments and underlying operating segments. Adjusted Property EBITDAR is a measure defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, gain on REIT transactions, net, 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), rent expense associated with triple-net operating and ground leases, income from unconsolidated affiliates related to investments in real estate ventures, property transactions, net, and also excludes gain on consolidation of CityCenter, net, gain related to CityCenter's sale of Harmon land recorded within income from unconsolidated affiliates and corporate expense (which includes CEO transition expense and October 1 litigation settlement) and stock compensation expense, which are not allocated to each operating segment, and rent expense related to the master lease with MGP that eliminates in consolidation. We manage capital allocation, tax planning, stock compensation, and financing decisions at the corporate level. “Adjusted Property EBITDAR margin” is Adjusted Property EBITDAR divided by related segment net revenues.
Non-GAAP Measure
“Adjusted EBITDAR” is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, NV Energy exit expense,property transactions, net, gain on Borgata transaction, and propertyREIT transactions, net. “Adjusted Property EBITDA” is Adjusted EBITDA before corporatenet, gain on consolidation of CityCenter, net, CEO transition expense, andOctober 1 litigation settlement, restructuring costs (which represents costs related to severance, accelerated stock compensation expense, which areand consulting fees directly related to the operating model component of the MGM 2020 Plan), rent expense associated with triple-net operating and ground leases, gain related to CityCenter's sale of Harmon land recorded within income from unconsolidated affiliates, and income from unconsolidated affiliates related to investments in real estate ventures.
Adjusted EBITDAR information is a valuation metric, should not
allocated to each property. “Adjusted Property EBITDA margin” is Adjusted Property EBITDA divided by net revenues. Adjusted EBITDA informationbe used as an operating metric, and is presented solely as a supplemental disclosure to reported GAAP measures because
management believes these measures are 1)we believe this measure is widely used
measures of operating performance in the gaming industry,by analysts, lenders, financial institutions, and
2)investors as a principal basis for
the valuation of gaming companies.
We believe that while items excluded from Adjusted EBITDA, Adjusted Property EBITDA, and Adjusted Property EBITDA marginEBITDAR may be recurring in nature and should not be disregarded in evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods because these items can vary significantly depending on specific underlying transactions or events that may not be comparable between the periods being presented.trends. Also, we believe excluded items may not relate specifically to current operating trends or be indicative of future results. For example, preopening and start-up expenses will be significantly different in periods when we are developing and constructing a major expansion project and will depend on where the current period lies within the development cycle, as well as the size and scope of the project(s). Property transactions, net includes normal recurring disposals, gains and losses on sales of assets related to specific assets within our resorts, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period. In addition, capital allocation, tax planning, financing and stock compensation awards are all managed at the corporate level. Therefore, we useHowever, as discussed herein, Adjusted Property EBITDAEBITDAR should not be viewed as the primarya measure of domestic resortsoverall operating performance.
performance, considered in isolation, or as an alternative to net income, because this measure is not
presented on a GAAP basis and exclude certain expenses, including the rent expense associated with our triple-net operating and ground leases, and are provided for the limited purposes discussed herein.
Adjusted
EBITDA, Adjusted Property EBITDA or Adjusted Property EBITDA marginEBITDAR should not be construed as
alternativesan alternative to operating income or net income, as
indicatorsan indicator of our performance; or as
alternativesan alternative to cash flows from operating activities, as
measuresa measure of liquidity; or as any other measure determined in accordance with
generally accepted accounting principles.GAAP. We have significant uses of cash flows, including capital expenditures, interest payments, taxes,
real estate triple-net lease and ground lease payments, and debt principal repayments, which are not reflected in Adjusted
EBITDA, Adjusted Property EBITDA or Adjusted Property EBITDA margin.EBITDAR. Also, other companies in the gaming and hospitality industries that report Adjusted
EBITDA, Adjusted Property EBITDA or Adjusted Property EBITDA marginEBITDAR information may calculate Adjusted
EBITDA, Adjusted Property EBITDA or Adjusted Property EBITDA marginEBITDAR in a different
manner.manner and such differences may be material.
The following table presents a reconciliation of net income attributable to MGM Resorts International to Adjusted
EBITDA:EBITDAR: | | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (In thousands) | |
Net income attributable to MGM Resorts International | | $ | 466,772 | | | $ | 1,952,052 | | | $ | 1,100,408 | |
Plus: Net income attributable to noncontrolling interests | | | 117,122 | | | | 136,132 | | | | 135,438 | |
Net income | | | 583,894 | | | | 2,088,184 | | | | 1,235,846 | |
Provision (benefit) for income taxes | | | 50,112 | | | | (1,127,394 | ) | | | 21,743 | |
Income before income taxes | | | 634,006 | | | | 960,790 | | | | 1,257,589 | |
Non-operating expense | | | | | | | | | | | | |
Interest expense, net of amounts capitalized | | | 769,513 | | | | 668,745 | | | | 694,773 | |
Non-operating items from unconsolidated affiliates | | | 47,827 | | | | 34,751 | | | | 53,139 | |
Other, net | | | 18,140 | | | | 48,241 | | | | 72,698 | |
| | | 835,480 | | | | 751,737 | | | | 820,610 | |
Operating income | | | 1,469,486 | | | | 1,712,527 | | | | 2,078,199 | |
NV Energy exit expense | | | — | | | | (40,629 | ) | | | 139,335 | |
Preopening and start-up expenses | | | 151,392 | | | | 118,475 | | | | 140,075 | |
Property transactions, net | | | 9,147 | | | | 50,279 | | | | 17,078 | |
Gain on Borgata transaction | | | — | | | | — | | | | (430,118 | ) |
Depreciation and amortization | | | 1,178,044 | | | | 993,480 | | | | 849,527 | |
Adjusted EBITDA | | $ | 2,808,069 | | | $ | 2,834,132 | | | $ | 2,794,096 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Net income (loss) attributable to MGM Resorts International | | $ | 1,254,370 | | | $ | (1,032,724) | | | $ | 2,049,146 | |
| Plus: Net income (loss) attributable to noncontrolling interests | | (45,981) | | | (287,183) | | | 165,234 | |
| Net income (loss) | | 1,208,389 | | | (1,319,907) | | | 2,214,380 | |
| Provision (benefit) for income taxes | | 253,415 | | | (191,572) | | | 632,345 | |
| Income (loss) before income taxes | | 1,461,804 | | | (1,511,479) | | | 2,846,725 | |
| Non-operating (income) expense | | | | | | |
| Interest expense, net of amounts capitalized | | 799,593 | | | 676,380 | | | 847,932 | |
| Non-operating items from unconsolidated affiliates | | 83,243 | | | 103,304 | | | 62,296 | |
| Other, net | | (65,941) | | | 89,361 | | | 183,262 | |
| | | 816,895 | | | 869,045 | | | 1,093,490 | |
| Operating income (loss) | | 2,278,699 | | | (642,434) | | | 3,940,215 | |
| Preopening and start-up expenses | | 5,094 | | | 84 | | | 7,175 | |
| Property transactions, net | | (67,736) | | | 93,567 | | | 275,802 | |
| Gain on REIT transactions, net | | — | | | (1,491,945) | | | (2,677,996) | |
| Gain on consolidation of CityCenter, net | | (1,562,329) | | | — | | | — | |
| Depreciation and amortization | | 1,150,610 | | | 1,210,556 | | | 1,304,649 | |
| CEO transition expense | | — | | | 44,401 | | | — | |
| October 1 litigation settlement | | — | | | 49,000 | | | — | |
| Restructuring | | — | | | 26,025 | | | 92,139 | |
| Triple-net operating lease and ground lease rent expense | | 833,158 | | | 710,683 | | | 74,656 | |
| Gain related to sale of Harmon land - unconsolidated affiliate | | (49,755) | | | — | | | — | |
| Income from unconsolidated affiliates related to real estate ventures | | (166,658) | | | (148,434) | | | (544) | |
| Adjusted EBITDAR | | $ | 2,421,083 | | | | | |
Guarantor Financial Information
As of December 31, 2021, all of our principal debt arrangements are guaranteed by each of our wholly owned material domestic subsidiaries that guarantee our senior credit facility. Our principal debt arrangements are not guaranteed by MGP, the Operating Partnership, MGM Grand Detroit, MGM National Harbor, Blue Tarp reDevelopment, LLC (the entity that operates MGM Springfield), and each of their respective subsidiaries. Our foreign subsidiaries, including MGM China and its subsidiaries, are also not guarantors of our principal debt arrangements. In the event that any subsidiary is no longer a guarantor of our credit facility or any of our future capital markets indebtedness, that subsidiary will be released and relieved of its obligations to guarantee our existing senior notes. The following tables present reconciliationsindentures governing the senior notes further provide that in the event of a sale of all or substantially all of the assets of, or capital stock in a subsidiary guarantor then such subsidiary guarantor will be released and relieved of any obligations under its subsidiary guarantee.
The guarantees provided by the subsidiary guarantors rank senior in right of payment to any future subordinated debt of ours or such subsidiary guarantors, junior to any secured indebtedness to the extent of the value of the assets securing such debt and effectively subordinated to any indebtedness and other obligations of our subsidiaries that do not guarantee the senior notes. In addition, the obligations of each subsidiary guarantor under its guarantee is limited so as not to constitute a fraudulent conveyance under applicable law, which may eliminate the subsidiary guarantor’s obligations or reduce such obligations to an amount that effectively makes the subsidiary guarantee lack value.
The summarized financial information of us and our guarantor subsidiaries, on a combined basis, is presented below. Certain of our guarantor subsidiaries collectively own Operating Partnership units and each subsidiary accounts for its respective investment under the equity method within the summarized financial information presented below. These subsidiaries have also accounted for the MGP master lease as an operating
income (loss) to Adjusted Property EBITDAlease, recording operating lease liabilities and
Adjusted EBITDA:operating ROU assets with the related rent expense of guarantor subsidiaries reflected within the summarized financial information. | | | | | |
| December 31, |
| 2021 |
| Balance Sheet | (In thousands) |
| Current assets | $ | 5,663,171 | |
| Investment in the MGP Operating Partnership | 2,284,222 | |
| Intercompany accounts due from non-guarantor subsidiaries | — | |
| MGP master lease right-of-use asset, net | 6,629,140 | |
| Other long-term assets | 17,025,933 | |
| MGP master lease operating lease liabilities – current | 154,287 | |
| Other current liabilities | 2,752,185 | |
| Intercompany accounts due to non-guarantor subsidiaries | 16,697 | |
| MGP master lease operating lease liabilities – noncurrent | 7,083,505 | |
| Other long-term liabilities | 18,472,138 | |
| | Year Ended December 31, 2018 | |
| | | | | | | | | | Preopening | | | Property | | | Depreciation | | | | | |
| | Operating | | | NV Energy | | | and Start-up | | | Transactions, | | | and | | | Adjusted | |
| | Income (Loss) | | | Exit Expense | | | Expenses | | | Net | | | Amortization | | | EBITDA | |
| | (In thousands) | |
Bellagio | | $ | 405,221 | | | $ | — | | | $ | — | | | $ | 1,661 | | | $ | 82,984 | | | $ | 489,866 | |
MGM Grand Las Vegas | | | 304,590 | | | | — | | | | — | | | | 750 | | | | 66,226 | | | | 371,566 | |
Mandalay Bay | | | 174,268 | | | | — | | | | — | | | | 787 | | | | 90,686 | | | | 265,741 | |
The Mirage | | | 94,226 | | | | — | | | | — | | | | 1,677 | | | | 35,961 | | | | 131,864 | |
Luxor | | | 81,197 | | | | — | | | | 114 | | | | 562 | | | | 38,876 | | | | 120,749 | |
New York-New York | | | 112,570 | | | | — | | | | — | | | | 250 | | | | 24,802 | | | | 137,622 | |
Excalibur | | | 91,394 | | | | — | | | | — | | | | 68 | | | | 19,793 | | | | 111,255 | |
Park MGM | | | (75,060 | ) | | | — | | | | 22,569 | | | | 19,901 | | | | 46,880 | | | | 14,290 | |
Circus Circus Las Vegas | | | 43,592 | | | | — | | | | — | | | | 402 | | | | 18,532 | | | | 62,526 | |
Las Vegas Strip Resorts | | | 1,231,998 | | | | — | | | | 22,683 | | | | 26,058 | | | | 424,740 | | | | 1,705,479 | |
MGM Grand Detroit | | | 173,515 | | | | — | | | | — | | | | (95 | ) | | | 22,397 | | | | 195,817 | |
Beau Rivage | | | 76,855 | | | | — | | | | 51 | | | | 510 | | | | 26,490 | | | | 103,906 | |
Gold Strike Tunica | | | 43,066 | | | | — | | | | 45 | | | | 71 | | | | 8,899 | | | | 52,081 | |
Borgata | | | 139,935 | | | | — | | | | — | | | | 936 | | | | 57,523 | | | | 198,394 | |
MGM National Harbor | | | 119,383 | | | | — | | | | 163 | | | | 271 | | | | 75,292 | | | | 195,109 | |
MGM Springfield | | | (34,757 | ) | | | — | | | | 32,435 | | | | — | | | | 16,111 | | | | 13,789 | |
Regional Operations | | | 517,997 | | | | — | | | | 32,694 | | | | 1,693 | | | | 206,712 | | | | 759,096 | |
MGM Macau | | | 406,763 | | | | — | | | | — | | | | 630 | | | | 70,728 | | | | 478,121 | |
MGM Cotai | | | (190,959 | ) | | | — | | | | 64,341 | | | | 24,224 | | | | 192,567 | | | | 90,173 | |
MGM China | | | 215,804 | | | | — | | | | 64,341 | | | | 24,854 | | | | 263,295 | | | | 568,294 | |
Unconsolidated resorts | | | 144,369 | | | | — | | | | 3,321 | | | | — | | | | — | | | | 147,690 | |
Management and other operations | | | 55,465 | | | | — | | | | — | | | | 178 | | | | 19,147 | | | | 74,790 | |
| | | 2,165,633 | | | | — | | | | 123,039 | | | | 52,783 | | | | 913,894 | | | | 3,255,349 | |
Stock compensation | | | (68,211 | ) | | | — | | | | — | | | | — | | | | — | | | | (68,211 | ) |
Corporate | | | (627,936 | ) | | | — | | | | 28,353 | | | | (43,636 | ) | | | 264,150 | | | | (379,069 | ) |
| | $ | 1,469,486 | | | $ | — | | | $ | 151,392 | | | $ | 9,147 | | | $ | 1,178,044 | | | $ | 2,808,069 | |
| | | | | |
| Year Ended |
| December 31, |
| 2021 |
| Income Statement | (In thousands) |
| Net revenues | $ | 6,841,788 | |
| MGP master lease rent expense | (630,364) | |
| Operating income | 2,025,160 | |
| Income from continuing operations | 1,963,979 | |
| Net income | 1,702,096 | |
| Net income attributable to MGM Resorts International | 1,702,096 | |
| | Year Ended December 31, 2017 | |
| | | | | | | | | | Preopening | | | | | | | Depreciation | | | | | |
| | Operating | | | NV Energy | | | and Start-up | | | Property | | | and | | | Adjusted | |
| | Income (Loss) | | | Exit Expense | | | Expenses | | | Transactions, Net | | | Amortization | | | EBITDA | |
| | (In thousands) | |
Bellagio | | $ | 419,462 | | | $ | (6,970 | ) | | $ | — | | | $ | 924 | | | $ | 92,320 | | | $ | 505,736 | |
MGM Grand Las Vegas | | | 279,841 | | | | (7,424 | ) | | | 6 | | | | 1,752 | | | | 70,510 | | | | 344,685 | |
Mandalay Bay | | | 169,828 | | | | (8,524 | ) | | | — | | | | 590 | | | | 96,577 | | | | 258,471 | |
The Mirage | | | 140,881 | | | | (4,043 | ) | | | — | | | | 304 | | | | 39,854 | | | | 176,996 | |
Luxor | | | 89,127 | | | | (3,394 | ) | | | — | | | | 2,428 | | | | 38,489 | | | | 126,650 | |
New York-New York | | | 107,953 | | | | (2,025 | ) | | | (162 | ) | | | 720 | | | | 28,550 | | | | 135,036 | |
Excalibur | | | 97,382 | | | | (2,658 | ) | | | — | | | | 485 | | | | 18,352 | | | | 113,561 | |
Park MGM | | | (30,659 | ) | | | (2,461 | ) | | | 6,532 | | | | 33,510 | | | | 42,269 | | | | 49,191 | |
Circus Circus Las Vegas | | | 55,256 | | | | (3,130 | ) | | | 452 | | | | 940 | | | | 16,756 | | | | 70,274 | |
Las Vegas Strip Resorts | | | 1,329,071 | | | | (40,629 | ) | | | 6,828 | | | | 41,653 | | | | 443,677 | | | | 1,780,600 | |
MGM Grand Detroit | | | 153,533 | | | | — | | | | — | | | | — | | | | 22,747 | | | | 176,280 | |
Beau Rivage | | | 62,543 | | | | — | | | | — | | | | 370 | | | | 24,865 | | | | 87,778 | |
Gold Strike Tunica | | | 43,722 | | | | — | | | | — | | | | 91 | | | | 9,069 | | | | 52,882 | |
Borgata | | | 206,445 | | | | — | | | | 1,430 | | | | 1,417 | | | | 71,878 | | | | 281,170 | |
MGM National Harbor | | | 50,696 | | | | — | | | | 366 | | | | — | | | | 82,744 | | | | 133,806 | |
Regional Operations | | | 516,939 | | | | — | | | | 1,796 | | | | 1,878 | | | | 211,303 | | | | 731,916 | |
MGM China | | | 204,190 | | | | — | | | | 86,970 | | | | 6,286 | | | | 238,078 | | | | 535,524 | |
Unconsolidated resorts | | | 146,222 | | | | — | | | | — | | | | — | | | | — | | | | 146,222 | |
Management and other operations | | | 18,913 | | | | — | | | | — | | | | — | | | | 7,925 | | | | 26,838 | |
| | | 2,215,335 | | | | (40,629 | ) | | | 95,594 | | | | 49,817 | | | | 900,983 | | | | 3,221,100 | |
Stock compensation | | | (60,936 | ) | | | — | | | | — | | | | — | | | | — | | | | (60,936 | ) |
Corporate | | | (441,872 | ) | | | — | | | | 22,881 | | | | 462 | | | | 92,497 | | | | (326,032 | ) |
| | $ | 1,712,527 | | | $ | (40,629 | ) | | $ | 118,475 | | | $ | 50,279 | | | $ | 993,480 | | | $ | 2,834,132 | |
| | Year Ended December 31, 2016 | |
| | | | | | | | | | | | | | Property | | | | | | | | | |
| | | | | | | | | | | | | | Transactions, Net | | | | | | | | | |
| | | | | | | | | | Preopening | | | and Gain on | | | Depreciation | | | | | |
| | Operating | | | NV Energy | | | and Start-up | | | Borgata | | | and | | | Adjusted | |
| | Income (Loss) | | | Exit Expense | | | Expenses | | | Transaction | | | Amortization | | | EBITDA | |
| | (In thousands) | |
Bellagio | | $ | 368,106 | | | $ | 23,815 | | | $ | — | | | $ | 118 | | | $ | 88,783 | | | $ | 480,822 | |
MGM Grand Las Vegas | | | 232,492 | | | | 25,365 | | | | 82 | | | | 1,719 | | | | 72,188 | | | | 331,846 | |
Mandalay Bay | | | 114,717 | | | | 29,123 | | | | 252 | | | | 2,377 | | | | 89,655 | | | | 236,124 | |
The Mirage | | | 86,035 | | | | 13,813 | | | | — | | | | 44 | | | | 40,270 | | | | 140,162 | |
Luxor | | | 57,848 | | | | 11,594 | | | | 1,625 | | | | 708 | | | | 36,612 | | | | 108,387 | |
New York-New York | | | 93,316 | | | | 7,439 | | | | 479 | | | | 210 | | | | 20,432 | | | | 121,876 | |
Excalibur | | | 72,023 | | | | 9,083 | | | | — | | | | 4,405 | | | | 16,152 | | | | 101,663 | |
Park MGM | | | 33,547 | | | | 8,409 | | | | 1,929 | | | | 1,131 | | | | 34,102 | | | | 79,118 | |
Circus Circus Las Vegas | | | 33,450 | | | | 10,694 | | | | — | | | | 816 | | | | 16,963 | | | | 61,923 | |
Las Vegas Strip Resorts | | | 1,091,534 | | | | 139,335 | | | | 4,367 | | | | 11,528 | | | | 415,157 | | | | 1,661,921 | |
MGM Grand Detroit | | | 146,722 | | | | — | | | | — | | | | (59 | ) | | | 23,608 | | | | 170,271 | |
Beau Rivage | | | 68,210 | | | | — | | | | — | | | | (172 | ) | | | 25,880 | | | | 93,918 | |
Gold Strike Tunica | | | 39,409 | | | | — | | | | — | | | | 67 | | | | 9,792 | | | | 49,268 | |
Borgata | | | 34,271 | | | | — | | | | 90 | | | | 8,652 | | | | 33,923 | | | | 76,936 | |
MGM National Harbor | | | (13,914 | ) | | | — | | | | 17,986 | | | | — | | | | 5,236 | | | | 9,308 | |
Regional Operations | | | 274,698 | | | | — | | | | 18,076 | | | | 8,488 | | | | 98,439 | | | | 399,701 | |
MGM China | | | 263,809 | | | | — | | | | 27,848 | | | | (216 | ) | | | 237,840 | | | | 529,281 | |
Unconsolidated resorts | | | 525,119 | | | | — | | | | 3,168 | | | | — | | | | — | | | | 528,287 | |
Management and other operations | | | 3,382 | | | | — | | | | 1,150 | | | | 29 | | | | 7,505 | | | | 12,066 | |
| | | 2,158,542 | | | | 139,335 | | | | 54,609 | | | | 19,829 | | | | 758,941 | | | | 3,131,256 | |
Stock compensation | | | (53,503 | ) | | | — | | | | — | | | | — | | | | — | | | | (53,503 | ) |
Corporate | | | (26,840 | ) | | | — | | | | 85,466 | | | | (432,869 | ) | | | 90,586 | | | | (283,657 | ) |
| | $ | 2,078,199 | | | $ | 139,335 | | | $ | 140,075 | | | $ | (413,040 | ) | | $ | 849,527 | | | $ | 2,794,096 | |
Liquidity and Capital Resources
Our cash flows consisted of the following:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (In thousands) | |
Net cash provided by operating activities | | $ | 1,722,539 | | | $ | 2,206,411 | | | $ | 1,533,972 | |
Net cash used in investing activities | | | (2,083,021 | ) | | | (1,580,592 | ) | | | (2,276,204 | ) |
Net cash provided by (used in) financing activities | | | 389,234 | | | | (568,778 | ) | | | 519,422 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Net cash provided by (used in) operating activities | | $ | 1,373,423 | | | $ | (1,493,043) | | | $ | 1,810,401 | |
| Net cash provided by investing activities | | 1,543,645 | | | 2,159,304 | | | 3,519,434 | |
| Net cash provided by (used in) financing activities | | (2,814,095) | | | 2,103,427 | | | (4,529,594) | |
Operating activities.Trends in our operating cash flows tend to follow trends in operating income, excluding non-cash charges, but can be affected by changes in working capital, the timing of significant interest payments, tax payments or refunds, and distributions from unconsolidated affiliates.affiliates. Cash provided by operating activities was $1.7$1.4 billion in 20182021 compared to $2.2cash used in operating activities of $1.5 billion in 2017. Operating cash flows decreased2020. The change from the prior year was due primarily to the increase in Adjusted Property EBITDAR discussed within the current period primarilyresults of operations section above, and due to the prior year being negatively affected by a change in working capital related to timing of significant purchases of chips by gaming promoters at MGM China, as well as a decrease in consolidated operating income, and an increase in cash paid for interest. In 2018 we received net cash tax refunds of $10 million compared to cash paid fornon-gaming deposits, gaming taxes of $182 million in 2017 primarilyand other gaming liabilities, and payroll related liabilities as a result of the Tax Act.Cash provided by operating activities in 2017 in comparison to 2016 was positively affected by increase in operating income at our Las Vegas Strip Resorts and Regional Operations and changes in working capital primarily related to the timing of significant purchases of chips by gaming promoters at MGM China,COVID-19 pandemic, partially offset by an increase in triple-net lease rent payments and cash paid for taxes to $182 million in 2017 compared to $68 million in 2016.
interest and taxes.
Investing activities.Our investing cash flows can fluctuate significantly from year to year depending on our decisions with respect to strategic capital investments in new or existing resorts, business acquisitions or dispositions, and the timing of maintenance capital expenditures to maintain the quality of our resorts. Capital expenditures related to regular investments in our existing resorts can also vary depending on timing of larger remodel projects related to our public spaces and hotel rooms.rooms
.
Cash used inprovided by investing activities was $1.5 billion in 2018 increased2021 compared to $2.2 billion in comparison to 2017 as a result2020. In 2021, we received $3.9 billion in net cash proceeds from the sale of the $1.0 billion outflow by the Operating Partnership for the Northfield acquisition, partially offset by a decreasereal estate of $377Aria (including Vdara), received $107 million in capital expenditures as well as an inflownet proceeds from the sale of $164 million for proceeds receivedproperty and equipment, primarily related to the sale of art, which were partially offset by our investment in Grand Victoria. The decreasepayments of $1.8 billion to acquire CityCenter, net of cash acquired, $491 million in capital expenditures, as further discussed below, and contributions of $225 million to BetMGM. In comparison, in the prior year we received $2.5 billion in net cash proceeds from 2018 to 2017 of $377 million primarily reflects less expenditures for the developments of MGM CotaiMandalay Bay and MGM National Harbor,Grand Las Vegas real estate transaction, which were partially offset by increased expenditures for MGM Springfield and the rebranding at Park MGM, as discussed in further detail below. Cash used in investing activities in 2017 decreased in comparison to 2016 as a result of the $559$271 million outflow for the Borgata acquisition in 2016 as well as a $398 million decrease in capital expenditures partially offset by a decrease of $240and $80 million in contributions to BetMGM. In the prior year period, distributions received from CityCenter. The decrease in capital expenditures from 2016unconsolidated affiliates included $51 million related to 2017our share of $398 million primarily reflects less expenditures for the developments of MGM Cotai and MGM National Harbor, partially offseta distribution paid by increased expenditures for MGM Springfield and the rebranding of Park MGM, as discussed in further detail below.
CityCenter.
In 2018,2021, we hadmade capital expenditures of $1.5 billion,$491 million, of which $376$68 million related to MGM China, excluding development fees and capitalized interest on development fees eliminated in consolidation.China. Capital expenditures at MGM China included $340$49 million primarily related to the construction of the Emerald Tower project at MGM Cotai and $36$19 million related to projects at MGM Macau. Capital expenditures at our Las Vegas Strip Resorts, Regional Operations and corporate entities of $1.1 billion included $368$423 million primarily relate to expenditures in information technology and room remodels.
In 2020, we made capital expenditures of $271 million, of which $108 million related to
the construction of MGM
Springfield, $228 million related to the Park MGM rebranding project, as well as expenditures relating to the expansion of the convention center at MGM Grand Las Vegas and various room, restaurant, and entertainment venue remodels.In 2017, we had capital expenditures of $1.9 billion, which included $908 million at MGM China, excluding development fees and capitalized interest on development fees eliminated in consolidation.China. Capital expenditures at MGM China included $856$95 million primarily related to construction close-out and projects at MGM Cotai and $13 million related to the construction of MGM Cotai and $53 million related to improvementsprojects at MGM Macau. Capital expenditures at our Las Vegas Strip Resorts, Regional Operations and corporate entities of $956$162 million included $269 million relatedexpenditures relating to the construction of MGM Springfield, $221 million related to the rebranding at Park MGM,information technology, health and $195 million primarily related to the finalization of construction of MGM National Harbor, as well assafety initiatives, and various resorts’ room, remodels, construction of additional convention space at MGM Grand Las Vegas, the parking garage at Excalibur, a waterpark at Circus Circus, and various restaurant, and entertainment venue remodels.
In 2016, we had capital expenditures of $2.3 billion, which included $971 million at MGM China, excluding development fees and capitalized interest on development fees eliminated in consolidation. Capital expenditures at MGM China included $948 million related to the construction of MGM Cotai and $23 million related to improvements at MGM Macau. Capital expenditures at our Las Vegas Strip Resorts, Regional Operations and corporate entities of $1.3 billion included $741 million related to the construction of MGM National Harbor, $121 million related to the construction of MGM Springfield, $39 million related to the construction of The Park, as well as various room remodels including the tower rooms at Mandalay Bay, construction of additional exhibit space at the Mandalay Bay Convention Center, construction of the Park Theater and rebranding at Park MGM, construction of the parking garage at Excalibur and restaurant and entertainment venue remodels.
Financing activities. Cash provided by financing activities increased in 2018 from the cash used in financing activities in 2017 primarily as a result of net borrowings of debt in 2018 of $2.2 billion in comparison to net repayments of debt in 2017 of $138 million, partially offset by MGP’s issuance of class A shares in 2017, and an increase in shares repurchased in 2018 compared to 2017.Cash used in financing activities decreasedwas $2.8 billion in 2017 from the2021 compared to cash provided by financing activities of $2.1 billion in 2016 primarily as a result of the net proceeds of $1.1 billion from MGP’s issuance of class A shares in 2016 compared to the net proceeds of $388 million from MGP’s issuance of class A shares in 2017, dividends that 2020. In 2021, we began paying in 2017, as well as an increase of $67 million in distributions to noncontrolling interest owners, partially offset by net payments of debt in 2017 of $138 million compared tohad net repayments of debt of $301$1.3 billion, as further discussed below, distributed $324 million to noncontrolling interest owners, and we repurchased $1.8 billion of our common stock, partially offset by net proceeds received of $793 million from the issuance of MGP's Class A shares. In comparison, in the prior year period, we received net proceeds from the incurrence of the bridge loan facility in connection with the MGP BREIT Venture Transaction of $1.3 billion, net proceeds of $525 million from MGP’s Class A share issuances, net debt borrowings of $1.1 billion, as further discussed below, repurchased $354 million of our common stock, distributed $286 million to noncontrolling interest owners, and paid $78 million in 2016 as well as the $100 million paid in 2016 as partdividends to our shareholders.
Borrowings and Repayments of consideration for the purchaseLong-term Debt
In 2021, we had net repayments of
additional shares of MGM China.
Borrowings (repayments) of debt
In 2018, we borrowed net debt of $2.2$1.3 billion, which primarily consisted of the repayment of the $1.7 billion outstanding on CityCenter's credit facility in full, which was assumed in the acquisition, using cash on hand, and net repayments of $407 million on MGM China’s first revolving credit facility. These repayments were partially offset by MGM China’s March 2021 issuance of $1.0$750 million in aggregate principal amount of 4.75% senior notes due 2027 at an issue price of 99.97% and net draws of $40 million on the Operating Partnership's revolving credit facility, of which $35 million was used in connection with MGP's acquisition of MGM Springfield with the remainder used to fund the Operating Partnership's and MGP's distribution and dividend payments. The net proceeds from MGM China’s 4.75% senior notes due 2027 issuance were used to partially repay amounts outstanding under the MGM China first revolving credit facility and for general corporate purposes.
In 2020, we had net proceeds from the incurrence of the bridge loan facility in connection with the MGP BREIT Venture Transaction of $1.3 billion 5.750%and net debt borrowings of $1.1 billion, which consisted of net borrowings on MGM China’s credit facility of $103 million, our issuance of $750 million of 4.75% senior notes and $750 million of 6.75% senior notes, the Operating Partnership’s issuance of $750 million of 3.875% senior notes and $800 million of 4.625% senior notes, and MGM China’s issuance of $500 million of 5.25% senior notes, partially offset by the tender of $750 million of our senior notes and the corresponding $97 million of tender offer costs, and the net repayment of $1.7 billion on the Operating Partnership's senior credit facility consisting of the repayment of $1.3 billion of its term loan B facility in full using the proceeds of the $1.3 billion bridge loan facility, which was then assumed by MGP BREIT Venture, the repayment of its $399 million term loan A facility in full using the net proceeds from MGP’s settlement of forward equity agreements, partially offset by a net draw of $10 million on its revolving credit facility.
In March 2020, with certain of the proceeds from the MGP BREIT Venture Transaction, we completed cash tender offers for an aggregate amount of $750 million of our senior notes, comprised of $325 million principal amount of our outstanding 5.75% senior notes due 2025, $368$100 million principal amount of netour outstanding 4.625% senior notes due 2026, and $325 million principal amount of our outstanding 5.5% senior notes due 2027.
In May 2020, we issued $750 million in aggregate principal amount of 6.750% senior notes due 2025. The proceeds were used to further increase our liquidity position.
In June 2020, the Operating Partnership issued $800 million in aggregate principal amount of 4.625% senior notes due 2025. The proceeds were used to repay borrowings on ourthe Operating Partnership’s senior credit facility, $137which were used to fund the May 2020 redemption of $700 million of net borrowings onOperating Partnership units held by us.
In June 2020, MGM China issued $500 million in aggregate principal amount of 5.25% senior notes due 2025. The proceeds were used to partially repay amounts outstanding under the MGM China credit facility and $728for general corporate purposes.
In October 2020, we issued $750 million in aggregate principal amount of net borrowings on4.75% senior notes due 2028. The proceeds were used for general corporate purposes.
In November 2020, the Operating Partnership issued $750 million in aggregate principal amount of 3.875% senior credit facility. Additionally, we paid $77notes due 2029. The proceeds were used for general corporate purposes, which included the December 2020 redemption of $700 million of debt issuance costs related to the amendments of the Operating Partnership’s senior credit facility in MarchPartnership units held by us.
Dividends, Distributions to Noncontrolling Interest Owners and June 2018, the amendment of MGM China’s credit facility in June 2018, the amendmentShare Repurchases
In 2021, we repurchased and retired $1.8 billion of our
senior credit facility in Decembercommon stock pursuant to our May 2018
$2.0 billion and
the issuance of the $1.0February 2020 $3.0 billion
5.750% senior notes.In 2017, we repaid net debt of $138 million which primarily consisted of a $135 million draw on our senior credit facility, a $462 million draw on the MGM China credit facility, and a $28 million draw on the MGM National Harbor credit facility, as well as the Operating Partnership’s issuance of $350 million 4.50% senior notes due 2028 in connection with the MGM National Harbor transaction, partially offset by the redemption of our $475 million 11.375% senior notes at a premium, the repayment of $478 million MGM National Harbor credit facility, as well as amortization payments of $132 million on our term loan facilities.
In 2016, we repaid net debt of $301 million. In April 2016, in connection with the MGP IPO and related financing transactions we permanently repaid $2.7 billion under our prior senior secured credit facility and entered into an amended and restated senior secured credit facility under which we borrowed $250 million. The Operating Partnership borrowed net debt of $2.1 billion during 2016 under its senior credit facility. In addition, MGM National Harbor borrowed $450 million under its credit facility, MGM China borrowed $374 million under its revolving credit facility, and we permanently repaid $584 million under Borgata’s credit facility. The following senior notes were issued during 2016:
$500 million 4.625% senior notes, due 2026 issued by us;
$500 million 4.5% senior notes, due 2026 issued by the Operating Partnership; and
$1.05 billion 5.625% senior notes, due 2024 issued by the Operating Partnership.
We redeemed the following senior notes during 2016:
$743 million 7.625% senior notes, due 2017 at a premium;
$732.7 million 7.5% senior notes, due 2016 at a premium;
$500 million 10% senior notes, due 2016 at a premium; and
$242.9 million 6.875% senior notes in April 2016 at maturity.
Additionally, we paid $140 million of debt issuance costs related to the senior notes issued in August 2016, the MGP financing transactions, the MGM National Harbor credit facility and the February 2016 amendment to the MGM China credit facility.
MGM Resorts International stock repurchase program. Inprograms. As a result of those repurchases, we completed our May 2018 our Board of Directors authorized a $2.0 billion stock repurchase program, and completed the previously announced $1.0remaining availability under the February 2020 $3.0 billion stock repurchase program. We repurchased approximatelyprogram was $1.3 billion as of December 31, 2021. In 2020, we repurchased and $328retired $354 million of our common stock in connection with the program inpursuant to our May 2018 $2.0 billion stock repurchase program.
In March 2021, June 2021, September 2021, and
2017, respectively.MGM Resorts International dividends. During 2018,December 2021, we paid dividends each quarter of $0.12$0.0025 per share, totaling $261$5 million for the year. On February 13, 2019 the Board2021. In March 2020, we paid a dividend of Directors approved a quarterly dividend to holders$0.15 per share, and in June 2020, September 2020 and December 2020, we paid dividends of record on March 8, 2019 of $0.13$0.0025 per share, totaling approximately $70 million, which will be paid on March 15, 2019. During 2017, we paid dividends each quarter of $0.11 per share, totaling $252$78 million for 2020.
In 2020, MGM China paid the year.Operating Partnership distributionsfinal dividend for 2019 of $41 million, of which we received $23 million and MGP dividends. noncontrolling interests received $18 million.
The Operating Partnership paid the following distributions to its partnership unit
holders:$119 million distribution paid in January 2019, of which we received $87 millionholders during 2021 and MGP received $32 million, which MGP concurrently paid as a dividend to its Class A shareholders;
•$454545 million of distributions paid in 2018,2021, of which we received $333$243 million and MGP received $121 million, which MGP concurrently paid as a dividend to its Class A shareholders;
$385 million of distributions paid in 2017, of which we received $290 million and MGP received $95received $302 million, which MGP concurrently paid as a dividend to its Class A shareholders; and
•$151602 million of distributions paid in 2016,2020, of which we received $113$358 million and MGP received $38$244 million, which MGP concurrently paid as a dividend to its Class A shareholders.
MGM China dividends. MGM China paid the following dividends to its shareholders:
$78 million of dividends paid in 2018, of which we received $44 million and noncontrolling interests received $34 million;
| •
| $134 million of dividends paid in 2017, of which we received $75 million and noncontrolling interests received $59 million; and
|
$104 million of dividends paid in 2016, of which we received $53 million and noncontrolling interests received $51 million.
Other Factors Affecting Liquidity
and Anticipated usesUses of cash.Cash
As previously discussed, the spread of COVID-19 and developments surrounding the global pandemic have had a significant impact on our business, financial condition, results of operations, and cash flows in 2020 and 2021 and may continue to impact our business in 2022 and thereafter. We require a certain amount of cash on hand to operate our resorts.
In addition to required cash on hand for operations, we utilize corporate cash management procedures to minimize the amount of cash held on hand or in banks. Funds are swept from the accounts at most of our domestic resorts daily into central bank accounts, and excess funds are invested overnight or are used to repay borrowingsamounts drawn under our senior securedrevolving credit facility. In addition, from time to time we may use excess funds to repurchase our outstanding debt and equity securities subject to limitations in our senior securedrevolving credit facility and Delaware law, as applicable. We have significant outstanding debt, interest payments, rent payments, and contractual obligations in addition to planned capital expenditures and acquisitions.We heldcommitments, including acquiring the operations of The Cosmopolitan for cash consideration of $1.625 billion, as discussed further in Note 1
.
As of December 31, 2021, we had cash and cash equivalents of $1.5$4.7 billion, at December 31, 2018, of which MGM China held $510$399 million and the Operating Partnership held $60$8 million. In addition to our cash and cash equivalent balance, we have significant holdings: a 41.5% economic interest in MGP (refer to Note 1 for discussion on our agreement entered into in August 2021 regarding the VICI Transaction) and an approximate 56% interest in MGM China.
At December 31, 2018,2021, we had $15.3$12.9 billion in principal amount of indebtedness, including $750$360 million of borrowings outstanding under our $2.3 billion senior secured credit facility, $2.8 billion outstanding under the $3.6$1.25 billion MGM China first revolving credit facility and $50 million outstanding under the $1.35 billion Operating Partnership revolving credit facility. No amounts were drawn on our $1.675 billion revolving credit facility or the $400 million MGM China second revolving credit facility. We have $1.0 billion of debt maturing in the next twelve months, which we expect to repay with cash on hand.
Due to the continued impact of the COVID-19 pandemic, in February 2021, MGM China further amended each of its first revolving credit facility and $2.4its second revolving credit facility to provide for waivers of the maximum leverage ratio and minimum interest coverage ratio through the fourth quarter of 2022. In February 2022, MGM China further amended each of its first revolving credit facility and its second revolving credit facility to extend the financial covenant waivers through maturity.
As of December 31, 2021, our expected cash interest payments, excluding MGP and MGM China, for 2022, 2023, and 2024 are approximately $300 million, $225 million, and $190 million, respectively, and our expected cash interest payments on a consolidated basis, which includes MGP if the VICI Transaction does not close and MGM China, for 2022, 2023, and 2024, are approximately $715 million, $625 million, and $585 million, respectively. We are also required as of December 31, 2021 to make annual cash rent payments of $1.6 billion, outstandingin the aggregate, under the $2.8 billion MGM China credit facility. triple-net lease agreements, which leases are also subject to annual escalators and also require us to pay substantially all costs associated with the lease, including real estate taxes, ground lease payments, insurance, utilities and routine maintenance, in addition to the annual cash rent.
We expect to make domestichave planned capital investments at our resorts and corporate entitiesexpenditures in 2022 of $600approximately $775 million to $650$815 million which excludes $45domestically and approximately $110 million to $50$130 million of construction closeout costs at MGM Springfield. Additionally, we expect to make capital investments at MGM China, which is inclusive of $350 millionthe capital expenditures required under the triple-net lease agreements, each of which requires us to $375 million, which includes $250 millionspend a specified percentage of construction closeout costsnet revenues, at MGM Cotai and $100 million to $125 million of maintenancethe respective properties, on capital expenditures. We additionally have
planned contributions to BetMGM in 2022 of approximately $225 million.
We also closed the acquisition of Empire City in January 2019 for a purchase price ofexpect to continue to repurchase shares pursuant to our February 2020 $3.0 billion share repurchase program. Subsequent to December 31, 2021, we repurchased approximately $864 million. We funded the acquisition of Empire City with the issuance of approximately $26615 million shares of our common stock the assumptionat an average price of approximately $246$43.88 per share for an aggregate amount of $670 million of debt, which was immediately assumed and repaid by. Repurchased shares were retired.
In January 2022, the Operating Partnership paid $141 million of distributions to its partnership unit holders, of which we received $59 million and MGP received $82 million, which MGP concurrently paid as a dividend to its Class A shareholders.
On February 9, 2022, our Board of Directors approved a quarterly dividend of $0.0025 per share. The dividend will be payable on March 15, 2022 to holders of record on March 10, 2022. Future determinations regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our results of operations, financial condition, and other factors that our Board of Directors may deem relevant.
As previously discussed, the COVID-19 pandemic has caused, and is continuing to cause, significant economic disruption both globally and in the United States, and impacted our business, financial condition, results of operations and cash flows in 2020 and 2021 and may continue to impact our business in 2022 and thereafter. As widespread vaccine distribution continues and operational restrictions have been removed, we have seen economic recovery in some of the market segments in which we operate, as shown in our Summary Operating Results. However, some areas continue to experience renewed outbreaks and surges in infection rates. As a result, our business segments continue to face many uncertainties and our operations remain vulnerable to reversal of these trends or other continuing negative effects caused by
the pandemic. We cannot predict the degree, or duration, to which our operations will be affected by the COVID-19 pandemic, and the remaining balanceeffects could be material. We continue to monitor the evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to further adjust our operating plan, including the implementation or extension of new or existing restrictions, which may include the reinstatement of stay-at-home orders in cash. Additionally,the jurisdictions in January 2019,which we operate or additional restrictions on travel and/or our business operations. Because the Operating Partnership issued $750 millionsituation is ongoing, and because the duration and severity remain unclear, it is difficult to forecast any impacts on our future results.
For additional information related to our long-term obligations, refer to the maturities of long-term debt table in
aggregate principal amount of 5.75% senior notes due 2027Note 9 and
the lease liability maturity table in
February 2019, we repaid our $850 million 8.625% notes due 2019. We expect to meet our remaining debt maturities and planned capital expenditure requirements with future anticipated operating cash flows, cash and cash equivalents, and available borrowings under our credit facilities.Note 11.
Principal Debt Arrangements
See Note 9 to the accompanying consolidated financial statements for information regarding our debt agreements as of December 31,
2018.Off Balance Sheet Arrangements
Our off-balance sheet arrangements consist primarily of investments in unconsolidated affiliates, which consists primarily of our investment in CityCenter. We have not entered into any transactions with special purpose entities, nor have we engaged in any derivative transactions, other than the Operating Partnership’s cash flow hedges. See Note 9 to the accompanying consolidated financial statements for additional information. Our unconsolidated affiliate investments allow us to realize the proportionate benefits of owning a full-scale resort or other entertainment facilities in a manner that minimizes our initial investment. In addition, there are no other provisions in the agreements with our investees which we believe are unusual or subject us to risks to which we would not be subjected if we had full ownership of the resort.
Commitments and Contractual Obligations
The following table summarizes our scheduled contractual obligations as of December 31, 2018:
| | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | Thereafter | | | Total | |
| | (In millions) | |
Long-term debt (1) | | $ | 1,273 | | | $ | 1,966 | | | $ | 1,716 | | | $ | 2,306 | | | $ | 2,885 | | | $ | 5,107 | | | $ | 15,253 | |
Estimated interest payments on long-term debt (2) | | | 809 | | | | 737 | | | | 636 | | | | 465 | | | | 351 | | | | 420 | | | | 3,418 | |
Construction commitments | | | 61 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 61 | |
Operating leases (3) | | | 107 | | | | 83 | | | | 62 | | | | 47 | | | | 45 | | | | 1,358 | | | | 1,702 | |
Other long-term liabilities (4) | | | — | | | | 2 | | | | 8 | | | | 7 | | | | — | | | | 61 | | | | 78 | |
Other purchase obligations (5) | | | 34 | | | | 6 | | | | 5 | | | | 3 | | | | 2 | | | | 4 | | | | 54 | |
| | $ | 2,284 | | | $ | 2,794 | | | $ | 2,427 | | | $ | 2,828 | | | $ | 3,283 | | | $ | 6,950 | | | $ | 20,566 | |
(1)
| Reflects scheduled amortization payments and debt maturities. Refer to Note 9 for further information on long-term debt.
|
2021.(2)
| Estimated interest payments, including the impact of interest rate swap agreements, are based on principal amounts and expected maturities of debt outstanding at December 31, 2018 and management’s forecasted LIBOR rates for our senior credit facility, the Operating Partnership senior credit facility and HIBOR rates for the MGM China credit facility.
|
(3)
| Refer to Note 11 for further information on operating leases.
|
(4)
| Reflects future expected cash outlays of our other long-term liabilities recorded on our balance sheet as of December 31, 2018, and, accordingly, we have not included such liabilities above that do not have future cash payments, such as deferred rent. We have also excluded deferred income tax liabilities and unrecognized tax benefits from the amounts presented in the table as the amounts that will be settled in cash are not known and the timing of any payments is uncertain.
|
(5)
| Our purchase obligations represent minimum obligations we have under agreements with certain of our vendors, primarily advertising and entertainment contracts. Also, although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services, and hence, have not been included in the table above.
|
Critical Accounting Policies and Estimates
Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements. To prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, we must make estimates and assumptions that affect the amounts reported in the consolidated financial statements. We regularly evaluate these estimates and assumptions, particularly in areas we consider to be critical accounting estimates, where
changes in the estimates and assumptions
couldinvolve a significant level of estimation uncertainty and have had or are reasonably likely to have a material effect on our
financial condition or results of
operations, financial position or cash flows. Senior management and the Audit Committee of the Board of Directors have reviewed the disclosures included herein about our critical accounting estimates, and have reviewed the processes to determine those estimates.operations. However, by their nature, judgments are subject to an inherent degree of uncertainty and therefore actual results can differ from our estimates.
Allowance
Loss Reserve for Doubtful Casino Accounts Receivable
Marker play represents a significant portion of the table games volume at certain of our Las Vegas resorts. Our other casinos do not emphasize marker play to the same extent, although we offer markers to customers at those casinos as well. MGM China extends credit to certain in-house VIP gaming customers and,
historically, to gaming promoters. We maintain strict controls over the issuance of markers and aggressively pursue collection from our customers who fail to pay their marker balances timely. These collection efforts are similar to those used by most large corporations when dealing with overdue customer accounts, including the mailing of statements and delinquency notices, personal contacts, the use of outside collection agencies and civil litigation. Markers are generally legally enforceable instruments in the United States and Macau. Markers are not legally enforceable instruments in some foreign countries, but the United States assets of foreign customers may be reached to satisfy judgments entered in the United States. We consider the likelihood and difficulty of enforceability, among other factors, when we issue credit to customers at our domestic resorts who are not residents of the United States. MGM China performs background checks and investigates
the credit worthiness
of gaming promoters and casino customers prior to issuing credit. Refer to Note 2 for further discussion of
the Company’sour casino receivables and those due from customers residing in foreign countries.
We maintain an allowance, ora loss reserve for doubtful casino accounts at all of our operating casino resorts. The provision for doubtful accounts, an operating expense, increases the allowance for doubtful accounts.loss reserve. We regularly evaluate the allowanceloss reserve for doubtful casino accounts. At domestic resorts where marker play is not significant, the allowanceloss reserve is generally established by applying standard reserve percentages to aged account balances.balances, which is supported by relevant historical analysis and any other known information such as the current economic conditions that could drive losses. At domestic resorts where marker play is significant, we apply standard reserve percentages to aged account balances under a specified dollar amount and specifically analyze the collectability of each account with a balance over the specified dollar amount, based on the age of the account, the customer’s current and expected future financial condition, collection history and any other known information.current and expected future economic conditions. MGM China specifically analyzes the collectability of casino receivables on an individual basis taking into account the age of the account, the financial condition and the collection history of the customer or, historically, the gaming promoter or casino customer.promoter.
In addition to enforceability issues, the collectability of unpaid markers given by foreign customers at our domestic resorts is affected by a number of factors, including changes in currency exchange rates and economic conditions in the customers’ home countries. Because individual customer account balances can be significant, the
allowanceloss reserve and the provision can change significantly between periods, as information about a certain customer becomes known or as changes in a region’s economy occur.
The following table shows key statistics related to our casino receivables, net of discounts:
| | | December 31, | |
| | | 2018 | | | 2017 | |
| | | (In thousands) | |
| Casino receivables | | $ | 419,127 | | | $ | 343,869 | |
| Allowance for doubtful casino accounts receivable | | | 85,544 | | | | 86,126 | |
| Allowance as a percentage of casino accounts receivable | | | 20% | | | | 25% | |
| | | | | | | | | | | | | | |
| | | December 31, |
| | | 2021 | | 2020 |
| | | (In thousands) |
| Casino receivables | | $ | 380,907 | | $ | 260,998 |
| Loss reserve for casino accounts receivable | | 117,539 | | 107,723 |
| Loss reserve as a percentage of casino accounts receivable | | 31 | % | | 41 | % |
Approximately $48$63 million and $31$54 million of casino receivables and $12$31 million and $7$18 million of the allowanceloss reserve for doubtful casino accounts receivable relate to MGM China at December 31, 20182021 and 2017,2020, respectively. The allowance for doubtful accountsloss reserve as a percentage of casino accounts receivable decreased in the current year due to a decrease in specific reserves at our domestic resorts, as well as the inclusion of Aria in the current year, which had a lower loss reserve compared to our other domestic resorts due to the age of its outstanding receivables, partially offset by an increase in the loss reserve at our Las Vegas Strip Resorts as a result of favorable collections.MGM China primarily due to an increase in its specific reserves. At December 31, 2018,2021, a 100 basis-point change in the allowance for doubtful accountsloss reserve as a percentage of casino accounts receivable would change income before income taxes by $4 million.
Fixed Asset Capitalization and Depreciation Policies
Property and equipment are stated at cost. A significant amount of our property and equipment was acquired through business combinations and was therefore recognized at fair value at the acquisition date. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets. When we construct assets, we capitalize direct costs of the project, including fees paid to architects and contractors, property taxes, and certain costs of our design and construction subsidiaries. In addition, interest cost associated with major development and construction projects is capitalized as part of the cost of the project. Interest is typically capitalized on amounts expended on the project using the
weighted-averageweighted average cost of our outstanding borrowings. Capitalization of interest starts when construction activities begin and ceases when construction is substantially complete, or development activity is suspended for more than a brief period.
We must make estimates and assumptions when accounting for capital expenditures. Whether an expenditure is considered a maintenance expense, or a capital asset is a matter of judgment. When constructing or purchasing assets, we must determine whether existing assets are being replaced or otherwise impaired, which also may be a matter of judgment. In addition, our depreciation expense is highly dependent on the assumptions we make about our assets’ estimated useful lives. We determine the estimated useful lives based on our experience with similar assets, engineering studies, and our estimate of the usage of the asset. Whenever events or circumstances occur which change the estimated useful life of an asset, we account for the change prospectively.
Impairment of Long-lived Assets, Goodwill and Indefinite-lived Intangible Assets
We evaluate our property and equipment and other long-lived assets for impairment based on our classification as held for sale or to be held and used. Several criteria must be met before an asset is classified as held for sale, including that management with the appropriate authority commits to a plan to sell the asset at a reasonable price in relation to its fair value and is actively seeking a buyer. For assets classified as held for sale, we recognize the asset at the lower of carrying value or fair market value less costs of disposal, as estimated based on comparable asset sales, offers received, or a discounted cash flow model. For assets to be held and used, we review for impairment whenever indicators of impairment exist. We then compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is recorded based on the fair value of the asset. For operating assets, fair value is typically measured using a discounted cash flow model whereby future cash flows are discounted using a
weighted-averageweighted average cost of capital, developed using a standard capital asset pricing model, based on guideline companies in our industry. If an asset is still under development, future cash flows include remaining construction costs. All recognized impairment losses, whether for assets to be held for sale or assets to be held and used, are recorded as operating expenses.
There are several estimates, assumptions and decisions in measuring impairments of long-lived assets. First, management must determine the usage of the asset. To the extent management decides that an asset will be sold, it is more likely that an impairment may be recognized. Assets must be tested at the lowest level for which identifiable cash flows exist. This means that some assets must be grouped, and management has some discretion in the grouping of assets. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates.
On a quarterly basis, we review our major long-lived assets to determine if events have occurred or circumstances exist that indicate a potential impairment. Potential factors which could trigger an impairment include underperformance compared to historical or projected operating results, negative industry or economic factors, significant changes to our operating environment, or changes in intended use of the asset group. We estimate future cash flows using our internal budgets and probability weight cash flows in certain circumstances to consider alternative outcomes associated with recoverability of the asset group, including potential sale. Historically, undiscounted cash flows of our significant operating asset groups have exceeded their carrying values by a substantial margin.
During 2019, we recorded a non-cash impairment charge relating to the carrying value of Circus Circus Las Vegas and adjacent land. Refer to Note 16 for further discussion.
We review indefinite-lived intangible assets at least annually and between annual test dates in certain circumstances. We perform our annual impairment test for indefinite-lived intangible assets in the fourth quarter of each fiscal year. Indefinite-lived intangible assets consist primarily of license rights and trademarks. For our
2018 and 20172021 annual impairment tests, we utilized the option to perform a qualitative (“step zero”) analysis for certain of our indefinite-lived intangibles and concluded it was more likely than not that the fair values of such intangibles exceeded their carrying values by a substantial margin. We elected to perform a quantitative analysis for the
Borgata trade nameMGM Northfield Park gaming license in 2021 primarily using the
relief-from -royalty method,discounted cash flow approach, for which the fair value exceeded its carrying value by
approximately 14% in 2018 and 4% in 2017. For our 2016 annual impairment tests we utilized a
quantitative analysis for all of our intangible assets, using a discounted cash flow approach for license rights and using the relief-from-royalty method for trademarks. The estimated fair values of the intangibles were substantially in excess of their carrying values, with the fair value of the Borgata trade name exceeding its carrying value by approximately 2%, reflecting the recentness of the Borgata acquisition which occurred in August 2016.substantial margin. As discussed below, management makes significant judgments and estimates as part of these analyses. If certain future operating results do not meet current expectations it could cause carrying values of the intangibles to exceed their fair values in future periods, potentially resulting in an impairment charge.
We review goodwill at least annually and between annual test dates in certain circumstances. None of our reporting units incurred any goodwill impairment charges in
2018, 2017 or 2016.2021. For our
2018, 2017, and 20162021 annual impairment tests, we utilized the option to perform a step zero analysis for certain of our reporting units and concluded it was more likely than not that the fair values of such reporting units exceeded their carrying values
by a substantial margin. For reporting units for which we elected to perform a quantitative analysis, the fair value of such reporting units exceeded their carrying value by a substantial margin. As discussed below, management makes significant judgments and estimates as part of these analyses. If future operating results of our reporting units do not meet current expectations it could cause carrying values of our reporting units to exceed their fair values in future periods, potentially resulting in a goodwill impairment charge.
There are several estimates inherent in evaluating these assets for impairment. In particular, future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates. In addition, the determination of multiples, capitalization rates and the discount rates used in the impairment tests are highly judgmental and dependent in large part on expectations of future market conditions.
See Note 2 and Note 7 to the accompanying consolidated financial statements for further discussion of goodwill and other intangible assets.
Impairment of Investments in Unconsolidated Affiliates
See Note 2 to the accompanying consolidated financial statements for discussion of our evaluation of other-than-temporary impairment of investments in unconsolidated affiliates.
None of ourDuring 2021 and 2020, we recorded $22 million and $64 million, respectively, in other-than-temporary impairment charges on equity method investments. Refer to Note 6 for further discussion. Our investments in unconsolidated affiliates had
other-than-temporary impairmentno material impairments in
2018, 2017, or 2016.2019.
We
recognize deferred tax assets, net of applicable reserves, relatedare subject to
net operating loss and tax credit carryforwards and certain temporary differences with a future tax benefit to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied.
We file income tax returnstaxes in the U.S. federal jurisdiction, various state and local jurisdictions, and foreign jurisdictions, although the income taxes paid in foreign jurisdictions are not material. Our
We recognize deferred tax assets and liabilities related to net operating losses, tax credit carryforwards and temporary differences with future tax consequences. We reduce the carrying amount of deferred tax assets by a valuation allowance if it is more likely than not such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on such "more-likely-than-not" realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the scheduled reversal of deferred tax liabilities, the duration of statutory carryforward periods, and tax planning strategies.
We recorded a valuation allowance on the net deferred tax assets of our domestic jurisdictions of $2.7 billion as of both December 31, 2021 and 2020, and a valuation allowance on certain net deferred tax assets of foreign jurisdictions of $149 million and $156 million as of December 31, 2021 and 2020, respectively. We reassess the realization of deferred tax assets each reporting period. In the event we were to determine that it is more likely than not that we will be unable to
realize all or part of our deferred tax assets in the future, we would increase the valuation allowance and recognize a corresponding charge to earnings or other comprehensive income in the period in which we make such a determination. Likewise, if we later determine that we are more likely than not to realize the deferred tax assets, we would reverse the applicable portion of the previously recognized valuation allowance. In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income in the jurisdictions in which the deferred tax assets are located.
Furthermore, we are subject to routine corporate income tax audits in many of these jurisdictions. We believe that positions taken on our tax returns are
subject tofully supported, but tax authorities may challenge these positions, which may not be fully sustained on examination by the
Internal Revenue Service (“IRS”) and otherrelevant tax authorities.
Positions taken in tax returns are sometimes subject to uncertainty in the tax laws and may not ultimately be accepted by the IRS or other tax authorities. See Note 10 in the accompanying consolidated financial statements for a discussion of the status and impact of examinations by tax authorities.We assessAccordingly, our tax positions using a two-step process. A tax position is recognized if it meets a “more likely than not” threshold, and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized. Uncertain tax positions must be reviewed at each balance sheet date. Liabilities we record as a result of this analysis are recorded separately from any current or deferred income tax accounts, and are classified as current in “Other accrued liabilities” or long-term in “Other long-term liabilities” based onprovision includes amounts intended to satisfy assessments that may result from these challenges. Determining the time until expected payment. Additionally, we recognize accrued interest and penalties, if any, related to unrecognized tax benefits in income tax expense.
provision for these potential assessments and recording the related effects requires management judgments and estimates. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in our income tax provision and, therefore, could have a material impact on our income tax provision, net income and cash flows.
Refer to Note 10 in the accompanying consolidated financial statements for further discussion relating to income taxes.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In addition to the inherent risks associated with our normal operations, we are also exposed to additional market risks. Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rates. Our primary exposure to market risk is interest rate risk associated with our variable rate long-term debt. We attempt to limit our exposure to interest rate risk by managing the mix of our long-term fixed rate borrowings and short-term borrowings under our bank credit facilities and by utilizing interest rate swap agreements that provide for a fixed interest payment on the Operating Partnership’s term loan Bcredit facility. A change in interest rates generally does not have an impact upon our future earnings and cash flow for fixed-rate debt instruments. As fixed-rate debt matures, however, and if additional debt is acquired to fund the debt repayment, future earnings and cash flow may be affected by changes in interest rates. This effect would be realized in the periods subsequent to the periods when the debt matures. We do not hold or issue financial instruments for trading purposes and do not enter into derivative transactions that would be considered speculative positions.positions
. As of December 31, 2018,2021, variable rate borrowings represented approximately 31%3% of our total borrowings after giving effect to the $500 million and $700 million notional amount Operating Partnership interest rate swaps with weighted average fixed rates that we pay 1.764% and 1.901%, respectively. In December 2018,on the Operating Partnership entered into additionalPartnership’s borrowings for the currently effective interest rate swap agreements foron which the Operating Partnership will paypays a weighted average 2.735%of 1.783% on a total notional amount of $400$700 million. These swaps will be effective December 31, 2019, at which pointAdditionally, the Operating Partnership will be paying a combined weighted average 2.066%.has $900 million of notional amount of forward starting swaps that are not currently effective. The following table provides additional information about the maturities of our gross long-term debt subject to changes in interest rates, excluding the effect of the Operating Partnership interest rate swaps discussed above: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Debt maturing in, | | | December 31, | | | | Debt maturing in | | Fair Value December 31, 2021 |
| | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | Thereafter | | | Total | | | 2018 | | | | 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | Thereafter | | Total | |
| | (In millions) | | | | (In millions except interest rates) |
Fixed-rate | | $ | 850 | | | $ | 1,500 | | | $ | 1,250 | | | $ | 1,000 | | | $ | 1,250 | | | $ | 3,401 | | | $ | 9,251 | | | $ | 9,179 | | Fixed-rate | | $ | 1,000 | | | $ | 1,250 | | | $ | 1,800 | | | $ | 2,725 | | | $ | 1,650 | | | $ | 4,026 | | | $ | 12,451 | | | $ | 12,948 | |
Average interest rate | | | 8.6 | % | | | 6.3 | % | | | 6.6 | % | | | 7.8 | % | | | 6.0 | % | | | 5.2 | % | | | 6.3 | % | | | | | Average interest rate | | 7.8 | % | | 6.0 | % | | 5.5 | % | | 5.6 | % | | 5.2 | % | | 4.9 | % | | 5.5 | % | | |
Variable rate | | $ | 423 | | | $ | 466 | | | $ | 466 | | | $ | 1,306 | | | $ | 1,635 | | | $ | 1,706 | | | $ | 6,002 | | | $ | 5,893 | | Variable rate | | $ | — | | | $ | 50 | | | $ | 360 | | | $ | — | | | $ | — | | | $ | — | | | $ | 410 | | | $ | 410 | |
Average interest rate | | | 4.7 | % | | | 4.7 | % | | | 4.7 | % | | | 4.7 | % | | | 4.6 | % | | | 4.5 | % | | | 4.6 | % | | | | | Average interest rate | | N/A | | 1.9 | % | | 3.0 | % | | N/A | | N/A | | N/A | | 2.8 | % | | |
In addition to the risk associated with our variable interest rate debt, we are also exposed to risks related to changes in foreign currency exchange rates, mainly related to MGM China and to our operations at MGM Macau and MGM Cotai. While recent fluctuations in exchange rates have not been significant, potential changes in policy by governments or fluctuations in the economies of the United States, China, Macau or Hong Kong could cause variability in these exchange rates. We cannot assure you that the Hong Kong dollar will continue to be pegged to the U.S. dollar or the current peg rate for the Hong Kong dollar will remain at the same level. The possible changes to the peg of the Hong Kong dollar may result in severe fluctuations in the exchange rate thereof. For U.S. dollar denominated debt incurred by MGM China, fluctuations in the exchange rates of the Hong Kong dollar in relation to the U.S. dollar could have adverse effects on our financial position and results of operations. As of December 31, 2018,2021, a 1% increase inweakening of the Hong Kong dollar (the functional currency of MGM China) to the U.S. dollar exchange rate would impact the carrying valueresult in a foreign currency transaction loss of our cash balance by $5$28 million and a 1% decrease in the exchange rate would impact the carrying value of our debt balance by $25 million..
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statement Schedule:
The financial information included in the financial statement schedule should be read in conjunction with the consolidated financial statements. All other financial statement schedules have been omitted because they are not applicable, or the required information is included in the consolidated financial statements or the notes thereto.
Audited consolidated financial statements for CityCenter Holdings, LLC as of December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016 are presented in Exhibit 99.3 and are incorporated herein by reference.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of MGM Resorts International
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of MGM Resorts International and subsidiaries (the “Company”) as of December 31,
2018,2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2018,2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31,
2018,2021, of the Company and our report dated February
27, 2019,25, 2022, expressed an unqualified opinion on those financial statements.
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/
DELOITTEDeloitte &
TOUCHETouche LLP
February
27, 201925, 2022
REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of MGM Resorts International
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of MGM Resorts International and subsidiaries (the "Company") as of December 31,
20182021 and
2017,2020, the related consolidated statements of operations, comprehensive income
(loss), cash flows and stockholders' equity for each of the three years in the period ended December 31,
2018,2021, and the related notes and the financial statement schedule of Valuation and Qualifying Accounts included in Item 15(a)(2), (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
20182021 and
2017,2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2018,2021, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31,
2018,2021, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February
27, 2019,25, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Acquisition and Goodwill and Other Intangible Assets Valuation of CityCenter — Refer to Notes 1 and 4 to the financial statements
On September 27, 2021, the Company completed the acquisition of the 50% ownership interest in CityCenter Holdings, LLC (“CityCenter”) held by Infinity World Development Corp for cash consideration of $2.125 billion. Prior to the acquisition, the Company held a 50% ownership interest, which was accounted for under the equity method. The Company accounted for the acquisition under the acquisition method of accounting for business combinations, and the fair value was allocated to the assets acquired and liabilities assumed at the acquisition date, which included $180.0 million of trademarks and $1.4 billion of goodwill. Management estimated the fair value of the trademarks using the relief from royalty method, which is a specific discounted cash flow method. Goodwill was recognized as the excess of the cash consideration and the acquisition-date fair value of the Company’s equity method investment over the identifiable assets acquired and liabilities assumed.
The fair value determination of the trademarks required management to make significant estimates and assumptions around expected cash flows and projected financial results, including forecasted revenues (collectively the “forecast”), as
well as the selection of discount rates. Changes to these assumptions and estimates could have a significant impact on the fair value of the trademarks and the recognition of goodwill. Therefore, auditing the forecast and the selection of discount rates involved a higher degree of auditor judgment and subjectivity, as well as an increased level of audit effort, including the involvement of fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the forecast and selection of discount rates used by management to determine the fair value of the acquired intangible assets and the reporting unit assigned goodwill included the following, among others:
•We tested the effectiveness of controls over determining the fair value of the tradename, including those over management’s forecast and the selection of discount rates.
•We evaluated the assumptions and estimates included in the forecast by:
◦Comparing the forecasts to information included in the Company’s communications to the Board of Directors, earnings and press releases, gaming industry reports, investor presentations, and analyst reports for the Company and certain of its peer companies;
◦Comparing the forecasts to historical financial results;
◦Conducting inquiries with management; and
◦Evaluating whether the forecast was consistent with evidence obtained in other areas of the audit.
•With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rates by:
◦Testing the market-based source information underlying the determination of the discount rates and the mathematical accuracy of the discount rate calculations.
◦Developing a range of independent estimates and comparing those to the discount rate selected by management.
/s/
DELOITTEDeloitte &
TOUCHETouche LLP
February
27, 201925, 2022
We have served as the Company's auditor since 2002.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| | December 31, | |
| | 2018 | | | 2017 | |
ASSETS | |
Current assets | | | | | | | | |
Cash and cash equivalents | | $ | 1,526,762 | | | $ | 1,499,995 | |
Accounts receivable, net | | | 657,206 | | | | 542,273 | |
Inventories | | | 110,831 | | | | 102,292 | |
Income tax receivable | | | 28,431 | | | | 42,551 | |
Prepaid expenses and other | | | 203,548 | | | | 189,244 | |
Total current assets | | | 2,526,778 | | | | 2,376,355 | |
| | | | | | | | |
Property and equipment, net | | | 20,729,888 | | | | 19,635,459 | |
| | | | | | | | |
Other assets | | | | | | | | |
Investments in and advances to unconsolidated affiliates | | | 732,867 | | | | 1,033,297 | |
Goodwill | | | 1,821,392 | | | | 1,806,531 | |
Other intangible assets, net | | | 3,944,463 | | | | 3,877,960 | |
Other long-term assets, net | | | 455,318 | | | | 430,440 | |
Total other assets | | | 6,954,040 | | | | 7,148,228 | |
| | $ | 30,210,706 | | | $ | 29,160,042 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |
Current liabilities | | | | | | | | |
Accounts payable | | $ | 302,578 | | | $ | 255,028 | |
Construction payable | | | 311,793 | | | | 474,807 | |
Current portion of long-term debt | | | 43,411 | | | | 158,042 | |
Accrued interest on long-term debt | | | 140,046 | | | | 135,785 | |
Other accrued liabilities | | | 2,151,054 | | | | 2,114,635 | |
Total current liabilities | | | 2,948,882 | | | | 3,138,297 | |
| | | | | | | | |
Deferred income taxes, net | | | 1,342,538 | | | | 1,295,375 | |
Long-term debt, net | | | 15,088,005 | | | | 12,751,052 | |
Other long-term obligations | | | 259,240 | | | | 284,416 | |
Commitments and contingencies (Note 11) | | | | | | | | |
Redeemable noncontrolling interests | | | 102,250 | | | | 79,778 | |
Stockholders' equity | | | | | | | | |
Common stock, $.01 par value: authorized 1,000,000,000 shares, issued and outstanding 527,479,528 and 566,275,789 shares | | | 5,275 | | | | 5,663 | |
Capital in excess of par value | | | 4,092,085 | | | | 5,357,709 | |
Retained earnings | | | 2,423,479 | | | | 2,217,299 | |
Accumulated other comprehensive loss | | | (8,556 | ) | | | (3,610 | ) |
Total MGM Resorts International stockholders' equity | | | 6,512,283 | | | | 7,577,061 | |
Noncontrolling interests | | | 3,957,508 | | | | 4,034,063 | |
Total stockholders' equity | | | 10,469,791 | | | | 11,611,124 | |
| | $ | 30,210,706 | | | $ | 29,160,042 | |
| | | | | | | | | | | | | | |
| | | December 31, |
| | | 2021 | | 2020 |
| ASSETS |
| Current assets | | | | |
| Cash and cash equivalents | | $ | 4,703,059 | | | $ | 5,101,637 | |
| Restricted cash | | 500,000 | | | — | |
| Accounts receivable, net | | 583,915 | | | 316,502 | |
| Inventories | | 96,374 | | | 88,323 | |
| Income tax receivable | | 273,862 | | | 243,415 | |
| Prepaid expenses and other | | 258,972 | | | 200,782 | |
| Total current assets | | 6,416,182 | | | 5,950,659 | |
| | | | | |
| Property and equipment, net | | 14,435,493 | | | 14,632,091 | |
| | | | | |
| Other assets | | | | |
| Investments in and advances to unconsolidated affiliates | | 967,044 | | | 1,447,043 | |
| Goodwill | | 3,480,997 | | | 2,091,278 | |
| Other intangible assets, net | | 3,616,385 | | | 3,643,748 | |
| Operating lease right-of-use assets, net | | 11,492,805 | | | 8,286,694 | |
| Other long-term assets, net | | 490,210 | | | 443,421 | |
| Total other assets | | 20,047,441 | | | 15,912,184 | |
| | | $ | 40,899,116 | | | $ | 36,494,934 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY |
| Current liabilities | | | | |
| Accounts payable | | $ | 263,097 | | | $ | 142,523 | |
| Construction payable | | 23,099 | | 30,149 |
| Current portion of long-term debt | | 1,000,000 | | — | |
| Accrued interest on long-term debt | | 172,624 | | 138,832 |
| Other accrued liabilities | | 1,983,444 | | 1,545,079 |
| Total current liabilities | | 3,442,264 | | 1,856,583 |
| | | | | |
| Deferred income taxes, net | | 2,439,364 | | 2,153,016 |
| Long-term debt, net | | 11,770,797 | | 12,376,684 |
| Operating lease liabilities | | 11,802,464 | | 8,390,117 |
| Other long-term obligations | | 319,914 | | 472,084 |
| Commitments and contingencies (Note 12) | | 0 | | 0 |
| Redeemable noncontrolling interests | | 147,547 | | 66,542 |
| Stockholders' equity | | | | |
Common stock, $0.01 par value: authorized 1,000,000,000 shares, issued and outstanding 453,803,759 and 494,317,865 shares | | 4,538 | | 4,943 |
| Capital in excess of par value | | 1,750,135 | | 3,439,453 |
| Retained earnings | | 4,340,588 | | 3,091,007 |
| Accumulated other comprehensive loss | | (24,616) | | (30,677) |
| Total MGM Resorts International stockholders' equity | | 6,070,645 | | 6,504,726 |
| Noncontrolling interests | | 4,906,121 | | 4,675,182 |
| Total stockholders' equity | | 10,976,766 | | 11,179,908 |
| | | $ | 40,899,116 | | | $ | 36,494,934 | |
The accompanying notes are an integral part of these consolidated financial statements.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
Revenues | | | | | | | | | | | | |
Casino | | $ | 5,753,150 | | | $ | 5,016,426 | | | $ | 4,108,126 | |
Rooms | | | 2,212,573 | | | | 2,152,741 | | | | 2,003,027 | |
Food and beverage | | | 1,959,021 | | | | 1,871,969 | | | | 1,727,805 | |
Entertainment, retail and other | | | 1,412,860 | | | | 1,354,301 | | | | 1,242,159 | |
Reimbursed costs | | | 425,492 | | | | 402,042 | | | | 397,152 | |
| | | 11,763,096 | | | | 10,797,479 | | | | 9,478,269 | |
Expenses | | | | | | | | | | | | |
Casino | | | 3,199,775 | | | | 2,673,397 | | | | 2,213,922 | |
Rooms | | | 791,761 | | | | 748,947 | | | | 697,977 | |
Food and beverage | | | 1,501,868 | | | | 1,414,611 | | | | 1,310,969 | |
Entertainment, retail and other | | | 999,979 | | | | 954,125 | | | | 901,201 | |
Reimbursed costs | | | 425,492 | | | | 402,042 | | | | 397,152 | |
General and administrative | | | 1,764,638 | | | | 1,559,575 | | | | 1,378,534 | |
Corporate expense | | | 419,204 | | | | 356,872 | | | | 312,705 | |
NV Energy exit expense | | | — | | | | (40,629 | ) | | | 139,335 | |
Preopening and start-up expenses | | | 151,392 | | | | 118,475 | | | | 140,075 | |
Property transactions, net | | | 9,147 | | | | 50,279 | | | | 17,078 | |
Gain on Borgata transaction | | | — | | | | — | | | | (430,118 | ) |
Depreciation and amortization | | | 1,178,044 | | | | 993,480 | | | | 849,527 | |
| | | 10,441,300 | | | | 9,231,174 | | | | 7,928,357 | |
Income from unconsolidated affiliates | | | 147,690 | | | | 146,222 | | | | 528,287 | |
Operating income | | | 1,469,486 | | | | 1,712,527 | | | | 2,078,199 | |
Non-operating income (expense) | | | | | | | | | | | | |
Interest expense, net of amounts capitalized | | | (769,513 | ) | | | (668,745 | ) | | | (694,773 | ) |
Non-operating items from unconsolidated affiliates | | | (47,827 | ) | | | (34,751 | ) | | | (53,139 | ) |
Other, net | | | (18,140 | ) | | | (48,241 | ) | | | (72,698 | ) |
| | | (835,480 | ) | | | (751,737 | ) | | | (820,610 | ) |
Income before income taxes | | | 634,006 | | | | 960,790 | | | | 1,257,589 | |
Benefit (provision) for income taxes | | | (50,112 | ) | | | 1,127,394 | | | | (21,743 | ) |
Net income | | | 583,894 | | | | 2,088,184 | | | | 1,235,846 | |
Less: Net income attributable to noncontrolling interests | | | (117,122 | ) | | | (136,132 | ) | | | (135,438 | ) |
Net income attributable to MGM Resorts International | | $ | 466,772 | | | $ | 1,952,052 | | | $ | 1,100,408 | |
| | | | | | | | | | | | |
Earnings per share | | | | | | | | | | | | |
Basic | | $ | 0.82 | | | $ | 3.38 | | | $ | 1.94 | |
Diluted | | $ | 0.81 | | | $ | 3.34 | | | $ | 1.92 | |
Weighted average common shares outstanding | | | | | | | | | | | | |
Basic | | | 544,253 | | | | 572,253 | | | | 568,134 | |
Diluted | | | 549,536 | | | | 578,795 | | | | 573,317 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| Revenues | | | | | | |
| Casino | | $ | 5,362,912 | | | $ | 2,871,720 | | | $ | 6,517,759 | |
| Rooms | | 1,690,037 | | | 830,382 | | | 2,322,579 | |
| Food and beverage | | 1,391,605 | | | 696,040 | | | 2,145,247 | |
| Entertainment, retail and other | | 1,009,503 | | | 518,991 | | | 1,477,200 | |
| Reimbursed costs | | 226,083 | | | 244,949 | | | 436,887 | |
| | | 9,680,140 | | | 5,162,082 | | | 12,899,672 | |
| Expenses | | | | | | |
| Casino | | 2,551,169 | | | 1,701,783 | | | 3,623,899 | |
| Rooms | | 600,942 | | | 419,156 | | | 829,677 | |
| Food and beverage | | 1,034,780 | | | 674,118 | | | 1,661,626 | |
| Entertainment, retail and other | | 617,635 | | | 412,705 | | | 1,051,400 | |
| Reimbursed costs | | 226,083 | | | 244,949 | | | 436,887 | |
| General and administrative | | 2,507,239 | | | 2,122,333 | | | 2,101,217 | |
| Corporate expense | | 422,777 | | | 460,148 | | | 464,642 | |
| Preopening and start-up expenses | | 5,094 | | | 84 | | | 7,175 | |
| Property transactions, net | | (67,736) | | | 93,567 | | | 275,802 | |
| Gain on REIT transactions, net | | — | | | (1,491,945) | | | (2,677,996) | |
| Gain on consolidation of CityCenter, net | | (1,562,329) | | | — | | | — | |
| Depreciation and amortization | | 1,150,610 | | | 1,210,556 | | | 1,304,649 | |
| | | 7,486,264 | | | 5,847,454 | | | 9,078,978 | |
| Income from unconsolidated affiliates | | 84,823 | | | 42,938 | | | 119,521 | |
| Operating income (loss) | | 2,278,699 | | | (642,434) | | | 3,940,215 | |
| Non-operating income (expense) | | | | | | |
| Interest expense, net of amounts capitalized | | (799,593) | | | (676,380) | | | (847,932) | |
| Non-operating items from unconsolidated affiliates | | (83,243) | | | (103,304) | | | (62,296) | |
| Other, net | | 65,941 | | | (89,361) | | | (183,262) | |
| | | (816,895) | | | (869,045) | | | (1,093,490) | |
| Income (loss) before income taxes | | 1,461,804 | | | (1,511,479) | | | 2,846,725 | |
| Benefit (provision) for income taxes | | (253,415) | | | 191,572 | | | (632,345) | |
| Net income (loss) | | 1,208,389 | | | (1,319,907) | | | 2,214,380 | |
| Less: Net (income) loss attributable to noncontrolling interests | | 45,981 | | | 287,183 | | | (165,234) | |
| Net income (loss) attributable to MGM Resorts International | | $ | 1,254,370 | | | $ | (1,032,724) | | | $ | 2,049,146 | |
| | | | | | | |
| Earnings (loss) per share | | | | | | |
| Basic | | $ | 2.44 | | | $ | (2.02) | | | $ | 3.90 | |
| Diluted | | $ | 2.41 | | | $ | (2.02) | | | $ | 3.88 | |
| Weighted average common shares outstanding | | | | | | |
| Basic | | 481,930 | | 494,152 | | 524,173 |
| Diluted | | 487,356 | | 494,152 | | 527,645 |
The accompanying notes are an integral part of these consolidated financial statements.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
Net income | | $ | 583,894 | | | $ | 2,088,184 | | | $ | 1,235,846 | |
Other comprehensive loss, net of tax: | | | | | | | | | | | | |
Foreign currency translation adjustment | | | (13,022 | ) | | | (43,188 | ) | | | (2,680 | ) |
Unrealized gain on cash flow hedges | | | 3,576 | | | | 7,995 | | | | 1,879 | |
Other comprehensive loss | | | (9,446 | ) | | | (35,193 | ) | | | (801 | ) |
Comprehensive income | | | 574,448 | | | | 2,052,991 | | | | 1,235,045 | |
Less: Comprehensive income attributable to noncontrolling interests | | | (112,622 | ) | | | (119,700 | ) | | | (134,680 | ) |
Comprehensive income attributable to MGM Resorts International | | $ | 461,826 | | | $ | 1,933,291 | | | $ | 1,100,365 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| Net income (loss) | | $ | 1,208,389 | | | $ | (1,319,907) | | | $ | 2,214,380 | |
| Other comprehensive income (loss), net of tax: | | | | | | |
| Foreign currency translation adjustment | | (24,655) | | | 27,762 | | | 28,870 | |
| Unrealized gain (loss) on cash flow hedges | | 34,788 | | | (79,365) | | | (29,505) | |
| Other comprehensive income (loss) | | 10,133 | | | (51,603) | | | (635) | |
| Comprehensive income (loss) | | 1,218,522 | | | (1,371,510) | | | 2,213,745 | |
| Less: Comprehensive (income) loss attributable to noncontrolling interests | | 35,700 | | | 309,969 | | | (168,447) | |
| Comprehensive income (loss) attributable to MGM Resorts International | | $ | 1,254,222 | | | $ | (1,061,541) | | | $ | 2,045,298 | |
The accompanying notes are an integral part of these consolidated financial statements.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
Cash flows from operating activities | | | | | | | | | | | | |
Net income | | $ | 583,894 | | | $ | 2,088,184 | | | $ | 1,235,846 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | |
Depreciation and amortization | | | 1,178,044 | | | | 993,480 | | | | 849,527 | |
Amortization of debt discounts, premiums and issuance costs | | | 41,102 | | | | 32,996 | | | | 40,493 | |
Loss on retirement of long-term debt | | | 3,619 | | | | 45,696 | | | | 66,933 | |
Provision for doubtful accounts | | | 39,762 | | | | 20,603 | | | | 10,863 | |
Stock-based compensation | | | 70,177 | | | | 62,494 | | | | 55,487 | |
Property transactions, net | | | 9,147 | | | | 50,279 | | | | 17,078 | |
Gain on Borgata transaction | | | — | | | | — | | | | (430,118 | ) |
Income from unconsolidated affiliates | | | (96,542 | ) | | | (111,471 | ) | | | (471,980 | ) |
Distributions from unconsolidated affiliates | | | 11,563 | | | | 13,050 | | | | 16,905 | |
Deferred income taxes | | | 46,720 | | | | (1,259,406 | ) | | | (81,183 | ) |
Change in operating assets and liabilities: | | | | | | | | | | | | |
Accounts receivable | | | (149,554 | ) | | | (17,972 | ) | | | (31,866 | ) |
Inventories | | | (7,860 | ) | | | (4,656 | ) | | | 10,806 | |
Income taxes receivable and payable, net | | | 14,120 | | | | (53,204 | ) | | | 13,385 | |
Prepaid expenses and other | | | (15,535 | ) | | | (46,974 | ) | | | 20,192 | |
Prepaid Cotai land concession premium | | | 6,879 | | | | (7,765 | ) | | | (22,376 | ) |
Accounts payable and accrued liabilities | | | 21,508 | | | | 422,258 | | | | 273,744 | |
Other | | | (34,505 | ) | | | (21,181 | ) | | | (39,764 | ) |
Net cash provided by operating activities | | | 1,722,539 | | | | 2,206,411 | | | | 1,533,972 | |
Cash flows from investing activities | | | | | | | | | | | | |
Capital expenditures, net of construction payable | | | (1,486,843 | ) | | | (1,864,082 | ) | | | (2,262,473 | ) |
Dispositions of property and equipment | | | 25,612 | | | | 718 | | | | 3,944 | |
Proceeds from partial disposition of investment in unconsolidated affiliate | | | — | | | | — | | | | 15,000 | |
Proceeds from sale of business units and investment in unconsolidated affiliate | | | 163,616 | | | | — | | | | — | |
Acquisition of Borgata, net of cash acquired | | | — | | | | — | | | | (559,443 | ) |
Acquisition of Northfield, net of cash acquired | | | (1,034,534 | ) | | | — | | | | — | |
Investments in and advances to unconsolidated affiliates | | | (56,295 | ) | | | (16,727 | ) | | | (3,633 | ) |
Distributions from unconsolidated affiliates in excess of cumulative earnings | | | 322,631 | | | | 301,211 | | | | 542,097 | |
Other | | | (17,208 | ) | | | (1,712 | ) | | | (11,696 | ) |
Net cash used in investing activities | | | (2,083,021 | ) | | | (1,580,592 | ) | | | (2,276,204 | ) |
Cash flows from financing activities | | | | | | | | | | | | |
Net borrowings under bank credit facilities – maturities of 90 days or less | | | 1,242,259 | | | | 15,001 | | | | 491,032 | |
Borrowings under bank credit facilities – maturities longer than 90 days | | | — | | | | — | | | | 1,845,375 | |
Repayments under bank credit facilities – maturities longer than 90 days | | | — | | | | — | | | | (1,845,375 | ) |
Issuance of long-term debt | | | 1,000,000 | | | | 350,000 | | | | 2,050,000 | |
Retirement of senior debentures | | | (2,265 | ) | | | (502,669 | ) | | | (2,258,053 | ) |
Repayment of Borgata credit facility | | | — | | | | — | | | | (583,598 | ) |
Debt issuance costs | | | (76,519 | ) | | | (9,977 | ) | | | (139,584 | ) |
Issuance of MGM Growth Properties Class A shares in public offering | | | — | | | | 404,685 | | | | 1,207,500 | |
MGM Growth Properties Class A share issuance costs | | | — | | | | (17,137 | ) | | | (75,032 | ) |
Acquisition of MGM China shares | | | — | | | | — | | | | (100,000 | ) |
Dividends paid to common shareholders | | | (260,592 | ) | | | (252,014 | ) | | | — | |
Distributions to noncontrolling interest owners | | | (184,932 | ) | | | (170,402 | ) | | | (103,367 | ) |
Proceeds from issuance of redeemable noncontrolling interests | | | — | | | | — | | | | 47,325 | |
Purchases of common stock | | | (1,283,333 | ) | | | (327,500 | ) | | | — | |
Other | | | (45,384 | ) | | | (58,765 | ) | | | (16,801 | ) |
Net cash provided by (used in) financing activities | | | 389,234 | | | | (568,778 | ) | | | 519,422 | |
Effect of exchange rate on cash | | | (1,985 | ) | | | (3,627 | ) | | | (921 | ) |
Cash and cash equivalents | | | | | | | | | | | | |
Net increase (decrease) for the period | | | 26,767 | | | | 53,414 | | | | (223,731 | ) |
Balance, beginning of period | | | 1,499,995 | | | | 1,446,581 | | | | 1,670,312 | |
Balance, end of period | | $ | 1,526,762 | | | $ | 1,499,995 | | | $ | 1,446,581 | |
Supplemental cash flow disclosures | | | | | | | | | | | | |
Interest paid, net of amounts capitalized | | $ | 723,609 | | | $ | 658,637 | | | $ | 661,166 | |
Federal, state and foreign income taxes paid (refunds received), net | | | (10,100 | ) | | | 181,651 | | | | 68,236 | |
Non-cash investing and financing activities | | | | | | | | | | | | |
Common stock issued for acquisition of MGM China shares | | $ | — | | | $ | — | | | $ | 174,041 | |
Deferred cash payment for acquisition of MGM China shares | | | — | | | | — | | | | 43,265 | |
Increase in construction accounts payable | | | — | | | | 204,466 | | | | 20,241 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| Cash flows from operating activities | | | | | | |
| Net income (loss) | | $ | 1,208,389 | | | $ | (1,319,907) | | | $ | 2,214,380 | |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | | | |
| Depreciation and amortization | | 1,150,610 | | | 1,210,556 | | | 1,304,649 | |
| Amortization of debt discounts, premiums and issuance costs | | 40,328 | | | 34,363 | | | 38,972 | |
| Loss on early retirement of debt | | 37 | | | 126,462 | | | 198,151 | |
| Provision for credit losses | | 21,852 | | | 71,422 | | | 39,270 | |
| Stock-based compensation | | 65,183 | | | 106,956 | | | 88,838 | |
| Property transactions, net | | (67,736) | | | 93,567 | | | 275,802 | |
| Gain on REIT transactions, net | | — | | | (1,491,945) | | | (2,677,996) | |
| Gain on consolidation of CityCenter, net | | (1,562,329) | | | — | | | — | |
| Noncash lease expense | | 188,917 | | | 183,399 | | | 71,784 | |
| Other investment gains | | (28,417) | | | — | | | — | |
| Loss (income) from unconsolidated affiliates | | (1,580) | | | 60,366 | | | (57,225) | |
| Distributions from unconsolidated affiliates | | 99,370 | | | 86,584 | | | 299 | |
| Deferred income taxes | | 241,947 | | | 18,347 | | | 595,046 | |
| Change in operating assets and liabilities: | | | | | | |
| Accounts receivable | | (236,182) | | | 960,099 | | | (726,610) | |
| Inventories | | 3,107 | | | 14,705 | | | 6,522 | |
| Income taxes receivable and payable, net | | (30,444) | | | (216,250) | | | 1,259 | |
| Prepaid expenses and other | | (36,608) | | | (37) | | | 7,567 | |
| Accounts payable and accrued liabilities | | 442,626 | | | (1,382,980) | | | 465,602 | |
| Other | | (125,647) | | | (48,750) | | | (35,909) | |
| Net cash provided by (used in) operating activities | | 1,373,423 | | | (1,493,043) | | | 1,810,401 | |
| Cash flows from investing activities | | | | | | |
| Capital expenditures | | (490,697) | | | (270,579) | | | (739,006) | |
| Dispositions of property and equipment | | 106,600 | | | 6,136 | | | 2,578 | |
| Proceeds from real estate transactions | | 3,888,431 | | | 2,455,839 | | | 4,151,499 | |
| Proceeds from sale of Circus Circus Las Vegas and adjacent land | | — | | | — | | | 652,333 | |
| Acquisitions, net of cash acquired | | (1,789,604) | | | — | | | (535,681) | |
| Investments in unconsolidated affiliates | | (226,889) | | | (96,925) | | | (81,877) | |
| Distributions from unconsolidated affiliates | | 9,694 | | | 63,960 | | | 100,700 | |
| Other | | 46,110 | | | 873 | | | (31,112) | |
| Net cash provided by investing activities | | 1,543,645 | | | 2,159,304 | | | 3,519,434 | |
| Cash flows from financing activities | | | | | | |
| Net repayments under bank credit facilities – maturities of 90 days or less | | (2,096,217) | | | (1,595,089) | | | (3,634,049) | |
| Issuance of long-term debt | | 749,775 | | | 3,550,000 | | | 3,250,000 | |
| Retirement of senior notes | | — | | | (846,815) | | | (3,764,167) | |
| Debt issuance costs | | (18,726) | | | (62,348) | | | (63,391) | |
| Proceeds from issuance of bridge loan facility | | — | | | 1,304,625 | | | — | |
| Issuance of MGM Growth Properties Class A shares, net | | 792,851 | | | 524,704 | | | 1,250,006 | |
| Dividends paid to common shareholders | | (4,789) | | | (77,606) | | | (271,288) | |
| Distributions to noncontrolling interest owners | | (324,190) | | | (286,385) | | | (223,303) | |
| Purchases of common stock | | (1,753,509) | | | (353,720) | | | (1,031,534) | |
| Other | | (159,290) | | | (53,939) | | | (41,868) | |
| Net cash provided by (used in) financing activities | | (2,814,095) | | | 2,103,427 | | | (4,529,594) | |
| Effect of exchange rate on cash, cash equivalents, and restricted cash | | (1,551) | | | 2,345 | | | 2,601 | |
| Cash, cash equivalents, and restricted cash | | | | | | |
| Net increase for the period | | 101,422 | | | 2,772,033 | | | 802,842 | |
| Balance, beginning of period | | 5,101,637 | | | 2,329,604 | | | 1,526,762 | |
| Balance, end of period | | $ | 5,203,059 | | | $ | 5,101,637 | | | $ | 2,329,604 | |
| Supplemental cash flow disclosures | | | | | | |
| Interest paid, net of amounts capitalized | | $ | 705,680 | | | $ | 639,718 | | | $ | 826,970 | |
| Federal, state and foreign income taxes paid, net | | 43,018 | | | 8,543 | | | 28,493 | |
| Non-cash investing and financing activities | | | | | | |
| Note receivable related to sale of Circus Circus Las Vegas and adjacent land | | $ | — | | | $ | — | | | $ | 133,689 | |
| Investments in unconsolidated affiliates | | — | | | 802,000 | | | 62,133 |
| MGP BREIT Venture assumption of bridge loan facility | | — | | | 1,304,625 | | | — | |
The accompanying notes are an integral part of these consolidated financial statements.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years ended December 31,
2018, 20172021, 2020 and
20162019
| | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | |
| | | | | | | | | | | | | | Retained | | | Accumulated | | | MGM Resorts | | | | | | | | | |
| | Common Stock | | | Capital in | | | Earnings | | | Other | | | International | | | Non- | | | Total | |
| | | | | | Par | | | Excess of | | | (Accumulated | | | Comprehensive | | | Stockholders' | | | Controlling | | | Stockholders' | |
| | Shares | | | Value | | | Par Value | | | Deficit) | | | Income (Loss) | | | Equity | | | Interests | | | Equity | |
Balances, January 1, 2016 | | | 564,839 | | | $ | 5,648 | | | $ | 5,655,886 | | | $ | (581,952 | ) | | $ | 14,022 | | | $ | 5,093,604 | | | $ | 2,644,500 | | | $ | 7,738,104 | |
Net income | | | — | | | | — | | | | — | | | | 1,100,408 | | | | — | | | | 1,100,408 | | | | 134,902 | | | | 1,235,310 | |
Currency translation adjustment | | | — | | | | — | | | | — | | | | — | | | | (1,477 | ) | | | (1,477 | ) | | | (1,203 | ) | | | (2,680 | ) |
Other comprehensive income - cash flow hedges | | | — | | | | — | | | | — | | | | — | | | | 1,434 | | | | 1,434 | | | | 445 | | | | 1,879 | |
Stock-based compensation | | | — | | | | — | | | | 51,460 | | | | — | | | | — | | | | 51,460 | | | | 4,147 | | | | 55,607 | |
Issuance of common stock pursuant to stock-based compensation awards | | | 2,225 | | | | 22 | | | | (30,065 | ) | | | — | | | | — | | | | (30,043 | ) | | | — | | | | (30,043 | ) |
Cash distributions to noncontrolling interest owners | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (103,457 | ) | | | (103,457 | ) |
MGM Growth Properties IPO | | | — | | | | — | | | | (150,414 | ) | | | — | | | | — | | | | (150,414 | ) | | | 1,334,252 | | | | 1,183,838 | |
MGP dividend payable to Class A shareholders | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (22,281 | ) | | | (22,281 | ) |
Issuance of performance share units | | | — | | | | — | | | | 5,817 | | | | — | | | | — | | | | 5,817 | | | | — | | | | 5,817 | |
MGM China common stock acquisition | | | 7,060 | | | | 71 | | | | 127,146 | | | | — | | | | 1,074 | | | | 128,291 | | | | (270,903 | ) | | | (142,612 | ) |
Borgata transaction | | | — | | | | — | | | | (18,385 | ) | | | — | | | | — | | | | (18,385 | ) | | | 28,752 | | | | 10,367 | |
Other | | | — | | | | — | | | | 12,130 | | | | — | | | | — | | | | 12,130 | | | | (22 | ) | | | 12,108 | |
Balances, December 31, 2016 | | | 574,124 | | | | 5,741 | | | | 5,653,575 | | | | 518,456 | | | | 15,053 | | | | 6,192,825 | | | | 3,749,132 | | | | 9,941,957 | |
Net income | | | — | | | | — | | | | — | | | | 1,952,052 | | | | — | | | | 1,952,052 | | | | 128,320 | | | | 2,080,372 | |
Currency translation adjustment | | | — | | | | — | | | | — | | | | — | | | | (23,995 | ) | | | (23,995 | ) | | | (19,193 | ) | | | (43,188 | ) |
Other comprehensive income - cash flow hedges | | | — | | | | — | | | | — | | | | — | | | | 5,234 | | | | 5,234 | | | | 2,761 | | | | 7,995 | |
Stock-based compensation | | | — | | | | — | | | | 57,531 | | | | — | | | | — | | | | 57,531 | | | | 4,991 | | | | 62,522 | |
Issuance of common stock pursuant to stock-based compensation awards | | | 2,152 | | | | 22 | | | | (33,802 | ) | | | — | | | | — | | | | (33,780 | ) | | | — | | | | (33,780 | ) |
Cash distributions to noncontrolling interest owners | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (147,685 | ) | | | (147,685 | ) |
Dividends declared to common shareholders ($0.44 per share) | | | — | | | | — | | | | — | | | | (252,014 | ) | | | — | | | | (252,014 | ) | | | — | | | | (252,014 | ) |
MGP dividend payable to Class A shareholders | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (29,777 | ) | | | (29,777 | ) |
Issuance of performance share units | | | — | | | | — | | | | 9,648 | | | | — | | | | — | | | | 9,648 | | | | 95 | | | | 9,743 | |
Repurchase of common stock | | | (10,000 | ) | | | (100 | ) | | | (327,400 | ) | | | — | | | | — | | | | (327,500 | ) | | | — | | | | (327,500 | ) |
MGP Class A share issuance | | | — | | | | — | | | | 35,029 | | | | — | | | | 109 | | | | 35,138 | | | | 326,484 | | | | 361,622 | |
Adjustment of redeemable non- controlling interest to redemption value | | | — | | | | — | | | | (18,280 | ) | | | — | | | | — | | | | (18,280 | ) | | | — | | | | (18,280 | ) |
MGM National Harbor transaction | | | — | | | | — | | | | (12,486 | ) | | | — | | | | (11 | ) | | | (12,497 | ) | | | 19,383 | | | | 6,886 | |
Other | | | — | | | | — | | | | (6,106 | ) | | | (1,195 | ) | | | — | | | | (7,301 | ) | | | (448 | ) | | | (7,749 | ) |
Balances, December 31, 2017 | | | 566,276 | | | | 5,663 | | | | 5,357,709 | | | | 2,217,299 | | | | (3,610 | ) | | | 7,577,061 | | | | 4,034,063 | | | | 11,611,124 | |
Net income | | | — | | | | — | | | | — | | | | 466,772 | | | | — | | | | 466,772 | | | | 108,114 | | | | 574,886 | |
Currency translation adjustment | | | — | | | | — | | | | — | | | | — | | | | (7,422 | ) | | | (7,422 | ) | | | (5,600 | ) | | | (13,022 | ) |
Other comprehensive income - cash flow hedges | | | — | | | | — | | | | — | | | | — | | | | 2,476 | | | | 2,476 | | | | 1,100 | | | | 3,576 | |
Stock-based compensation | | | — | | | | — | | | | 65,072 | | | | — | | | | — | | | | 65,072 | | | | 5,124 | | | | 70,196 | |
Issuance of common stock pursuant to stock-based compensation awards | | | 2,280 | | | | 23 | | | | (32,225 | ) | | | — | | | | — | | | | (32,202 | ) | | | — | | | | (32,202 | ) |
Cash distributions to noncontrolling interest owners | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (147,321 | ) | | | (147,321 | ) |
Dividends declared to common shareholders ($0.48 per share) | | | — | | | | — | | | | — | | | | (260,592 | ) | | | — | | | | (260,592 | ) | | | — | | | | (260,592 | ) |
MGP dividend payable to Class A shareholders | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (31,732 | ) | | | (31,732 | ) |
Issuance of performance share units | | | — | | | | — | | | | 3,609 | | | | — | | | | — | | | | 3,609 | | | | 107 | | | | 3,716 | |
Repurchase of common stock | | | (41,076 | ) | | | (411 | ) | | | (1,282,922 | ) | | | — | | | | — | | | | (1,283,333 | ) | | | — | | | | (1,283,333 | ) |
Adjustment of redeemable non- controlling interest to redemption value | | | — | | | | — | | | | (21,326 | ) | | | — | | | | — | | | | (21,326 | ) | | | — | | | | (21,326 | ) |
Other | | | — | | | | — | | | | 2,168 | | | | — | | | | — | | | | 2,168 | | | | (6,347 | ) | | | (4,179 | ) |
Balances, December 31, 2018 | | | 527,480 | | | $ | 5,275 | | | $ | 4,092,085 | | | $ | 2,423,479 | | | $ | (8,556 | ) | | $ | 6,512,283 | | | $ | 3,957,508 | | | $ | 10,469,791 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Common Stock | | Capital in Excess of Par Value | | Retained Earnings (Accumulated Deficit) | | Accumulated Other Comprehensive Income (Loss) | | Total MGM Resorts International Stockholders' Equity | | Noncontrolling Interests | | Total Stockholders' Equity |
| | | Shares | | Par Value | | | | | | |
| Balances, January 1, 2019 | | 527,480 | | | $ | 5,275 | | | $ | 4,092,085 | | | $ | 2,423,479 | | | $ | (8,556) | | | $ | 6,512,283 | | | $ | 3,957,508 | | | $ | 10,469,791 | |
| Net income | | — | | | — | | | — | | | 2,049,146 | | | — | | | 2,049,146 | | | 156,141 | | | 2,205,287 | |
| Currency translation adjustment | | — | | | — | | | — | | | — | | | 16,125 | | | 16,125 | | | 12,745 | | | 28,870 | |
| Cash flow hedges | | — | | | — | | | — | | | — | | | (19,973) | | | (19,973) | | | (9,532) | | | (29,505) | |
| Stock-based compensation | | — | | | — | | | 83,897 | | | — | | | — | | | 83,897 | | | 4,941 | | | 88,838 | |
| Issuance of common stock pursuant to stock-based compensation awards | | 2,150 | | | 20 | | | (25,985) | | | — | | | — | | | (25,965) | | | — | | | (25,965) | |
| Cash distributions to noncontrolling interest owners | | — | | | — | | | — | | | — | | | — | | | — | | | (181,816) | | | (181,816) | |
| Dividends declared and paid to common shareholders ($0.52 per share) | | — | | | — | | | — | | | (271,288) | | | — | | | (271,288) | | | — | | | (271,288) | |
| MGP dividend payable to Class A shareholders | | — | | | — | | | — | | | — | | | — | | | — | | | (53,489) | | | (53,489) | |
| Issuance of restricted stock units | | — | | | — | | | 1,546 | | | — | | | — | | | 1,546 | | | — | | | 1,546 | |
| Repurchases of common stock | | (35,854) | | | (358) | | | (1,031,176) | | | — | | | — | | | (1,031,534) | | | — | | | (1,031,534) | |
| Adjustment of redeemable noncontrolling interest to redemption value | | — | | | — | | | (2,714) | | | — | | | — | | | (2,714) | | | — | | | (2,714) | |
| Empire City acquisition | | 9,372 | | | 94 | | | 265,671 | | | — | | | — | | | 265,765 | | | — | | | 265,765 | |
| Empire City MGP transaction | | — | | | — | | | (18,913) | | | — | | | 195 | | | (18,718) | | | 23,745 | | | 5,027 | |
| MGP Class A share issuance | | — | | | — | | | 150,464 | | | — | | | 1,512 | | | 151,976 | | | 1,049,582 | | | 1,201,558 | |
| Park MGM Transaction | | — | | | — | | | (1,984) | | | — | | | 16 | | | (1,968) | | | 2,496 | | | 528 | |
| Northfield transaction | | — | | | — | | | 21,681 | | | — | | | (2) | | | 21,679 | | | (27,439) | | | (5,760) | |
| Other | | — | | | — | | | (3,473) | | | — | | | 481 | | | (2,992) | | | 772 | | | (2,220) | |
| Balances, December 31, 2019 | | 503,148 | | | 5,031 | | | 3,531,099 | | | 4,201,337 | | | (10,202) | | | 7,727,265 | | | 4,935,654 | | | 12,662,919 | |
| Net loss | | — | | | — | | | — | | | (1,032,724) | | | — | | | (1,032,724) | | | (293,401) | | | (1,326,125) | |
| Currency translation adjustment | | — | | | — | | | — | | | — | | | 15,711 | | | 15,711 | | | 12,051 | | | 27,762 | |
| Cash flow hedges | | — | | | — | | | — | | | — | | | (44,528) | | | (44,528) | | | (34,837) | | | (79,365) | |
| Stock-based compensation | | — | | | — | | | 100,907 | | | — | | | — | | | 100,907 | | | 6,049 | | | 106,956 | |
| Issuance of common stock pursuant to stock-based compensation awards | | 2,031 | | | 21 | | | (16,424) | | | — | | | — | | | (16,403) | | | — | | | (16,403) | |
| Cash distributions to noncontrolling interest owners | | — | | | — | | | — | | | — | | | — | | | — | | | (221,690) | | | (221,690) | |
| Dividends declared and paid to common shareholders ($0.1575 per share) | | — | | | — | | | — | | | (77,606) | | | — | | | (77,606) | | | — | | | (77,606) | |
| MGP dividend payable to Class A shareholders | | — | | | — | | | — | | | — | | | — | | | — | | | (64,086) | | | (64,086) | |
| Issuance of restricted stock units | | — | | | — | | | 2,142 | | | — | | | — | | | 2,142 | | | — | | | 2,142 | |
| Repurchases of common stock | | (10,861) | | | (109) | | | (353,611) | | | — | | | — | | | (353,720) | | | — | | | (353,720) | |
| Adjustment of redeemable noncontrolling interest to redemption value | | — | | | — | | | 35,520 | | | — | | | — | | | 35,520 | | | — | | | 35,520 | |
| MGP Class A share issuances | | — | | | — | | | 64,188 | | | — | | | 646 | | | 64,834 | | | 442,717 | | | 507,551 | |
| MGP BREIT Venture Transaction | | — | | | — | | | (6,503) | | | — | | | (59) | | | (6,562) | | | 8,287 | | | 1,725 | |
| Redemption of Operating Partnership units | | — | | | — | | | 83,859 | | | — | | | 8,773 | | | 92,632 | | | (114,924) | | | (22,292) | |
| Other | | — | | | — | | | (1,724) | | | — | | | (1,018) | | | (2,742) | | | (638) | | | (3,380) | |
| Balances, December 31, 2020 | | 494,318 | | | 4,943 | | | 3,439,453 | | | 3,091,007 | | | (30,677) | | | 6,504,726 | | | 4,675,182 | | | 11,179,908 | |
| Net income (loss) | | — | | | — | | | — | | | 1,254,370 | | | — | | | 1,254,370 | | | (55,793) | | | 1,198,577 | |
| Currency translation adjustment | | — | | | — | | | — | | | — | | | (13,871) | | | (13,871) | | | (10,784) | | | (24,655) | |
| Cash flow hedges | | — | | | — | | | — | | | — | | | 13,723 | | | 13,723 | | | 21,065 | | | 34,788 | |
| Stock-based compensation | | — | | | — | | | 59,492 | | | — | | | — | | | 59,492 | | | 5,691 | | | 65,183 | |
| Issuance of common stock pursuant to stock-based compensation awards | | 2,574 | | | 25 | | | (44,543) | | | — | | | — | | | (44,518) | | | — | | | (44,518) | |
| Cash distributions to noncontrolling interest owners | | — | | | — | | | — | | | — | | | — | | | — | | | (250,910) | | | (250,910) | |
| Dividends declared and paid to common shareholders ($0.01 per share) | | — | | | — | | | — | | | (4,789) | | | — | | | (4,789) | | | — | | | (4,789) | |
| MGP dividend payable to Class A shareholders | | — | | | — | | | — | | | — | | | — | | | — | | | (82,294) | | | (82,294) | |
| Repurchases of common stock | | (43,088) | | | (430) | | | (1,753,079) | | | — | | | — | | | (1,753,509) | | | — | | | (1,753,509) | |
| Adjustment of redeemable noncontrolling interest to redemption value | | — | | | — | | | (78,298) | | | — | | | — | | | (78,298) | | | — | | | (78,298) | |
| MGP Class A share issuances | | — | | | — | | | 99,934 | | | — | | | 3,240 | | | 103,174 | | | 656,361 | | | 759,535 | |
| Redemption of Operating Partnership units | | — | | | — | | | 171,332 | | | — | | | 5,327 | | | 176,659 | | | (227,487) | | | (50,828) | |
| MGM Springfield transaction | | — | | | — | | | (133,844) | | | — | | | — | | | (133,844) | | | 172,749 | | | 38,905 | |
| Other | | — | | | — | | | (10,312) | | | — | | | (2,358) | | | (12,670) | | | 2,341 | | | (10,329) | |
| Balances, December 31, 2021 | | 453,804 | | | $ | 4,538 | | | $ | 1,750,135 | | | $ | 4,340,588 | | | $ | (24,616) | | | $ | 6,070,645 | | | $ | 4,906,121 | | | $ | 10,976,766 | |
The accompanying notes are an integral part of these consolidated financial statements.statements
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
As of December 31, 2021, the Company
owns and operates the following integrated casino, hotel and entertainment resorts in Las Vegas, Nevada:
Aria (including Vdara), Bellagio, MGM Grand Las Vegas
(including The Signature), The Mirage, Mandalay Bay, Luxor, New York-New York, Park MGM,
(which was branded as Monte Carlo prior to May 2018), 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.Excalibur. The Company
also 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,
which opened on August 24, 2018. 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
Tunica in Tunica. Additionally, the Company
owns theoperates The Park, a dining and entertainment district located between New York-New York and Park MGM,
and the Company owns and operates 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 arebusiness is 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.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 one1 vote per share, while the Company, as the owner of the Class B share, holds a controlling interest in MGP as it 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-ownedwholly owned subsidiary of MGP. TheMGP. 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 valueFair Market Value of a Class A share.share (as defined in the Operating Partnership's partnership agreement). 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 12. As of December 31, 2018,2021, the Company owned 73.3%41.5% of the Operating Partnership units, and MGP held the remaining 26.7%58.5% ownership interest in the Operating Partnership.Pursuant to a master lease agreement between a subsidiary of the
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, andEmpire City, MGM National Harbor, from the landlord.In July 2018, MGP acquired the membership interests ofMGM Northfield Park, Associates, LLC (“Northfield”), an Ohio limited liability company that ownsand MGM Springfield pursuant to a master lease agreement between a subsidiary of the Company and a subsidiary of the Operating Partnership. The Company leases the real estate assets and operationsof Bellagio pursuant to a lease agreement between a subsidiary of the Hard Rock Rocksino Northfield Park from Milstein Entertainment LLC. Simultaneously withCompany and a venture that is 5% owned by such subsidiary and 95% owned by a subsidiary of Blackstone Real Estate Income Trust, Inc. (“BREIT”, and such venture, the close“Bellagio BREIT Venture”)
. Additionally, the Company leases the real estate assets of Mandalay Bay and MGM Grand Las Vegas, pursuant to a lease agreement between a subsidiary of the transaction, MGP entered intoCompany and a new agreement with an affiliate of Hard Rock Café International (STP), Inc. to continue to serve as the managerventure that is 50.1% owned by a subsidiary of the property.Operating Partnership and 49.9% by a subsidiary of BREIT (such venture, the “MGP BREIT Venture”). Further, the Company leases the real estate assets of Aria (including Vdara) pursuant to a lease agreement between a subsidiary of the Company and funds managed by The Blackstone Group ("Blackstone"), as further discussed below. Refer to Note 411 for additional information.In September 2018, the Company entered into an agreement with MGP to acquire allfurther discussion of the operating assets of Northfield from MGP. Northfield will be added to the existing master lease between the Company and MGP. The transaction is expected to close in the first half of 2019, subject to customary closing conditions. Refer to Note 4 for additional information.
leases.
In January 2019, the Company acquired the real property and operations associated with the Empire City Casino's race trackracetrack and casino ("Empire City"). Subsequently, MGP then acquired the developed real property associated with Empire City from the Company and Empire City was added to the master lease between the Company and MGP. Refer to Note 4 and Note 18 for additional information.
In March 2019, the Company entered into an amendment to the master lease with respect to improvements made by the Company related to the rebranding of the Park MGM and NoMad Las Vegas. Refer to Note 18 for additional information on this transaction, which eliminates in consolidation.
In April 2019, the Company acquired the membership interests of Northfield Park Associates, LLC ("Northfield") from MGP and MGP retained the associated real estate assets. The Company then rebranded the property to MGM
Northfield Park, and added it to the master lease between the Company and MGP. Refer to Note 18 for additional information.
On November 15, 2019, Bellagio BREIT Venture was formed, which acquired the Bellagio real estate assets from the Company and leased such assets back to the Company pursuant to a lease agreement. In exchange for the contribution of the real estate assets, the Company received total consideration of $4.25 billion, which consisted of a 5% equity interest in the venture and cash of approximately $4.2 billion. The Company recorded a gain of $2.7 billion related to sale of the Bellagio real estate assets, recorded in “Gain on REIT transactions, net” in the consolidated statements of operations, which primarily reflects the difference between the carrying value of the real estate assets sold and the consideration received. The Company also provides a shortfall guarantee of the principal amount of indebtedness of the debt of Bellagio BREIT Venture’s $3.01 billion of debt (and any interest accrued and unpaid thereon). Refer to Note 11 and Note 12 for additional information relating to the lease and guarantee, respectively.
In December 2019, the Company completed the sale of Circus Circus Las Vegas and adjacent land. See Note 16 for additional information related to this transaction.
On February 14, 2020, the Company completed a series of transactions (collectively the “MGP BREIT Venture Transaction”) pursuant to which the real estate assets of Empire City will be leasedMGM Grand Las Vegas and Mandalay Bay (including Mandalay Place) were contributed to the newly formed MGP BREIT Venture. In exchange for the contribution of the real estate assets, the Company received total consideration of $4.6 billion, which was comprised of $2.5 billion of cash, $1.3 billion of the Operating Partnership’s secured indebtedness assumed by MGP BREIT Venture, and the Operating Partnership’s 50.1% equity interest in MGP BREIT Venture. In addition, the Operating Partnership issued approximately 3 million Operating Partnership units to the Company pursuantrepresenting 5% of the equity value of MGP BREIT Venture. The Company recorded the difference between consideration received of $2.5 billion and the carrying value of the MGM Grand Las Vegas real estate assets of $733 million and selling costs of $27 million as a net gain on sale of assets of $1.7 billion, which is reflected within “Gain on REIT transactions, net” in the consolidated statements of operations. The Company also recorded the difference between consideration received of $2.1 billion and the carrying value of the Mandalay Bay real estate assets of $2.3 billion and selling costs of $10 million as a net loss on sale of assets of $252 million, which is reflected within “Gain on REIT transactions, net” in the consolidated statements of operations. In connection with the transactions, the Company provides a shortfall guarantee of the principal amount of indebtedness of MGP BREIT Venture (and any interest accrued and unpaid thereon) as further discussed in Note 12. On the closing date, BREIT also purchased approximately 5 million MGP Class A shares for $150 million.
In connection with the MGP BREIT Venture Transaction, MGP BREIT Venture entered into a lease with a subsidiary of the Company for the real estate assets of Mandalay Bay and MGM Grand Las Vegas as further discussed in Note 11. Additionally, the master lease with MGP was modified to remove the Mandalay Bay property and the annual cash rent under the MGP master lease was reduced by $133 million, as further discussed in Note 18.
Also, on January 14, 2020, the Company, the Operating Partnership, and MGP entered into an amendmentagreement for the Operating Partnership to waive its right following the closing of the MGP BREIT Venture Transaction to issue MGP Class A shares, in lieu of cash, to the Company in connection with the Company exercising its right to require the Operating Partnership to redeem Operating Partnership units that the Company holds, at a price per unit equal to a 3% discount to the ten day average closing price prior to the date of the notice of redemption. The waiver was effective upon closing of the transaction on February 14, 2020 and was scheduled to terminate on the earlier of February 14, 2022 or upon the Company’s receipt of cash proceeds of $1.4 billion as consideration for the redemption of the Company’s Operating Partnership units. On May 18, 2020, the Operating Partnership redeemed approximately 30 million Operating Partnership units that the Company held for $700 million, or $23.10 per unit, and on December 2, 2020, the Operating Partnership redeemed approximately 24 million of the Operating Partnership units that the Company held for the remaining $700 million, or $29.78 per unit. As a result, the waiver terminated in accordance with its terms.
On March 4, 2021, certain subsidiaries of the Company delivered a notice of redemption to MGP covering approximately 37 million Operating Partnership units that they held, as further discussed in Note 13.
On August 4, 2021, the Company entered into an agreement with VICI Properties, Inc. (“VICI”) and MGP whereby VICI will acquire MGP in a stock-for-stock transaction (such transaction, the “VICI Transaction”). Pursuant to the agreement, MGP Class A shareholders will receive 1.366 shares of newly issued VICI stock in exchange for each MGP Class A share outstanding and the Company will receive 1.366 units of the new VICI operating partnership (“VICI OP”) in exchange for each Operating Partnership unit held by the Company. The fixed exchange ratio represents an agreed upon price of $43 per share of MGP Class A share to the five-day volume weighted average price of VICI stock as of the close of business on July 30, 2021. In connection with the exchange, VICI OP will redeem the majority of the Company’s VICI OP units for cash consideration of $4.4 billion, with the Company retaining an approximate $370 million ownership
interest in the VICI OP (based upon the close price of VICI stock as of August 3, 2021). MGP’s Class B share that is held by the Company will be cancelled. As part of the transaction, the Company will enter into an amended and restated master lease.lease with VICI. The new master lease will have an initial term of 25 years, with 3 10-year renewals, and initial annual rent of $860 million, escalating annually at a rate of 2% per annum for the first 10 years and thereafter equal to the greater of 2% and the CPI increase during the prior year subject to a cap of 3%. The transaction is expected to close in the first half of 2022, subject to customary closing conditions, regulatory approvals, and approval by VICI stockholders (which was obtained on October 29, 2021).
On September 26, 2021, the Company entered into an agreement to acquire the operations of The Cosmopolitan of Las Vegas ("The Cosmopolitan") for cash consideration of $1.625 billion, subject to customary working capital adjustments. Pursuant to the agreement, the Company is obligated to use its reasonable best efforts to obtain the requisite antitrust and gaming regulatory approvals. The agreement may be terminated by either party if the transaction has not closed on or before June 26, 2022, which date may be extended by either party to a date on or prior to September 26, 2022 under certain circumstances. The agreement contemplates a reverse termination fee of $500 million that is payable by the Company in the event that the parties are unable to obtain antitrust or gaming regulatory approval. Additionally, the Company will enter into a lease agreement for the real estate assets of The Cosmopolitan. The Cosmopolitan lease will have an initial term of 30 years with 3 subsequent 10-year renewal periods, exercisable at the Company’s option. The initial term of the lease provides for an initial annual cash rent of $200 million with a fixed 2% escalator for the first 15 years, and thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3%. Additionally, the lease will require the Company to spend a specified percentage of net revenues over a rolling 5-year period at the property on capital expenditures and for the Company to comply with certain financial covenants, which, if not met, would require the Company to maintain cash security or one or more letters of credit in favor of the landlord in an amount equal to rent for the succeeding 1-year period. The transaction is expected to close in the first half of 2022, subject to regulatory approvals and other customary closing conditions.
On September 27, 2021, the Company completed the acquisition of the 50% ownership interest in CityCenter Holdings, LLC ("CityCenter") held by Infinity World Development Corp ("Infinity World"), a wholly owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity. CityCenter is located between Bellagio and Park MGM and consists of Aria, an integrated casino, hotel and entertainment resort; and Vdara, a luxury condominium-hotel. Refer to Note 4 for additional information on this acquisition.
On September 28, 2021, the Company sold the real estate assets of Aria (including Vdara) to funds managed by The Blackstone Group Inc. ("Blackstone") for cash consideration of $3.89 billion and entered into a lease through which the real property is leased back to a subsidiary of the Company, as further discussed in Note 11.
On October 29, 2021, MGP acquired the real estate assets of MGM Springfield from the Company and MGM Springfield was added to the MGP master lease between the Company and MGP through which MGP leases back the real property to a subsidiary of the Company. Transactions with MGP, including transactions under the MGP master lease, have been eliminated in the Company’s consolidation of MGP. Refer to Note 18 for additional information.
On December 13, 2021, the Company entered into an agreement to sell the operations of The Mirage to an affiliate of Seminole Hard Rock Entertainment, Inc. ("Hard Rock") for cash consideration of $1.075 billion, subject to certain purchase price adjustments. Pursuant to the agreement, Hard Rock is obligated to use its reasonable best efforts to obtain the requisite antitrust and gaming regulatory approvals. The agreement may be terminated by either party if the closing has not occurred on or before December 13, 2022, which date may be extended by either party to March 13, 2023 under certain circumstances. The agreement contemplates a reverse termination fee of $322.5 million that is payable by Hard Rock to the Company in the event that the parties are unable to obtain antitrust or gaming regulatory approval. Upon closing, the master lease between the Company and VICI (or MGP in the event that the VICI Transaction is terminated) will be amended and restated to reflect a $90 million reduction in annual cash rent. The transaction is expected to close during the second half of 2022, subject to certain closing conditions, including, but not limited to, the consummation or termination of the VICI Transaction and receipt of regulatory approvals.
The Company has an approximate 56% controlling interest in MGM China Holdings Limited (together with its subsidiaries, “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, an2 integrated casino, hotel and entertainment resort located on the Cotai Stripresorts in Macau, that opened on February 13, 2018, as well as the related gaming subconcession and land concessions.
Gaming in Macau is currently administered by the Macau Government through concessions awarded to three different concessionaires and three subconcessionaires, of which a subsidiary of MGM China, MGM Grand Paradise, is a subconcessionaire. In 2019, the expiration of MGM Grand Paradise’s subconcession term was extended from March 31, 2020 to June 26, 2022, consistent with the expiration of the other concessionaires and subconcessionaires. Pursuant to the
Macau gaming law, upon reaching the maximum duration of 20 years, the term of the concessions may be extended one or more times by order of the Chief Executive, which period may not exceed, in total, 5 years. On January 14, 2022, the Macau Government disclosed the content of a bill to amend Macau gaming law, which followed a 45-day public consultation process regarding draft amendment proposals that were issued in September 2021. Under the bill the existing subconcessions will be discontinued and a maximum of six concessions will be awarded for a term to be specified in the concession contract that may not exceed 10 years and which may be extended by three years under certain circumstances. The bill is subject to debate and approval by the Macau Legislative Assembly. The approval of the new gaming law bill will precede the public tender for the awarding of new gaming concessions and to date the Macau Government has provided no indication as to whether the public tender will take place before expiry of the existing gaming concessions and subconcessions but acknowledged that it could consider the extension of the existing concessions and subconcessions beyond their current term if the public tender is held at a later date. Unless MGM Grand Paradise's gaming subconcession is extended or legislation with regard to reversion of casino premises is amended the casino area premises and gaming-related equipment subject to reversion will automatically be transferred to the Macau Government upon expiration, and MGM China will cease to generate any revenues from such gaming operations. In addition, certain events relating to the loss, termination, rescission, revocation or modification of MGM Grand Paradise’s gaming subconcession in Macau, where such events have a material adverse effect on the financial condition, business, properties, or results of operations of MGM China, taken as a whole, may result in a special put option triggering event under MGM China’s senior notes and in an event of default under MGM China’s revolving credit facilities. MGM China continues to closely monitor developments regarding the retendering process or concession extensions including the issuance of guidance by the Macau Government. MGM China intends to respond proactively to all relevant Macau Government requirements when known relating to the process. Management cannot provide any assurance that the gaming subconcession will be extended beyond the current term or that it will be able to obtain a gaming concession in a public tender; however, management believes that MGM Grand Paradise will be successful in obtaining a gaming concession when a public tender is held.
The Company owns 50% of
and manages CityCenter Holdings,BetMGM, LLC (“
CityCenter”BetMGM”),
located between Bellagiowhich provides online sports betting and
Park MGM.iGaming in certain jurisdictions in the United States. The other 50% of
CityCenterBetMGM 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. On August 30, 2018, CityCenter completed the sale of the Mandarin Oriental Las Vegas (“Mandarin Oriental”) and adjacent retail parcels. See Note 6 and Note 17 for additional information related to CityCenter.Entain plc.
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 6 for additional information regarding the Company’s investment in the Las Vegas Arena Company.In August 2018, the Company, along with its joint venture partner, completed the sale of its 50% interest in Grand Victoria, a riverboat casino in Elgin, Illinois. See Note 6 for additional information regarding the Company’s investment in Grand Victoria.
During the fourth quarter of 2018, the Company has changed the aggregation of its operations into three3 reportable segments: Las Vegas Strip Resorts, Regional Operations and MGM China. This change of reportable segments reflects realignment within the Company stemming from the expansion of the Company’s regional operations. See Note 1617 for additional information about the Company’s segments.
Financial Impact of COVID-19. The spread of the novel 2019 coronavirus (“COVID-19”) and developments surrounding the global pandemic have had a significant impact on the Company’s business, financial condition, results of operations and cash flows in 2020 and 2021 and may continue to impact the Company's business in 2022 and thereafter. In March 2020, all of the Company’s domestic properties were temporarily closed pursuant to state and local government restrictions imposed as a result of COVID-19. Throughout the second and third quarters of 2020, all of the Company’s properties that were temporarily closed re-opened to the public, with temporary re-closures and re-openings occurring for certain of the Company’s properties or portions thereof into the first quarter of 2021. Upon re-opening, the properties continued to operate without certain amenities and subject to certain occupancy limitations, with restrictions varying by jurisdiction. Beginning in the latter part of the first quarter of 2021 and continuing into the second quarter of 2021, the Company’s domestic jurisdictions eased and removed prior operating restrictions, including capacity and occupancy limits, as well as social distancing policies.
Although all of the Company’s properties have re-opened, in light of the unpredictable nature of the pandemic, including the emergence and spread of COVID-19 variants, the properties may be subject to new operating restrictions and/or temporary, complete, or partial shutdowns in the future. At this time, the Company cannot predict whether jurisdictions, states or the federal government will adopt similar or more restrictive measures in the future than in the past, including stay-at-home orders or the temporary closure of all or a portion of the Company’s properties as a result of the pandemic.
In Macau, following a temporary closure of the Company’s properties on February 5, 2020, operations resumed on February 20, 2020, subject to certain health safeguards, such as limiting the number of seats available at each table game, slot machine spacing, reduced operating hours at a number of restaurants and bars, temperature checks, and mask protection. Although the issuance of tourist visas (including the individual visit scheme) for residents of Zhuhai, Guangdong Province and all other provinces in mainland China to travel to Macau resumed on August 12, 2020, August 26, 2020 and September 23, 2020, respectively, several travel and entry restrictions in Macau, Hong Kong and mainland China remain in place (including the temporary suspension of ferry services between Hong Kong and Macau, the negative nucleic acid test result certificate, and mandatory quarantine requirements for returning residents, for visitors from Hong Kong, Taiwan, and certain regions in mainland China, and bans on entry on other visitors), which significantly impacted visitation to the Company’s Macau properties. In the third and fourth quarters of 2021, local COVID-19 cases were identified in Macau. Upon such occurrences, a state of immediate prevention was declared and mass mandatory nucleic acid testing was imposed in Macau, the validity period of negative test results for re-entry into mainland China was shortened and quarantine requirements were imposed, certain events were cancelled or suspended, and in some instances,
certain entertainment and leisure facilities were closed throughout Macau. Although gaming and hotel operations have remained open during these states of immediate prevention, such measures have had a negative effect on the Company's operations and it is uncertain whether further closures, including the closure of the Company’s properties, or travel restrictions to Macau will be implemented if additional local COVID-19 cases are identified.
NOTE 2 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation. For entities not determined to be a variable interest entity (“VIE”), the Company consolidates such entities in which the Company owns 100% of the equity. For entities in which the Company owns less than 100% of the equity interest, the Company consolidates the entity if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements. For these entities, the Company records a noncontrolling interest in the consolidated balance sheets. The Company’s investments in unconsolidated affiliates which are 50% or less owned are accounted for under the equity method when the Company can exercise significant influence over or has joint control of the unconsolidated affiliate. All intercompany balances and transactions are eliminated in consolidation.The
Company evaluates entities for which control is achieved through means other than voting rights to determine if it is the primary beneficiary of a VIE.variable interest entity (“VIE”). A VIE is an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is its primary beneficiary. For these VIEs, the Company records a noncontrolling interest in the consolidated balance sheets. The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The Company performs this analysis on an ongoing basis.basis
. Management has determined that MGP is a 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 26.7% as of December 31, 2018 as noncontrolling interest in the Company’s consolidated financial statements. As of December 31, 2018,2021, on a consolidated basis MGP had total assets of $11.0$10.4 billion, primarily related to its real estate investments, and total liabilities of $5.1 billion, primarily related to its indebtedness.
Management has determined that Bellagio BREIT Venture is a VIE because the equity holders 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 not the primary beneficiary of Bellagio BREIT Venture and, accordingly, does not consolidate the venture, because the Company does not have power to direct the activities that could potentially be significant to the venture; BREIT, as the managing member, has such power. The Company has recorded its 5% ownership interest in Bellagio BREIT Venture as an investment in unconsolidated affiliates in the Company’s consolidated financial statements, for which such amount was $58 million as of December 31, 2021. The Company’s maximum exposure to loss as a result of its involvement with Bellagio BREIT Venture is equal to the carrying value of its investment, assuming no future capital funding requirements, plus the exposure to loss resulting from the Company’s guarantee of the debt of Bellagio BREIT Venture, which guarantee is immaterial as of December 31, 2021, as further discussed in Note 12.
For entities determined not to be a VIE, the Company consolidates such entities in which the Company owns 100% of the equity. For entities in which the Company owns less than 100% of the equity interest, the Company consolidates the entity under the voting interest model if it has a controlling financial interest based upon the terms of the respective entities’ ownership agreements, such as MGM China. For these entities, the Company records a noncontrolling interest in the consolidated balance sheets and all intercompany balances and transactions are eliminated in consolidation. If the entity does not qualify for consolidation under the voting interest model and the Company has significant influence over the operating and financial decisions of the entity, the Company accounts for the entity under the equity method, such as the Company’s investments in MGP BREIT Venture and BetMGM, which do not qualify for consolidation as the Company has joint control, given the entities are structured with substantive participating rights whereby both owners participate in the decision making process, which prevents the Company from exerting a controlling financial interest in such entities, as defined in ASC 810.
For equity interests in entities in which the Company does not have significant influence, the Company records its equity investment under ASC 321 and reflects such investments within “Other long-term assets, net” on the consolidated balance sheets. The fair value of such equity investments was $66 million as of December 31, 2021.
Reclassifications. Certain reclassifications have been made to conform the prior period presentation.
Management’s use of estimates. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. These principles require the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair value measurements. Fair value measurements affect the Company’s accounting and impairment assessments of its long-lived assets, investments in unconsolidated affiliates cost method investments,or equity interests, assets acquired, and liabilities assumed in an acquisition, and goodwill and other intangible assets. Fair value measurements also affect the Company’s accounting for certain of its financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy that includes: Level 1 inputs, such as quoted prices in an active market; Level 2 inputs, which are observable inputs for similar assets; or Level 3 inputs, which are unobservable inputs.The Company used the following inputs in its fair value measurements:
•Level 1 inputs when measuring its equity investments under ASC 321;
•Level 1 and Level 2 inputs for its long-term debt fair value disclosures. See Note 9;
•Level 2 inputs when measuring the Operating Partnership’s fair value of its interest rate swaps. See Note 9;
•Level 1, Level 2, and Level 3 inputs when assessing the fair value of assets acquired and liabilities assumed duringin the Northfield transaction and Borgata transaction.CityCenter acquisition. See Note 4.
4; and•Level 2 and Level 3 inputs when assessing the fair value of the note receivable relating to the Circus Circus Las Vegas and adjacent land sale. See Note 16.
Cash and cash equivalents. Cash and cash equivalents include cash on hand, investments and interest bearinginterest-bearing instruments with maturities of 90 days or less at the date of acquisition. Such investments are carried at cost, which approximates market value. Book overdraft balances resulting from the Company’s cash management program are recorded as accounts payable“Accounts payable” or construction payable“Construction payable” as applicable.
Restricted cash. Restricted cash reflects cash held in an escrow account related to the reverse termination fee that was contractually required to be prefunded for The Cosmopolitan acquisition and is reflected as "Restricted Cash" on the consolidated balance sheets as of December 31, 2021. "Restricted Cash" and "Cash and cash equivalents" on the consolidated balance sheets as of December 31, 2021 equal "Cash, cash equivalents, and restricted cash" on the consolidated statements of cash flows.
Accounts receivable and credit risk. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of casino accounts receivable. The Company issues credit to approved casino customers and gaming promoters following background checks and investigations of creditworthiness. At December 31, 20182021 and 2017,2020, approximately 62%43% and 40%52%, respectively, of ourthe Company’s gross casino accounts receivable were owed by customers from foreign countries, primarily within Asia. Business or economic conditions or other significant events in these countries could affect the collectability of such receivables.
Accounts receivable are typically non-interest bearing and are initially recorded at cost. Accounts are written off when management deems the account to be uncollectible. Recoveries of accounts previously written off are recorded when received. An estimated
allowance for doubtful accountsloss reserve is maintained to reduce the Company’s receivables to their net carrying amount, which approximates fair value. The
allowanceloss reserve is estimated based on both a specific review of customer accounts as well as historical collection experience and current
and expected future economic and business conditions. Management believes that as of December 31,
2018,2021, no significant concentrations of credit risk existed for which
an allowancea loss reserve had not already been recorded.
Inventories. Inventories consist primarily of food and beverage, retail merchandise and operating supplies, and are stated at the lower of cost or net realizable value. Cost is determined primarily using the average cost method for food and beverage and operating supplies. Cost for retail merchandise is determined using the cost method.
Property and equipment. Property and equipment are stated at cost. A significant amount of the Company’s property and equipment was acquired through business combinations and therefore recognized at fair value at the acquisition date. Gains or losses on dispositions of property and equipment are included in the determination of income or loss. Maintenance costs are expensed as incurred. As of December 31, 2018 and 2017, the Company had accrued $47 million and $28 million, respectively for property and equipment within accounts payable, and $2 million and $34 million, respectively, related to construction retention within other long-term liabilities.
Property and equipment are generally depreciated over the following estimated useful lives on a straight-line basis:
| | | | | | | | |
| Buildings and improvements | | 15 to 40 years |
Land improvements | | 10 to 20 years |
Furniture and fixtures | | 3 to 20 years |
Equipment | | 3 to 15 years |
The Company evaluates its property and equipment and other long-lived assets for impairment based on its classification as held for sale or to be held and used. Several criteria must be met before an asset is classified as held for sale, including that management with the appropriate authority commits to a plan to sell the asset at a reasonable price in relation to its fair value and is actively seeking a buyer. For assets held for sale, the Company recognizes the asset at the lower of carrying value or fair market value less costs to sell, as estimated based on comparable asset sales, offers received, or a discounted cash flow model. For assets to be held and
used, the Company reviews for impairment whenever indicators of impairment exist. The Company then compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment charge is recorded based on the fair value of the asset, typically measured using a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs. All recognized impairment losses, whether for assets held for sale or assets to be held and used, are recorded as operating expenses.
Refer to Note 16 for discussion on the impairment loss recorded on Circus Circus Las Vegas and adjacent land in 2019.
Capitalized interest. The interest cost associated with major development and construction projects is capitalized and included in the cost of the project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using the weighted-averageweighted average cost of the Company’s outstanding borrowings. Capitalization of interest ceases when the project is substantially complete, or development activity is suspended for more than a brief period.
Investments in and advances to unconsolidated affiliates. The Company has investments in unconsolidated affiliates accounted for under the equity method. Under the equity method, carrying value is adjusted for the Company’s share of the investees’ earnings and losses, amortization of certain basis differences, as well as capital contributions to and distributions from these companies. Distributions in excess of equity method earnings are recognized as a return of investment and recorded as investing cash inflows in the accompanying consolidated statements of cash flows. The Company classifies operating income and losses as well as gains and impairments related to its investments in unconsolidated affiliates as a component of operating income or loss and classifies non-operating income or losses related to its investments in unconsolidated affiliates as a component of non-operating income or loss, as the Company’s investments in such unconsolidated affiliates are an extension of the Company’s core business operations.
The Company evaluates its investments in unconsolidated affiliates for impairment whenever events or changes in circumstances indicate that the carrying value of its investment may have experienced an
“other-than-temporary”other-than-temporary decline in value. If such conditions exist, the Company compares the estimated fair value of the investment to its carrying value to determine if an impairment is indicated and determines whether the impairment is “other-than-temporary” based on its assessment of all relevant factors, including consideration of the Company’s intent and ability to retain its investment. The Company estimates fair value using a discounted cash flow analysis based on estimated future results of the investee and market indicators of terminal year capitalization rates, and a market approach that utilizes business enterprise value multiples based on a range of multiples from the Company’s peer group.
See Note 6 for results of the Company’s review of its investment in certain of its unconsolidated affiliates.
Goodwill and other intangible assets. Goodwill represents the excess of purchase price over fair market value of net assets acquired in business combinations. Goodwill and indefinite-lived intangible assets must be reviewed for impairment at least annually and between annual test dates in certain circumstances. The Company performs its annual impairment tests in the fourth quarter of each fiscal year. No material impairments were indicated or recorded as a result of the annual impairment review for goodwill and indefinite-lived intangible assets in 2018, 20172021, 2020, and 2016.2019.
Accounting guidance provides entities the option to perform a qualitative assessment of goodwill and indefinite-lived intangible assets (commonly referred to as “step zero”) in order to determine whether further impairment testing is necessary. In performing the step zero analysis the Company considers macroeconomic conditions, industry and market considerations, current and forecasted financial performance, entity-specific events, and changes in the composition or carrying amount of net assets of reporting units for goodwill. In addition, the Company takes into consideration the amount of excess of fair value over carrying value determined in the last quantitative analysis that was performed, as well as the
period of time that has passed since the last quantitative analysis. If the step zero analysis indicates that it is more likely than not that the fair value is less than its carrying amount, the entity would proceed to a quantitative analysis.
Under the quantitative analysis, goodwill for relevant reporting units is tested for impairment using a discounted cash flow analysis based on the estimated future results of the Company’s reporting units discounted using market discount rates and market indicators of terminal year capitalization rates, and a market approach that utilizes business enterprise value multiples based on a range of multiples from the Company’s peer group.
Effective January 1, 2017,If the
Company adopted accounting guidance that simplifies goodwill impairment testing by eliminating the requirement to calculate the implied fair value of
goodwill (formerly “Step 2”) in the
event that impairmentreporting unit is
identified. Instead,less than its carrying value, an impairment charge is recognized
forequal to the
amount by which the carrying value exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit.difference. Under the quantitative analysis, license rights are tested for impairment using a discounted cash flow approach, and trademarks are tested for impairment using the relief-from-royalty method. If the fair value of an indefinite-lived intangible asset is less than its carrying amount, an impairment loss is recognized equal to the difference.
Revenue recognition. The Company’s revenue from contracts with customers consists of casino wagers transactions, hotel room sales, food and beverage transactions, entertainment shows, and retail transactions.
The transaction price for a casino wager is the difference between gaming wins and losses (“net win”). In certain circumstances, the Company offers discounts on markers, which is estimated based upon historical business practice, and recorded as a reduction of casino revenue. Commissions rebated to gaming promoters and VIP players at MGM China are also recorded as a reduction of casino revenue. The Company accounts for casino revenue on a portfolio basis given the similar characteristics of wagers by recognizing net win per gaming day versus on an individual wager basis.
For casino wager transactions that include other goods and services provided by the Company to gaming patrons on a discretionary basis to incentivize gaming, the Company allocates revenue from the casino wager transaction to the good or service delivered based upon
stand-alonestandalone selling price (“SSP”). Discretionary goods and services provided by the Company and supplied by third parties are recognized as an operating expense.
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 SSP 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 partythird-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. Commissions and incentives provided to gaming customers were collectively $2.3 billion, $2.1 billion and $1.8 billion for the years ended December 31, 2018, 2017 and 2016, 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.revenue
.
The transaction price of rooms, food and beverage, and retail contracts is the net amount collected from the customer for such goods and services. The transaction price for such contracts is recorded as revenue when the good or service is transferred to the customer over their stay at the hotel or when the delivery is made for the food & beverage and retail & other contracts. Sales and usage-based taxes are excluded from revenues. For some arrangements, the Company acts as an agent in that it arranges for another party to transfer goods and services
and the Company is not the controlling entity, which primarily include certain of the Company’s entertainment shows
as well as customer rooms arranged byand, in certain jurisdictions, the Company’s arrangement with BetMGM for online
travel agents.sports betting and iGaming.
The Company also has other contracts that include multiple goods and services, such as packages that bundle food, beverage, or entertainment offerings with hotel stays and convention services. For such arrangements, the Company allocates revenue to each good or service based on its relative SSP. The Company primarily determines the SSP of rooms, food and beverage, entertainment, and retail goods and services based on the amount that the Company charges when sold separately in similar circumstances to similar customers.
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 owed 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 | |
| 2018 | | | 2017 | | | 2018 | | | 2017 | | | 2018 | | | 2017 | |
| (in thousands) | |
Balance at January 1 | $ | 597,753 | | | $ | 227,538 | | | $ | 91,119 | | | $ | 88,379 | | | $ | 539,626 | | | $ | 437,287 | |
Balance at December 31 | | 323,811 | | | | 597,753 | | | | 113,293 | | | | 91,119 | | | | 667,285 | | | | 539,626 | |
Increase / (decrease) | $ | (273,942 | ) | | $ | 370,215 | | | $ | 22,174 | | | $ | 2,740 | | | $ | 127,659 | | | $ | 102,339 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Outstanding Chip Liability | | Loyalty Program | | Customer Advances and Other |
| | | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 |
| | | (in thousands) |
| Balance at January 1 | | $ | 212,671 | | | $ | 314,570 | | | $ | 139,756 | | | $ | 126,966 | | | $ | 382,287 | | | $ | 481,095 | |
| Balance at December 31 | | 176,219 | | | 212,671 | | | 144,465 | | | 139,756 | | | 640,001 | | | 382,287 | |
| Increase / (decrease) | | $ | (36,452) | | | $ | (101,899) | | | $ | 4,709 | | | $ | 12,790 | | | $ | 257,714 | | | $ | (98,808) | |
Reimbursed costs.cost. Costs reimbursed pursuant to management services are recognized as revenue in the period it incurs the costs as this reflects when the Company performs its related performance obligation and is entitled to reimbursement. Reimbursed costs relaterelated primarily to the Company’s management of CityCenter.CityCenter (such management agreement was terminated upon the acquisition of CityCenter in September 2021).
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 16.17.
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 of time 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.
The Company classifies a lease with terms greater than twelve months as either operating or finance. At commencement date, the right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. The initial measurement of the operating lease ROU assets also includes any prepaid lease payments and are reduced by any previously accrued deferred rent. When available, such as for the Company’s triple-net operating leases for which the lessor has provided its implicit rate or provided the assumptions required for the Company to readily determine the rate implicit in the lease, the Company uses the rate implicit in the lease to discount lease payments to present value. However, for most of the Company’s leases, such as its equipment leases, the Company cannot readily determine the implicit rate. Accordingly, the Company uses its incremental borrowing rate to discount the lease payments for such leases based on the information available at the commencement date. Lease terms include options to extend or terminate the lease when it is reasonably certain that such option will be exercised. The Company’s triple-net operating leases each contain renewal periods at the Company’s option, each of which are not considered to be reasonably certain of being exercised. Many of the Company’s leases include fixed rental escalation clauses that are factored into the determination of lease payments. For operating leases, lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term. For finance leases, the ROU asset depreciates on a straight-line basis over the shorter of the lease term or useful life of the ROU asset and the lease liability accretes interest based on the interest method using the discount rate determined at lease commencement.
Refer to Note 11 for discussion of leases under which the Company is a lessee. The master lease agreement with MGP is eliminated in consolidation; refer to Note 18 for further discussion of the master lease with MGP.
The Company is a lessor under certain other lease arrangements. Lease revenues earned by the Company from third-partiesthird parties are classified within the line item corresponding to the type or nature of the tenant’s good or service. Lease revenues from third-party tenants include $51$43 million, $51$24 million and $50$53 million recorded within food and beverage revenue for 2018, 20172021, 2020 and 2016,2019, respectively, and $87$85 million, $79$60 million and $77$89 million recorded within entertainment, retail, and other revenue for the same such periods, respectively. Lease revenues from the rental of hotel rooms are recorded as rooms revenues within the consolidated statements of operations.
Advertising. The Company expenses advertising costs the first time the advertising takes place.as incurred. Advertising expense that primarily relates to media placement costs and which is generally included in general and administrative expenses, was $305$121 million, $223$88 million and $171$195 million for 2018, 20172021, 2020 and 2016,2019, respectively.
Corporate expense. Corporate expense represents unallocated payroll, aircraft costs, professional fees and various other expenses not directly related to the Company’s casino resort operations. In addition, corporate expense includes the costs associated with the Company’s evaluation and pursuit of new business opportunities, which are expensed as incurred.
Preopening and start-up expenses. Preopening and start-up costs, including organizational costs, are expensed as incurred. Costs classified as preopening and start-up expenses include payroll, outside services, advertising, and other expenses related to new or start-up operations.
Property transactions, net. The Company classifies transactions such as write-downs and impairments, demolition costs, and normal gains and losses on the sale of assets as “Property transactions, net.” See Note 1516 for a detailed discussion of these amounts.
Redeemable noncontrolling interest. Certain noncontrolling interest parties have non-voting economic interests in MGM National Harbor which provide for annual preferred distributions by MGM National Harbor to the noncontrolling interest parties based on a percentage of its annual net gaming revenue (as defined in the MGM National Harbor operating agreement). Such distributions are accrued each quarter and are paid 90-days90 days after the end of each fiscal year.Beginning on December 31, 2019 the The noncontrolling interest parties will each have the ability to require MGM National Harbor to purchase all or a portion of their interests for a purchase price based on a contractually agreed upon formula. Additionally, certain noncontrolling interest parties each have the right to sell back all or a portion of their interests prior to such date if MGM National Harbor were to guarantee or grant liens to secure any indebtedness of the Company or its affiliates other than the indebtedness of MGM National Harbor.
The Company has recorded the interests as “Redeemable noncontrolling interests” in the mezzanine section of the accompanying consolidated balance sheets and not stockholders’ equity because their redemption is not exclusively in the Company’s control. The interests were initially accounted for at fair value. Subsequently, the Company recognizes changes in the redemption value as they occur and adjusts the carrying amount of the redeemable noncontrolling interests to equal the maximum redemption value, provided such amount does not fall below the initial carrying value, at the end of each reporting period. The Company records any changes caused by such an adjustment in capital in excess of par value. Additionally, the carrying amount of the redeemable noncontrolling interests is adjusted for accrued annual preferred distributions, with changes caused by such adjustments recorded within net income (loss) attributable to noncontrolling interests.
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.interests. Diluted weighted-averageweighted average common and common equivalent shares include adjustments for potential dilution of share-based awards outstanding under the Company’s stock compensation plan. | | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
Numerator: | | (In thousands) | |
Net income attributable to MGM Resorts International | | $ | 466,772 | | | $ | 1,952,052 | | | $ | 1,100,408 | |
Adjustment related to redeemable noncontrolling interests | | | (21,326 | ) | | | (18,363 | ) | | | (28 | ) |
Net income available to common stockholders - basic | | | 445,446 | | | | 1,933,689 | | | | 1,100,380 | |
Potentially dilutive effect due to MGP and MGM China stock compensation plans | | | (206 | ) | | | (268 | ) | | | (51 | ) |
Net income attributable to common stockholders - diluted | | $ | 445,240 | | | $ | 1,933,421 | | | $ | 1,100,329 | |
Denominator: | | | | | | | | | | | | �� |
Weighted-average common shares outstanding basic | | | 544,253 | | | | 572,253 | | | | 568,134 | |
Potential dilution from share-based awards | | | 5,283 | | | | 6,542 | | | | 5,183 | |
Weighted-average common and common equivalent shares - diluted | | | 549,536 | | | | 578,795 | | | | 573,317 | |
Antidilutive share-based awards excluded from the calculation of diluted earnings per share | | | 2,668 | | | | 2,601 | | | | 4,207 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| Numerator: | | (In thousands) |
| Net income (loss) attributable to MGM Resorts International | | $ | 1,254,370 | | | $ | (1,032,724) | | | $ | 2,049,146 | |
| Adjustment related to redeemable noncontrolling interests | | (78,298) | | | 35,520 | | | (2,713) | |
| Net income (loss) available to common stockholders - basic | | 1,176,072 | | | (997,204) | | | 2,046,433 | |
| Other | | — | | | — | | | (194) | |
| Net income (loss) attributable to common stockholders - diluted | | $ | 1,176,072 | | | $ | (997,204) | | | $ | 2,046,239 | |
| Denominator: | | | | | | |
| Weighted average common shares outstanding basic | | 481,930 | | | 494,152 | | | 524,173 | |
| Potential dilution from share-based awards | | 5,426 | | | — | | | 3,472 | |
| Weighted average common and common equivalent shares - diluted | | 487,356 | | | 494,152 | | | 527,645 | |
| Antidilutive share-based awards excluded from the calculation of diluted earnings per share | | 198 | | | 9,493 | | | 1,617 | |
Currency translation. The Company translates the financial statements of foreign subsidiaries that are not denominated in U.S. dollars. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date. Income statement accounts are translated at the average rate of exchange prevailing during the period. Translation adjustments resulting from this process are recorded to other comprehensive income (loss). Gains or losses from foreign currency remeasurements are recorded to other non-operating income (expense).
Accumulated other comprehensive income (loss). Comprehensive income (loss) includes net income (loss) and all other non-stockholder changes in equity, or other comprehensive income (loss). Elements of the Company’s accumulated other comprehensive income (loss) are reported in the accompanying consolidated statements of stockholders’ equity. Amounts reported in accumulated other comprehensive income related to cash flow hedges will be reclassified to interest expense as interest payments are made on our variable-rate debt.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 right-of-use (“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 will adopt ASC 842 on January 1, 2019 utilizing the simplified transition method and accordingly will not recast comparative period financial information. The Company will elect 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. The Company also currently expects that the most significant impact will be the recognition of ROU assets and lease liabilities for operating leases that exist at the Company on the date of adoption with the most material of such leases being ground leases.
NOTE 3 — ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
| | | December 31, | | | | December 31, |
| | 2018 | | | 2017 | | | | 2021 | | 2020 |
| | (In thousands) | | | | (In thousands) |
Casino | | $ | 419,127 | | | $ | 343,869 | | Casino | | $ | 380,907 | | | $ | 260,998 | |
Hotel | | | 154,707 | | | | 146,931 | | Hotel | | 180,098 | | | 46,288 | |
Other | | | 174,147 | | | | 144,044 | | Other | | 151,258 | | | 135,805 | |
| | | 747,981 | | | | 634,844 | | | | 712,263 | | | 443,091 | |
Less: Allowance for doubtful accounts | | | (90,775 | ) | | | (92,571 | ) | |
| Less: Loss reserves | | Less: Loss reserves | | (128,348) | | | (126,589) | |
| | $ | 657,206 | | | $ | 542,273 | | | | $ | 583,915 | | | $ | 316,502 | |
NOTE 4 —
ACQUISITIONNorthfield
ACQUISITIONS
CityCenter
On July 6, 2018, MGPSeptember 27, 2021, the Company completed itsthe acquisition of Infinity World's 50% ownership interest in CityCenter for cash consideration of $2.125 billion.
Through the acquisition, the Company obtained 100% of the membershipequity interests in CityCenter and therefore consolidated CityCenter as of September 27, 2021. Prior to the acquisition, the Company held a 50% ownership interest, which was accounted for under the equity method. The fair value of the equity interests of Northfield for a purchaseCityCenter was determined by the transaction price and equaled $4.25 billion. The carrying value of approximately $1.1 billion (“Northfield Acquisition”). MGP fundedthe Company's equity method investment was less than its share of the fair value of CityCenter at the acquisition throughdate, resulting in a $200 million drawnet gain of $1.6 billion upon consolidation, which is recognized as "Gain on consolidation of CityCenter, net" on the Operating Partnership’s term loan A and a $655 million draw underconsolidated statements of operations.
On September 28, 2021, the
Operating Partnership’s revolving credit facility, withCompany sold the
remainder of the purchase price paid with cash on hand. The acquisition expanded MGP’s real estate assets
of Aria (including Vdara) for cash consideration of $3.89 billion and
diversified MGP’s geographic reach.MGPentered into a lease agreement pursuant to which the Company leases back the real property. The Company classified the real estate assets as held for sale as of the acquisition date and accordingly measured the real estate assets at fair value less costs to sell, as reflected in the table below. See Note 11 for additional information regarding the lease.
The Company recognized 100% of the assets and liabilities of
NorthfieldCityCenter at fair value at the date of the 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
bothlevel 1 inputs, 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 December 31, 2018, the Company is finalizing valuation work related to the asset classes that comprise the property and equipment acquired.
The following table sets forth the
preliminary purchase price allocation
as of July 6, 2018 (in thousands):
Fair value of assets acquired and liabilities assumed: | | | |
Property and equipment | $ | 792,807 | |
Cash and cash equivalents | | 35,831 | |
Racing and gaming license | | 228,000 | |
Customer list | | 25,000 | |
Goodwill | | 17,915 | |
Other assets | | 9,598 | |
Other liabilities | | (38,786 | ) |
| $ | 1,070,365 | |
| | | | | |
| Fair value of assets acquired and liabilities assumed: | |
| Cash and cash equivalents | $ | 335,396 | |
| Receivables and other current assets | 106,417 | |
| Property and equipment - real estate assets held for sale | 3,888,431 | |
| Property and equipment | 323,093 | |
| Trademarks | 180,000 | |
| Goodwill | 1,397,338 | |
| Other long-term assets | 13,923 | |
| Accounts payable, accrued liabilities, and other current liabilities | (201,093) | |
| Debt | (1,729,451) | |
| Other long-term liabilities | (64,054) | |
| $ | 4,250,000 | |
MGP
The Company recognized the identifiable intangible assets of CityCenter at fair value. The estimated fair valuesvalue, which consisted of the intangible assets were preliminarilyindefinite-lived trade names, which was determined using methodologies under the income approachrelief from royalty method based on significant
inputs that were not observable. The goodwill is primarily attributable to the
synergies expected to arise after the acquisition.As further discussedprofitability of CityCenter in Note 17, the Company entered into an agreement with MGP to acquire allexcess of identifiable assets, of which approximately 50% of the operating assets of Northfield (“Northfield OpCo”) from MGP and the real estate assets of Northfield will be leased to a subsidiarygoodwill is deductible for income tax purposes. All of the Company. The transaction is expectedgoodwill was assigned to close in the first half of 2019, subject to customary closing conditions. The transaction will be an intercompany transaction and, accordingly, the effect will be eliminated in the Company’s consolidated financial statements.
Consolidated results. ForLas Vegas Strip Resorts segment.
Results. CityCenter’s net revenue for the period from July 6, 2018September 27, 2021 through December 31, 2018, Northfield’s net revenue2021 was $133$367 million and operating income and net income were both $33 million. Pro$69 million and $68 million, respectively.
Unaudited pro forma information. The operating results for CityCenter are included in the accompanying consolidated statements of operations from the date of acquisition. The following unaudited pro forma consolidated financial information for the Company has been prepared assuming the Company’s acquisition of its controlling interest had occurred as of January 1, 2020 and excludes the gain on consolidation discussed above. The pro forma information does not reflect transactions that occurred subsequent to acquisition, such as the subsequent sale-leaseback transaction or the repayment of CityCenter's assumed debt. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations foror results that might have been achieved had the acquisition have not been presented because it is not material to the consolidated resultsconsummated as of operations.January 1, 2020. | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2021 | | 2020 |
| | (In thousands) |
| Net Revenues | | $ | 10,153,603 | | | $ | 5,456,763 | |
| Net income attributable to MGM Resorts International | | 137,773 | | | (1,041,271) | |
On January 29, 2019, the Company acquired the real property and operations associated with the Empire City Casino's race track and casino (“Empire City”) for total consideration of approximately $864$865 million, plus customary working capital and other adjustments (“Empire City Acquisition”).adjustments. The fair value of consideration paid included the assumption of debt of approximately $246 million, which was subsequently repaid, 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. Preliminary fair values for assets acquired and liabilities assumed are not reported herein asThe acquisition expands the Company is stillCompany’s presence in the process of completingnortheast region and greater New York City market. Subsequent to the initial accounting for the acquisition.Following the completion of theCompany’s acquisition, of Empire City, MGP acquired the developed real property associated with Empire City from the Company and leasesEmpire City was added to the real property to a subsidiary of the Company. See Note 17 for additional information.
Borgata acquisition
On August 1, 2016, the Company completed the acquisition of Boyd Gaming Corporation’s (“Boyd Gaming”) ownership interest in Borgata for cash consideration of $604 million. Following the completion of the acquisition of Boyd Gaming’s interest, MGP acquired Borgata’s real property frommaster lease between the Company and leasesMGP
. See Note 18 for additional information.
For the period from January 29, 2019 through December 31, 2019, Empire City’s net revenue was $193 million, operating income was $12 million and net income was $36 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
In April 2019, the Company acquired the membership interests of Northfield from MGP, and MGP retained the associated real propertyestate assets. MGM Northfield Park was then added to a subsidiarythe master lease between the Company and MGP. Refer to Note 18 for additional information.
NOTE 5 — PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the Company. Additionally, as discussedfollowing:
| | | | | | | | | | | | | | |
| | | December 31, |
| | | 2021 | | 2020 |
| | | (In thousands) |
| Land | | $ | 4,082,842 | | | $ | 4,081,029 | |
| Buildings, building improvements and land improvements | | 12,236,042 | | | 12,053,422 | |
| Furniture, fixtures and equipment | | 5,722,565 | | | 5,600,579 | |
| Construction in progress | | 421,445 | | | 170,957 | |
| | | 22,462,894 | | | 21,905,987 | |
| Less: Accumulated depreciation | | (8,179,310) | | | (7,474,876) | |
| Finance lease ROU assets, net | | 151,909 | | | 200,980 | |
| | | $ | 14,435,493 | | | $ | 14,632,091 | |
NOTE 6 — INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
Investments in Note 11, Borgata subsequently entered into a property tax reimbursement agreement in February 2017 with the Department of Community Affairsand advances to unconsolidated affiliates consisted of the Statefollowing:
| | | | | | | | | | | | | | |
| | | December 31, |
| | | 2021 | | 2020 |
| | | (In thousands) |
| CityCenter (50% as of December 31, 2020) | | $ | — | | | $ | 441,893 | |
| MGP BREIT Venture (50.1% owned by the Operating Partnership) | | 816,756 | | | 810,066 | |
| BetMGM (50%) | | 41,060 | | | 27,310 | |
| Other | | 109,228 | | | 167,774 | |
| | | $ | 967,044 | | | $ | 1,447,043 | |
The Company recorded its share of New Jerseyincome (loss) from unconsolidated affiliates, including adjustments for basis differences, as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Income from unconsolidated affiliates | | $ | 84,823 | | | $ | 42,938 | | | $ | 119,521 | |
| Non-operating items from unconsolidated affiliates | | (83,243) | | | (103,304) | | | (62,296) | |
| | | $ | 1,580 | | | $ | (60,366) | | | $ | 57,225 | |
The following table summarizes further information related to the Company’s share of operating income (loss) from unconsolidated affiliates:
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| CityCenter (through September 26, 2021) | | $ | 128,127 | | | $ | (29,753) | | | $ | 128,421 | |
| MGP BREIT Venture | | 155,817 | | | 136,755 | | | — | |
| BetMGM | | (211,182) | | | (61,663) | | | (15,804) | |
| Other | | 12,061 | | | (2,401) | | | 6,904 | |
| | | $ | 84,823 | | | $ | 42,938 | | | $ | 119,521 | |
MGP BREIT Venture distributions. During the years ended December 31, 2021 and Atlantic City2020, the Operating Partnership received $94 million and received$81 million, respectively, in distributions from MGP BREIT Venture.
BetMGM contributions. During the settlement amount of $72 million in June 2017, half of whichyears ended December 31, 2021 and 2020, the Company paid Boyd Gaming, net of feescontributed $225 million and expenses. Through the acquisition of Boyd Gaming’s interest in Borgata, the$80 million to BetMGM, respectively.
CityCenter acquisition. The Company obtained 100% of the equity interests in BorgataCityCenter and therefore consolidated BorgataCityCenter as of August 1, 2016. The Company recognized 100% of the assets and liabilities of Borgata at fair value at the date of the acquisition.September 27, 2021. Prior to the acquisition, the Company held a 50% ownership interest, in Borgata, which was accounted for under the equity method. The fair value ofRefer to Note 4.
CityCenter distributions. During the equity interests of Borgata was determined by the transaction price and equaled approximately $1.2 billion. The carrying value of the Company’s equity method investment was significantly less than its share of the fair value of Borgata at the acquisition date, resulting in a $430 million gain on the acquisition.Borgata’s net revenue for the period from August 1, 2016 throughyear ended December 31, 2016 was $3502020, CityCenter paid $101 million operating income was $34 million and net income was $4 million.
Pro forma information. The operating results for Borgata are included in the accompanying consolidated statementsdistributions, of operations from the date of acquisition. The following unaudited pro forma consolidated financial information forwhich the Company has been prepared assuming the Company’s acquisition ofreceived its controlling interest has occurred as of January 1, 2015 and excludes the $430 million gain discussed above. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations50% share, or results that might have been achieved had the acquisition been consummated as of January 1, 2015.
| Year Ended December 31, | |
| 2016 | |
| (In thousands, except per share data) | |
| (unaudited) | |
Net revenues | $ | 9,963,322 | |
Net income attributable to MGM Resorts International | | 818,247 | |
Basis net income per share | $ | 1.44 | |
Diluted net income per share | $ | 1.43 | |
NOTE 5 — PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
| | December 31, | |
| | 2018 | | | 2017 | |
| | (In thousands) | |
Land | | $ | 6,923,769 | | | $ | 6,531,701 | |
Buildings, building improvements and land improvements | | | 16,437,695 | | | | 12,245,950 | |
Furniture, fixtures and equipment | | | 6,064,330 | | | | 5,157,363 | |
Construction in progress | | | 321,944 | | | | 3,950,635 | |
| | | 29,747,738 | | | | 27,885,649 | |
Less: Accumulated depreciation | | | (9,017,850 | ) | | | (8,250,190 | ) |
| | $ | 20,729,888 | | | $ | 19,635,459 | |
NOTE 6 — INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
Investments in and advances to unconsolidated affiliates consisted of the following:
| | December 31, | |
| | 2018 | | | 2017 | |
| | | | | | | | |
| | (In thousands) | |
CityCenter Holdings, LLC – CityCenter (50%) | | $ | 589,965 | | | $ | 808,220 | |
Elgin Riverboat Resort–Riverboat Casino – Grand Victoria (50% at December 31, 2017) | | | — | | | | 124,342 | |
Las Vegas Arena Company, LLC (42.5%) | | | 73,540 | | | | 76,619 | |
Other | | | 69,362 | | | | 24,116 | |
| | $ | 732,867 | | | $ | 1,033,297 | |
The Company recorded its share of income from unconsolidated affiliates, including adjustments for basis differences, as follows:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | | | | | | | | | | | |
| | (In thousands) | |
Income from unconsolidated affiliates | | $ | 147,690 | | | $ | 146,222 | | | $ | 528,287 | |
Preopening and start-up expenses | | | (3,321 | ) | | | — | | | | (3,168 | ) |
Non-operating items from unconsolidated affiliates | | | (47,827 | ) | | | (34,751 | ) | | | (53,139 | ) |
| | $ | 96,542 | | | $ | 111,471 | | | $ | 471,980 | |
The following table summarizes information related to the Company’s share of income from unconsolidated affiliates:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | | | | | | | | | | | |
| | (In thousands) | |
CityCenter | | $ | 138,383 | | | $ | 133,401 | | | $ | 445,853 | |
Borgata (through July 31, 2016) | | | — | | | | — | | | | 61,169 | |
Other | | | 9,307 | | | | 12,821 | | | | 21,265 | |
| | $ | 147,690 | | | $ | 146,222 | | | $ | 528,287 | |
CityCenter
Mandarin Oriental sale. In August 2018, CityCenter closed the sale of the Mandarin Oriental and adjacent retail parcels for approximately $214$51 million. During the year ended December 31, 2018,2019, CityCenter recognized a loss onpaid $180 million in distributions, of which the Company received its 50% share, or approximately $90 million.
CityCenter sale of the Mandarin Oriental of $133 million and the Company recognized a $12 million gain on the sale related to the reversal of basis differences in excess of its share of the loss recorded by CityCenter, which is recorded within “Income from unconsolidated affiliates”.
Crystals sale.Harmon land.
In April 2016,June 2021, CityCenter closed the sale of Crystalsits Harmon land for approximately $1.1 billion. During the year ended December 31, 2016, CityCenter recognized$80 million on which it recorded a gain on the sale of Crystals of $400$30 million and thegain. The Company recognizedrecorded a $401$50 million gain, which included $200$15 million representingof its 50% share of the gain recorded by CityCenter and $201$35 million representing the reversal of certain basis differences. The basis differences primarily related toin 2021.
Other. During the years ended December 31, 2021 and 2020, the Company recognized other-than-temporary impairment charges recorded on the Company’s investment in CityCenter that were allocated to Crystals’ building assets.CityCenter distributions. In September 2018, CityCenter paid a $225 million dividend, of which the Company received its 50% share, or approximately $113$22 million and in May 2018, CityCenter paid a $400$64 million, dividend, of which the Company received its 50% share, or $200 million. In April 2017, CityCenter paid a $600 million dividend, consisting of a $350 million dividend using proceeds from the upsized senior credit facilities and a $250 million dividend from cash on hand, of which $78 million was part of its annual dividend policy. MGM Resorts received its 50% share, or $300 million. In March 2016, a $90 million distribution was declared in accordance with CityCenter’s annual distribution policy and in April 2016, CityCenter declared a $990 million special distribution in connection with the Crystals sale. The Company’s $540 million share of such distributions was received in May 2016.
Grand Victoria
Grand Victoria sale. In August 2018, the Company, along with its joint venture partner, completed the sale of Grand Victoria, of which a subsidiary of the Company owned a 50% interest, for $328 million in cash. The Company recorded a gain of $45 million related to the sale, which is recordedrespectively, within “Property transactions, net”.
Borgata
The Company acquired Boyd Gaming’s ownership interest in Borgata on August 1, 2016, and therefore began to consolidate Borgata beginning on that date. Prior thereto, the Company’s investment in Borgata was accounted for under the equity method.
Las Vegas Arena Company, LLC
Athena Arena transaction. On September 1, 2016, the Company and AEG each sold a 7.5% membership interest in the Las Vegas Arena Company, LLCconsolidated statements of operations related to Athena Arena, LLC. As a result of this transaction,investments in unconsolidated affiliates previously classified within “Other” in the Company received $15 million“Investments in proceeds and recorded a $3 million gain in “Property transactions, net”.
advances to unconsolidated affiliates” table above.
Unconsolidated Affiliate Financial Information
-– CityCenter
(as of December 31, 2020 and through September 26, 2021) & MGP BREIT Venture
Summarized balance sheet information is as follows:
| | December 31, | |
| | 2018 | | | 2017 | |
| | (In thousands) | |
Current assets | | $ | 363,755 | | | $ | 708,910 | |
Property and other assets, net and other long-term assets | | | 6,167,853 | | | | 6,280,474 | |
Current liabilities | | | 347,710 | | | | 348,232 | |
Long-term debt and other long-term obligations | | | 1,763,290 | | | | 1,557,633 | |
| | | | | | | | | | | | | | |
| | | December 31, |
| | | 2021 | | 2020 |
| | | (In thousands) |
| Cash and cash equivalents | | $ | 16 | | | $ | 96,758 | |
| Property and equipment, net | | 4,439,851 | | | 10,237,004 | |
| Other assets, net | | 193,184 | | | 256,813 | |
| Debt, net | | 2,994,782 | | | 4,715,997 | |
| Other liabilities | | 8,018 | | | 270,583 | |
Summarized results of operations are as follows:
| | Year Ended December 31, | | | | | | | | | | | | | | | | | | |
| | 2018 | | | 2017 | | | 2016 | | | | Year Ended December 31, |
| | | | | | | | | | | | | | | 2021 | | 2020 | | 2019 |
| | (In thousands) | | | | (In thousands) |
Net revenues | | $ | 1,277,745 | | | $ | 1,227,733 | | | $ | 1,160,606 | | Net revenues | | $ | 1,084,503 | | | $ | 869,638 | | | $ | 1,294,861 | |
Operating income | | | 185,368 | | | | 200,109 | | | | 13,979 | | |
Income (loss) from continuing operations | | | 97,091 | | | | 137,226 | | | | (50,376 | ) | |
Net income (loss) | | | (37,911 | ) | | | 131,683 | | | | 349,716 | | Net income (loss) | | 294,797 | | | (43,749) | | | 69,143 | |
The Company’s investments in unconsolidated affiliates do not equal the Company’s share of venture-level equity due to various basis differences. Basis differences related to depreciable assets are being amortized based on the useful lives of the related assets and liabilities, and basis differences related to non–depreciable assets, such as land and indefinite-lived intangible assets, are not being amortized. Basis differences relating to the Company's investment in CityCenter were resolved in connection with the consolidation of CityCenter in 2021.
Differences between the Company’s share of venture-level equity and investment balances are as follows:
| | December 31, | |
| | 2018 | | | 2017 | |
| | | | | | | | |
| | (In thousands) | |
Venture-level equity attributable to the Company | | $ | 2,347,103 | | | $ | 2,659,780 | |
Adjustment to CityCenter equity upon contribution of net assets by MGM Resorts International (1) | | | (514,592 | ) | | | (532,501 | ) |
CityCenter capitalized interest (2) | | | 186,830 | | | | 206,065 | |
CityCenter completion guarantee (3) | | | 274,685 | | | | 322,703 | |
CityCenter deferred gain (4) | | | (212,276 | ) | | | (219,561 | ) |
CityCenter capitalized interest on sponsor notes (5) | | | (36,500 | ) | | | (40,258 | ) |
Other-than-temporary impairments of CityCenter investment (6) | | | (1,352,118 | ) | | | (1,504,161 | ) |
Acquisition fair value adjustments net of other-than-temporary impairments of Grand Victoria investment (7) | | | — | | | | 99,619 | |
Other adjustments | | | 39,735 | | | | 41,611 | |
| | $ | 732,867 | | | $ | 1,033,297 | |
| (1)
| Primarily relates to land and fixed assets.
|
| (2)
| Relates to interest capitalized on the Company’s investment balance during development and construction stages.
|
| | | | | | | | | | | | | | |
| | | December 31, |
| | | 2021 | | 2020 |
| | | (In thousands) |
| Venture-level equity attributable to the Company | | $ | 961,787 | | | $ | 2,981,550 | |
Adjustment to CityCenter equity upon contribution of net assets by MGM Resorts International(1) | | — | | | (504,171) | |
CityCenter capitalized interest(2) | | — | | | 168,966 | |
CityCenter completion guarantee(3) | | — | | | 248,730 | |
CityCenter deferred gain(4) | | — | | | (208,204) | |
CityCenter capitalized interest on sponsor notes(5) | | — | | | (33,010) | |
Other-than-temporary impairments of CityCenter investment(6) | | — | | | (1,256,516) | |
| Other adjustments | | 5,257 | | | 49,698 | |
| | | $ | 967,044 | | | $ | 1,447,043 | |
| (3)
| Created by contributions to CityCenter under the completion guarantee recognized as equity contributions by CityCenter split between the members.
|
(1)Primarily related to land and fixed assets. | (4)
| Relates to a deferred gain on assets contributed to CityCenter upon formation of CityCenter.
|
(2)Related to interest capitalized on the Company’s investment balance during development and construction stages. | (5)
| Relates to interest on the sponsor notes capitalized by CityCenter during development. Such sponsor notes were converted to equity in 2013.
|
(3)Created by contributions to CityCenter under the completion guarantee recognized as equity contributions by CityCenter split between the members. | (6)
| The impairment of the Company’s CityCenter investment includes $352 million and $379 million of impairments allocated to land as of December 31, 2018 and December 31, 2017, respectively.
|
(4)Related to a deferred gain on assets contributed to CityCenter upon formation of CityCenter. | (7)
| Relates to indefinite-lived gaming license rights for Grand Victoria and other-than-temporary impairments of the Company’s investment in Grand Victoria.
|
(5)Related to interest on the sponsor notes capitalized by CityCenter during development. Such sponsor notes were converted to equity in 2013.
(6)The impairment of the Company’s CityCenter investment included $352 million of impairments allocated to land.
NOTE 7 — GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets consisted of the following:
| | December 31, | |
| | 2018 | | | 2017 | |
Goodwill: | | (In thousands) | |
Las Vegas Strip Resorts | | $ | 70,975 | | | $ | 70,975 | |
Regional Operations | | | 386,892 | | | | 386,892 | |
Corporate and other | | | 17,915 | | | | — | |
MGM China | | | 1,345,610 | | | | 1,348,664 | |
| | $ | 1,821,392 | | | $ | 1,806,531 | |
Indefinite-lived intangible assets: | | | | | | | | |
Detroit development rights | | $ | 98,098 | | | $ | 98,098 | |
Northfield racing and gaming licenses | | | 228,000 | | | | — | |
Trademarks, license rights and other | | | 312,022 | | | | 312,022 | |
Total indefinite-lived intangible assets | | | 638,120 | | | | 410,120 | |
Finite-lived intangible assets: | | | | | | | | |
MGM Grand Paradise gaming subconcession | | | 4,468,766 | | | | 4,478,911 | |
Less: Accumulated amortization | | | (1,342,561 | ) | | | (1,180,908 | ) |
| | | 3,126,205 | | | | 3,298,003 | |
MGM Macau land concession | | | 83,885 | | | | 84,076 | |
Less: Accumulated amortization | | | (32,035 | ) | | | (27,870 | ) |
| | | 51,850 | | | | 56,206 | |
MGM China customer lists | | | 127,679 | | | | 127,969 | |
Borgata customer list | | | 22,000 | | | | 22,000 | |
Northfield customer list | | | 25,000 | | | | — | |
Less: Accumulated amortization | | | (151,465 | ) | | | (145,569 | ) |
| | | 23,214 | | | | 4,400 | |
Finite-lived gaming licenses and other intangible assets | | | 136,127 | | | | 136,127 | |
Less: Accumulated amortization | | | (31,053 | ) | | | (26,896 | ) |
| | | 105,074 | | | | 109,231 | |
Total finite-lived intangible assets, net | | | 3,306,343 | | | | 3,467,840 | |
Total other intangible assets, net | | $ | 3,944,463 | | | $ | 3,877,960 | |
| | | | | | | | | | | | | | |
| | | December 31, |
| | | 2021 | | 2020 |
| | | (In thousands) |
| Goodwill | | $ | 3,480,997 | | | $ | 2,091,278 | |
| | | | | |
| Indefinite-lived intangible assets: | | | | |
| Detroit development rights | | $ | 98,098 | | | $ | 98,098 | |
| MGM Northfield Park and Empire City racing and gaming licenses | | 280,000 | | | 280,000 | |
| Trademarks and other | | 479,238 | | | 299,238 | |
| Total indefinite-lived intangible assets | | 857,336 | | | 677,336 | |
| Finite-lived intangible assets: | | | | |
| MGM Grand Paradise gaming subconcession | | 4,516,532 | | | 4,541,990 | |
| Less: Accumulated amortization | | (1,865,219) | | | (1,697,481) | |
| | | 2,651,313 | | | 2,844,509 | |
| MGM National Harbor and MGM Springfield gaming licenses | | 106,600 | | | 106,600 | |
| Less: Accumulated amortization | | (26,209) | | | (19,102) | |
| | | 80,391 | | | 87,498 | |
| Other finite-lived intangible assets | | 65,207 | | | 60,649 | |
| Less: Accumulated amortization | | (37,862) | | | (26,244) | |
| | | 27,345 | | | 34,405 | |
| Total finite-lived intangible assets, net | | 2,759,049 | | | 2,966,412 | |
| Total other intangible assets, net | | $ | 3,616,385 | | | $ | 3,643,748 | |
Goodwill. A summary of changes in the Company’s goodwill by reportable segment is as follows for 2018 and 2017:follows: | | 2018 | |
| | Balance at January 1 | | | Acquisitions | | | Currency exchange | | | Balance at December 31 | |
| | (In thousands) | |
Goodwill, net by segment: | | | | | | | | | | | | | | | | |
Las Vegas Strip Resorts | | $ | 70,975 | | | $ | — | | | $ | — | | | $ | 70,975 | |
Regional Operations | | | 386,892 | | | | — | | | | — | | | | 386,892 | |
MGM China | | | 1,348,664 | | | | — | | | | (3,054 | ) | | | 1,345,610 | |
Corporate and other | | | — | | | | 17,915 | | | | — | | | | 17,915 | |
| | $ | 1,806,531 | | | $ | 17,915 | | | $ | (3,054 | ) | | $ | 1,821,392 | |
| | | | | | | | | | | | | | | | |
| | 2017 | |
| | Balance at January 1 | | | Acquisitions | | | Currency exchange | | | Balance at December 31 | |
| | (In thousands) | |
Goodwill, net by segment: | | | | | | | | | | | | | | | | |
Las Vegas Strip Resorts | | $ | 70,975 | | | $ | — | | | $ | — | | | $ | 70,975 | |
Regional Operations | | | 386,892 | | | | — | | | | — | | | | 386,892 | |
MGM China | | | 1,359,252 | | | | — | | | | (10,588 | ) | | | 1,348,664 | |
| | $ | 1,817,119 | | | $ | — | | | $ | (10,588 | ) | | $ | 1,806,531 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2021 |
| | | Balance at January 1 | | Acquisitions | | Currency exchange | | Balance at December 31 |
| | | (In thousands) |
| Goodwill, net by segment: | | | | | | | | |
| Las Vegas Strip Resorts | | $ | 30,452 | | | $ | 1,397,338 | | | $ | — | | | $ | 1,427,790 | |
| Regional Operations | | 701,463 | | | — | | | — | | | 701,463 | |
| MGM China | | 1,359,363 | | | — | | | (7,619) | | | 1,351,744 | |
| | | $ | 2,091,278 | | | $ | 1,397,338 | | | $ | (7,619) | | | $ | 3,480,997 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2020 |
| | | Balance at January 1 | | Acquisitions | | Currency exchange | | Balance at December 31 |
| | | (In thousands) |
| Goodwill, net by segment: | | | | | | | | |
| Las Vegas Strip Resorts | | $ | 30,452 | | | $ | — | | | $ | — | | | $ | 30,452 | |
| Regional Operations | | 701,463 | | | — | | | — | | | 701,463 | |
| MGM China | | 1,352,649 | | | — | | | 6,714 | | | 1,359,363 | |
| | | $ | 2,084,564 | | | $ | — | | | $ | 6,714 | | | $ | 2,091,278 | |
Goodwill was recognized by MGP,in 2021 related to the acquisition of the 50% ownership interest in CityCenter, which is included within Corporate and other, in connection with its acquisition of NorthfieldLas Vegas Strip Resorts, as further discussed in 2018. See Note 4 for discussion of the Northfield Acquisition.Indefinite-lived intangible assets. The Company’s indefinite-lived intangible assets consist primarily of development rights in Detroit, gaming and racing licenses for Northfield, and trademarks and trade names, of which $210 million is related to the Mandalay Resort Group and $83 million is related to Borgata.
4.
MGM Grand Paradise gaming subconcession. Pursuant to the agreement dated JuneApril 19, 20042005 between MGM Grand Paradise and SJM Resorts S.A. ("SJMSA", formerly Sociedade de Jogos de Macau, S.A.), a gaming subconcession was acquired by MGM Grand Paradise for the right to operate casino games of chance and other casino games for a period of 15 years commencing on April 20, 2005.2005 through March 31, 2020. In March 2019, MGM Grand Paradise and SJMSA entered into a Subconcession Extension Contract (the “Extension Agreement”), pursuant to which the gaming subconcession was extended to June 26, 2022, which coincides with the current expiration of all the other concessions and subconcessions. MGM Grand Paradise paid the government of Macau approximately $25 million and paid SJMSA approximately $2 million as a contract premium for such extension. The Company cannot provide any assurance that the gaming subconcessionMGM Grand Paradise will be extended beyondawarded a gaming concession subsequent to the original termsexpiration of the agreement;its gaming subconcession; however, as further discussed in Note 1, management believes that the gaming subconcessionMGM Grand Paradise will be extended, given that the Cotai landsuccessful in obtaining a gaming concession agreement with the government extends significantly beyond the gaming subconcession. As such,when a public tender is held. Accordingly, as of December 31, 2018,2021 and 2020, the Company amortizes the gaming subconcession intangible asset on a straight-line basis over the initial term of the Cotai land concession ending inthrough January 2038.
MGM Macau land concession. National Harbor and MGM Grand Paradise entered into a contract with the Macau government to use the land under MGM Macau commencing from April 6, 2006. The land use right has an initial term through April 6, 2031, subject to renewal for additional periods. As of December 31, 2018, the land concession intangible asset is amortized on a straight-line basis over the remaining initial contractual term.Customer lists. The Company recognized an intangible asset related to Northfield’s customer list, which is amortized on a straight-line basis over its estimated useful life of seven years. The Company also recognized intangible assets related to MGM China and Borgata’s customer lists, which became fully amortized in 2016 and 2018, respectively.
Finite-livedSpringfield gaming licenses.
The Company was granted a license to operate a casino in Maryland. The considerationfee paid to the State of Maryland for the license fee of $22 million is considered a finite-lived intangible asset that is amortized on a straight-line basis over a period of its initial term of 15 years, beginning in December 2016, when the casinoMGM National Harbor started operations. The Company was granted a license to operate a casino in Massachusetts. The considerationfee paid to the State of Massachusetts for the license fee of $85 million is considered a finite-lived intangible asset that will beis amortized over a period of 15 years, beginning in August 2018, when the casinoMGM Springfield started operations.Other. The Company’s other finite–lived intangible assets consist primarily of lease acquisition costs amortized over the life of the related leases, and certain license rights amortized over their contractual life.
Total amortization expense related to intangible assets was
$176$197 million,
$173$194 million and
$180$192 million for
2018, 2017,2021, 2020, and
2016,2019, respectively. As of December 31,
2018,2021, estimated future amortization is as follows:
| | | | |
Years ending December 31, | | (In thousands) | |
2019 | | $ | 179,944 | |
2020 | | | 179,944 | |
2021 | | | 179,944 | |
2022 | | | 179,944 | |
2023 | | | 179,761 | |
Thereafter | | | 2,406,806 | |
| | $ | 3,306,343 | |
| | | | | | | | |
| Years ending December 31, | | (In thousands) |
| 2022 | | $ | 190,257 | |
| 2023 | | 177,982 | |
| 2024 | | 175,995 | |
| 2025 | | 174,210 | |
| 2026 | | 172,424 | |
| Thereafter | | 1,868,181 | |
| | | $ | 2,759,049 | |
NOTE 8 — OTHER ACCRUED LIABILITIES
Other accrued liabilities consisted of the following:
| | 2018 | | | 2017 | |
| | (In thousands) | |
Contract and contract-related liabilities: | | | | | | | | |
Outstanding chip liability | | $ | 323,811 | | | $ | 597,753 | |
Loyalty program obligations | | | 113,293 | | | | 91,119 | |
Casino front money | | | 342,941 | | | | 303,950 | |
Advance deposits and ticket sales | | | 221,003 | | | | 149,698 | |
Unpaid wagers and other | | | 103,341 | | | | 85,978 | |
Other accrued liabilities: | | | | | | | | |
Payroll and related | | | 518,892 | | | | 483,101 | |
Taxes, other than income taxes | | | 235,160 | | | | 170,639 | |
MGP Dividend | | | 31,732 | | | | 29,777 | |
Other | | | 260,881 | | | | 202,620 | |
| | $ | 2,151,054 | | | $ | 2,114,635 | |
| | | | | | | | | | | | | | |
| | | December 31, |
| | | 2021 | | 2020 |
| | | (In thousands) |
| Contract and contract-related liabilities: | | | | |
| Outstanding chip liability | | $ | 176,219 | | | $ | 212,671 | |
| Loyalty program obligations | | 144,465 | | | 139,756 | |
| Casino front money | | 206,244 | | | 133,114 | |
| Advance deposits and ticket sales | | 283,188 | | | 123,079 | |
| Unpaid wagers and other | | 150,569 | | | 126,094 | |
| Other accrued liabilities: | | | | |
| Payroll and related | | 429,797 | | | 327,644 | |
| Taxes, other than income taxes | | 195,973 | | | 109,100 | |
| Operating Partnership interest rate swaps - current | | 14,071 | | | 32,155 | |
| MGP dividend | | 82,294 | | | 64,086 | |
Operating lease liabilities - current (Refer to Note 11) | | 31,706 | | | 31,843 | |
Finance lease liabilities - current (Refer to Note 11) | | 87,665 | | | 80,193 | |
| Other | | 181,253 | | | 165,344 | |
| | $ | 1,983,444 | | | $ | 1,545,079 | |
Long-term debt consisted of the following:
| | December 31, | |
| | 2018 | | | 2017 | |
| | | | | | | | |
| | (In thousands) | |
Senior credit facility | | $ | 750,000 | | | $ | 372,500 | |
Operating Partnership senior credit facility | | | 2,819,125 | | | | 2,091,375 | |
MGM China credit facility | | | 2,433,562 | | | | 2,301,584 | |
$850 million 8.625% senior notes, due 2019 | | | 850,000 | | | | 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 | | | | — | |
$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 | |
$350 million 4.50% Operating Partnership senior notes, due 2028 | | | 350,000 | | | | 350,000 | |
$0.6 million 7% debentures, due 2036 | | | 552 | | | | 552 | |
$2.3 million 6.7% debentures, due 2096 | | | — | | | | 2,265 | |
| | | 15,253,239 | | | | 13,018,276 | |
Less: Premiums, discounts, and unamortized debt issuance costs, net | | | (121,823 | ) | | | (109,182 | ) |
| | | 15,131,416 | | | | 12,909,094 | |
Less: Current portion | | | (43,411 | ) | | | (158,042 | ) |
| | $ | 15,088,005 | | | $ | 12,751,052 | |
| | | | | | | | | | | | | | |
| | | December 31, |
| | | 2021 | | 2020 |
| | | | | |
| | | (In thousands) |
| Operating Partnership senior credit facility | | $ | 50,000 | | | $ | 10,000 | |
| MGM China first revolving credit facility | | 360,414 | | | 770,034 | |
| 7.75% senior notes, due 2022 | | 1,000,000 | | | 1,000,000 | |
| 6% senior notes, due 2023 | | 1,250,000 | | | 1,250,000 | |
| 5.625% Operating Partnership senior notes, due 2024 | | 1,050,000 | | | 1,050,000 | |
| 5.375% MGM China senior notes, due 2024 | | 750,000 | | | 750,000 | |
| 6.75% senior notes, due 2025 | | 750,000 | | | 750,000 | |
| 5.75% senior notes, due 2025 | | 675,000 | | | 675,000 | |
| 4.625% Operating Partnership senior notes, due 2025 | | 800,000 | | | 800,000 | |
| 5.25% MGM China senior notes, due 2025 | | 500,000 | | | 500,000 | |
| 5.875% MGM China senior notes, due 2026 | | 750,000 | | | 750,000 | |
| 4.5% Operating Partnership senior notes, due 2026 | | 500,000 | | | 500,000 | |
| 4.625% senior notes, due 2026 | | 400,000 | | | 400,000 | |
| 5.75% Operating Partnership senior notes, due 2027 | | 750,000 | | | 750,000 | |
| 5.5% senior notes, due 2027 | | 675,000 | | | 675,000 | |
| 4.75% MGM China senior notes, due 2027 | | 750,000 | | | — | |
| 4.5% Operating Partnership senior notes, due 2028 | | 350,000 | | | 350,000 | |
| 4.75% senior notes, due 2028 | | 750,000 | | | 750,000 | |
| 3.875% Operating Partnership senior notes, due 2029 | | 750,000 | | | 750,000 | |
| 7% debentures, due 2036 | | 552 | | | 552 | |
| | | 12,860,966 | | | 12,480,586 | |
| Less: Premiums, discounts, and unamortized debt issuance costs, net | | (90,169) | | | (103,902) | |
| | | 12,770,797 | | | 12,376,684 | |
| Less: Current portion | | (1,000,000) | | | — | |
| | $ | 11,770,797 | | | $ | 12,376,684 | |
Debt due within one year of the December 31, 2018 and 2017 balance sheet 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 $43 million and $158 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 as of December 31, 2018 and 2017, respectively.
Interest expense, net consisted of the following:
| | Year Ended December 31, | | | | Year Ended December 31, |
| 2018 | | | 2017 | | | 2016 | | | | 2021 | | 2020 | | 2019 |
| | | | | | | | | | | | | | | | | | |
| (In thousands) | | | | (In thousands) |
Total interest incurred | $ | 821,229 | | | $ | 779,855 | | | $ | 814,731 | | Total interest incurred | | $ | 800,156 | | | $ | 679,251 | | | $ | 853,007 | |
Interest capitalized | | (51,716 | ) | | | (111,110 | ) | | | (119,958 | ) | Interest capitalized | | (563) | | (2,871) | | (5,075) |
| $ | 769,513 | | | $ | 668,745 | | | $ | 694,773 | | | | $ | 799,593 | | | $ | 676,380 | | | $ | 847,932 | |
Senior credit facility. At December 31, 2018, 2021, the Company’s senior credit facility consisted of a $750 million term loan A facility and a $1.5$1.675 billion revolving facility. facility of which no amounts were drawn.
On February 14, 2020, in connection with the MGP BREIT Venture Transaction, the Company used proceeds from the transaction to repay and terminate the $1.5 billion outstanding on its then existing revolving facility in full and entered into an unsecured credit agreement, comprised of a $1.5 billion unsecured revolving facility that would mature in February 2025. As a result, the Company incurred a $4 million loss on early retirement of debt recorded in “Other, net” in the consolidated statements of operations.
In December 2018,April 2020 and then in February 2021, the Company amended its senior credit facility to provide for a $250 million increaseit with certain relief from the effects of the COVID-19 pandemic, including certain financial maintenance covenant waivers, agreeing to liquidity tests, and pledging the Operating Partnership units held by loan parties to the lenders as collateral. In November 2021, the Company terminated its existing revolving facility to $1.5and entered into a new $1.675 billion and a $520 million increase on the term loan A facility. Additionally, thesecured revolving and term loan A facilities were repriced to LIBORcredit facility that matures in November 2026. The revolving credit facility bears interest of SOFR plus 1.50% to 2.25% determined by reference to a rent adjusted total net leverage ratio pricing grid and the final maturity dategrid.
The Company's senior revolving credit facility is, subject to gaming approval, guaranteed by each of the facilities was extendedCompany's existing direct and indirect wholly-owned material domestic restricted subsidiaries, subject to December 2023. The term loan A facility’s repayment will start on the last business day of each calendar quarter beginning March 31, 2020, for an amount equal to 1.25% of the aggregate principal amount of the term loan A facility outstanding as of the amendment effective date, with the remaining balance due in December 2023. The Company permanently repaid $9 million of the term loan A facility for the year ended December 31, 2018 in accordance with the scheduled amortization. At December 31, 2018, the interest rate on the term loan A facility was 4.77%. At December 31, 2018, no amounts were drawn on the revolving credit facility.certain exclusions. The senior credit facility contains representations and warranties, customary events of default, and positive, negative and financial covenants, including that the Company maintain compliance with a maximum total net leverage ratio, a maximum first lien net leverage ratio and a minimum interest coverage ratio. Such financial covenants will become effective beginning in January 2019.
The seniorrevolving credit facility is secured by (i) a mortgage on the real properties comprising the MGM Grand Las Vegas and the Bellagio, (ii) a pledge of substantially all existing and future personal property of the subsidiaries of the Company that own the MGM Grand Las Vegas and the Bellagio; and (iii) a pledge of the equity or limited liability company interestsin certain of the entities that own MGM Grand Las Vegas and the Bellagio.
Company's domestic operating properties. Mandatory prepayments of the credit facilities will be required upon the occurrence of certain events, including sales of certain assets, casualty events and the incurrence of certain additional indebtedness, subject to certain exceptionsexceptions.
The Company’s senior revolving credit facility also contains customary representations and reinvestment rights.warranties, events of default and positive and negative covenants.
The Company was in compliance with its applicable covenants at December 31, 2021.
Operating Partnership senior credit facility and bridge facility. At December 31, 2018,2021, the Operating Partnership’s senior secured credit facility consisted of a $470 million term loan A facility, a $1.8 billion term loan B facility, and a $1.35 billion revolving credit facility. In March 2018, the Operating Partnership repriced its term loan B interest rate to LIBOR plus 2.00% and extended the maturity of the term loan B facility to March 2025, which became effective in August 2018.In June 2018, the Operating Partnership amended its credit agreement to provide for a $750 million increase of theThe revolving facility to $1.35 billion, a $200 million increase on the term loan A facility, and extensionsbears interest of the maturities of the revolving facility and the term loan A facility to June 2023. Additionally, the revolving and term loan A facilities were repriced to LIBOR plus 1.75% to 2.25% determined by reference to a total net leverage ratio pricing grid. In addition, the term loan A facility’s repaymentgrid and will start on the last business day of each calendar quarter beginning September 30, 2019, for an amount equal to 0.625% of the aggregate principal amount of the term loan A outstanding as of the amendment effective date.
Prior to the amendment, the term loan A facility was subject to amortizationmature in equal quarterly installments of 2.5% of the initial aggregate principal amount to be payable each year. The Operating Partnership permanently repaid $4 million of the term loan A facility for the year ended December 31, 2018. The term loan B facility is subject to equal quarterly installments of 1.0% of the initial aggregate principal amount to be payable each year. The Operating Partnership permanently repaid $19 million of the term loan B facility for the year ended December 31, 2018, in accordance with the scheduled amortization.June 2023. At December 31, 2018, $5502021, $50 million was drawn on the revolving credit facility. At December 31, 2018, the interest rates on the term loan A facility and the term loan B facility were both 4.52%, and
the interest rate on the revolving credit facility was 4.43%1.85%.
In February 2020, in connection with the MGP BREIT Venture Transaction, the Operating Partnership amended its senior secured credit facility to, among other things, allow for the transaction to occur, permit the incurrence by the Operating Partnership of a nonrecourse guarantee relating to the debt of MGP BREIT Venture (refer to Note 12 for description of such guarantee), and permit the incurrence of the bridge loan facility. As a result of the transaction and the amendment, the Operating Partnership repaid its $1.3 billion outstanding term loan B facility in full with the proceeds of a bridge facility, which was then assumed by MGP BREIT Venture as partial consideration for the Operating Partnership’s contribution. Additionally, the Operating Partnership used the proceeds from the settlement of the forward equity issuances to pay off the outstanding balance of $399 million on its term loan A facility in full. As a result, the Operating Partnership incurred an $18 million loss on early retirement of debt recorded in “Other, net” in the consolidated statements of operations.
The Operating Partnership is party to interest rate swaps to mitigate the effects of interest rate volatility inherent in its variable rate debt as well as forecasted debt issuances. As of December 31, 2021, the Operating Partnership has currently effective interest rate swap agreements on which it pays a weighted average fixed rate of 1.783% on total notional amount of $700 million. The Operating Partnership has an additional $900 million total notional amount of forward starting interest rate swaps that are not currently effective. The fair value of interest rate swaps designated as cash flow hedges was $25 million, with $5 million recorded as a current liability and $20 million recorded as a long-term liability as of December 31, 2021, and $41 million, with $1 million recorded as a current liability and $40 million recorded as a long-term liability, as of December 31, 2020. The fair value of interest rate swaps not designated as cash flow hedges was $27 million, with $8 million recorded as a current liability and $19 million recorded as a long-term liability as of December 31, 2021, and $78 million, with $31 million recorded as a current liability and $47 million recorded as a long-term liability, as of December 31, 2020. Interest rate swaps in a current liability position are recorded within “Other accrued expenses,” and those in a long-term liability position are recorded within “Other long-term obligations” on the consolidated balance sheets.
The Operating Partnership credit facility contains customary representations and warranties, events of default and positive and negative covenants. The revolving credit facility and term loan A facility also requirecovenants, including that the Operating Partnership maintain compliance with a maximum senior secured net debt to adjusted total assets ratio, a maximum total net debt to adjusted assets ratio and a minimum interest coverage ratio. The Operating Partnership was in compliance with its credit facility covenants at December 31, 2018. 2021.
The Operating Partnership senior credit facility is guaranteed by each of the Operating Partnership’s existing and subsequently acquired direct and indirect wholly owned material domestic restricted subsidiaries,
except for MGM Springfield reDevelopment, which owns the real estate assets of MGM Springfield, and secured by a first priority lien security interest on substantially all of the Operating Partnership’s and such restricted subsidiaries’ material assets, including mortgages on its real estate, excluding the real estate assets of MGM National Harbor,
and Empire City,
and MGM Springfield and subject to
other customary exclusions.
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 December 31, 2018, 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 December 31, 2018 and 2017, the derivative financial instruments have been designated as cash flow hedges and qualify for hedge accounting.
MGM China first revolving credit facility. At December 31, 2018,2021, the MGM China first revolving credit facility consisted of $1.8a $1.25 billion of term loans and a $1.0 billionunsecured revolving credit facility. The MGM China first revolving credit facility which bearbears interest at a fluctuating rate per annum based on HIBORHong Kong Interbank Offered Rate (“HIBOR”) plus 1.375%1.625% to 2.50%2.75%, as
determined by MGM China’s leverage ratio. In June 2018, MGM China amendedratio and restated its credit facility for a reductionwill mature in the total revolving credit commitments of $450 million to $1.0 billion and an increase in the total term loan commitments of $450 million to $2.0 billion (the aggregate amount of commitments remained unchanged). The final maturity date was also extended to June 2022, but no revolving credit loans or term loans shall remain outstanding after, and no revolving credit or term loan commitments shall be available after March 31, 2022. Quarterly principal amortization payments of the term loan facilities were amended to be 5% of the original principal amount beginning in September 2018 through December 2021, with the remaining balance due in March 2022. MGM China permanently repaid $507 million of term loans for the year ended December 31, 2018 in accordance with the scheduled amortization.May 2024. At December 31, 2018, $6412021, $360 million was drawn on the revolving credit facility. At December 31, 2018, the interest rate on the term loans was 4.74% and the interest rate on theMGM China first revolving credit facility and the weighted average interest rate was 4.72%2.95%.
The MGM China first revolving credit facility contains customary representations and warranties, events of default, and positive, negative and financial covenants, including that MGM China maintains compliance with a maximum leverage ratio and a minimum interest coverage ratio. In February 2021, MGM China amended its credit agreement to provide for a waiver of its maximum leverage ratio. and its minimum interest coverage ratio through the fourth quarter of 2022. MGM China was in compliance with its applicable MGM China credit facility covenants at December 31, 2018.
2021. In February 2022, MGM China further amended its first revolving credit facility to extend the financial covenant waivers through maturity.
MGM China second revolving credit facility. At December 31, 2021,the MGM China second revolving credit facility consisted of a $400 million unsecured revolving credit facility with an option to increase the amount of the facility up to $500 million, subject to certain conditions. The MGM China second credit facility bears interest at a fluctuating rate per annum based on HIBOR plus 1.625% to 2.75%, as determined by MGM China’s leverage ratio and will mature in May 2024. Draws will be subject to satisfaction of certain conditions precedent, including evidence that the MGM China first revolving credit facility has been fully drawn. At December 31, 2021, no amounts were drawn on the MGM China second revolving credit facility.
The MGM China second credit facility contains customary representations and warranties, events of default, and positive, negative and financial covenants, including that MGM China maintains compliance with a maximum leverage ratio and a minimum interest coverage ratio beginning in the third quarter of 2021. In February 2021, MGM China further amended its second credit facility agreement to provide for a waiver of its maximum leverage ratio and its minimum interest coverage ratio through the fourth quarter of 2022. MGM China was in compliance with its applicable MGM China second credit facility covenants at December 31, 2021. In February 2022, MGM China further amended its second revolving credit facility to extend the financial covenant waivers through maturity.
Senior Notes. In February 2019, the Company repaid its $850 million 8.625% notes due 2019.In June 2018,October 2020, the Company issued $1.0 billion
$750 million in aggregate principal amount of 5.750%4.75% senior notes due 2025.2028.
In July 2017,May 2020, the Company redeemedissued $750 million in aggregate principal amount of 6.75% senior notes due 2025.
In March 2020, the Company completed cash tender offers for an aggregate amount of $750 million of its senior notes, comprised of $325 million principal amount of its outstanding 5.75% senior notes due 2025, $100 million principal amount of its outstanding 4.625% senior notes due 2026, and $325 million principal amount of its outstanding 5.5% senior notes due 2027. As a result, the Company incurred a $105 million loss on early retirement of debt recorded in “Other, net” in the consolidated statements of operations.
In December 2019, the Company used a portion of the net proceeds from the Bellagio transaction to redeem for cash all
$475$267 million principal amount of its outstanding
11.375%5.250% senior notes due
2018.2020, all $361 million principal amount of its outstanding 6.750% senior notes due 2020, and all $1.25 billion principal amount of its outstanding 6.625% senior notes due 2021. The Company incurred a
$30$171 million loss on the early retirement of such notes recorded in “Other, net” in the consolidated statements of operations.
Operating Partnership
In April 2019, the Company issued $1.0 billion in aggregate principal amount of 5.50% senior
notes. In September 2017,notes due 2027. The Company primarily used the Operating Partnership issued $350net proceeds from the offering to fund the purchase of $639 million in aggregate principal amount of 4.50%its outstanding 6.75% senior notes due 2028.2020 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% senior notes due 2019.
Operating Partnership senior notes. In November 2020, the Operating Partnership issued $750 million in aggregate principal amount of 3.875% senior notes due 2029.
In June 2020, the Operating Partnership issued $800 million in aggregate principal amount of 4.625% senior notes due 2025.
In January 2019, the Operating Partnership issued $750 million in aggregate principal amount of 5.75% senior notes due 2027.
Each series of the Operating Partnership's senior notes are fully and unconditionally guaranteed, jointly and severally, on a senior basis by all of the Operating Partnership’s subsidiaries that guarantee the Operating Partnership’s credit facilities, other than MGP Finance Co-Issuer, Inc., which is a co-issuer of the senior notes. The Operating Partnership may redeem all or part of the senior notes at a redemption price equal to 100% of the principal amount of the senior notes plus, to the extent the Operating Partnership is redeeming senior notes prior to the date that is three months prior to their maturity date, an applicable make whole premium, plus, in each case, accrued and unpaid interest. The indentures governing the senior notes contain customary covenants and events of default. These covenants are subject to a number of important exceptions and qualifications set forth in the applicable indentures governing the senior notes, including, with respect to the restricted payments covenants, the ability to make unlimited restricted payments to maintain the REIT status of MGP.
MGM China senior notes. In March 2021, MGM China issued $750 million in aggregate principal amount of 4.75% senior notes due 2027 at an issue price of 99.97%.
In June 2020, MGM China issued $500 million in aggregate principal amount of 5.25% senior notes due 2025.
In May 2019, MGM China issued $750 million in aggregate principal amount of 5.375% senior notes due 2024 and $750 million in aggregate principal amount of 5.875% senior notes due 2026. The Company primarily used the net proceeds from the offering to pay down outstanding borrowings under the MGM China first revolving credit facility. MGM China incurred a $16 million loss on the debt retirement recorded in “Other, net” in the consolidated statements of operations.
CityCenter senior credit facility. In connection with the CityCenter acquisition, the Company assumed $1.7 billion of CityCenter's indebtedness, which was repaid and extinguished in September 2021 with cash on hand.
Maturities of long-term debt. The maturities of the principal amount of the Company’s long-term debt as of December 31, 20182021 are as follows: Years ending December 31, | | | | (In thousands) | |
2019 | | | | $ | 1,272,734 | |
2020 | | | | | 1,966,109 | |
2021 | | | | | 1,716,109 | |
2022 | | | | | 2,306,237 | |
2023 | | | | | 2,884,875 | |
Thereafter | | | | | 5,107,175 | |
| | | | $ | 15,253,239 | |
| | | | | | |
| | | | | | | | |
| Years ending December 31, | | (In thousands) |
| 2022 | | $ | 1,000,000 | |
| 2023 | | 1,300,000 | |
| 2024 | | 2,160,414 | |
| 2025 | | 2,725,000 | |
| 2026 | | 1,650,000 | |
| Thereafter | | 4,025,552 | |
| | | $ | 12,860,966 | |
Fair value of long-term debt. The estimated fair value of the Company’s long-term debt was $15.1$13.4 billion and $13.6$13.2 billion at December 31, 20182021 and 2017,2020, respectively. Fair value was estimated using quoted market prices for the Company’s senior notes and senior credit facilities.
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.
Income (loss) before income taxes for domestic and foreign operations consisted of the following:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (In thousands) | |
Domestic operations | | $ | 660,832 | | | $ | 747,090 | | | $ | 984,095 | |
Foreign operations | | | (26,826 | ) | | | 213,700 | | | | 273,494 | |
| | $ | 634,006 | | | $ | 960,790 | | | $ | 1,257,589 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Domestic operations | | $ | 2,094,324 | | | $ | (665,376) | | | $ | 2,717,756 | |
| Foreign operations | | (632,520) | | | (846,103) | | | 128,969 | |
| | | $ | 1,461,804 | | | $ | (1,511,479) | | | $ | 2,846,725 | |
The benefit (provision) for income taxes attributable to income (loss) before income taxes is as follows:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
Federal: | | (In thousands) | |
Current | | $ | 11,991 | | | $ | (120,980 | ) | | $ | (97,502 | ) |
Deferred (excluding separate components) | | | (143,468 | ) | | | 204,713 | | | | (124,625 | ) |
Deferred – change in enacted rates | | | — | | | | 987,942 | | | | — | |
Deferred – valuation allowance | | | (19,753 | ) | | | 101,443 | | | | 222,688 | |
Other noncurrent | | | 576 | | | | 1,356 | | | | 3,608 | |
Benefit (provision) for federal income taxes | | | (150,654 | ) | | | 1,174,474 | | | | 4,169 | |
State: | | | | | | | | | | | | |
Current | | | (12,564 | ) | | | (6,798 | ) | | | 4,069 | |
Deferred (excluding separate components) | | | (12,731 | ) | | | (25,233 | ) | | | 2,313 | |
Deferred – operating loss carryforward | | | (29,490 | ) | | | 44,242 | | | | (16,024 | ) |
Deferred – valuation allowance | | | 41,068 | | | | (40,078 | ) | | | 23,058 | |
Other noncurrent | | | (1,334 | ) | | | (3,876 | ) | | | (2,901 | ) |
Benefit (provision) for state income taxes | | | (15,051 | ) | | | (31,743 | ) | | | 10,515 | |
Foreign: | | | | | | | | | | | | |
Current | | | (2,037 | ) | | | (470 | ) | | | (2,015 | ) |
Deferred (excluding separate components) | | | 63,827 | | | | (40,653 | ) | | | (34,425 | ) |
Deferred – operating loss carryforward | | | 30,574 | | | | 4,688 | | | | 2,988 | |
Deferred – valuation allowance | | | 23,229 | | | | 21,098 | | | | (2,975 | ) |
Benefit (provision) for foreign income taxes | | | 115,593 | | | | (15,337 | ) | | | (36,427 | ) |
| | $ | (50,112 | ) | | $ | 1,127,394 | | | $ | (21,743 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| Federal: | | (In thousands) |
| Current | | $ | (8,984) | | | $ | 207,544 | | | $ | (4,928) | |
| Deferred (excluding separate components) | | (189,657) | | | 19,852 | | | (537,993) | |
Deferred – valuation allowance | | (14,967) | | | (42,109) | | | (20,175) | |
| Other noncurrent | | (14,262) | | | 4,922 | | | (5,745) | |
| Benefit (provision) for federal income taxes | | (227,870) | | | 190,209 | | | (568,841) | |
| State: | | | | | | |
| Current | | 5 | | | (816) | | | (22,685) | |
| Deferred (excluding separate components) | | (28,068) | | | (33,087) | | | (32,793) | |
Deferred – operating loss carryforward | | (27,936) | | | 47,728 | | | (5,241) | |
Deferred – valuation allowance | | (601) | | | (3,375) | | | (191) | |
| Other noncurrent | | 13,260 | | | (946) | | | (1,401) | |
| Benefit (provision) for state income taxes | | (43,340) | | | 9,504 | | | (62,311) | |
| Foreign: | | | | | | |
| Current | | (3,717) | | | (828) | | | (2,454) | |
| Deferred (excluding separate components) | | 8,943 | | | 4,206 | | | 44,374 | |
Deferred – operating loss carryforward | | 5,793 | | | 39,920 | | | 32,915 | |
Deferred – valuation allowance | | 6,776 | | | (51,439) | | | (76,028) | |
| Benefit (provision) for foreign income taxes | | 17,795 | | | (8,141) | | | (1,193) | |
| | | $ | (253,415) | | | $ | 191,572 | | | $ | (632,345) | |
A reconciliation of the federal income tax statutory rate and the Company’s effective tax rate is as follows:
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
Federal income tax statutory rate | | | 21.0 | % | | | 35.0 | % | | | 35.0 | % |
Change in enacted rates | | | — | | | | (102.7 | ) | | | — | |
Non-controlling interest | | | (2.4 | ) | | | (1.5 | ) | | | (0.9 | ) |
Foreign jurisdiction income/losses taxed at other than U.S. statutory rate | | | (9.5 | ) | | | (9.2 | ) | | | (3.8 | ) |
Repatriation of foreign earnings | | | — | | | | 35.4 | | | | 5.2 | |
Foreign tax credit | | | — | | | | (70.3 | ) | | | (10.6 | ) |
Federal valuation allowance | | | 3.1 | | | | (10.6 | ) | | | (17.7 | ) |
Macau dividend tax | | | (6.4 | ) | | | 4.2 | | | | — | |
State taxes, net | | | 1.9 | | | | 2.4 | | | | — | |
General business credits | | | (2.9 | ) | | | (1.0 | ) | | | (0.7 | ) |
Stock-based compensation | | | (1.2 | ) | | | (2.1 | ) | | | — | |
Gain on Borgata transaction | | | — | | | | — | | | | (5.4 | ) |
Non-deductible employee dining facility costs | | | 1.4 | | | | — | | | | — | |
Permanent and other items | | | 2.9 | | | | 3.1 | | | | 0.6 | |
| | | 7.9 | % | | | (117.3 | )% | | | 1.7 | % |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| Federal income tax statutory rate | | 21.0 | % | | 21.0 | % | | 21.0 | % |
| Net operating loss carryback rate differential | | — | | | 5.5 | | | — | |
| Noncontrolling interest | | (3.2) | | | 1.6 | | | (0.8) | |
| Foreign jurisdiction income/losses taxed at other than U.S. statutory rate | | 8.2 | | | (12.5) | | | (0.5) | |
| Federal valuation allowance | | 1.0 | | | (2.8) | | | 0.7 | |
| State taxes, net | | 2.3 | | | 0.5 | | | 1.7 | |
| Gain on consolidation of CityCenter, net | | (10.1) | | | — | | | — | |
| Permanent and other items | | (1.9) | | | (0.6) | | | 0.1 | |
| | | 17.3 | % | | 12.7 | % | | 22.2 | % |
The tax-effected components of the Company’s net deferred tax liability are as follows:
| | | December 31, | | | | December 31, |
| | 2018 | | | 2017 | | | | 2021 | | 2020 |
Deferred tax assets – federal and state: | | (In thousands) | | Deferred tax assets – federal and state: | | (In thousands) |
Bad debt reserve | | $ | 23,497 | | | $ | 25,432 | | |
Deferred compensation | | | 5,950 | | | | 5,232 | | |
Net operating loss carryforward | | | 23,406 | | | | 46,702 | | Net operating loss carryforward | | $ | 35,350 | | | $ | 57,419 | |
Accruals, reserves and other | | | 88,139 | | | | 94,904 | | Accruals, reserves and other | | 39,163 | | | 167,553 | |
Investments in unconsolidated affiliates | | | 83,130 | | | | 84,188 | | |
Stock-based compensation | | | 20,581 | | | | 24,390 | | |
| Lease liabilities | | Lease liabilities | | 2,714,308 | | | 1,972,343 | |
Tax credits | | | 2,926,996 | | | | 3,045,138 | | Tax credits | | 3,060,733 | | | 3,095,856 | |
| | | 3,171,699 | | | | 3,325,986 | | | | 5,849,554 | | | 5,293,171 | |
Less: Valuation allowance | | | (2,449,582 | ) | | | (2,462,272 | ) | Less: Valuation allowance | | (2,735,451) | | | (2,720,008) | |
| | | 722,117 | | | | 863,714 | | | | 3,114,103 | | | 2,573,163 | |
Deferred tax assets – foreign: | | | | | | | | | Deferred tax assets – foreign: | | | | |
Bad debt reserve | | | 1,372 | | | | 821 | | |
Net operating loss carryforward | | | 107,308 | | | | 76,909 | | Net operating loss carryforward | | 185,936 | | | 180,143 | |
Accruals, reserves and other | | | 18,603 | | | | — | | Accruals, reserves and other | | 15,228 | | | 17,083 | |
Property and equipment | | | 998 | | | | — | | Property and equipment | | 27,366 | | | 17,890 | |
Stock-based compensation | | | 5,409 | | | | 4,423 | | |
| Lease liabilities | | Lease liabilities | | 1,458 | | | 1,368 | |
| | | 133,690 | | | | 82,153 | | | | 229,988 | | | 216,484 | |
Less: Valuation allowance | | | (28,121 | ) | | | (51,466 | ) | Less: Valuation allowance | | (148,811) | | | (155,587) | |
| | | 105,569 | | | | 30,687 | | | | 81,177 | | | 60,897 | |
Total deferred tax assets | | $ | 827,686 | | | $ | 894,401 | | Total deferred tax assets | | $ | 3,195,280 | | | $ | 2,634,060 | |
Deferred tax liabilities – federal and state: | | | | | | | | | Deferred tax liabilities – federal and state: | | | | |
Property and equipment | | $ | (1,729,786 | ) | | $ | (1,670,704 | ) | Property and equipment | | $ | (1,361,356) | | | $ | (1,349,355) | |
Long-term debt | | | (3,141 | ) | | | (48,809 | ) | |
| Investments in unconsolidated affiliates | | Investments in unconsolidated affiliates | | (1,252,816) | | | (1,158,342) | |
| ROU assets | | ROU assets | | (2,570,620) | | | (1,860,195) | |
Intangibles | | | (90,758 | ) | | | (79,167 | ) | Intangibles | | (141,934) | | | (108,728) | |
| | | (1,823,685 | ) | | | (1,798,680 | ) | | | (5,326,726) | | | (4,476,620) | |
Deferred tax liabilities – foreign: | | | | | | | | | Deferred tax liabilities – foreign: | | | | |
Accruals, reserves and other | | | — | | | | (26,657 | ) | |
Property and equipment | | | — | | | | (16,277 | ) | |
Intangibles | | | (346,539 | ) | | | (348,162 | ) | Intangibles | | (307,522) | | | (309,256) | |
| ROU Assets | | ROU Assets | | (396) | | | (1,200) | |
| | | (346,539 | ) | | | (391,096 | ) | | | (307,918) | | | (310,456) | |
Total deferred tax liability | | $ | (2,170,224 | ) | | $ | (2,189,776 | ) | Total deferred tax liability | | $ | (5,634,644) | | | $ | (4,787,076) | |
Net deferred tax liability | | $ | (1,342,538 | ) | | $ | (1,295,375 | ) | Net deferred tax liability | | $ | (2,439,364) | | | $ | (2,153,016) | |
On December 22, 2017,
In March 2020, the
U.S. government enacted comprehensive tax legislation commonly referred to as the U.S. Tax CutsCoronavirus Aid, Relief, and
JobsEconomic Security Act (the
“Tax“CARES Act”)
. was signed into law. The
TaxCARES Act
makes broad and complex changescontains certain income tax provisions that are beneficial to the
U.S.Company; namely, the relaxation of the interest expense deduction limitation for the 2019 and 2020 tax
code that are generally applicableyears and the allowance of a 5-year carryback of net operating losses (“NOLs”) incurred during tax years 2018 through 2020. The Company has recorded a federal income tax receivable of $226 million to reflect the carryback of its 2020 NOL. Furthermore, since the NOL was carried back to tax years
beginning after December 31, 2017, including, but not limited to, (1) reducingwhen the
U.S. federal
corporateincome tax rate
from 35 percentwas 35%, compared to
21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) adding a new provision designed to tax global intangible low-taxed income (GILTI), which allows for the
possibility of using foreign tax credits (FTCs) and a deduction of up to 50 percent to offset21% rate currently in effect, the
Company realized $90 million more income tax
liability (subject to some limitations); (5) creating a new limitation on deductible interest expense; (6) imposing additional limitations on the deductibility of executive compensation and certain employee fringe benefits; and (7) increasing bonus depreciation to allow for full expensing of qualified property.The SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete butbenefit than if it iswould have only been able to determine a reasonable estimate, it must record a provisional estimate incarry the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.
NOL forward.
The Company’s accounting for certain elements of the Tax Act was incomplete as of December 31, 2017. However, the Company was able to make reasonable estimates of certain effects and, therefore, recorded a provisional discrete non-cash net tax benefit of $1.4 billion in the period ended December 31, 2017, consisting of a benefit of $988 million for the corporate rate reduction and a benefit of $438 million from its provisional re-assessment of the Tax Act’s impact on the valuation allowance on its foreign tax credit (“FTC”) carryovers. The Company did not provide tax expense for the transition tax on its unrepatriated earnings, which totaled $669 million without regard to actual 2017 distributions of $62 million, because such earnings were fully offset by FTCs.
The Company’s accounting for the impact of the Tax Act is now complete. The Company recorded non-cash income tax expense totaling $20 million during the measurement period in 2018, as it adjusted its valuation allowance on its FTC carryovers to account for guidance clarifying the treatment of FTCs resulting from GILTI and other provisions impacting FTC utilization. These measurement period adjustments increased the Company’s effective tax rate by 3% during the year ended December 31, 2018. In addition, the Company finalized its accounting for the tax treatment of indirect costs of providing certain employee fringe benefits subject to limitation under the Tax Act. This measurement period adjustment had an immaterial impact on the effective tax rate for the year ended December 31, 2018.
The Company has made an accounting policy decision to treat taxes due, if any, on future inclusions in U.S. taxable income under the GILTI provisions as a current period expense when incurred. Accordingly, the Company has not provided a deferred tax liability for any GILTI taxes that may result in future periods.
The Company has recorded a valuation allowance of $2.4$2.7 billion on its FTCforeign tax credit (“FTC”) carryover of $2.9$3.1 billion as of December 31, 2018,2021, resulting in an FTC net deferred tax asset of $481$332 million. The FTCs are attributable to the Macau Special Gaming Tax, which is 35% of gross gaming revenue in Macau. Because MGM Grand Paradise is presently exempt from the Macau 12% complementary tax on gaming profits, the Company believes that payment of the Macau Special Gaming Tax qualifies as a tax paid in lieu of an income tax that is creditable against U.S. taxes. While the Company generally does not expect to generate new FTC carryovers underafter the Tax Act,year ended December 31, 2017, it will be able to utilize its existing FTC carryovers to the extent that it has active foreign source income during the 10-year FTC carryforward period. Such foreign source income includes the recapture, to the extent of 50% of U.S. taxable income each year, of overall domestic losses that totaled $1.7$1.3 billion at December 31, 2018.2021. The Company relies on future U.S. source
operating income in assessing utilization of the overall domestic losses and, by extension, future FTC realization during the 10-year FTC carryover period. The FTC carryovers will expire if not utilized as follows:
$640$297 million in 2022; $976 million in 2023;
$782$780 million in 2024;
$332$674 million in 2025;
and $196$134 million in
2026; and $200 million in 2027.
The Company’s assessment of the realization of its FTC deferred tax asset is based on available evidence, including assumptions concerning future U.S. operating profits and
our interpretations of the Tax Act based upon guidance issued to date.foreign source income. As a result, significant judgment is required in assessing the possible need for a valuation allowance and changes to such assumptions could result in a material change in the valuation allowance with a corresponding impact on the provision for income taxes in the period including such change.
Income generated from gaming operations of
On March 30, 2020, MGM Grand Paradise is exemptedwas granted an extension of its exemption from Macau’sthe Macau 12% complementary tax pursuant to approvalon gaming profits through June 26, 2022, concurrent with the end of the term of its current gaming subconcession. Absent the exemption from the Macau government. Absent this exemption,complementary tax on gaming profits, “Net income attributable to MGM Resorts International” would have decreased by $43 million and $38$10 million in 20182021 and 2017, respectively,increased by $4 million in 2020 and diluted earnings per share would have decreased by $0.08$0.02 in 2021 and $0.07 increased by $0.01in 2018 and 2017, respectively.MGM Grand Paradise has been granted an exemption from the Macau 12% complementary tax on gaming profits through March 31, 2020, which is the end of the term of its current gaming sub-concession.2020. The Company has assumedcontinues to assume that MGM Grand Paradise will pay the Macau 12% complementary tax on gaming profits for all periods beyond March 31, 2020June 26, 2022 and has factored that assumption into the measurement of Macau deferred tax assets and liabilities.
Non-gaming operations remain subject to the Macau complementary tax.
At December 31, 2021, MGM Grand Paradise had
at December 31, 2018 a complementary tax
net operating lossNOL carryforward of
$866 million$1.5 billion resulting from non-gaming operations that will expire if not utilized
against non-gaming income in years
20192022 through
2021.2024.
MGM Grand Paradise’s exemption from the 12% complementary tax on gaming profits does not apply to dividend distributions of such profits to MGM China. However,On July 26, 2021, MGM Grand Paradise has had anextended its agreement with the Macau government to settle the 12% complementary tax that would otherwise be due by its shareholder, MGM China, on distributions of its gaming profits by paying a flat annual payment (“annual fee arrangement”) regardless of the amount of distributable dividends. Such annual fee arrangement was effective for distributions of profits earned through December 31, 2016. Since the earnings for 2017 were not covered by an annual fee arrangement as of December 31, 2017, the Company provided deferred taxes on such earnings, which totaled $41 million as of December 31, 2017. On March 15, 2018, MGM Grand Paradise executed anThe extension of the annual fee arrangement, which covers the distributions of gaming profits earned for the period of JanuaryApril 1, 20172020 through March 31, 2020. ItJune 26, 2022. The agreement requires annual payments of approximately $1 million for 2017the period April 1, 2020 through 2019December 31, 2020, $2 million for January 1, 2021 through December 31, 2021, and a payment of approximately $300,000$1 million for the first quarter 2020.period January 1, 2022 through June 26, 2022. The Company reversed the $41recorded $3 million of deferred taxes previously recorded on 2017 earnings, resulting in a reduction in provision for income taxes fortax expense during the year ended December 31, 2018, partially offset by2021 under the 2017 annual payment amount.extension.
The Company has
net operating lossesNOLs in certain of the states in which it operates that total
$355$536 million as of December 31,
2018,2021, which equates to deferred tax assets of
$23$35 million after federal tax effect and before valuation allowance.
These net operating lossThe majority of these NOL carryforwards will expire if not utilized by
20292025 through
2038.2040 with the remaining being carried forward indefinitely. The Company has provided a valuation allowance of
$3$6 million on certain of its state deferred tax assets, including
the net operating lossesa portion of NOLs described above.
In addition, there is a valuation allowance of
$26$146 million on certain Macau deferred tax assets, and a valuation allowance of
$2$3 million on Hong Kong
net operating lossesNOLs because the Company believes these assets do not meet the “more likely than not” criteria for recognition.
A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits is as follows:
| | | Year Ended December 31, | | | | Year Ended December 31, |
| | 2018 | | | 2017 | | | 2016 | | | | 2021 | | 2020 | | 2019 |
| | (In thousands) | | | | (In thousands) |
Gross unrecognized tax benefits at January 1 | | $ | 18,588 | | | $ | 14,026 | | | $ | 13,724 | | Gross unrecognized tax benefits at January 1 | | $ | 35,617 | | | $ | 33,298 | | | $ | 24,464 | |
Gross increases - prior period tax positions | | | 5,345 | | | | — | | | | — | | Gross increases - prior period tax positions | | 12,949 | | | 3,717 | | | 8,960 | |
Gross decreases - prior period tax positions | | | (957 | ) | | | (2,280 | ) | | | (3,375 | ) | Gross decreases - prior period tax positions | | (13,388) | | | (1,398) | | | (1,006) | |
Gross increases - current period tax positions | | | 1,488 | | | | 6,842 | | | | 3,677 | | Gross increases - current period tax positions | | 654 | | | — | | | 880 | |
| Settlements with Taxing Authorities | | Settlements with Taxing Authorities | | (16,264) | | | — | | | — | |
Gross unrecognized tax benefits at December 31 | | $ | 24,464 | | | $ | 18,588 | | | $ | 14,026 | | Gross unrecognized tax benefits at December 31 | | $ | 19,568 | | | $ | 35,617 | | | $ | 33,298 | |
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was
$13$11 million and
$11$9 million at December 31,
20182021 and
2017,2020, respectively.
The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense, which were not material
asfor each of
December 31, 2018, 2017 or 2016. The Company does not anticipate that the
total amounts of unrecognized tax benefits at December 31, 2018 will change materially within the next twelve months.periods presented.
The Company files income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and foreign jurisdictions, although the income taxes paid in foreign jurisdictions are not material. As of December 31,
2018,2021, the IRS can
generally no longer assess tax with respect to years ended prior to
2014; however2016. During the twelve months ended December 31, 2021, the Company reached a settlement with the IRS
may adjust NOLs generated in such years that were utilized in 2014. The Company’sAppeals Office on the examination of its 2014 U.S. consolidated federal income tax
return is currently under examination by the IRS. The IRS examinationreturn. No cash tax payments were due as a result of the
2014 U.S. income tax return of CityCenter Holdings, LLC, an unconsolidated affiliate treated as a partnership for income tax purposes was completed during 2018 and the Company’s share of the resultant adjustments were not material in the aggregate. settlement.
As of December 31, 2018,2021, other than adjustments resulting from the federal and state income tax audits discussed above,herein, the various state and local tax jurisdictions in which the Company files tax returns can no longer assess tax with respect to years ended prior to 2014.2016. However, such state and local tax jurisdictions may adjust NOLs generated in such years that are utilized in subsequent years. The Company’s stateDuring 2021, an examination of income tax returns filed in MississippiNew Jersey for tax years 2015 through 2018 closed with no change and an examination of income tax returns filed in Massachusetts for tax years 2017 and 2018 closed with no material adjustments. Additionally, the Company's income tax returns filed in New JerseyYork City for the tax years 20142017 through 2016 and2019 are currently under examination. The Company does not anticipate any material adjustments upon resolution of this audit.
The Company received a final audit determination with respect to the examination of income tax returns filed in the state of Michigan for the tax years 2014 through 20172018. The Company had an informal conference with the Michigan Department of Treasury Hearings Division to contest the findings of the audit. The Hearings Division issued its decision and order and now the Company is determining its next course of action. Any final adjustments upon resolution of this matter are currentlynot expected to be material.
The Company believes that it is reasonably possible that the total amounts of unrecognized tax benefits at December 31, 2021 may decrease by up to $13 million within the next twelve months on the expectation of resolution of a tax accounting method related to its customer loyalty program.
NOTE 11 – LEASES
The Company leases the land underlying certain of its properties, real estate, and various equipment under examination. Nooperating and, to a lesser extent, finance lease arrangements. The MGP master lease, which is further discussed in Note 18, eliminates in consolidation and, accordingly, is not included within the disclosures below.
Land. The Company, through MGP, is a lessee of land underlying MGM National Harbor and a portion of the land underlying Borgata and Beau Rivage. MGP is obligated to make lease payments through the non-cancelable term of the ground leases, which is through 2051 for Beau Rivage, through 2070 for Borgata, and through 2082 for MGM National Harbor. Additionally, MGM Grand Paradise has MGM Macau and MGM Cotai land concession contracts, each with an initial 25-year contract term ending in April 2031 and January 2038, respectively. The land leases are classified as operating leases.
Real Estate Assets. The Company leases the real estate assets of Bellagio, Mandalay Bay and MGM Grand Las Vegas, and Aria (including Vdara) pursuant to triple-net lease agreements, which are classified as operating leases. Each of the leases obligates the Company to spend a specified percentage of net revenues at the properties on capital expenditures and that the Company comply with certain financial covenants, which, if not met, would require the Company to maintain cash security or provide one or more letters of credit in favor of the landlord in an amount equal to 1 year of rent under the Mandalay Bay and MGM Grand lease and Aria lease and 2 years of rent under the Bellagio lease. The Company was in compliance with its applicable covenants as of December 31, 2021.
Bellagio lease. The Company leases the real estate assets of Bellagio from Bellagio BREIT Venture. The Bellagio lease has an initial term of 30 years with 2 10-year renewal periods, exercisable at the Company’s option, with a fixed 2% rent escalator for the first 10 years and, thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3% during the 11th through 20th years and 4% thereafter. Annual cash rent payments for the third lease year that commenced on December 1, 2021 increased to $255 million as a result of the second 2% fixed annual escalator.
Mandalay Bay and MGM Grand Las Vegas lease. The Company leases the real estate assets of Mandalay Bay and MGM Grand Las Vegas from MGP BREIT Venture. The Mandalay Bay and MGM Grand Las Vegas lease has an initial term of 30 years with 2 10-year renewal periods, exercisable at the Company’s option, with a fixed 2% rent escalator for the first 15 years and, thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3%. Annual cash rent payments for the second lease year that commenced on March 1, 2021 increased to $298 million as a result of the first 2% fixed annual escalator.
Aria lease. The Company leases the real estate assets of Aria (including Vdara) from funds managed by Blackstone. The Aria lease has an initial term of 30 years with 3 10-year renewal periods, exercisable at the Company's option, with a fixed 2% rent escalator for the first 15 years, and thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3%. Annual cash rent payments for the first lease year that commenced on September 28, 2021 was $215 million.
Other information. Components of lease costs and other state or local income tax returnsinformation related to the Company’s leases was:
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2021 | | 2020 | | 2019 |
| | (In thousands) |
Operating lease cost, primarily classified within "General and administrative"(1) | $ | 870,779 | | | $ | 751,002 | | | $ | 143,954 | |
| | | | | | |
| Finance lease costs | | | | | |
Interest expense(2) | $ | 2,354 | | | $ | (21,320) | | | $ | 1,164 | |
| Amortization expense | 73,475 | | | 70,476 | | | 13,341 | |
| Total finance lease costs | $ | 75,829 | | | $ | 49,156 | | | $ | 14,505 | |
(1)The Bellagio lease and the Mandalay Bay and MGM Grand Las Vegas lease are currently under examination.held with related parties, as further discussed in Note 18. Operating lease cost includes $331 million for each of the years ended December 31, 2021 and 2020, and $42 million for the year ended December 31, 2019, related to the Bellagio lease. Operating lease cost includes $395 million, $347 million, and $0 for the years ended December 31, 2021, 2020, and December 31, 2019, respectively, related to the Mandalay Bay and MGM Grand Las Vegas lease.
(2)For the years ended December 31, 2021 and 2020, interest expense includes the effect of COVID-19 related rent concessions, which was recognized as negative variable rent expense.
| | | | | | | | | | | |
| | December 31, |
| | 2021 | | 2020 |
| Supplemental balance sheet information | (In thousands) |
| Operating leases | | | |
Operating lease right-of-use assets, net(1) | $ | 11,492,805 | | $ | 8,286,694 |
Operating lease liabilities - current, classified within "Other accrued liabilities" | $ | 31,706 | | $ | 31,843 |
Operating lease liabilities - long-term(2) | 11,802,464 | | 8,390,117 |
| Total operating lease liabilities | $ | 11,834,170 | | $ | 8,421,960 |
| | | | |
| Finance leases | | | |
Finance lease right-of-use assets, net, classified within "Property and equipment, net" | $ | 151,909 | | $ | 200,980 |
Finance lease liabilities - current, classified within "Other accrued liabilities" | $ | 87,665 | | $ | 80,193 |
Finance lease liabilities - long-term, classified within "Other long-term obligations" | 75,560 | | 134,287 |
| Total finance lease liabilities | $ | 163,225 | | $ | 214,480 |
| | | | |
| Weighted average remaining lease term (years) | | | |
| Operating leases | 29 | | 30 |
| Finance leases | 2 | | 3 |
| | | | |
| Weighted average discount rate (%) | | | |
| Operating leases | 7 | | | 8 | |
| Finance leases | 3 | | | 3 | |
(1)As of December 31, 2021 and 2020, operating lease right-of-use assets, net included $3.6 billion and $3.7 billion related to the Bellagio lease, respectively and $4.0 billion related to the Mandalay Bay and MGM Grand Las Vegas lease for each of the respective periods.
(2)As of December 31, 2021 and 2020, operating lease liabilities – long-term included $3.8 billion related to the Bellagio lease for each of the respective periods, and $4.2 billion and $4.1 billion related to the Mandalay Bay and MGM Grand Las Vegas lease, respectively.
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2021 | | 2020 | | 2019 |
| Cash paid for amounts included in the measurement of lease liabilities | (In thousands) |
| Operating cash outflows from operating leases | $ | 669,681 | | | $ | 572,186 | | | $ | 117,072 | |
| Operating cash outflows from finance leases | 4,761 | | | 2,956 | | | 1,164 | |
Financing cash outflows from finance leases(1) | 73,257 | | | 34,494 | | | 10,311 | |
| | | | | | |
| ROU assets obtained in exchange for new lease liabilities | | | | | |
| Operating leases | $ | 3,388,120 | | | $ | 4,120,955 | | | $ | 3,814,115 | |
| Finance leases | 24,433 | | | 177,085 | | | 84,934 | |
(1)Included within “Other” within cash flows from financing activities on the consolidated statements of cash flows.
Maturities of lease liabilities were as follows:
| | | | | | | | | | | |
| | Operating Leases | | Finance Leases |
| Year ending December 31, | (In thousands) |
| 2022 | $ | 838,062 | | | $ | 90,633 | |
| 2023 | 850,305 | | | 73,568 | |
| 2024 | 862,796 | | | 1,747 | |
| 2025 | 876,046 | | | 1,253 | |
| 2026 | 885,863 | | | 24 | |
| Thereafter | 26,660,145 | | | — | |
| Total future minimum lease payments | 30,973,217 | | | 167,225 | |
| Less: Amount of lease payments representing interest | (19,139,047) | | | (4,000) | |
| Present value of future minimum lease payments | 11,834,170 | | | 163,225 | |
| Less: Current portion | (31,706) | | | (87,665) | |
| Long-term portion of lease liabilities | $ | 11,802,464 | | | $ | 75,560 | |
NOTE
1112 – COMMITMENTS AND CONTINGENCIES
Leases. The Company leases real estate and various equipment under operating and, to a lesser extent, capital lease arrangements. Certain real estate leases provide for escalation of rent based upon a specified price index and/or based upon periodic appraisals.
At December 31, 2018, the Company was obligated under non-cancellable operating leases to make future minimum lease payments as follows:
Years ending December 31, | | (In thousands) | |
2019 | | $ | 106,643 | |
2020 | | | 83,150 | |
2021 | | | 62,437 | |
2022 | | | 47,036 | |
2023 | | | 45,157 | |
Thereafter | | | 1,357,611 | |
Total minimum lease payments | | $ | 1,702,034 | |
The table above excludes the Company’s future lease obligations to a subsidiary of the Operating Partnership pursuant to the master lease agreement discussed in Note 17 as these lease obligations are eliminated in consolidation. Rental expense for operating leases was $89 million, $92 million and $80 million for 2018, 2017 and 2016, respectively, which included short-term rentals charged to rent expense. The Company’s operating leases are materially comprised of ground leases for various properties. The Company accounts for the Cotai land concession contract as an operating lease for which the required upfront payments are amortized over the initial 25-year contract term ending in January 2038.
Additionally, the Company has a series of ground leases for a total of approximately 11 acres of land on which the Borgata employee parking garage, public space expansion, rooms expansion, and modified surface parking lot reside. The Company recorded an unfavorable lease liability for the excess contractual lease obligations over the market value of the leases, which will be amortized on a straight-line basis over the term of the lease contracts through December 2070. The remaining balance of the unfavorable lease liability was $46 million and $47 million as of December 31, 2018 and 2017, respectively. The ground lease is accounted for as an operating lease.
Also, the Company has a ground lease agreement for an approximate 23-acre parcel of land at MGM National Harbor. The ground lease has an initial term of 25 years and the right to extend for up to 13 additional six-year periods with the first 7 of those additional periods considered to be reasonably assured. The Company therefore amortizes the lease on a straight-line basis over a 67-year term to December 2082.
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 based on assertions that the Company and/or certain of its subsidiaries were negligent. The Company also received letters from attorneys purporting to represent other persons with claims related to the October 1, 2017 shooting. Lawsuits were first filed in October 2017 and include actions filed by multiple individuals in the District Court of Clark County, Nevada and in the Superior Court of Los Angeles County, California. Some of the original actions have been voluntarily dismissed, and plaintiffs’ counsel indicate they anticipate re-filing the lawsuits in similar form. In June 2018, the Company removed to federal court all actions that remained pending in California and Nevada state courts following the voluntary dismissals. Motions to remand have been filed in several cases, and the Company anticipates that there may be additional motions to remand filed in the future. 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. In February of 2019, the Company and plaintiffs’ counsel commenced mediation of these matters. The above-described litigation currently is stayed pending mediation.
The Company is currently unable to reliably predict the future developments in, outcome of, and economic costs and other consequences of pending or future 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 these 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 are 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. In the event the Company incurs any liability, the Company believes it is unlikely it would incur losses in connection with these claims in excess of its insurance coverage. 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. In addition, 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 litigationLitigation.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.
Borgata property tax reimbursement agreement. On February 15, 2017, Borgata, the Department of Community Affairs of the State of New Jersey and Atlantic City entered into an agreement wherein Borgata was to be reimbursed $72 million as settlement for property tax refunds in satisfaction of New Jersey Tax Court and Superior Court judgments totaling approximately $106 million, plus interest for the 2009-2012 tax years and the settlement of pending tax appeals for the tax years 2013-2015. Those pending tax appeals could potentially have resulted in Borgata being awarded additional refunds due of approximately $65 million. In June 2017, Atlantic City and the State of New Jersey issued bonds and used the proceeds to pay the $72 million settlement in full. The Company recorded the amounts received pursuant to the reimbursement agreement as an offset to general and administrative expenses in the consolidated statements of operations. As required by the purchase and sale agreement to acquire Borgata in August 2016, the Company paid Boyd Gaming half of the settlement amount received by the Company, net of fees and expenses. Amounts paid to Boyd Gaming were recorded in general and administrative expenses in the consolidated statements of operations.
NV Energy. In July 2016, the Company filed its notice to exit the fully bundled sales system of NV Energy and now purchases energy, capacity, and/or ancillary services from a provider other than NV Energy. The Company paid an upfront impact payment of $83 million, including $14 million related to CityCenter, in September 2016. Under the terms of the exit agreement, the Company and CityCenter were required to make ongoing payments to NV Energy for non-bypassable rate charges, which primarily relate to each entity’s share of NV Energy’s portfolio of renewable energy contracts which extended through 2040 and each entity’s share of the costs of decommissioning and remediation of coal-fired power plants in Nevada. The Company’s initial estimate of its obligation related to non-bypassable charges was $71 million. The expense recognized related to the upfront payment and the initial accrual for the liability associated with the non-bypassable charges was recorded within “NV Energy exit expense” in the Company’s consolidated statements of operations for the year ended December 31, 2016. Subsequent accretion of the liability and changes in estimates are recognized within general and administrative expenses in the consolidated statement of operations. In the second quarter of 2017, the terms of the ongoing impact fee obligations were modified. Such modifications included a credit to be applied against future non-bypassable rate charges and substantially shortened the period over which the Company and CityCenter are responsible for such charges, with an end date in 2022. As such, the Company recognized a reduction in its liability for future charges of $41 million with a corresponding credit to “NV Energy exit expense”. Additionally, CityCenter recorded an $8 million reduction in liability and credit to expense. As of December 31, 2018 and 2017, the Company has recorded an estimate of its remaining liability on a discounted basis of $8 million and $10 million, respectively, in “Other accrued liabilities” and $15 million and $23 million, respectively, in “Other long-term obligations.”
Grand Paradise Macau deferred cash payment. On September 1, 2016, the Company purchased 188.1 million common shares of its MGM China subsidiary from Grand Paradise Macau (“GPM”), an entity controlled by Ms. Ho, Pansy Catilina Chiu King (“Ms. Ho”). As part of the consideration for the purchase, the Company agreed to pay GPM or its nominee a deferred cash payment of $50 million, which will be paid in amounts equal to the ordinary dividends received on such shares, with a final lump sum payment due on the fifth anniversary of the closing date of the transaction if any portion of the deferred cash payment remains unpaid at that time. In 2018 and 2017, the total amount paid under the deferred cash payment arrangement was $11 million and $7 million, respectively. Such amount was paid to Expert Angles Limited, an entity controlled by Ms. Ho through November 2018 and subsequently controlled by an immediate family member of Ms. Ho. As of December 31, 2018, the Company recorded a remaining liability on a discounted basis of $36 million in “Other long-term obligations.”
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.$1.35 billion. At December 31, 2018, $122021, $33 million in letters of credit were outstanding under the Company’s senior credit facility. The Operating Partnership’s senior credit facility limits the amount of letters of credit that can be issued to $75 million. No letters of credit were outstanding under the Operating PartnershipPartnership’s senior credit facility or MGM China’s credit facility at December 31, 2018.2021. The amount of available borrowings under each of the credit facilities is reduced by any outstanding letters of credit.
MGM China bank guarantee.In connection with the extension of the expiration of the gaming subconcession to June 2022, MGM Grand Paradise provided a bank guarantee to the government of Macau in May 2019 to warrant the fulfillment of an existing commitment of labor liabilities upon expiration of the gaming subconcession in June 2022. The amount of the bank guarantee was approximately $102 million as of December 31, 2021 when giving effect to foreign currency exchange rate fluctuations.
Bellagio BREIT Venture shortfall guarantee.The Company provides a shortfall guarantee of the $3.01 billion principal amount of indebtedness (and any interest accrued and unpaid thereon) of Bellagio BREIT Venture, which matures in 2029. The terms of the shortfall guarantee provide that after the lenders have exhausted certain remedies to collect on the
obligations under the indebtedness, the Company would then be responsible for any shortfall between the value of the collateral, which is the real estate assets of Bellagio owned by Bellagio BREIT Venture, and the debt obligation. This guarantee is accounted for under ASC 460 at fair value; such value is immaterial.
MGP BREIT Venture shortfall guarantee. The Company provides a shortfall guarantee of the $3.0 billion principal amount of indebtedness (and any interest accrued and unpaid thereon) of MGP BREIT Venture, which has an initial term of 12 years, maturing in 2032, with an anticipated repayment date of March 2030. The terms of the shortfall guarantee provide that after the lenders have exhausted certain remedies to collect on the obligations under the indebtedness, the Company would then be responsible for any shortfall between the value of the collateral, which is the real estate assets of Mandalay Bay and MGM Grand Las Vegas, owned by MGP BREIT Venture, and the debt obligation. This guarantee is accounted for under ASC 460 at fair value; such value is immaterial.
MGP BREIT Venture bad acts guarantee. The Operating Partnership provides a guarantee for the losses incurred by the lenders of the indebtedness of MGP BREIT Venture arising out of certain bad acts by the Operating Partnership, its venture partner, or the venture, such as fraud or willful misconduct, based on the party’s percentage ownership of MGP BREIT Venture. This guarantee is capped at 10% of the principal amount outstanding at the time of the loss. The Operating Partnership and its venture partner have separately indemnified each other for the other party’s share of the overall liability exposure, if at fault. The guarantee is accounted for under ASC 460 at fair value; such value is immaterial.
NOTE
1213 — STOCKHOLDERS’ EQUITY
Accumulated Other Comprehensive
Income (Loss)The following is a summary of the changesLoss
Changes in
the accumulated
balance of other comprehensive
income (loss)loss attributable to MGM Resorts
International:International are as follows: | | Currency Translation Adjustments | | | Cash Flow Hedges | | | Other | | | Total | |
| | (In thousands) | |
Balance, January 1, 2017 | | $ | 12,545 | | | $ | 1,434 | | | $ | 1,074 | | | $ | 15,053 | |
Other comprehensive income (loss) before reclassifications | | | (43,188 | ) | | | (1,221 | ) | | | 98 | | | | (44,311 | ) |
Amounts reclassified from accumulated other comprehensive income (loss) to interest expense | | | — | | | | 9,216 | | | | — | | | | 9,216 | |
Other comprehensive income (loss), net of tax | | | (43,188 | ) | | | 7,995 | | | | 98 | | | | (35,095 | ) |
Other comprehensive income (loss) attributable to noncontrolling interest | | | 19,193 | | | | (2,761 | ) | | | — | | | | 16,432 | |
Balance, December 31, 2017 | | | (11,450 | ) | | | 6,668 | | | | 1,172 | | | | (3,610 | ) |
Other comprehensive income (loss) before reclassifications | | | (13,022 | ) | | | 4,706 | | | | — | | | | (8,316 | ) |
Amounts reclassified from accumulated other comprehensive income (loss) to interest expense | | | — | | | | (1,130 | ) | | | — | | | | (1,130 | ) |
Other comprehensive income (loss), net of tax | | | (13,022 | ) | | | 3,576 | | | | — | | | | (9,446 | ) |
Other comprehensive income (loss) attributable to noncontrolling interest | | | 5,600 | | | | (1,100 | ) | | | — | | | | 4,500 | |
Balance, December 31, 2018 | | $ | (18,872 | ) | | $ | 9,144 | | | $ | 1,172 | | | $ | (8,556 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Currency Translation Adjustments | | Cash Flow Hedges | | Other | | Total |
| | | (In thousands) |
| Balances, January 1, 2019 | | $ | (18,872) | | | $ | 9,144 | | | $ | 1,172 | | | $ | (8,556) | |
| Other comprehensive income (loss) before reclassifications | | 28,870 | | | (28,783) | | | — | | | 87 | |
| Amounts reclassified from accumulated other comprehensive loss to interest expense | | — | | | (5,599) | | | — | | | (5,599) | |
| Amounts reclassified from accumulated other comprehensive loss related to de-designation of interest rate swaps to "Other, net" | | — | | | 4,877 | | | — | | | 4,877 | |
| Other comprehensive income (loss), net of tax | | 28,870 | | | (29,505) | | | — | | | (635) | |
Other changes in accumulated other comprehensive loss:
| | | | | | | | |
| Empire City MGP transaction | | — | | | — | | | 195 | | | 195 | |
| MGP Class A share issuances | | — | | | — | | | 1,512 | | | 1,512 | |
| Park MGM Transaction | | — | | | — | | | 16 | | | 16 | |
| Northfield transaction | | — | | | — | | | (2) | | | (2) | |
| Other | | — | | | — | | | 481 | | | 481 | |
| Changes in accumulated other comprehensive loss | | 28,870 | | | (29,505) | | | 2,202 | | | 1,567 | |
| Other comprehensive (income) loss attributable to noncontrolling interest | | (12,745) | | | 9,532 | | | — | | | (3,213) | |
| Balances, December 31, 2019 | | (2,747) | | | (10,829) | | | 3,374 | | | (10,202) | |
| Other comprehensive income (loss) before reclassifications | | 27,762 | | | (94,740) | | | — | | | (66,978) | |
| Amounts reclassified from accumulated other comprehensive loss to interest expense | | — | | | 17,922 | | | — | | | 17,922 | |
| Amounts reclassified from accumulated other comprehensive loss to "Other, net" | | — | | | (2,547) | | | — | | | (2,547) | |
| Other comprehensive income (loss), net of tax | | 27,762 | | | (79,365) | | | — | | | (51,603) | |
| Other changes in accumulated other comprehensive loss: | | | | | | | | |
| MGP Class A share issuances | | — | | | — | | | 646 | | | 646 | |
| MGP BREIT Venture Transaction | | — | | | — | | | (59) | | | (59) | |
| Redemption of Operating Partnership units | | — | | | — | | | 8,773 | | | 8,773 | |
| Other | | — | | | — | | | (1,018) | | | (1,018) | |
| Changes in accumulated other comprehensive loss | | 27,762 | | | (79,365) | | | 8,342 | | | (43,261) | |
| Other comprehensive (income) loss attributable to noncontrolling interest | | (12,051) | | | 34,837 | | | — | | | 22,786 | |
| Balances, December 31, 2020 | | 12,964 | | | (55,357) | | | 11,716 | | | (30,677) | |
| Other comprehensive income (loss) before reclassifications | | (24,655) | | | 12,588 | | | — | | | (12,067) | |
| Amounts reclassified from accumulated other comprehensive loss to interest expense | | — | | | 22,200 | | | — | | | 22,200 | |
| Other comprehensive income (loss), net of tax | | (24,655) | | | 34,788 | | | — | | | 10,133 | |
| Other changes in accumulated other comprehensive loss | | | | | | | | |
| MGP Class A share issuances | | — | | | — | | | 3,240 | | | 3,240 | |
| Redemption of Operating Partnership units | | — | | | — | | | 5,327 | | | 5,327 | |
| Other | | — | | | — | | | (2,358) | | | (2,358) | |
| Changes in accumulated other comprehensive loss | | (24,655) | | | 34,788 | | | 6,209 | | | 16,342 | |
| Other comprehensive (income) loss attributable to noncontrolling interest | | 10,784 | | | (21,065) | | | — | | | (10,281) | |
| Balances, December 31, 2021 | | $ | (907) | | | $ | (41,634) | | | $ | 17,925 | | | $ | (24,616) | |
At December 31, 2021, the estimated amount currently recorded in accumulated other comprehensive loss that will be recognized in earnings over the next 12 months is not material.
The following is a summary of net income attributable to MGM Resorts International and transfers to noncontrolling
interest:interest, which shows the effects of changes in the Company’s ownership interest in a subsidiary on the equity attributable to the Company: | | | | For the Years Ended December 31, | |
| | | | 2018 | | | 2017 | |
| | | | (In thousands) | |
Net income attributable to MGM Resorts International | | | | $ | 466,772 | | | $ | 1,952,052 | |
Transfers from/(to) to noncontrolling interest: | | | | | | | | | | |
MGP Class A share issuance | | | | | — | | | | 35,138 | |
MGM National Harbor transaction | | | | | — | | | | (12,497 | ) |
Other | | | | | (5,667 | ) | | | (2,889 | ) |
Net transfers from/(to) noncontrolling interest | | | | | (5,667 | ) | | | 19,752 | |
Change from net income attributable to MGM Resorts International and transfers to noncontrolling interest | | | | $ | 461,105 | | | $ | 1,971,804 | |
| | | | | | | | | | | | | | | | | | | | |
| | | For the Years Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Net income (loss) attributable to MGM Resorts International | | $ | 1,254,370 | | | $ | (1,032,724) | | | $ | 2,049,146 | |
| Transfers from/(to) noncontrolling interest: | | | | | | |
| Empire City MGP transaction | | — | | | — | | | (18,718) | |
| MGP Class A share issuances | | 103,174 | | | 64,834 | | | 151,976 | |
| Park MGM Transaction | | — | | | — | | | (1,968) | |
| Northfield transaction | | — | | | — | | | 21,679 | |
| MGP BREIT Venture Transaction | | — | | | (6,562) | | | — | |
| Redemption of Operating Partnership units | | 176,659 | | | 92,632 | | | — | |
| Other | | (5,062) | | | (1,759) | | | (935) | |
| Net transfers from noncontrolling interest | | 274,771 | | | 149,145 | | | 152,034 | |
| Change from net income (loss) attributable to MGM Resorts International and transfers to noncontrolling interest | | $ | 1,529,141 | | | $ | (883,579) | | | $ | 2,201,180 | |
Noncontrolling interest ownership transactions
Empire City MGP transaction. As further discussed in Note 18, on January 29, 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 MGP transaction, the Company indirectly owned 74.6% of the partnership units in the Operating Partnership.
MGP Class A share issuance. In September 2017,issuance – January 2019.On January 31, 2019, MGP completed a publican offering of 13.2approximately 20 million of its Class A shares. In connection with the offering, the Operating Partnership issued 13.2 millionan equal amount of 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 interestsinterests’ ownership percentage of the Operating Partnership'sPartnership’s net assets, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive income. Subsequent to MGP��sthe issuance, of the incremental shares, the Company indirectly owned 72.3%69.7% of the partnership units in the Operating Partnership.
Park MGM National Harbor transaction. On October 5, 2017,Transaction. As further discussed in Note 18, on March 7, 2019, the Company entered into an amendment to the MGP acquiredmaster lease with respect to improvements made by the long-term leasehold interest and real property associated with MGM National Harbor from a subsidiaryCompany related to the rebranding of the Company in exchangePark MGM and NoMad Las Vegas property (the “Park MGM Transaction”) for cash of $463 million, the assumption of $425 million of indebtedness, which was immediately repaid by MGP on the closing date, andconsideration included the issuance of 9.8approximately 1 million Operating Partnership units to a subsidiary of the Company. The Company adjusted the carrying value of the noncontrolling interests to adjust for the change in noncontrolling interestsinterests’ ownership percentage of the Operating Partnership’s net assets, including assets and liabilities transferred, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive income. Subsequent to the MGM National Harbor transaction,issuance, the Company indirectly owned 73.4%69.8% of the partnership units in the Operating Partnership.
Other events. In JanuaryNorthfield transaction. As further discussed in Note 18, in April 2019, the Company acquired the membership interests of Northfield from MGP issued 12.9for consideration of approximately 9 million Operating Partnership units to a subsidiary ofthat were ultimately redeemed by the Company in connection withOperating Partnership and MGP retained the Empire City Transaction.real estate assets. The Company will adjustadjusted the carrying value of the noncontrolling interests to adjust for the change in noncontrolling interestsinterests’ ownership percentage of the Operating Partnership’s net assets, including assets and liabilities transferred, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive income, as needed, withinincome. Subsequent to the first quartertransaction, the Company indirectly owned 68.8% of the partnership units in the Operating Partnership.
MGP Class A share issuances – At-the-Market (“ATM”) program. During the year ended December 31, 2019, MGP issued approximately 5 million Class A shares under its ATM program. In connection with the issuances, the Operating Partnership issued an equal amount of Operating Partnership units to MGP during the year ended December 31, 2019.In January 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 collective issuances, the Company indirectly owned 67.6% of the partnership units in the Operating Partnership
. MGP Class A share issuance – November 2019.On November 22, 2019, MGP completed an offering of 19.630 million of its Class A shares. The offering consisted of 18 million shares sold directly to the underwriters at closing and 12 million shares sold to forward purchasers under forward sale agreements. In connection with the offering, the Operating Partnership issued 19.618 million Operating Partnership units to MGP. The Company will adjustadjusted the carrying value of the noncontrolling interests as a result of MGP’s Class A share issuance to adjust for the change in noncontrolling interestsinterests’ ownership percentage of the Operating Partnership'sPartnership’s net assets, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive income,income. Subsequent to the issuance, the Company indirectly owned 63.7% of the partnership units in the Operating Partnership.
MGP Class A share issuance – Forward settlements. On February 11, 2020 through February 13, 2020, MGP settled approximately 13 million Class A shares issued under forward sales agreements from MGP's November 2019 offering and under MGP's ATM program. In connection with the settlements, the Operating Partnership issued an equal amount of Operating Partnership units to MGP. 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 settlements, the Company indirectly owned 61.2% of the partnership units in the Operating Partnership.
MGP Class A share issuance – BREIT. On February 14, 2020, in connection with MGP’s registered sale of approximately 5 million Class A shares to BREIT, the Operating Partnership issued an equal amount of Operating Partnership units to MGP. 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 issuance, the Company indirectly owned 60.3% of the partnership units in the Operating Partnership.
MGP Class A share issuance – MGP BREIT Venture Transaction. In February 2020, in connection with the MGP BREIT Venture Transaction, the Operating Partnership issued approximately 3 million Operating Partnership units to the Company as needed, withindiscussed in Note 1. The Company adjusted the first quarter 2019.Stock repurchasecarrying 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, the Company indirectly owned
60.6% of the partnership units in the Operating Partnership.
Redemption of Operating Partnership units. On May 18, 2020, the Operating Partnership redeemed approximately 30 million Operating Partnership units from the Company for $700 million pursuant to the waiver agreement discussed in Note 1. 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 redemption, the Company indirectly owned 56.7% of the partnership units in the Operating Partnership. Further, on December 2, 2020, the Operating Partnership redeemed approximately 24 million Operating Partnership units from the Company for $700 million pursuant to the waiver agreement discussed in Note 1. 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 redemption and as of December 31, 2020, the Company indirectly owned 53.0% of the partnership units in the Operating Partnership.
MGP Class A share issuance – March 2021. On March 15, 2021, MGP completed an offering of 22 million of its Class A shares, the proceeds of which were used to partially satisfy MGP’s obligations pursuant to the notice of redemption delivered by certain MGM subsidiaries, discussed below. Subsequent to MGP’s Class A share issuance and the redemption of Operating Partnership units, discussed below, the Company indirectly owned 42.1% of the partnership units in the Operating Partnership.
Redemption of Operating Partnership units – March 2021. In March 2021, subsidiaries of the Company delivered a notice of redemption to MGP covering approximately 37 million Operating Partnership units that they held in accordance with the terms of the Operating Partnership’s partnership agreement. Upon receipt of the notice of redemption, MGP formed a conflicts committee to determine the mix of consideration that it would provide for the Operating
Partnership units. The conflicts committee determined that MGP would redeem approximately 15 million Operating Partnership units for cash (with such Operating Partnership units retired upon redemption) and would satisfy its remaining obligation under that notice covering the remaining 22 million Operating Partnership units using the proceeds, net of the underwriters’ discount, of MGP’s Class A offering, for aggregate cash proceeds received by the Company of approximately $1.2 billion. 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 loss. Subsequent to the collective transactions, the Company indirectly owned 42.1% of the partnership units in the Operating Partnership.
MGP Class A share issuances – ATM program. During the year ended December 31, 2021, MGP issued approximately 3 million Class A shares under its ATM program, which completed its ATM program. In connection with the issuances, the Operating Partnership issued an equal amount of Operating Partnership units to MGP. 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 loss. Subsequent to the collective issuances, the Company indirectly owned 41.6% of the partnership units in the Operating Partnership.
Other equity activity
MGM Resorts International dividends. On February 9, 2022 the Company’s Board of Directors approved a quarterly dividend of $0.0025 per share that will be payable on March 15, 2022 to holders of record on March 10, 2022.
MGM Resorts International stock repurchase program. In February 2020, upon substantial completion of the May 2018 $2.0 billion stock repurchase program, the Company’s Board of Directors authorized a $2.0 billion stock repurchase program and completed the previously announced $1.0$3.0 billion stock repurchase program. Under eachthe 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.
During the year ended December 31,
2018,2019, the Company repurchased approximately
4136 million shares
of its common stock at an average purchase price of
$31.25$28.77 per share for an aggregate amount of
$1.3$1.0 billion. Repurchased shares were retired.
The remaining availability under the $2.0 billion stock repurchase program was approximately $1.4 billion as of December 31, 2018.
During the year ended December 31,
2017,2020, the Company repurchased
10approximately 11 million shares
of its common stock at
$32.75an average purchase price of $32.57 per share for
a totalan aggregate amount of
$328$354 million. Repurchased shares were retired.
MGM Resorts International dividends. On February 13, 2019
During the Company’s Boardyear ended December 31, 2021, the Company repurchased approximately 43 million shares of Directors approved a quarterly dividendits common stock at an average price of $0.13$40.70 per share that will be payable on Marchfor an aggregate amount of $1.8 billion. Repurchased shares were retired. During the year ended December 31, 2021, the Company completed its May 2018 $2.0 billion stock repurchase program and the remaining availability under the February 2020 $3.0 billion stock repurchase program was $1.3 billion as of December 31, 2021.
Subsequent to the year ended December 31, 2021, the Company repurchased approximately 15
2019 to holdersmillion shares of
record on March 8, 2019.its common stock at an average price of $43.88 per share for an aggregate amount of $670 million, which included the February 2022 repurchase of 4.5 million shares at a price of $45.00 per share for an aggregate amount of $202.5 million from funds managed by Corvex Management LP, a related party. Repurchased shares were retired.
NOTE
1314 — STOCK-BASED COMPENSATION
MGM Resorts 2005 Omnibus Incentive Plan. The Company’s omnibus incentive plan, as amended (the “Omnibus Plan”), allows it to grant up to 45 million shares or share-based awards, such as stock options, stock appreciation rights (“SARs”), restricted stock units (“RSUs”), performance share units (“PSUs”) and other stock-based awards to eligible directors, officers and employees of the Company and its subsidiaries.
As of December 31,
2018,2021, the Company had an aggregate of approximately 20 million shares of common stock available for grant as share-based awards under the Omnibus Plan. Additionally, as of December 31,
2018,2021, the Company had approximately
71 million aggregate SARs outstanding and approximately
76 million aggregate RSUs and PSUs outstanding, including deferred share units and dividend equivalent units related to RSUs and PSUs.
98
Intrinsic value. The following table includes information related to the intrinsic value:
| | | Year ended | |
| | | December 31, 2018 | |
| | | (In thousands) | |
Share-based awards exercised and RSUs and PSUs vested | | | $ | 97,302 | |
Stock options and SARs outstanding | | | | 21,563 | |
Stock options and SARs vested and expected to vest | | | | 21,547 | |
Stock options and SARs exercisable | | | | 19,745 | |
As of December 31,
2018,2021, there was
a total of $134$85 million of unamortized compensation related to
stock options, SARs, RSUs, and PSUs, which is expected to be recognized over a
weighted-averageweighted average period of
2.11.6 years.
MGM Growth Properties 2016 Omnibus Incentive Plan and MGM China Share Option Plan. The Company’s subsidiaries, MGP and MGM China, each adopted their own equity award plans for the issuance of share-based awards to each subsidiary’s eligible recipients.
Recognition of compensation cost. Compensation cost was recognized as follows: | | | Year Ended December 31, | | | | Year Ended December 31, |
| | 2018 | | | 2017 | | | 2016 | | | | 2021 | | 2020 | | 2019 |
Compensation cost: | | (In thousands) | | Compensation cost: | | (In thousands) |
Omnibus Plan | | $ | 57,735 | | | $ | 49,383 | | | $ | 43,661 | | Omnibus Plan | | $ | 53,683 | | | $ | 93,096 | | | $ | 76,995 | |
MGM Growth Properties Omnibus Incentive Plan | | | 2,092 | | | | 2,568 | | | | 3,401 | | MGM Growth Properties Omnibus Incentive Plan | | 4,827 | | | 2,854 | | | 2,277 | |
MGM China Share Option Plan | | | 10,369 | | | | 10,571 | | | | 8,545 | | MGM China Share Option Plan | | 6,673 | | | 11,006 | | | 9,566 | |
Total compensation cost | | | 70,196 | | | | 62,522 | | | | 55,607 | | Total compensation cost | | 65,183 | | | 106,956 | | | 88,838 | |
Less: Reimbursed costs and capitalized cost | | | (1,710 | ) | | | (1,398 | ) | | | (1,350 | ) | Less: Reimbursed costs and capitalized cost | | (1,198) | | | (2,118) | | | (3,487) | |
Compensation cost after reimbursed costs and capitalized cost | | | 68,486 | | | | 61,124 | | | | 54,257 | | Compensation cost after reimbursed costs and capitalized cost | | 63,985 | | | 104,838 | | | 85,351 | |
Less: Related tax benefit | | | (13,218 | ) | | | (18,650 | ) | | | (16,782 | ) | Less: Related tax benefit | | (12,982) | | | (20,605) | | | (16,752) | |
Compensation cost, net of tax benefit | | $ | 55,268 | | | $ | 42,474 | | | $ | 37,475 | | Compensation cost, net of tax benefit | | $ | 51,003 | | | $ | 84,233 | | | $ | 68,599 | |
NOTE
1415 — EMPLOYEE BENEFIT PLANS
Multiemployer benefit plans. The Company currently participates in multiemployer pension plans in which the risks of participating differs from single-employer plans in the following aspects: | a)
| | | | | | | |
| a) | Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; |
| b)
| | | | | | | |
| b) | If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; |
| c)
| | | | | | | |
| c) | If an entity chooses to stop participating in some of its multiemployer plans, the entity may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability; and |
| d)
| | | | | | | |
| d) | If the plan is terminated by withdrawal of all employers and if the value of the nonforfeitable benefits exceeds plan assets and withdrawal liability payments, employers are required by law to make up the insufficient difference. |
The Company’s participation in these plans is presented below.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | EIN/Pension | | Pension Protection Act Zone Status (2) | | FIP/RP | | Contributions by the Company (in thousands)(4) | | | Surcharge | | Expiration Dates of Collective Bargaining |
Pension Fund(1) | | Plan Number | | 2017 | | 2016 | | Status (3) | | 2018 | | | 2017 | | | 2016 | | | Imposed | | Agreements |
Southern Nevada Culinary and Bartenders Pension Plan | | 88-6016617/001 | | Green | | Green | | No | | $ | 47,825 | | | $ | 45,297 | | | $ | 44,001 | | | No | | 5/31/2019; 5/31/2023(5) |
Legacy Plan of the National Retirement Fund (NRF)(6) | | 13-6130178/001 | | Red | | Red | | Yes | | $ | 9,794 | | | $ | 9,416 | | | $ | 3,788 | | | Yes | | 2/29/2020 |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (1)
| The Company was listed in the plan's Form 5500 as providing more than 5% of the total contributions for the plan years 2017 and 2016 for the Southern Nevada Culinary and Bartenders Pension Plan and for the plan year 2016 for the NRF. At the date the financial statements were issued, Form 5500 was not available for the plan year 2018.
|
| (2)
| The zone status is based on information that the Company received from the plan and is certified by the plan's actuary. Plans in the red zone are generally less than 65% funded (critical status) and plans in the green zone are at least 80% funded.
|
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| | | EIN/Pension | | Pension Protection Act Zone Status (2) | | FIP/RP | | Contributions by the Company (in thousands)(4) | | Surcharge | | Expiration Dates of Collective Bargaining |
Pension Fund(1) | | Plan Number | | 2020 | | 2019 | | Status (3) | | 2021 | | 2020 | | 2019 | | Imposed | | Agreements |
| Southern Nevada Culinary and Bartenders Pension Plan | | 88-6016617/001 | | Green | | Green | | No | | $ | 37,242 | | | $ | 24,610 | | | $ | 52,218 | | | No | | 05/31/2023(5); 05/31/2024(5) |
| The Legacy Plan of the UNITE HERE Retirement Fund (UHF) | | 82-0994119/001 | | Red | | Red | | Implemented | | $ | 7,683 | | | $ | 5,151 | | | $ | 10,151 | | | No | | 5/31/2022 |
| (3)
| Indicates plans for which a Financial Improvement Plan (FIP) or a Rehabilitation Plan (RP) is either pending or has been implemented.
|
(1)The Company was listed in the plan's Form 5500 as providing more than 5% of the total contributions for the plan years 2020 and 2019 for both plans. At the date the financial statements were issued, Form 5500 was not available for the plan year 2021. | (4)
| There have been no significant changes that affect the comparability of contributions, other than those for the UNITE HERE Retirement Fund (“UHF”), formally known as the Legacy Plan of the National Retirement Fund (“NRF”) prior to January 1, 2018, which reflect the period from acquisition of Borgata of August 1, 2016 through December 31, 2016 within the 2016 column and a full-year of contributions within the 2018 and 2017 columns.
|
(2)The zone status is based on information that the Company received from the plan and is certified by the plan's actuary. Plans in the red zone are generally less than 65% funded (critical status) and plans in the green zone are at least 80% funded. | (5)
| The Company is party to ten collective bargaining agreements (CBA) that require contributions with the Local Joint Executive Board of Las Vegas, which is made up of the Culinary and Bartenders Unions. The agreements between CityCenter Hotel Casino, LLC, Bellagio, Mandalay Corp., and MGM Grand Hotel, LLC are the most significant because more than half of the Company’s employee participants in this plan are covered by those four agreements.
|
(3)Indicates plans for which a Financial Improvement Plan (FIP) or a Rehabilitation Plan (RP) is either pending or has been implemented. | (6)
| In December 2017, the Pension Benefit Guaranty Corporation approved the spin-off of the UNITE HERE portion of the NRF to the plan of a newly-formed Legacy Plan of the UNITE HERE Retirement Fund. As a result of the spin-off, the pension liabilities as well as certain assets of the plan were transferred to the new Plan. The terms of the Plan are identical to the NRF. The spin-off was effective as of January 1, 2018.
|
(4)There have been no significant changes that affect the comparability of contributions.(5)The Company is party to 11 collective bargaining agreements (CBA) that require contributions with the Local Joint Executive Board of Las Vegas, which is made up of the Culinary Workers Union and Bartenders Union. The agreements between Aria, Bellagio, Mandalay Bay, and MGM Grand Las Vegas are the most significant because more than half of the Company’s employee participants in this plan are covered by those 4 agreements.
Multiemployer benefit plans other than pensions. Pursuant to its collective bargaining agreements referenced above, the Company also contributes to UNITE HERE Health (the “Health Fund”), which provides healthcare benefits to
its active and retired members. The Company contributed
$191$143 million,
$183$138 million, and
$187$206 million to the Health Fund in the years ended December 31,
2018, 2017,2021, 2020, and
2016,2019, respectively.
Self-insurance. The Company is self-insured for most health care benefits and workers compensation for its non-union employees. The liability for self-insurance was $93 million and $87 million at December 31, 2018 and 2017, respectively, which is included in “Other accrued liabilities.”
NOTE
1516 — PROPERTY TRANSACTIONS, NET
Property transactions, net consisted of the following:
| | Year Ended December 31, | | | | | | | | | | | | | | | | | | |
| | 2018 | | | 2017 | | | 2016 | | | | Year Ended December 31, |
| | | | | | | | | | | | | | | 2021 | | 2020 | | 2019 |
| | (In thousands) | | | | (In thousands) |
Gain on sale of Grand Victoria | | $ | (44,703 | ) | | $ | — | | | $ | — | | |
| Loss related to sale of Circus Circus Las Vegas and adjacent land | | Loss related to sale of Circus Circus Las Vegas and adjacent land | | $ | — | | | $ | — | | | $ | 220,294 | |
Other property transactions, net | | | 53,850 | | | | 50,279 | | | | 17,078 | | Other property transactions, net | | (67,736) | | | 93,567 | | | 55,508 | |
| | $ | 9,147 | | | $ | 50,279 | | | $ | 17,078 | | | | $ | (67,736) | | | $ | 93,567 | | | $ | 275,802 | |
Grand Victoria investment sale. See Note 6
Circus Circus Las Vegas and adjacent land. In December 2019, the Company completed the sale of Circus Circus Las Vegas and the adjacent land for additional information related$825 million, which consisted of $663 million paid in cash and a secured note due 2024 with a face value of $163 million and fair value of $134 million. The note has a stated interest rate of 3% for the first two years, 4% for following two years, and 4.5% for the fifth year and is secured by the borrower with the land adjacent to Circus Circus Las Vegas as collateral with an effective interest rate of 7.31%. The interest on the note, which is comprised of the stated interest and the discount on the note, amortizes into interest income using the effective interest method over the length of the agreement. The carrying value of the note receivable was $155 million and $144 million as of December 31, 2021 and 2020, respectively, and was recorded within “Other long-term assets, net” in the consolidated balance sheets.
During the third quarter of 2019, the Company recorded a non-cash impairment charge of $219 million, which reflects the amount by which the assets’ carrying value exceeds the assets’ fair value (expected selling price). The Company further recognized a loss of $2 million during the fourth quarter of 2019 primarily relating to selling costs. The assets and liabilities of Circus Circus Las Vegas and the adjacent land of $810 million and $14 million, respectively, primarily consisted of property and equipment, net of $785 million. Circus Circus Las Vegas was not classified as discontinued operations for the year ended December 31, 2019 because the Company concluded that the sale is not a strategic shift that has a major effect on the Company’s operations or its financial results and it does not represent a major geographic segment or product line.
Other. Other property transactions, net in 2021 includes a gain of $76 million relating to the sale of Grand Victoriaart and a gain of $29 million related to a reduction in the estimate of contingent consideration related to the Empire City acquisition, partially offset by an other-than-temporary impairment charge of $22 million related to an investment in 2018.Other.an unconsolidated affiliate, as discussed in Note 6, as well as miscellaneous asset disposals and write-downs.
Other property transactions, net in 2020 includes other-than-temporary impairment charges of $64 million related to an investment in an unconsolidated affiliate, as discussed in Note 6, a loss of $17 million related to production show costs, as well as miscellaneous asset disposals and write-downs.
Other property transactions, net for 2019 includes miscellaneous asset disposals and demolition
costs in the periods presented in the above table, including a loss of $24 million related to MGM Cotai production show costs in 2018, and a loss of $20 million and $34 million related to the rebranding of the Monte Carlo Resort and Casino to Park MGM and NoMad Las Vegas in 2018 and 2017, respectively.costs.
NOTE
1617 — 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.
DuringThe Company has aggregated its operating segments into the
fourth quarter of 2018, the Company changed itsfollowing reportable
segments tosegments: Las Vegas Strip Resorts, Regional Operations and MGM China.
This change of reportable segments reflects realignment within the Company stemming from the expansion of the Company’s regional operations.
Las Vegas Strip Resorts. Las Vegas Strip Resorts consists of the following casino resorts: Aria (including Vdara) (upon acquisition in September 2021), Bellagio, MGM Grand Las Vegas (including The Signature), Mandalay Bay (including Delano and Four Seasons), The Mirage, Luxor, New York-New York (including theThe Park), Excalibur, Park MGM (including NoMad Las Vegas) and Circus Circus Las Vegas.Vegas (until the sale of such property in December 2019).
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; and MGM Springfield in Springfield, MassachusettsMassachusetts; Empire City in Yonkers, New York (upon commencingacquisition in January 2019); and MGM Northfield Park in Northfield Park, Ohio (upon MGM’s acquisition of the operations from MGP in August 2018)April 2019).
MGM China. MGM China consists of MGM Macau and MGM Cotai (upon commencing operations in February 2018).Cotai.
The Company’s operations related to investments in unconsolidated affiliates,
MGP’sMGM Northfield
casino,Park (prior to April 1, 2019 as the operations were owned by MGP until that date), 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.
The Company’s management utilizes
Adjusted Property EBITDAEBITDAR is the Company’s reportable segment GAAP measure, which management utilizes 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 property. Adjusted EBITDAEBITDAR is a measure defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, NV Energy exit expense, gain on Borgata transaction,REIT transactions, net, 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), rent expense associated with triple-net operating and ground leases, income from unconsolidated affiliates related to investments in real estate ventures, property transactions, net.net, and excludes gain on consolidation of CityCenter, net, gain related to CityCenter's sale of Harmon land recorded within income from unconsolidated affiliates, and corporate expense (which includes CEO transition expense and October 1 litigation settlement) and stock compensation expense, which are not allocated to each operating segment, and rent expense related to the master lease with MGP that eliminates in consolidation.
The following tables present the Company’s segment information. As a resultinformation:
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | (In thousands) |
| Net revenue | | | | | | |
| Las Vegas Strip Resorts | | | | | | |
| Casino | | $ | 1,549,419 | | | $ | 728,254 | | | $ | 1,296,170 | |
| Rooms | | 1,402,712 | | | 662,813 | | | 1,863,521 | |
| Food and beverage | | 1,015,366 | | | 471,529 | | | 1,517,745 | |
| Entertainment, retail and other | | 769,688 | | | 383,189 | | | 1,153,615 | |
| | | 4,737,185 | | | 2,245,785 | | | 5,831,051 | |
| Regional Operations | | | | | | |
| Casino | | 2,721,515 | | | 1,569,193 | | | 2,537,780 | |
| Rooms | | 220,828 | | | 130,945 | | | 316,753 | |
| Food and beverage | | 307,750 | | | 184,153 | | | 494,243 | |
| Entertainment, retail and other | | 142,270 | | | 82,880 | | | 201,008 | |
| | | 3,392,363 | | | 1,967,171 | | | 3,549,784 | |
| MGM China | | | | | | |
| Casino | | 1,057,962 | | | 565,671 | | | 2,609,806 | |
| Rooms | | 66,498 | | | 36,624 | | | 142,306 | |
| Food and beverage | | 68,489 | | | 40,284 | | | 127,152 | |
| Entertainment, retail and other | | 17,812 | | | 14,124 | | | 26,158 | |
| | | 1,210,761 | | | 656,703 | | | 2,905,422 | |
| Reportable segment net revenues | | 9,340,309 | | | 4,869,659 | | | 12,286,257 | |
| Corporate and other | | 339,831 | | | 292,423 | | | 613,415 | |
| | | $ | 9,680,140 | | | $ | 5,162,082 | | | $ | 12,899,672 | |
| Adjusted Property EBITDAR | | | | | | |
| Las Vegas Strip Resorts | | $ | 1,738,211 | | | $ | 232,188 | | | $ | 1,643,122 | |
| Regional Operations | | 1,217,814 | | | 343,990 | | | 969,866 | |
| MGM China | | 25,367 | | | (193,832) | | | 734,729 | |
| Reportable segment Adjusted Property EBITDAR | | 2,981,392 | | | 382,346 | | | 3,347,717 | |
| | | | | | | |
| Other operating income (expense) | | | | | | |
| Corporate and other, net | | (560,309) | | | (530,843) | | | (331,621) | |
| Preopening and start-up expenses | | (5,094) | | | (84) | | | (7,175) | |
| Property transactions, net | | 67,736 | | | (93,567) | | | (275,802) | |
| Depreciation and amortization | | (1,150,610) | | | (1,210,556) | | | (1,304,649) | |
| Gain on REIT transactions, net | | — | | | 1,491,945 | | | 2,677,996 | |
| Gain on consolidation of CityCenter, net | | 1,562,329 | | | — | | | — | |
| CEO transition expense | | — | | | (44,401) | | | — | |
| October 1 litigation settlement | | — | | | (49,000) | | | — | |
| Restructuring | | — | | | (26,025) | | | (92,139) | |
| Triple-net operating lease and ground lease rent expense | | (833,158) | | | (710,683) | | | (74,656) | |
| Gain related to sale of Harmon land - unconsolidated affiliate | | 49,755 | | | — | | | — | |
| Income from unconsolidated affiliates related to real estate ventures | | 166,658 | | | 148,434 | | | 544 | |
| Operating income (loss) | | 2,278,699 | | | (642,434) | | | 3,940,215 | |
| Non-operating income (expense) | | | | | | |
| Interest expense, net of amounts capitalized | | (799,593) | | | (676,380) | | | (847,932) | |
| Non-operating items from unconsolidated affiliates | | (83,243) | | | (103,304) | | | (62,296) | |
| Other, net | | 65,941 | | | (89,361) | | | (183,262) | |
| | | (816,895) | | | (869,045) | | | (1,093,490) | |
| Income (loss) before income taxes | | 1,461,804 | | | (1,511,479) | | | 2,846,725 | |
| Benefit (provision) for income taxes | | (253,415) | | | 191,572 | | | (632,345) | |
| Net income (loss) | | 1,208,389 | | | (1,319,907) | | | 2,214,380 | |
| Less: Net (income) loss attributable to noncontrolling interests | | 45,981 | | | 287,183 | | | (165,234) | |
| Net income (loss) attributable to MGM Resorts International | | $ | 1,254,370 | | | $ | (1,032,724) | | | $ | 2,049,146 | |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| Capital expenditures: | | (In thousands) |
| Las Vegas Strip Resorts | | $ | 266,944 | | | $ | 87,511 | | | $ | 285,863 | |
| Regional Operations | | 77,406 | | | 41,456 | | | 187,489 | |
| MGM China | | 67,989 | | | 108,352 | | | 145,634 | |
| Reportable segment capital expenditures | | 412,339 | | | 237,319 | | | 618,986 | |
| Corporate and other | | 78,358 | | | 33,260 | | | 120,020 | |
| | | $ | 490,697 | | | $ | 270,579 | | | $ | 739,006 | |
Total assets are not allocated to segments for internal reporting presentations or when determining the allocation of resources and, accordingly, are not presented.
Long-lived assets, which includes property and equipment, net, operating and finance lease right-of-use assets, net, goodwill, and other intangible assets, net, presented by geographic region in which the
change in reportable segments described above, we have recast previously reported segment information to conform to the current presentation in the following tables: | | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
| | (In thousands) | |
Net Revenues | | | | | | | | | | | | |
Las Vegas Strip Resorts | | | | | | | | | | | | |
Casino | | $ | 1,407,733 | | | $ | 1,436,830 | | | $ | 1,394,820 | |
Rooms | | | 1,776,029 | | | | 1,778,869 | | | | 1,762,850 | |
Food and beverage | | | 1,402,378 | | | | 1,410,496 | | | | 1,432,717 | |
Entertainment, retail and other | | | 1,130,532 | | | | 1,119,928 | | | | 1,074,307 | |
| | | 5,716,672 | | | | 5,746,123 | | | | 5,664,694 | |
Regional Operations | | | | | | | | | | | | |
Casino | | | 2,026,925 | | | | 1,834,803 | | | | 1,017,857 | |
Rooms | | | 318,017 | | | | 319,049 | | | | 182,809 | |
Food and beverage | | | 428,934 | | | | 410,143 | | | | 235,383 | |
Entertainment, retail and other | | | 160,645 | | | | 145,725 | | | | 84,108 | |
| | | 2,934,521 | | | | 2,709,720 | | | | 1,520,157 | |
MGM China | | | | | | | | | | | | |
Casino | | | 2,195,144 | | | | 1,741,635 | | | | 1,695,023 | |
Rooms | | | 118,527 | | | | 54,824 | | | | 57,367 | |
Food and beverage | | | 114,862 | | | | 51,330 | | | | 51,237 | |
Entertainment, retail and other | | | 21,424 | | | | 10,371 | | | | 8,331 | |
| | | 2,449,957 | | | | 1,858,160 | | | | 1,811,958 | |
Reportable segment net revenues | | | 11,101,150 | | | | 10,314,003 | | | | 8,996,809 | |
Corporate and other | | | 661,946 | | | | 483,476 | | | | 481,460 | |
| | $ | 11,763,096 | | | $ | 10,797,479 | | | $ | 9,478,269 | |
Adjusted Property EBITDA | | | | | | | | | | | | |
Las Vegas Strip Resorts | | $ | 1,705,479 | | | $ | 1,780,600 | | | $ | 1,661,921 | |
Regional Operations | | | 759,096 | | | | 731,916 | | | | 399,701 | |
MGM China | | | 568,294 | | | | 535,524 | | | | 529,281 | |
Reportable segment Adjusted Property EBITDA | | | 3,032,869 | | | | 3,048,040 | | | | 2,590,903 | |
| | | | | | | | | | | | |
Other operating income (expense) | | | | | | | | | | | | |
Corporate and other | | | (224,800 | ) | | | (213,908 | ) | | | 203,193 | |
NV Energy exit expense | | | — | | | | 40,629 | | | | (139,335 | ) |
Preopening and start-up expenses | | | (151,392 | ) | | | (118,475 | ) | | | (140,075 | ) |
Property transactions, net | | | (9,147 | ) | | | (50,279 | ) | | | (17,078 | ) |
Gain on Borgata transaction | | | — | | | | — | | | | 430,118 | |
Depreciation and amortization | | | (1,178,044 | ) | | | (993,480 | ) | | | (849,527 | ) |
Operating income | | | 1,469,486 | | | | 1,712,527 | | | | 2,078,199 | |
Non-operating income (expense) | | | | | | | | | | | | |
Interest expense, net of amounts capitalized | | | (769,513 | ) | | | (668,745 | ) | | | (694,773 | ) |
Non-operating items from unconsolidated affiliates | | | (47,827 | ) | | | (34,751 | ) | | | (53,139 | ) |
Other, net | | | (18,140 | ) | | | (48,241 | ) | | | (72,698 | ) |
| | | (835,480 | ) | | | (751,737 | ) | | | (820,610 | ) |
Income before income taxes | | | 634,006 | | | | 960,790 | | | | 1,257,589 | |
Benefit (provision) for income taxes | | | (50,112 | ) | | | 1,127,394 | | | | (21,743 | ) |
Net income | | | 583,894 | | | | 2,088,184 | | | | 1,235,846 | |
Less: Net income attributable to noncontrolling interests | | | (117,122 | ) | | | (136,132 | ) | | | (135,438 | ) |
Net income attributable to MGM Resorts International | | $ | 466,772 | | | $ | 1,952,052 | | | $ | 1,100,408 | |
Company holds assets are presented below: | | | | | | | | | | | | | | | | | | | | |
| | | December 31, |
| | | 2021 | | 2020 | | 2019 |
| Long-lived assets: | | (In thousands) |
| United States | | $ | 25,848,917 | | | $ | 21,035,992 | | | $ | 20,582,055 | |
| China and all other foreign countries | | 7,176,763 | | | 7,617,819 | | | 8,007,449 | |
| | | $ | 33,025,680 | | | $ | 28,653,811 | | | $ | 28,589,504 | |
| | December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
Total assets: | | (In thousands) | |
Las Vegas Strip Resorts | | $ | 11,783,736 | | | $ | 11,648,168 | | | $ | 11,650,747 | |
Regional Operations | | | 5,751,826 | | | | 4,780,717 | | | | 4,800,714 | |
MGM China | | | 9,093,307 | | | | 9,461,535 | | | | 8,443,411 | |
Reportable segment total assets | | | 26,628,869 | | | | 25,890,420 | | | | 24,894,872 | |
Corporate and other | | | 3,666,586 | | | | 3,339,746 | | | | 3,334,724 | |
Eliminated in consolidation | | | (84,749 | ) | | | (70,124 | ) | | | (55,196 | ) |
| | $ | 30,210,706 | | | $ | 29,160,042 | | | $ | 28,174,400 | |
| | December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
Property and equipment, net: | | (In thousands) | |
Las Vegas Strip Resorts | | $ | 10,605,454 | | | $ | 10,568,296 | | | $ | 10,568,317 | |
Regional Operations | | | 4,503,104 | | | | 3,752,528 | | | | 3,785,654 | |
MGM China | | | 3,818,460 | | | | 3,827,391 | | | | 2,857,626 | |
Reportable segment property and equipment, net | | | 18,927,018 | | | | 18,148,215 | | | | 17,211,597 | |
Corporate and other | | | 1,887,619 | | | | 1,557,368 | | | | 1,268,622 | |
Eliminated in consolidation | | | (84,749 | ) | | | (70,124 | ) | | | (55,196 | ) |
| | $ | 20,729,888 | | | $ | 19,635,459 | | | $ | 18,425,023 | |
| | Year Ended December 31, | |
| | 2018 | | | 2017 | | | 2016 | |
Capital expenditures: | | (In thousands) | |
Las Vegas Strip Resorts | | $ | 501,044 | | | $ | 419,983 | | | $ | 288,526 | |
Regional Operations | | | 72,865 | | | | 66,628 | | | | 29,425 | |
MGM China | | | 390,212 | | | | 923,346 | | | | 984,355 | |
Reportable segment capital expenditures | | | 964,121 | | | | 1,409,957 | | | | 1,302,306 | |
Corporate and other | | | 537,347 | | | | 469,053 | | | | 973,446 | |
Eliminated in consolidation | | | (14,625 | ) | | | (14,928 | ) | | | (13,279 | ) |
| | $ | 1,486,843 | | | $ | 1,864,082 | | | $ | 2,262,473 | |
NOTE 1718 — RELATED PARTY TRANSACTIONS
Management agreements. The Company andUntil the Company's acquisition of CityCenter have entered into agreements wherebyin September 2021, the Company is responsible forwas party to a management ofagreement pursuant to which it managed the operations of CityCenter for a fee of 2% of revenue and 5% of EBITDA (as defined)defined within the management agreement) for Aria and Vdara. The Company earned fees of $47$29 million, $49$16 million and $43$48 million forduring the years ended December 31, 2018, 20172021, 2020, and 2016,2019, respectively. The Company is being reimbursed for certain costs in performing its development and management services. During the years ended December 31, 2018, 2017 and 2016, the Company incurred $409 million, $390 million and $387 million, respectively, of costs reimbursable by CityCenter, primarily for employee compensation and certain allocated costs.costs in performing the Company's management services, of $187 million, $212 million and $420 million during the years ended December 31, 2021, 2020, and 2019, respectively. As of December 31, 2018 and 2017,2020, CityCenter owed the Company $83$39 million and $77 million, respectively, for management services and reimbursable costs recorded in “Accounts receivable, net” inon the accompanying consolidated balance sheets. The management agreement was terminated in connection with the Company's acquisition of CityCenter, as discussed in Note 4.
Ms. Ho, Pansy Catilina Chiu King (“Ms. Ho”) is a memberthe Co-Chairperson of the Board of Directors of, and holds a minority ownership interest in, MGM China. Ms. Ho is also the managing director of Shun Tak Holdings Limited (together with its subsidiaries “Shun Tak”), a leading conglomerate in Hong Kong with core businesses in transportation, property, hospitality and investments. Shun Tak provides various services and products, including ferry tickets, travel products, rental of hotel rooms, laundry services advertising services and property cleaning services to MGM China. In addition, MGM China leases transportation equipment and office space from Shun Tak. MGM China incurred expenses relating to Shun Tak of $17$7 million, $13$7 million and $10$16 million for the years ended December 31, 2018, 20172021, 2020 and 2019, respectively.
In addition, Ms. Ho indirectly holds a 50% interest in an entity that provides, along with its subsidiary, marketing and public relations consulting services, including for the retendering of MGM China's gaming subconcession, to MGM China, which totaled $4 million, $1 million, and $4 million for the years ended December 31, 2021, 2020, and 2019, respectively.
Grand Paradise Macau deferred cash payment. On September 1, 2016, respectively.the Company purchased 188.1 million common shares of its MGM China subsidiary from Grand Paradise Macau (“GPM”), an entity controlled by Ms. Ho. As
part of the consideration for the purchase, the Company agreed to pay GPM or its nominee a deferred cash payment of $50 million. The payments included amounts equal to the ordinary dividends received on such shares, with a final lump sum payment due on the fifth anniversary of the closing date of the transaction, which was made in September 2021. Such amounts were paid to Expert Angels Limited, an entity controlled by an immediate family member of Ms. Ho. As of December 31, 2020, the Company recorded a remaining liability on a discounted basis of $33 million in “Other accrued liabilities” on the consolidated balance sheets.
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. An entity owned by Ms. Ho received distributions of
$22$8 million,
$15$5 million and
$15$20 million for the years ended December 31,
2018, 20172021, 2020 and
2016,2019, respectively, in connection with the ownership of a noncontrolling interest in MGM Branding and Development Holdings, Ltd.
As further described in Note 1, pursuant to the master lease
with MGP, the
tenantCompany 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,
andEmpire City, MGM National Harbor,
MGM Northfield Park, and MGM Springfield from
the landlord.MGP.
MGP master lease.The MGP master lease has an initial lease term of ten10 years that began on April 25, 2016 (other than with respect to MGM National Harbor, as described below) with the potential to extend the term for four4 additional five-year5-year terms thereafter at the option of the tenant.Company (with additional renewal options with respect to MGM Springfield, as described below). The MGP master lease provides that any extension of its term must apply to all of the real estate under the master lease at the time of the extension. The master lease has a triple-net structure, which requires the tenant to pay substantially all costs associated with the lease, including real estate taxes, insurance, utilities and routine maintenance, in addition to the base rent. Additionally, theMGP master lease provides the landlord with a right of first offer with respect to MGM Springfield, which the landlord may exercise should the Company elect to sell this property in the future. In connection with the MGM National Harbor transaction, the master lease was amended to provide that the initial term with respect to MGM National Harbor ends on April 31, 2024. Thereafter, the initial term of the MGP master lease with respect to MGM National Harbor may be renewed at the option of the tenantCompany for an initial renewal period lasting until the earlier of the end of the then-current term of the master lease or the next renewal term (depending on whether the Company elects to renew the other properties under the master lease in connection with the expiration of the initial ten-year10-year term). If, however, the tenantCompany chooses not to renew the lease with respect to MGM National Harbor after the initial MGM National Harbor term under the master lease, the tenantCompany would also lose the right to renew the MGP master lease with respect to the rest of the properties when the initial ten-year10-year lease term ends related to the rest of the properties in 2026.
In connectionaddition to the four 5-year renewal terms, the term of the lease with respect to MGM Springfield may be extended for an additional four 5-year renewal terms. The MGP master lease has a triple-net structure, which requires the Company to pay substantially all costs associated with the commencement oflease, including real estate taxes, ground lease payments, insurance, utilities and routine maintenance, in addition to the third lease year on April 1, 2018, annual rent payments underbase rent. Additionally, the master lease increasedprovides MGP with a right of first offer with respect to $770 million from $757 million. any further gaming development by the Company on the undeveloped land adjacent to Empire City, which MGP may exercise should the Company elect to sell this property in the future.
Rent under the
MGP master lease consists of a
“base rent”base rent component and a
“percentage rent”percentage rent component. As of December 31,
2018,2021, the base rent represents approximately
90%91% of the rent payments due and the percentage rent represents approximately 9% of the rent payments due under the
master lease and the percentage rent represents approximately 10% of the rent payments due under theMGP master lease.
The MGP master lease also provides for fixed annual escalators of 2% on the base rent through the sixth lease year and the possibility for additional 2% increases thereafter subject to the tenant and operating subsidiary sublessee, collectively, meeting an adjusted net revenue to rent ratio, as well as potential increases in percentage rent in year six and every five years thereafter based on a percentage of average actual annual net revenue during the preceding five year period calculated in accordance with the terms under the master lease. With respect to the additional renewal terms for MGM Springfield, for the first two additional renewal terms, base rent will include a fixed annual rent escalator of 2.0%, subject to the adjusted net revenue to rent ratio, as discussed above. For each lease year subsequent to the first two additional renewal terms, the base rent shall be the Fair Market Rent (as defined in the MGP master lease) in respect of MGM Springfield. The
MGP master lease also contains customary events of default and financial
covenants.covenants; provided that the tenant will not be in default of the financial covenants in the event there is an unavoidable delay (as such term is defined in the lease). The Company was in compliance with all applicable covenants as of December 31,
2018.2021.
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.million, which included the assumption of debt of approximately $246 million, which was immediately repaid, and the remainder in issuance of Operating Partnership units. The real estate assets of Empire City will bewere then leased to the Company pursuant to an amendment to the MGP master lease, increasing the annual rent payment to MGP by $50 million, prorated for the remainder of the lease year. Consistent with the MGP master lease terms, 90 percent90% of this rent will be fixed and contractually
grow at
2 percent2% per year until 2022.
In addition,As disclosed above, the master lease provides
the landlordMGP 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 landlordMGP may exercise should the Company elect to sell this property in the future.
Additionally, in September 2018,
On March 7, 2019, the Company entered into a definitive agreement with MGP to acquire Northfield OpCo from MGP for approximately $275 million, subject to customary purchase price adjustments. The real estate assets of Northfield will be leased to the Company pursuant to an amendment to the existing MGP master lease increasingwith respect to the Park MGM Transaction. In connection with the transaction, the Company received consideration of $638 million, of which approximately $606 million was paid in cash and the remainder in issuance of Operating Partnership units. Additionally, the annual rent payment to MGP was increased by $60$50 million, prorated for the remainder of the lease year. Consistent with the master lease terms, 90 percent90% of this rent will be fixed and contractually grow at 2 percent2% per year until 2022. The transaction is expected to close in the first half of
Additionally, on April 1, 2019, subject to customary closing conditions.Also, in December 2018, the Company entered into an agreementacquired the membership interests of Northfield from MGP, which held the operations of Northfield, for fair value of consideration of approximately
$305 million consisting primarily 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 MGP master lease with MGP, whereby MGP will pay the Company consideration of $638 million for renovations undertaken by the Company regarding the Park MGM and NoMad Las Vegas property (the “Park MGM Lease Transaction”). Additionally, at closing, the parties will enter into an amendment to the master lease wherebyincreasing the annual rent payment to MGP will increase by $50$60 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.
The annual rent payments under the MGP master lease for the fourth lease year, which commenced on April 1, 2019, increased to $946 million from $770 million at the start of the third lease year. The increase was a result of the $50 million in additional rent for each of the Park MGM Transaction and the addition of Empire City in the beginning of 2019, the $60 million of additional rent for MGM Northfield Park, which entered the Master Lease on April 1, 2019, as well as the third 2% fixed annual rent escalator that went into effect on April 1, 2019.
On February 14, 2020, the Company amended the MGP master lease to remove Mandalay Bay from such master lease and the annual rent under the MGP master lease was reduced by $133 million to $813 million.
The annual cash rent payments under the MGP master lease for the fifth lease year, which commenced on April 1, 2020, increased to $828 million from $813 million, as a result of the fourth 2% fixed annual rent escalator that went into effect on April 1, 2020.
The annual cash rent payments under the MGP master lease for the sixth lease year, which commenced on April 1, 2021, increased to $843 million from $828 million, as a result of the fifth 2% fixed annual rent escalator that went into effect on April 1, 2021.
In October 2021, MGP acquired the real estate assets of MGM Springfield from the Company for $400 million of cash consideration, which was accounted for as a transaction isbetween entities under common control. The Company adjusted the carrying value of noncontrolling interests to adjust for its share of the difference between the carrying value of the net assets transferred and the consideration received, with offsetting adjustments to capital in excess of par value. MGM Springfield was added to the master lease between the Company and MGP. Following the closing of the transaction, the annual rent payment to MGP increased from $843 million to $873 million, reflecting the addition of MGM Springfield, which increased the annual rent payment by $30 million, $27 million of which will be fixed and contractually grow at 2% per year with escalators subject to the adjusted net revenue to rent ratio, as further described above. Final regulatory approvals, which were not necessary for the transaction to close, are expected to be received within nine to twelve months following the close of the transaction. Until final regulatory approvals are obtained, the parties will be subject to a trust agreement, which provides for the property to go into a trust (or, at the Company’s option, be returned to the Company) during the interim period in the first quarter of 2019event that the regulator finds reasonable cause to believe that MGP may not be found suitable. The property will then remain in trust until a final determination regarding MGP’s suitability is made.
Additionally, refer to Note 1 for discussion relating to the waiver agreement with MGP and is subject to customary closing conditions.the Operating Partnership units redeemed in 2020 thereunder.
All intercompany transactions, including transactions under the
MGP master lease, have been eliminated in the Company’s consolidation of MGP. The public ownership of MGP’s Class A shares is recognized as
non-controllingnoncontrolling interests in the Company’s consolidated financial statements.
NOTE 18 —CONDENSED CONSOLIDATING FINANCIAL INFORMATION
As of December 31, 2018, allfurther described in Note 1, in August 2021, the Company entered into an agreement with VICI and MGP whereby VICI will acquire MGP in a stock-for-stock transaction. As part 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 December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016, are presented below. Within the Condensed Consolidating Statements of Cash Flows,transaction, the Company will enter into an amended and restated master lease with VICI. The transaction is expected to close in the first half of 2022, subject to customary closing conditions, regulatory approvals, and approval by VICI stockholders (which was obtained on October 29, 2021).
Bellagio BREIT Venture
The Company has
presented net changesa 5% ownership interest 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. For these subsidiaries, such investment constitutes continuing involvement, and accordingly, the sale and leaseback ofBellagio BREIT Venture, which owns the real estate assets under the master lease do not qualify for sale-leaseback accounting. The real estateof Bellagio and leases such assets are reflected in the balance sheetsto a subsidiary of the applicable MGM subsidiaries. In addition, such subsidiaries recognized finance liabilities within “Other long-term obligations”Company pursuant to a lease agreement. Refer to Note 11 for further information related to rent payments due under the master lease and recognized the relatedBellagio lease.
MGP BREIT Venture
MGP has a 50.1% ownership interest
expense component of such payments. These real estate assets are also reflected on the balance sheet of thein MGP
subsidiary that received such assets. The condensed consolidating financial information presented below therefore includes the accounting for such activity within the respective columns presented and in the elimination column. In connection with the adoption of ASC 842, the Company is reassessing whether the sale and leaseback ofBREIT Venture, which owns the real estate assets
under the master lease now qualify asof Mandalay Bay and MGM Grand Las Vegas and leases such assets to a
passed sale and, accordingly, the corresponding lease classification, both of which could impact the condensed consolidating financial information.
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
| | December 31, 2018 | |
| | | | | | | | | | Non-Guarantor Subsidiaries | | | | | | | | | |
| | Parent | | | Guarantor 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 long-term obligations | | | 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 | |
| | December 31, 2017 | |
| | | | | | | | | | Non-Guarantor Subsidiaries | | | | | | | | | |
| | Parent | | | Guarantor Subsidiaries | | | MGP | | | Other | | | Elimination | | | Consolidated | |
| | (In thousands) | |
Current assets | | $ | 78,909 | | | $ | 1,015,802 | | | $ | 266,627 | | | $ | 1,022,340 | | | $ | (7,323 | ) | | $ | 2,376,355 | |
Property and equipment, net | | | — | | | | 13,521,221 | | | | 10,021,938 | | | | 6,125,722 | | | | (10,033,422 | ) | | | 19,635,459 | |
Investments in subsidiaries | | | 21,040,147 | | | | 3,304,768 | | | | — | | | | — | | | | (24,344,915 | ) | | | — | |
Investments in the MGP Operating Partnership | | | — | | | | 3,549,063 | | | | — | | | | 862,037 | | | | (4,411,100 | ) | | | — | |
Investments in and advances to unconsolidated affiliates | | | — | | | | 1,002,903 | | | | — | | | | 5,394 | | | | 25,000 | | | | 1,033,297 | |
Intercompany accounts | | | — | | | | 5,998,499 | | | | — | | | | — | | | | (5,998,499 | ) | | | — | |
Other non-current assets | | | 49,142 | | | | 913,602 | | | | 62,555 | | | | 5,134,220 | | | | (44,588 | ) | | | 6,114,931 | |
| | $ | 21,168,198 | | | $ | 29,305,858 | | | $ | 10,351,120 | | | $ | 13,149,713 | | | $ | (44,814,847 | ) | | $ | 29,160,042 | |
Current liabilities | | $ | 153,159 | | | $ | 1,445,031 | | | $ | 144,537 | | | $ | 1,609,110 | | | $ | (213,540 | ) | | $ | 3,138,297 | |
Intercompany accounts | | | 5,783,578 | | | | — | | | | 962 | | | | 213,959 | | | | (5,998,499 | ) | | | — | |
Deferred income taxes, net | | | 934,966 | | | | — | | | | 28,544 | | | | 360,409 | | | | (28,544 | ) | | | 1,295,375 | |
Long-term debt, net | | | 6,682,574 | | | | 2,835 | | | | 3,934,628 | | | | 2,131,015 | | | | — | | | | 12,751,052 | |
Other long-term obligations | | | 36,860 | | | | 7,268,664 | | | | 174,710 | | | | 2,305,353 | | | | (9,501,171 | ) | | | 284,416 | |
Total liabilities | | | 13,591,137 | | | | 8,716,530 | | | | 4,283,381 | | | | 6,619,846 | | | | (15,741,754 | ) | | | 17,469,140 | |
Redeemable noncontrolling interests | | | — | | | | — | | | | — | | | | 79,778 | | | | — | | | | 79,778 | |
MGM Resorts International stockholders' equity | | | 7,577,061 | | | | 20,589,328 | | | | 4,443,089 | | | | 4,040,676 | | | | (29,073,093 | ) | | | 7,577,061 | |
Noncontrolling interests | | | — | | | | — | | | | 1,624,650 | | | | 2,409,413 | | | | — | | | | 4,034,063 | |
Total stockholders' equity | | | 7,577,061 | | | | 20,589,328 | | | | 6,067,739 | | | | 6,450,089 | | | | (29,073,093 | ) | | | 11,611,124 | |
| | $ | 21,168,198 | | | $ | 29,305,858 | | | $ | 10,351,120 | | | $ | 13,149,713 | | | $ | (44,814,847 | ) | | $ | 29,160,042 | |
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION
| | Year Ended December 31, 2018 | |
| | | | | | | | | | Non-Guarantor Subsidiaries | | | | | | | | | |
| | Parent | | | Guarantor Subsidiaries | | | MGP | | | Other | | | Elimination | | | Consolidated | |
| | (In thousands) | |
Net revenues | | $ | — | | | $ | 7,647,304 | | | $ | 1,002,444 | | | $ | 3,983,575 | | | $ | (870,227 | ) | | $ | 11,763,096 | |
Equity in subsidiaries' earnings | | | 1,216,482 | | | | 116,676 | | | | — | | | | — | | | | (1,333,158 | ) | | | — | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | |
Casino and hotel operations | | | 11,130 | | | | 4,350,634 | | | | 88,053 | | | | 2,491,007 | | | | (21,949 | ) | | | 6,918,875 | |
General and administrative | | | 9,945 | | | | 1,238,461 | | | | 96,607 | | | | 495,015 | | | | (75,390 | ) | | | 1,764,638 | |
Corporate expense | | | 156,503 | | | | 216,318 | | | | 48,675 | | | | 21,317 | | | | (23,609 | ) | | | 419,204 | |
Preopening and start-up expenses | | | — | | | | 26,100 | | | | — | | | | 125,292 | | | | — | | | | 151,392 | |
Property transactions, net | | | — | | | | (15,955 | ) | | | 20,319 | | | | 25,033 | | | | (20,250 | ) | | | 9,147 | |
Depreciation and amortization | | | — | | | | 622,552 | | | | 273,031 | | | | 543,606 | | | | (261,145 | ) | | | 1,178,044 | |
| | | 177,578 | | | | 6,438,110 | | | | 526,685 | | | | 3,701,270 | | | | (402,343 | ) | | | 10,441,300 | |
Income (loss) from unconsolidated affiliates | | | — | | | | 148,866 | | | | — | | | | (1,176 | ) | | | — | | | | 147,690 | |
Operating income | | | 1,038,904 | | | | 1,474,736 | | | | 475,759 | | | | 281,129 | | | | (1,801,042 | ) | | | 1,469,486 | |
Interest expense, net of amounts capitalized | | | (480,985 | ) | | | (510 | ) | | | (215,532 | ) | | | (72,486 | ) | | | — | | | | (769,513 | ) |
Other, net | | | 63,722 | | | | (444,897 | ) | | | (4,690 | ) | | | (187,786 | ) | | | 507,684 | | | | (65,967 | ) |
Income before income taxes | | | 621,641 | | | | 1,029,329 | | | | 255,537 | | | | 20,857 | | | | (1,293,358 | ) | | | 634,006 | |
Benefit (provision) for income taxes | | | (154,869 | ) | | | — | | | | (10,835 | ) | | | 115,592 | | | | — | | | | (50,112 | ) |
Net income | | | 466,772 | | | | 1,029,329 | | | | 244,702 | | | | 136,449 | | | | (1,293,358 | ) | | | 583,894 | |
Less: Net income attributable to noncontrolling interests | | | — | | | | — | | | | (67,065 | ) | | | (50,057 | ) | | | — | | | | (117,122 | ) |
Net income attributable to MGM Resorts International | | $ | 466,772 | | | $ | 1,029,329 | | | $ | 177,637 | | | $ | 86,392 | | | $ | (1,293,358 | ) | | $ | 466,772 | |
Net income | | $ | 466,772 | | | $ | 1,029,329 | | | $ | 244,702 | | | $ | 136,449 | | | $ | (1,293,358 | ) | | $ | 583,894 | |
Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustment | | | (7,422 | ) | | | (7,422 | ) | | | — | | | | (13,022 | ) | | | 14,844 | | | | (13,022 | ) |
Unrealized gain on cash flow hedges | | | 2,476 | | | | — | | | | 4,128 | | | | — | | | | (3,028 | ) | | | 3,576 | |
Other comprehensive income (loss) | | | (4,946 | ) | | | (7,422 | ) | | | 4,128 | | | | (13,022 | ) | | | 11,816 | | | | (9,446 | ) |
Comprehensive income | | | 461,826 | | | | 1,021,907 | | | | 248,830 | | | | 123,427 | | | | (1,281,542 | ) | | | 574,448 | |
Less: Comprehensive income attributable to noncontrolling interests | | | — | | | | — | | | | (68,165 | ) | | | (44,457 | ) | | | — | | | | (112,622 | ) |
Comprehensive income attributable to MGM Resorts International | | $ | 461,826 | | | $ | 1,021,907 | | | $ | 180,665 | | | $ | 78,970 | | | $ | (1,281,542 | ) | | $ | 461,826 | |
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
| | Year Ended December 31, 2018 | |
| | | | | | | | | | Non-Guarantor Subsidiaries | | | | | | | | | |
| | Parent | | | Guarantor Subsidiaries | | | MGP | | | Other | | | Elimination | | | Consolidated | |
| | (In thousands) | |
Cash flows from operating activities | | | |
Net cash provided by (used in) operating activities | | $ | (460,117 | ) | | $ | 1,271,583 | | | $ | 580,207 | | | $ | 330,866 | | | $ | — | | | $ | 1,722,539 | |
Cash flows from investing activities | | | | | | | | | | | | | | | | | | | | | | | | |
Capital expenditures, net of construction payable | | | — | | | | (696,076 | ) | | | (1,578 | ) | | | (789,189 | ) | | | — | | | | (1,486,843 | ) |
Dispositions of property and equipment | | | — | | | | 25,507 | | | | — | | | | 105 | | | | — | | | | 25,612 | |
Proceeds from sale of business units and investment in unconsolidated affiliate | | | — | | | | 163,616 | | | | — | | | | — | | | | — | | | | 163,616 | |
Acquisition of Northfield, net of cash acquired | | | — | | | | — | | | | (1,034,534 | ) | | | — | | | | — | | | | (1,034,534 | ) |
Investments in and advances to unconsolidated affiliates | | | — | | | | (56,295 | ) | | | — | | | | — | | | | — | | | | (56,295 | ) |
Distributions from unconsolidated affiliates in excess of cumulative earnings | | | — | | | | 322,631 | | | | — | | | | — | | | | — | | | | 322,631 | |
Intercompany accounts | | | — | | | | (1,136,764 | ) | | | — | | | | — | | | | 1,136,764 | | | | — | |
Other | | | — | | | | (13,416 | ) | | | — | | | | (3,792 | ) | | | — | | | | (17,208 | ) |
Net cash used in investing activities | | | — | | | | (1,390,797 | ) | | | (1,036,112 | ) | | | (792,876 | ) | | | 1,136,764 | | | | (2,083,021 | ) |
Cash flows from financing activities | | | | | | | | | | | | | | | | | | | | | | | | |
Net borrowings under bank credit facilities - maturities of 90 days or less | | | 377,500 | | | | — | | | | 727,750 | | | | 137,009 | | | | — | | | | 1,242,259 | |
Issuance of long-term debt | | | 1,000,000 | | | | — | | | | — | | | | — | | | | — | | | | 1,000,000 | |
Retirement of senior debentures | | | — | | | | (2,265 | ) | | | — | | | | — | | | | — | | | | (2,265 | ) |
Debt issuance costs | | | (26,125 | ) | | | — | | | | (17,490 | ) | | | (32,904 | ) | | | — | | | | (76,519 | ) |
Dividends paid to common shareholders | | | (260,592 | ) | | | — | | | | — | | | | — | | | | — | | | | (260,592 | ) |
MGP dividends paid to consolidated subsidiaries | | | — | | | | — | | | | (333,192 | ) | | | — | | | | 333,192 | | | | — | |
Distributions to noncontrolling interest owners | | | — | | | | — | | | | (121,069 | ) | | | (63,863 | ) | | | — | | | | (184,932 | ) |
Intercompany accounts | | | 917,760 | | | | 207,015 | | | | — | | | | 345,181 | | | | (1,469,956 | ) | | | — | |
Purchases of common stock | | | (1,283,333 | ) | | | — | | | | — | | | | — | | | | — | | | | (1,283,333 | ) |
Other | | | (32,225 | ) | | | (6,979 | ) | | | — | | | | (6,180 | ) | | | — | | | | (45,384 | ) |
Net cash provided by financing activities | | | 692,985 | | | | 197,771 | | | | 255,999 | | | | 379,243 | | | | (1,136,764 | ) | | | 389,234 | |
Effect of exchange rate on cash | | | — | | | | — | | | | — | | | | (1,985 | ) | | | — | | | | (1,985 | ) |
Cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) for the period | | | 232,868 | | | | 78,557 | | | | (199,906 | ) | | | (84,752 | ) | | | — | | | | 26,767 | |
Balance, beginning of period | | | 26,870 | | | | 311,044 | | | | 259,722 | | | | 902,359 | | | | — | | | | 1,499,995 | |
Balance, end of period | | $ | 259,738 | | | $ | 389,601 | | | $ | 59,816 | | | $ | 817,607 | | | $ | — | | | $ | 1,526,762 | |
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION
| | Year Ended December 31, 2017 | |
| | | | | | | | | | Non-Guarantor Subsidiaries | | | | | | | | | |
| | Parent | | | Guarantor Subsidiaries | | | MGP | | | Other | | | Elimination | | | Consolidated | |
| | (In thousands) | |
Net revenues | | $ | — | | | $ | 7,649,990 | | | $ | 765,695 | | | $ | 3,151,304 | | | $ | (769,510 | ) | | $ | 10,797,479 | |
Equity in subsidiaries' earnings | | | 1,391,725 | | | | 156,081 | | | | — | | | | — | | | | (1,547,806 | ) | | | — | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | |
Casino and hotel operations | | | 10,784 | | | | 4,262,212 | | | | — | | | | 1,923,942 | | | | (3,816 | ) | | | 6,193,122 | |
General and administrative | | | 8,742 | | | | 1,180,989 | | | | 84,348 | | | | 369,844 | | | | (84,348 | ) | | | 1,559,575 | |
Corporate expense | | | 127,092 | | | | 200,801 | | | | 34,085 | | | | (515 | ) | | | (4,591 | ) | | | 356,872 | |
NV Energy exit expense | | | — | | | | (40,629 | ) | | | — | | | | — | | | | — | | | | (40,629 | ) |
Preopening and start-up expenses | | | — | | | | 8,258 | | | | — | | | | 110,217 | | | | — | | | | 118,475 | |
Property transactions, net | | | — | | | | 43,985 | | | | 34,022 | | | | 6,294 | | | | (34,022 | ) | | | 50,279 | |
Depreciation and amortization | | | — | | | | 649,676 | | | | 260,455 | | | | 343,804 | | | | (260,455 | ) | | | 993,480 | |
| | | 146,618 | | | | 6,305,292 | | | | 412,910 | | | | 2,753,586 | | | | (387,232 | ) | | | 9,231,174 | |
Income (loss) from unconsolidated affiliates | | | — | | | | 147,234 | | | | — | | | | (1,012 | ) | | | — | | | | 146,222 | |
Operating income | | | 1,245,107 | | | | 1,648,013 | | | | 352,785 | | | | 396,706 | | | | (1,930,084 | ) | | | 1,712,527 | |
Interest expense, net of amounts capitalized | | | (466,907 | ) | | | (982 | ) | | | (184,175 | ) | | | (16,681 | ) | | | — | | | | (668,745 | ) |
Other, net | | | 26,215 | | | | (402,602 | ) | | | 2,286 | | | | (142,997 | ) | | | 434,106 | | | | (82,992 | ) |
Income before income taxes | | | 804,415 | | | | 1,244,429 | | | | 170,896 | | | | 237,028 | | | | (1,495,978 | ) | | | 960,790 | |
Benefit (provision) for income taxes | | | 1,147,637 | | | | — | | | | (4,906 | ) | | | (15,337 | ) | | | — | | | | 1,127,394 | |
Net income | | | 1,952,052 | | | | 1,244,429 | | | | 165,990 | | | | 221,691 | | | | (1,495,978 | ) | | | 2,088,184 | |
Less: Net income attributable to noncontrolling interests | | | — | | | | — | | | | (41,775 | ) | | | (94,357 | ) | | | — | | | | (136,132 | ) |
Net income attributable to MGM Resorts International | | $ | 1,952,052 | | | $ | 1,244,429 | | | $ | 124,215 | | | $ | 127,334 | | | $ | (1,495,978 | ) | | $ | 1,952,052 | |
Net income | | $ | 1,952,052 | | | $ | 1,244,429 | | | $ | 165,990 | | | $ | 221,691 | | | $ | (1,495,978 | ) | | $ | 2,088,184 | |
Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustment | | | (23,995 | ) | | | (23,995 | ) | | | — | | | | (43,188 | ) | | | 47,990 | | | | (43,188 | ) |
Unrealized gain on cash flow hedges | | | 5,234 | | | | — | | | | 9,782 | | | | — | | | | (7,021 | ) | | | 7,995 | |
Other comprehensive income (loss) | | | (18,761 | ) | | | (23,995 | ) | | | 9,782 | | | | (43,188 | ) | | | 40,969 | | | | (35,193 | ) |
Comprehensive income | | | 1,933,291 | | | | 1,220,434 | | | | 175,772 | | | | 178,503 | | | | (1,455,009 | ) | | | 2,052,991 | |
Less: Comprehensive income attributable to noncontrolling interests | | | — | | | | — | | | | (44,536 | ) | | | (75,164 | ) | | | — | | | | (119,700 | ) |
Comprehensive income attributable to MGM Resorts International | | $ | 1,933,291 | | | $ | 1,220,434 | | | $ | 131,236 | | | $ | 103,339 | | | $ | (1,455,009 | ) | | $ | 1,933,291 | |
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
| | Year Ended December 31, 2017 | |
| | | | | | | | | | | | Non-Guarantor Subsidiaries | | | | | | | | | |
| | Parent | | | | | Guarantor Subsidiaries | | | MGP | | | Other | | | Elimination | | | Consolidated | |
| | (In thousands) | |
Cash flows from operating activities | | | |
Net cash provided by (used in) operating activities | | $ | (584,252 | ) | | | | $ | 1,152,083 | | | $ | 482,578 | | | $ | 1,156,002 | | | $ | — | | | $ | 2,206,411 | |
Cash flows from investing activities | | | | | | | | | | | | | | | | | | | | | | | | | | |
Capital expenditures, net of construction payable | | | — | | | | | | (482,024 | ) | | | (488 | ) | | | (1,381,570 | ) | | | — | | | | (1,864,082 | ) |
Dispositions of property and equipment | | | — | | | | | | 502 | | | | — | | | | 216 | | | | — | | | | 718 | |
Acquisition of National Harbor, net of cash acquired | | | — | | | | | | — | | | | (462,500 | ) | | | — | | | | 462,500 | | | | — | |
Investments in and advances to unconsolidated affiliates | | | — | | | | | | (16,727 | ) | | | — | | | | — | | | | — | | | | (16,727 | ) |
Distributions from unconsolidated affiliates in excess of cumulative earnings | | | — | | | | | | 301,211 | | | | — | | | | — | | | | — | | | | 301,211 | |
Intercompany accounts | | | 462,500 | | | | | | (1,186,942 | ) | | | — | | | | — | | | | 724,442 | | | | — | |
Other | | | — | | | | | | (1,754 | ) | | | — | | | | 42 | | | | — | | | | (1,712 | ) |
Net cash provided by (used in) investing activities | | | 462,500 | | | | | | (1,385,734 | ) | | | (462,988 | ) | | | (1,381,312 | ) | | | 1,186,942 | | | | (1,580,592 | ) |
Cash flows from financing activities | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less | | | 122,500 | | | | | | — | | | | (466,875 | ) | | | 359,376 | | | | — | | | | 15,001 | |
Issuance of long-term debt | | | — | | | | | | — | | | | 350,000 | | | | — | | | | — | | | | 350,000 | |
Retirement of senior notes | | | (502,669 | ) | | | | | — | | | | — | | | | — | | | | — | | | | (502,669 | ) |
Debt issuance costs | | | — | | | | | | — | | | | (5,598 | ) | | | (4,379 | ) | | | — | | | | (9,977 | ) |
Issuance of MGM Growth Properties Class A shares in public offering | | | — | | | | | | — | | | | 404,685 | | | | — | | | | — | | | | 404,685 | |
MGM Growth Properties Class A share issuance costs | | | — | | | | | | — | | | | (17,137 | ) | | | — | | | | — | | | | (17,137 | ) |
Dividends paid to common shareholders | | | (252,014 | ) | | | | | — | | | | — | | | | — | | | | — | | | | (252,014 | ) |
MGP dividends paid to consolidated subsidiaries | | | — | | | | | | — | | | | (290,091 | ) | | | — | | | | 290,091 | | | | — | |
Distributions to noncontrolling interest owners | | | — | | | | | | — | | | | (95,344 | ) | | | (75,058 | ) | | | — | | | | (170,402 | ) |
Intercompany accounts | | | 1,042,111 | | | | | | 248,626 | | | | — | | | | 186,296 | | | | (1,477,033 | ) | | | — | |
Purchases of common stock | | | (327,500 | ) | | | | | — | | | | — | | | | — | | | | — | | | | (327,500 | ) |
Other | | | (33,801 | ) | | | | | (11,644 | ) | | | — | | | | (13,320 | ) | | | — | | | | (58,765 | ) |
Net cash provided by (used in) financing activities | | | 48,627 | | | | | | 236,982 | | | | (120,360 | ) | | | 452,915 | | | | (1,186,942 | ) | | | (568,778 | ) |
Effect of exchange rate on cash | | | — | | | | | | — | | | | — | | | | (3,627 | ) | | | — | | | | (3,627 | ) |
Cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) for the period | | | (73,125 | ) | | | | | 3,331 | | | | (100,770 | ) | | | 223,978 | | | | — | | | | 53,414 | |
Balance, beginning of period | | | 99,995 | | | | | | 307,713 | | | | 360,492 | | | | 678,381 | | | | — | | | | 1,446,581 | |
Balance, end of period | | $ | 26,870 | | | | | $ | 311,044 | | | $ | 259,722 | | | $ | 902,359 | | | $ | — | | | $ | 1,499,995 | |
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION
| | Year Ended December 31, 2016 | |
| | | | | | | | | | Non-Guarantor Subsidiaries | | | | | | | | | |
| | Parent | | | Guarantor Subsidiaries | | | MGP | | | Other | | | Elimination | | | Consolidated | |
| | (In thousands) | |
Net revenues | | $ | — | | | $ | 7,050,893 | | | $ | 467,548 | | | $ | 2,430,795 | | | $ | (470,967 | ) | | $ | 9,478,269 | |
Equity in subsidiaries' earnings | | | 1,779,119 | | | | 174,587 | | | | — | | | | — | | | | (1,953,706 | ) | | | — | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | |
Casino and hotel operations | | | 9,063 | | | | 4,027,602 | | | | — | | | | 1,487,975 | | | | (3,419 | ) | | | 5,521,221 | |
General and administrative | | | 6,834 | | | | 1,137,027 | | | | 68,063 | | | | 214,839 | | | | (48,229 | ) | | | 1,378,534 | |
Corporate expense | | | 131,938 | | | | 160,887 | | | | 20,360 | | | | (194 | ) | | | (286 | ) | | | 312,705 | |
NV Energy exit expense | | | — | | | | 139,335 | | | | — | | | | — | | | | — | | | | 139,335 | |
Preopening and start-up expenses | | | — | | | | 8,775 | | | | — | | | | 131,300 | | | | — | | | | 140,075 | |
Property transactions, net | | | — | | | | 16,449 | | | | 4,684 | | | | (246 | ) | | | (3,809 | ) | | | 17,078 | |
Gain on Borgata transaction | | | — | | | | (430,118 | ) | | | — | | | | — | | | | — | | | | (430,118 | ) |
Depreciation and amortization | | | — | | | | 524,123 | | | | 220,667 | | | | 261,730 | | | | (156,993 | ) | | | 849,527 | |
| | | 147,835 | | | | 5,584,080 | | | | 313,774 | | | | 2,095,404 | | | | (212,736 | ) | | | 7,928,357 | |
Income (loss) from unconsolidated affiliates | | | — | | | | 528,605 | | | | — | | | | (318 | ) | | | — | | | | 528,287 | |
Operating income | | | 1,631,284 | | | | 2,170,005 | | | | 153,774 | | | | 335,073 | | | | (2,211,937 | ) | | | 2,078,199 | |
Interest expense, net of amounts capitalized | | | (562,536 | ) | | | (1,500 | ) | | | (115,438 | ) | | | (15,299 | ) | | | — | | | | (694,773 | ) |
Other, net | | | (7,864 | ) | | | (324,141 | ) | | | (726 | ) | | | (93,145 | ) | | | 300,039 | | | | (125,837 | ) |
Income before income taxes | | | 1,060,884 | | | | 1,844,364 | | | | 37,610 | | | | 226,629 | | | | (1,911,898 | ) | | | 1,257,589 | |
Benefit (provision) for income taxes | | | 39,524 | | | | (22,579 | ) | | | (2,264 | ) | | | (36,424 | ) | | | — | | | | (21,743 | ) |
Net income | | | 1,100,408 | | | | 1,821,785 | | | | 35,346 | | | | 190,205 | | | | (1,911,898 | ) | | | 1,235,846 | |
Less: Net income attributable to noncontrolling interests | | | — | | | | — | | | | (29,938 | ) | | | (105,500 | ) | | | — | | | | (135,438 | ) |
Net income attributable to MGM Resorts International | | $ | 1,100,408 | | | $ | 1,821,785 | | | $ | 5,408 | | | $ | 84,705 | | | $ | (1,911,898 | ) | | $ | 1,100,408 | |
Net income | | $ | 1,100,408 | | | $ | 1,821,785 | | | $ | 35,346 | | | $ | 190,205 | | | $ | (1,911,898 | ) | | $ | 1,235,846 | |
Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustment | | | (1,477 | ) | | | (1,477 | ) | | | — | | | | (2,680 | ) | | | 2,954 | | | | (2,680 | ) |
Unrealized gain on cash flow hedges | | | 1,434 | | | | — | | | | 1,879 | | | | — | | | | (1,434 | ) | | | 1,879 | |
Other comprehensive income (loss) | | | (43 | ) | | | (1,477 | ) | | | 1,879 | | | | (2,680 | ) | | | 1,520 | | | | (801 | ) |
Comprehensive income | | | 1,100,365 | | | | 1,820,308 | | | | 37,225 | | | | 187,525 | | | | (1,910,378 | ) | | | 1,235,045 | |
Less: Comprehensive income attributable to noncontrolling interests | | | — | | | | — | | | | (30,383 | ) | | | (104,297 | ) | | | — | | | | (134,680 | ) |
Comprehensive income attributable to MGM Resorts International | | $ | 1,100,365 | | | $ | 1,820,308 | | | $ | 6,842 | | | $ | 83,228 | | | $ | (1,910,378 | ) | | $ | 1,100,365 | |
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
| | Year Ended December 31, 2016 | |
| | | | | | | | | | Non-Guarantor Subsidiaries | | | | | | | | | |
| | Parent | | | Guarantor Subsidiaries | | | MGP | | | Other | | | Elimination | | | Consolidated | |
| | (In thousands) | |
Cash flows from operating activities | | | |
Net cash provided by (used in) operating activities | | $ | (603,136 | ) | | $ | 1,313,595 | | | $ | 297,781 | | | $ | 525,732 | | | $ | — | | | $ | 1,533,972 | |
Cash flows from investing activities | | | | | | | | | | | | | | | | | | | | | | | | |
Capital expenditures, net of construction payable | | | — | | | | (290,455 | ) | | | (138,987 | ) | | | (1,833,031 | ) | | | — | | | | (2,262,473 | ) |
Dispositions of property and equipment | | | — | | | | 1,940 | | | | — | | | | 2,004 | | | | — | | | | 3,944 | |
Proceeds from partial disposition of investment in unconsolidated affiliates | | | — | | | | 15,000 | | | | — | | | | — | | | | — | | | | 15,000 | |
Acquisition of Borgata, net of cash acquired | | | — | | | | (559,443 | ) | | | — | | | | — | | | | — | | | | (559,443 | ) |
Investments in and advances to unconsolidated affiliates | | | — | | | | (3,633 | ) | | | — | | | | — | | | | — | | | | (3,633 | ) |
Distributions from unconsolidated affiliates in excess of cumulative earnings | | | — | | | | 542,097 | | | | — | | | | — | | | | — | | | | 542,097 | |
Intercompany accounts | | | — | | | | (1,562,442 | ) | | | — | | | | — | | | | 1,562,442 | | | | — | |
Other | | | — | | | | (7,651 | ) | | | — | | | | (4,045 | ) | | | — | | | | (11,696 | ) |
Net cash used in investing activities | | | — | | | | (1,864,587 | ) | | | (138,987 | ) | | | (1,835,072 | ) | | | 1,562,442 | | | | (2,276,204 | ) |
Cash flows from financing activities | | | | | | | | | | | | | | | | | | | | | | | | |
Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less | | | (2,016,000 | ) | | | 4,094,850 | | | | (2,411,600 | ) | | | 823,782 | | | | — | | | | 491,032 | |
Borrowings under bank credit facilities - maturities longer than 90 days | | | 1,845,375 | | | | — | | | | — | | | | — | | | | — | | | | 1,845,375 | |
Repayments under bank credit facilities - maturities longer than 90 days | | | (1,845,375 | ) | | | — | | | | — | | | | — | | | | — | | | | (1,845,375 | ) |
Issuance of long-term debt | | | 500,000 | | | | — | | | | 1,550,000 | | | | — | | | | — | | | | 2,050,000 | |
Retirement of senior notes | | | (2,255,392 | ) | | | (2,661 | ) | | | — | | | | — | | | | — | | | | (2,258,053 | ) |
Repayment of Borgata credit facility | | | — | | | | (583,598 | ) | | | — | | | | — | | | | — | | | | (583,598 | ) |
Debt issuance costs | | | (29,871 | ) | | | — | | | | (77,163 | ) | | | (32,550 | ) | | | — | | | | (139,584 | ) |
Issuance of MGM Growth Properties Class A shares in public offering | | | — | | | | — | | | | 1,207,500 | | | | — | | | | — | | | | 1,207,500 | |
MGM Growth Properties Class A share issuance costs | | | — | | | | — | | | | (75,032 | ) | | | — | | | | — | | | | (75,032 | ) |
Acquisition of MGM China shares | | | (100,000 | ) | | | — | | | | — | | | | — | | | | — | | | | (100,000 | ) |
MGP dividends paid to consolidated subsidiaries | | | — | | | | — | | | | (113,414 | ) | | | — | | | | 113,414 | | | | — | |
Distributions to noncontrolling interest owners | | | — | | | | — | | | | (37,415 | ) | | | (65,952 | ) | | | — | | | | (103,367 | ) |
Intercompany accounts | | | 4,082,303 | | | | (2,954,054 | ) | | | 158,822 | | | | 388,785 | | | | (1,675,856 | ) | | | — | |
Proceeds from issuance of redeemable noncontrolling interests | | | — | | | | — | | | | — | | | | 47,325 | | | | — | | | | 47,325 | |
Other | | | (16,765 | ) | | | — | | | | — | | | | (36 | ) | | | — | | | | (16,801 | ) |
Net cash provided by financing activities | | | 164,275 | | | | 554,537 | | | | 201,698 | | | | 1,161,354 | | | | (1,562,442 | ) | | | 519,422 | |
Effect of exchange rate on cash | | | — | | | | — | | | | — | | | | (921 | ) | | | — | | | | (921 | ) |
Cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) for the period | | | (438,861 | ) | | | 3,545 | | | | 360,492 | | | | (148,907 | ) | | | — | | | | (223,731 | ) |
Balance, beginning of period | | | 538,856 | | | | 304,168 | | | | — | | | | 827,288 | | | | — | | | | 1,670,312 | |
Balance, end of period | | $ | 99,995 | | | $ | 307,713 | | | $ | 360,492 | | | $ | 678,381 | | | $ | — | | | $ | 1,446,581 | |
NOTE 19 — SELECTED QUARTERLY FINANCIAL RESULTS (UNAUDITED)
| | Quarter | |
| | First | | | Second | | | Third | | | Fourth | | | Total | |
2018 | | (In thousands, except per share data) | |
Net revenues | | $ | 2,822,237 | | | $ | 2,858,695 | | | $ | 3,029,302 | | | $ | 3,052,862 | | | $ | 11,763,096 | |
Operating income | | | 359,757 | | | | 363,075 | | | | 410,903 | | | | 335,751 | | | | 1,469,486 | |
Net income | | | 266,301 | | | | 140,423 | | | | 171,410 | | | | 5,760 | | | | 583,894 | |
Net income (loss) attributable to MGM Resorts International | | | 223,444 | | | | 123,777 | | | | 142,878 | | | | (23,327 | ) | | | 466,772 | |
Earnings (loss) per share-basic | | $ | 0.39 | | | $ | 0.21 | | | $ | 0.26 | | | $ | (0.06 | ) | | $ | 0.82 | |
Earnings (loss) per share-diluted | | $ | 0.38 | | | $ | 0.21 | | | $ | 0.26 | | | $ | (0.06 | ) | | $ | 0.81 | |
2017 | | | | | | | | | | | | | | | | | | | | |
Net revenues | | $ | 2,717,566 | | | $ | 2,652,133 | | | $ | 2,830,175 | | | $ | 2,597,605 | | | $ | 10,797,479 | |
Operating income | | | 496,511 | | | | 499,898 | | | | 492,704 | | | | 223,414 | | | | 1,712,527 | |
Net income | | | 252,574 | | | | 240,873 | | | | 175,744 | | | | 1,418,993 | | | | 2,088,184 | |
Net income attributable to MGM Resorts International | | | 206,412 | | | | 209,864 | | | | 148,363 | | | | 1,387,413 | | | | 1,952,052 | |
Earnings per share-basic | | $ | 0.36 | | | $ | 0.36 | | | $ | 0.26 | | | $ | 2.42 | | | $ | 3.38 | |
Earnings per share-diluted | | $ | 0.36 | | | $ | 0.36 | | | $ | 0.26 | | | $ | 2.39 | | | $ | 3.34 | |
Because earnings per share amounts are calculated using the weighted average number of common and dilutive common equivalent shares outstanding during each quarter, the sumsubsidiary of the per share amountsCompany pursuant to a lease agreement. Refer to Note 11 for the four quarters does not equal the total earnings per share amounts for the year. The following sections list certain items affecting comparability of quarterly and year-to-date results and related per share amounts. Additionalfurther information related to these items is included elsewhere in the notes to the accompanying financial statements.
Certain items affecting comparability for the year ended December 31, 2018 are as follows:
Mandalay Bay and MGM Grand Las Vegas lease. | •
| First Quarter. The Company recorded a $72 million tax benefit ($0.13 per share in the quarter) related to a measurement period adjustment of the Tax Act;
|
Third Quarter. The Company recorded a $45 million gain ($0.07 per share in the quarter and $0.06 per share in the full year of 2018) related to the sale of Grand Victoria. Additionally, the Company recorded a $12 million gain ($0.02 per share in the quarter and full year of 2018) related to the sale of Mandarin Oriental; and
Fourth Quarter. The Company recorded business interruption insurance proceeds of $24 million ($0.04 per share in the quarter and $0.03 per share in the full year of 2018) primarily at Mandalay Bay. Additionally, the Company recorded a $92 million tax expense ($0.17 per share in the quarter) related to the Tax Act.
Certain items affecting comparability for the year ended December 31, 2017 are as follows:
Second Quarter. The Company recorded a $41 million gain ($0.05 per share in the quarter and full year of 2017) related to a modification of the 2016 NV Energy exit fee. Additionally, the Company recorded a $36 million gain ($0.04 per share in the quarter and full year of 2017) related to Borgata’s share of a property tax settlement from Atlantic City;
Fourth Quarter. The Company recorded a $1.4 billion tax benefit ($2.49 per share in the quarter and $2.46 per share for full year of 2017) related to the enactment of the Tax Act.
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
| | Balance at | | | Provision for | | | Write-offs, | | | | | |
| | Beginning of | | | Doubtful | | | Net of | | | Balance at | |
| | Period | | | Accounts | | | Recoveries | | | End of Period | |
Allowance for doubtful accounts: | | | | | | | | | | | | | | | | |
Year Ended December 31, 2018 | | $ | 92,571 | | | $ | 39,762 | | | $ | (41,558 | ) | | $ | 90,775 | |
Year Ended December 31, 2017 | | | 97,920 | | | | 20,603 | | | | (25,952 | ) | | | 92,571 | |
Year Ended December 31, 2016 | | | 89,789 | | | | 10,863 | | | | (2,732 | ) | | | 97,920 | |
| | Balance at | | | | | | | | | | | | | |
| | Beginning of | | | | | | | | | | | Balance at | |
| | Period | | | Increase | | | Decrease | | | End of Period | |
Deferred income tax valuation allowance: | | | | | | | | | | | | | | | | |
Year Ended December 31, 2018 | | $ | 2,513,738 | | | $ | — | | | $ | (36,035 | ) | | $ | 2,477,703 | |
Year Ended December 31, 2017 | | | 2,583,274 | | | | — | | | | (69,536 | ) | | | 2,513,738 | |
Year Ended December 31, 2016 | | | 2,807,131 | | | | 2,975 | | | | (226,832 | ) | | | 2,583,274 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance at Beginning of Period | | Expected Credit Losses | | Write-offs, Net of Recoveries | | Balance at End of Period |
| Loss reserve: | | | | | | | | |
| Year Ended December 31, 2021 | | $ | 126,589 | | | $ | 21,852 | | | $ | (20,093) | | | $ | 128,348 | |
| Year Ended December 31, 2020 | | 94,561 | | | 71,422 | | | (39,394) | | | 126,589 | |
| Year Ended December 31, 2019 | | 90,775 | | | 39,270 | | | (35,484) | | | 94,561 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance at Beginning of Period | | Increase | | Decrease | | Balance at End of Period |
| Deferred income tax valuation allowance: | | | | | | | | |
| Year Ended December 31, 2021 | | $ | 2,875,595 | | | $ | 8,667 | | | $ | — | | | $ | 2,884,262 | |
| Year Ended December 31, 2020 | | 2,574,056 | | | 301,539 | | | — | | | 2,875,595 | |
| Year Ended December 31, 2019 | | 2,477,703 | | | 96,353 | | | — | | | 2,574,056 | |
ITEM 9.
| ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
ITEM 9A. CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“the Exchange Act”)) were effective as of December 31,
20182021 to provide reasonable assurance that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and regulations and to provide that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures. This conclusion is based on an evaluation as required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act conducted under the supervision and participation of the principal executive officer and principal financial officer along with company management.
Changes in Internal Control over Financial Reporting
During the quarter ended December 31,
2018,2021, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Control over Financial Reporting
Management’s Responsibilities
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Sections 13a-15(f) and 15d-15(f) of the Exchange Act) for MGM Resorts International and subsidiaries (the “Company”).
Objective of Internal Control over Financial Reporting
In establishing adequate internal control over financial reporting, management has developed and maintained a system of internal control, policies and procedures designed to provide reasonable assurance that information contained in the accompanying consolidated financial statements and other information presented in this annual report is reliable, does not contain any untrue statement of a material fact or omit to state a material fact, and fairly presents in all material respects the financial condition, results of operations and cash flows of the Company as of and for the periods presented in this annual report. These include controls and procedures designed to ensure that this information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate for all timely decisions regarding required disclosure. Significant elements of the Company’s internal control over financial reporting include, for example:
•Hiring skilled accounting personnel and training them appropriately;
•Written accounting policies;
•Written documentation of accounting systems and procedures;
•Segregation of incompatible duties;
•Internal audit function to monitor the effectiveness of the system of internal control; and
•Oversight by an independent Audit Committee of the Board of Directors.
Management, with the participation of the Company’s principal executive officer and principal financial officer, has evaluated the Company’s internal control over financial reporting using the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on its evaluation as of December 31,
2018,2021, management believes that the Company’s internal control over financial reporting is effective in achieving the objectives described above.
The Company’s independent registered public accounting firm’s report on the effectiveness of our internal control over financial reporting appears herein.
ITEM 9B. | OTHER INFORMATION |
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 10.
|
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
We incorporate by reference the information appearing under
“Executive Officers of the Registrant”“Information about our Executive Officers” in Item 1 of this Form 10-K and under “Election of Directors” and “Corporate Governance” in our definitive Proxy Statement for our
20192022 Annual Meeting of Stockholders, which we expect to file with the SEC
on or before April 2, 2019within 120 days after December 31, 2021 (the “Proxy Statement”).
ITEM 11.
|
ITEM 11. EXECUTIVE COMPENSATION |
We incorporate by reference the information appearing under “Director Compensation” and “Executive Compensation” and “Corporate Governance —
Human Capital and Compensation Committee Interlocks and Insider Participation” and
“Compensation“Human Capital and Compensation Committee Report” in the Proxy Statement.
ITEM 12.
| ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
We incorporate by reference the information appearing under “Principal Stockholders” and “Election of Directors” in the Proxy Statement.
Equity Compensation Plan Information
The following table includes information about our equity compensation plans at December 31,
2018:2021: | | Securities to be issued | | | Weighted average | | | Securities available for | |
| | upon exercise of | | | exercise price of | | | future issuance under | |
| | outstanding options, | | | outstanding options, | | | equity compensation | |
| | warrants and rights | | | warrants and rights | | | plans | |
| | (In thousands, except per share data) | |
Equity compensation plans approved by security holders (1) | | | 13,494 | | | $ | 21.81 | | | | 20,005 | |
Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
| | | Securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted average exercise price of outstanding options, warrants and rights | | Securities available for future issuance under equity compensation plans |
| | | (In thousands, except per share data) |
Equity compensation plans approved by security holders (1) | | 6,539 | | $ | 24.33 | | | 20,080 |
| Equity compensation plans not approved by security holders | | — | | — | | — |
(1)
| | | | | |
| (1) | As of December 31, 20182021, we had 3.84.0 million restricted stock units and 2.81.7 million performance share units outstanding that do not have an exercise price; therefore, the weighted average per share exercise price only relates to outstanding stock appreciation rights. The amount included in the securities outstanding above for performance share units assumes that each target price is achieved. |
ITEM 13.
| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS, INDEPENDENCE |
We incorporate by reference the information appearing under “Transactions with Related Persons” and “Corporate Governance” in the Proxy Statement.
ITEM 14.
|
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES |
We incorporate by reference the information appearing under
“Selection“Ratification of Selection of Independent Registered Public Accounting Firm” in the Proxy Statement.
PART IV
ITEM 15.
|
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
(a)(1).Financial Statements. The following consolidated financial statements of the Company are filed as part of this report under Item 8 – “Financial Statements and Supplementary Data.”
Audited consolidated financial statements for CityCenter Holdings, LLC as of December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016 are presented in Exhibit 99.3 and are incorporated herein by reference.
(a)(2).Financial Statement Schedule. The following financial statement schedule of the Company is filed as part of this report under Item 8 – “Financial Statements and Supplementary Data.” | | | | | | | | |
Years Ended December 31, 2018, 20172021, 2020 and 20162019 | | |
| | |
The financial information included in the financial statement schedule should be read in conjunction with the consolidated financial statements. All other financial statement schedules have been omitted because they are not applicable, or the required information is included in the consolidated financial statements or the notes thereto.
(a)(3). Exhibits.
| | |
Exhibit
Number
| | Description
| | | |
2.1
Exhibit
Number | | Description |
| 2.1 | | Master ContributionEquity Purchase Agreement by and among the Company,between MGM Growth Properties LLCCC Holdings, Inc., Infinity World Development Corp. and, solely for purposes of Article X thereof, MGM Growth Properties Operating Partnership LP,Resorts International, dated as of April 25, 2016June 30, 2021 (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on July 1, 2021). |
| 2.2 | | |
| 2.3 | | Master Transaction Agreement, by and among MGM Resorts International, MGM Growth Properties LLC, MGM Growth Properties Operating Partnership LP, VICI Properties Inc., Venus Sub LLC, VICI Properties L.P. and VICI Properties OP LLC, dated as of August 4, 2021 (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on April 25, 2016)August 5, 2021). |
3.1
2.4 | | |
| 2.5 | | |
| 3.1 | | |
3.2 | | |
4.1(1) | | |
| | |
4.1(5)
| | |
4.1(6)
4.1(5) | | |
4.1(7)
4.1(6) | | Indenture, dated as of September 19, 2012, among the Company, the guarantors named therein and U.S. Bank National Association, as trustee with respect to $1.0 billion aggregate principal amount of 6.750% Senior Notes due 2020 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 19, 2012).
|
4.1(8)
| | Second Supplemental Indenture, dated December 20, 2012, among the Company, the guarantors named therein and U.S. Bank National Association, as trustee to the Indenture, dated as of March 22, 2012, among the Company and U.S. Bank National Association, as trustee, relating to the 6.625% senior notes due 2021 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 20, 2012).
|
4.1(9)
| | Third Supplemental Indenture, dated December 19, 2013, among the Company, the guarantors named therein and U.S. Bank National Association, as trustee to the Indenture, dated as of March 22, 2012, among the Company and U.S. Bank National Association, as trustee, relating to the 5.250% senior notes due 2020 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 19, 2013).
|
4.1(10)
| | Fourth Supplemental Indenture, dated November 25, 2014, among the Company, the guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of March 22, 2012, among the Company and U.S. Bank National Association, as trustee, relating to the 6.000% senior notes due 2023 (incorporated by reference to Exhibit 4.1 toof the Company’s Current Report on Form 8-K filed on November 25, 2014). |
4.1(11)
4.1(7) | | Fifth Supplemental Indenture, dated August 19, 2016, among MGM Resorts International, the guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of March 22, 2012, among MGM Resorts International and U.S. Bank National Association, as trustee, relating to the 4.625% senior notes due 2026 (incorporated by reference to Exhibit 4.1 toof the Company’s Current Report on Form 8-K filed on August 19, 2016). |
4.1(12)
4.1(8) | | Sixth Supplemental Indenture, dated June 18, 2018, among MGM Resorts International, the guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of March 22, 2012, among MGM Resorts International and U.S. Bank National Association, as trustee, relating to the 5.750% senior notes due 2025 (incorporated by reference to Exhibit 4.1 toof the Company’s Current Report on Form 8-K filed on June 18, 2018). |
4.1(13)
4.1(9) | | Seventh Supplemental Indenture, dated April 10, 2019, among MGM Resorts International, the guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of March 22, 2012, among MGM Resorts International and U.S. Bank National Association, as trustee, relating to the 5.500% senior notes due 2027 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on April 10, 2019). |
| 4.1(10) | | Eighth Supplemental Indenture, dated May 4, 2020, among MGM Resorts International, the guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of March 22, 2012, among MGM Resorts International and U.S. Bank National Association, as trustee, relating to the 6.750% senior notes due 2025 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on May 4, 2020). |
| 4.1(11) | | Ninth Supplemental Indenture, dated October 13, 2020, among MGM Resorts International, the guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of March 22, 2012, among MGM Resorts International and U.S. Bank National Association, as trustee, relating to the 4.750% senior notes due 2028 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on October 13, 2020). |
| 4.1(12) | | |
4.1(14)
4.1(13) | | |
4.1(15)
4.1(14) | | |
4.1(16)
4.1(15) | | |
| 4.1(16) | | |
| | | | | | | | |
4.1(17) | | |
| 4.1(18) | | Third Supplemental Indenture to the Indentures, dated as of January 29, 2019, among MGP Yonkers Realty Sub, LLC, YRL Associates, L.P., MGP Finance Co-Issuer, Inc., MGM Growth Properties Operating Partnership LP, the Subsidiary Guarantors named therein, and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q of MGM Growth Properties LLC and MGM Growth Properties Operating Partnership LP filed on May 7, 2019). |
| 4.1(19) | | Fourth Supplemental Indenture to the Indentures, dated as of March 29, 2019, among MGP, MGP OH Propco, LLC, MGP Finance Co-Issuer, Inc., MGM Growth Properties Operating Partnership LP, the Subsidiary Guarantors named therein, and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.3 of the Company’s Quarterly Report on Form 10-Q of MGM Growth Properties LLC and MGM Growth Properties Operating Partnership LP filed on May 7, 2019). |
| 4.1(20) | | |
| 4.1(21) | | |
| 4.1(22) | | |
| 4.1(23) | | |
| 4.1(24) | | |
| 4.1(25) | | |
| 4.1(26) | | Seventh Supplemental Indenture, dated as of September 23, 2021, to the Indenture dated as of April 20, 2016, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K of MGM Growth Properties LLC and MGM Growth Properties Operating Partnership LP filed on September 27, 2021). |
| 4.1(27) | | Seventh Supplemental Indenture, dated as of September 23, 2021, to the Indenture dated as of August 12, 2016, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K of MGM Growth Properties LLC and MGM Growth Properties Operating Partnership LP filed on September 27, 2021). |
| 4.1(28) | | Seventh Supplemental Indenture, dated as of September 23, 2021, to the Indenture dated as of September 21, 2017, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.3 of theCurrent Report on Form 8-K of MGM Growth Properties LLC and MGM Growth Properties Operating Partnership LP filedon September 27, 2021). |
| 4.1(29) | | Seventh Supplemental Indenture, dated as of September 23, 2021, to the Indenture dated as of January 25, 2019, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.4 of the Current Report on Form 8-K of MGM Growth Properties LLC and MGM Growth Properties Operating Partnership LP filed on September 27, 2021). |
| 4.1(30) | | First Supplemental Indenture, dated as of September 23, 2021, to the Indenture dated as of June 5, 2020, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.5 of the Current Report on Form 8-K of MGM Growth Properties LLC and MGM Growth Properties Operating Partnership LP filed on September 27, 2021). |
| | | | | | | | |
4.2(1)
4.1(31) | | Guarantee (Mandalay Resort Group 6.70% Senior Notes due 2096),First Supplemental Indenture, dated as of April 25, 2005, by the Company certain subsidiaries of the Company, in favor of The Bank of New York, as successor in interest to First Interstate Bank of Nevada, N.A., as trustee for the benefit of the holders of the Notes pursuantSeptember 23, 2021, to the Indenture referred to thereindated as of November 19, 2020, by and among MGM Growth Properties Operating Partnership LP, MGP Finance Co-Issuer, Inc., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 10.21 to4.6 of the Current Report on Form 8-K of MGM Growth Properties LLC and MGM Growth Properties Operating Partnership LP filed on September 2005 10-Q)27, 2021). |
4.2(2)
4.2 | | |
4.3 | | |
10.1(1)
4.4 | | |
10.1(2)
10.1(1) | | First Amendment, dated as of December 21, 2018, to the Amended and Restated Credit Agreement, dated as of April 25, 2016 among the Company, the Administrative Agent and the other parties lenders thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 28, 2018).
|
10.1(3)
| | |
10.1(4)
10.1(2) | | |
10.1(5)
10.1(3) | | |
| 10.1(4) | | |
10.1(6)
| | |
10.1(7)
10.1(5) | | |
10.1(8)
10.1(6) | | |
| 10.1(7) | | |
| 10.1(8) | | |
| 10.1(9) | | |
| 10.1(10) | | |
| 10.1(11) | | |
| 10.1(12) | | |
| 10.1(13) | | |
| | | | | | | | |
| 10.1(14) | | |
| 10.1(15) | | |
| 10.1(16) | | |
| 10.1(17) | | |
10.1(9)
10.1(18) | | Third SupplementalGuaranty Agreement, by and among MGM China Holdings Limited, MGM Grand Paradise, S.A., the guarantors named therein, and Bankdated as of America, N.A., as facility agent, dated February 2, 201614, 2020 (incorporated by reference to Exhibit 10.1 to10.2 of the Company’s CurrentQuarterly Report on Form 8-K10-Q filed on February 4, 2016)May 1, 2020). |
| 10.2(1) | | |
10.1 (10)
| | Fourth Supplemental Agreement, dated February 15, 2017, among MGM China Holdings Limited, MGM Grand Paradise, S.A., the guarantors named therein and Bank of America, N.A., as facility agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 16, 2017).
|
10.1 (11)
| | Fifth Supplemental Agreement, dated June 15, 2018, by and among MGM China Holdings Limited, MGM Grand Paradise, S.A., and certain Lenders and Arrangers party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 18, 2018).
|
10.2(1)
| | |
10.2(2) | | |
| 10.2(3) | | |
| 10.2(4) | | |
10.2(3)
10.2(5) | | |
10.3(1)
10.4(1) | | Third Amended and Restated Limited Liability Company Agreement of CityCenter Holdings, LLC, dated December 22, 2015 (incorporated by reference to Exhibit 10.3(1) to the Company’s Annual Report on Form 10-K filed on February 29, 2016).
|
10.3(2)
| | Company Stock Purchase and Support Agreement, dated August 21, 2007, by and between the Company and Infinity World Investments, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed August 27, 2007).
|
10.3(3)
| | Amendment No. 1, dated October 17, 2007, to the Company Stock Purchase and Support Agreement by and between the Company and Infinity World Investments, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 23, 2007).
|
10.4(1)
| | |
10.4(2) | | |
10.4(3) | | |
10.4(4) | | |
| 10.4(5) | | |
| 10.4(6) | | |
| 10.4(7) | | |
| 10.4(8) | | |
| 10.4(9) | | |
| | | | | | | | |
| 10.4(10) | | |
| 10.4(11) | | |
| 10.4(12) | | |
| 10.4(13) | | |
| 10.4(14) | | |
| *10.5(1) | | |
*10.5(2) | | |
*10.5(3) | | |
*10.5(4) | | |
*10.5(5) | | |
*10.5(6) | | |
| *10.5(7) | | |
*10.5(7)
| | |
*10.5(8) | | |
*10.5(9)
| | Separation Agreement and Complete Release of Claims, between MGM Resorts International and Robert H. Baldwin, dated October 10, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 11, 2018).
|
*10.5(10)
| | Employment Agreement, dated as of October 3, 2016,April 1, 2020, by and between the Company and James J. Murren (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 5, 2016).
|
*10.5(11)
| | Employment Agreement, executed as of August 24, 2015, between the Company and Daniel J. D’Arrigo (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 28, 2015).
|
*10.5(12)
| | Employment Agreement, effective as of November 15, 2016, between the Company and Corey Sanders (incorporated by reference to Exhibit 10.2 to the Company’sof the Company's Current Report on Form 8-K filed on December 7, 2016)March 31, 2020).
|
*10.5(13) 10.5(9) | | |
| *10.5(10) | | |
| *10.5(11) | | |
*10.5(14) 10.5(12) | | |
*10.5(15) 10.5(13) | | |
*10.5(16) 10.5(14) | | |
*10.5(17)
| | Form of Restricted Stock Units Agreement of the Company (Non-Employee Director), effective for awards granted in August 2012 and thereafter (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2012).
|
*10.5(18)
| | Form of Restricted Stock Units Agreement of the Company (Performance), effective for awards granted in August 2012 through 2015 (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2012).
|
*10.5(19)
| | Form of Restricted Stock Units Agreement of the Company effective for awards granted in October 2015 and thereafter (incorporated by reference to Exhibit 10.4 toof the Company’s Quarterly Report on Form 10-Q filed on November 6, 2015). |
*10.5(20) 10.5(15) | | |
*10.5(21) 10.5(16) | | |
*10.5(22) 10.5(17) | | |
| | | | | | | | |
*10.5(23) 10.5(18) | | |
| *10.5(19) | | |
*10.5(24) 10.5(20) | | |
| *10.5(34) | | |
*10.5(43)
| | |
*10.5(44) 10.5(35) | | |
*10.5(45) 10.5(36) | | |
21
*10.5(37) | | |
| *10.5(38) | | |
| *10.5(39) | | |
| *10.5(40) | | |
| *10.5(41) | | |
| *10.5(42) | | |
| | | | | | | | |
| *10.5(43) | | |
| *10.5(44) | | |
| *10.5(45) | | |
| 21 | | |
23.1
22 | | |
| 23.1 | | |
23.2
31.1 | | Consent of Deloitte & Touche LLP, independent auditors to CityCenter Holdings, LLC.
|
31.1
| | |
31.2 | | |
**32.1 | | |
**32.2 | | |
99.1 | | Description of our Operating Resorts.
|
99.2
| | |
99.3
101.INS | | Audited consolidated financial statements of CityCenter Holdings, LLC, as of and forInline XBRL Instance Document – the three yearsinstance document does not appear in the period ended December 31, 2018.
Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101
101.SCH | | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | | The following informationcover page from the Company’sthis Annual Report on Form 10-K for the year ended December 31, 20182021, has been formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets at December 31, 2018 and December 31, 2017; (ii) Consolidated Statements of Operations for the years ended December 31, 2018, 2017and 2016; (iii) Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2018, 2017 and 2016; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2017; (v) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2018, 2017 and 2016; (vi) Notes to the Consolidated Financial Statements and (vii) Financial Statement Schedule.Inline XBRL. |
*
| | | | | |
| * | Management contract or compensatory plan or arrangement. |
** | Exhibits 32.1 and 32.2 shall not be deemed filed with the SEC, nor shall they be deemed incorporated by reference in any filing with the SEC under the Exchange Act or the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filings filings. |
| |
| In accordance with Rule 402 of Regulation S-T, the XBRL information included in Exhibit 101 and Exhibit 104 to this Form 10-K shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. |
ITEM 16.
| FORM 10KITEM 16. FORM 10-K SUMMARY
|
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MGM Resorts International
By:
| | /s/ JAMES J. MURREN
| | | | | | |
| By: | | James/s/ WILLIAM J. Murren
HORNBUCKLE |
| | Chairman of the Board and William J. Hornbuckle
|
| | Chief Executive Officer and President |
| | (Principal Executive Officer) |
Dated: February
27, 201925, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
| | Title
| | Date
| | | | | | | | | | |
Signature | | Title | | Date |
/ s/ Jamess/ William J. MurrenHornbuckle | | Chairman of the Board and
Chief Executive Officer and President (Principal Executive Officer) | | February 27, 2019 25, 2022 |
JamesWilliam J. Murren
Hornbuckle | | | |
/ s/ Daniel J. D’Arrigos/ Jonathan S. Halkyard | | Executive Vice President,
Chief Financial Officer and Treasurer (Principal Financial Officer) | | February 27, 201925, 2022 |
Daniel J. D’Arrigo
Jonathan S. Halkyard | | | |
/ s/ Robert C. Selwoods/ Todd R. Meinert | | Executive
Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) | | February 27, 201925, 2022 |
Robert C. Selwood
Todd R. Meinert | | | |
/ s/ William A. Bibles/ Paul Salem | | Director
Chairman of the Board | | February 27, 201925, 2022 |
William A. Bible
Paul Salem | | | | |
/s/ s/ Mary Chris GayJammet | | | | February 27, 201925, 2022 |
Mary Chris Gay Jammet | | | | |
/s/ William W. Groundss/ Barry Diller | | | | February 27, 201925, 2022 |
William W. Grounds
Barry Diller | | | | |
/s/ s/ Alexis M. Herman | | | | February 27, 201925, 2022 |
Alexis M. Herman | | | | |
/s/ Roland Hernandez s/ Joseph Levin | | | | February 27, 201925, 2022 |
Roland Hernandez
Joseph Levin | | | | |
/s/ John B. Kilroy, Jr.s/ Rose McKinney-James | | | | February 27, 201925, 2022 |
John B. Kilroy, Jr.
Rose McKinney-James | | | | |
/s/ Rose McKinney-James
| | Director
| | February 27, 2019
| | | | | | | | | | |
Rose McKinney-James
Signature | | Title | | Date |
| | | | February 27, 201925, 2022 |
Keith A. Meister | | | | |
/s/ Paul Salem | | Director
| | February 27, 2019
|
Paul Salem
| | | | |
/s/ s/ Gregory M. Spierkel
| | | | February 27, 201925, 2022 |
Gregory M. Spierkel | | | | |
/s/ JanJanet Swartz
| | | | February 27, 201925, 2022 |
JanJanet Swartz
| | | | |
| | | | February 27, 201925, 2022 |
Daniel J. Taylor | | | | |
112