Condensed Consolidating Financial Information | NOTE 19 —CONDENSED CONSOLIDATING FINANCIAL INFORMATION As of December 31, 2017, all of the Company’s principal debt arrangements are guaranteed by each of its material domestic subsidiaries, other than MGP and the Operating Partnership, MGM Grand Detroit, LLC, MGM National Harbor, LLC and Blue Tarp reDevelopment, LLC (the company that will own and operate the Company’s casino in Springfield, Massachusetts), 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, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015, are presented below. Within the Condensed Consolidating Statements of Cash Flows, the Company has presented net changes in intercompany accounts as investing activities if the applicable entities have a net asset in intercompany accounts and as a financing activity if the applicable entities have a net intercompany liability balance. Certain of the Company’s subsidiaries collectively own 73.4% of the Operating Partnership units as of December 31, 2017, 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 contribution and leaseback of the real estate assets do not qualify for sale-leaseback accounting. The real estate assets that were contributed to and owned by the Operating Partnership in connection with the IPO, along with the related transactions, are reflected in the balance sheets of the MGM subsidiaries that contributed such assets. In addition, such subsidiaries recognized finance liabilities within “Other long-term obligations” related to rent payments due under the master lease and recognized the related interest expense component of such payments. These real estate assets are also reflected on the balance sheet of the MGP subsidiary that received such assets in connection with the contribution. The condensed consolidating financial information presented below therefore includes the accounting for such activity within the respective columns presented and in the elimination column. For all periods prior to the commencement of the master lease arrangement, the condensed consolidating financial information set forth herein has been retrospectively adjusted to conform prior periods to the current presentation, as the transactions occurred between entities, which are considered businesses under common control. Accordingly, the real estate assets and associated operations in all periods prior to the IPO date were reclassified to conform to the current organizational structure, and are reflected in the MGP subsidiary that currently has legal title to such assets. CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION 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 December 31, 2016 Non-Guarantor Subsidiaries Parent Guarantor Subsidiaries MGP Other Elimination Consolidated (In thousands) Current assets $ 103,934 $ 983,901 $ 368,622 $ 783,920 $ (8,594 ) $ 2,231,783 Property and equipment, net — 13,599,127 9,079,678 4,837,868 (9,091,650 ) 18,425,023 Investments in subsidiaries 18,865,905 3,325,952 — — (22,191,857 ) — Investments in the MGP Operating Partnership — 3,553,840 — 636,268 (4,190,108 ) — Investments in and advances to unconsolidated affiliates — 1,188,493 — 5,853 25,000 1,219,346 Intercompany accounts — 4,809,802 — — (4,809,802 ) — Other non-current assets 50,741 934,836 58,440 5,302,132 (47,901 ) 6,298,248 $ 19,020,580 $ 28,395,951 $ 9,506,740 $ 11,566,041 $ (40,314,912 ) $ 28,174,400 Current liabilities $ 184,281 $ 1,344,605 $ 139,099 $ 837,844 $ (169,226 ) $ 2,336,603 Intercompany accounts 3,406,699 — 166 1,402,937 (4,809,802 ) — Deferred income taxes, net 2,188,081 — 25,368 348,419 (25,368 ) 2,536,500 Long-term debt, net 7,019,745 2,835 3,613,567 2,343,073 — 12,979,220 Other long-term obligations 28,949 7,360,887 120,279 1,051,754 (8,235,888 ) 325,981 Total liabilities 12,827,755 8,708,327 3,898,479 5,984,027 (13,240,284 ) 18,178,304 Redeemable noncontrolling interests — — — 54,139 — 54,139 MGM Resorts International stockholders' equity 6,192,825 19,687,624 4,274,444 3,112,560 (27,074,628 ) 6,192,825 Noncontrolling interests — — 1,333,817 2,415,315 — 3,749,132 Total stockholders' equity 6,192,825 19,687,624 5,608,261 5,527,875 (27,074,628 ) 9,941,957 $ 19,020,580 $ 28,395,951 $ 9,506,740 $ 11,566,041 $ (40,314,912 ) $ 28,174,400 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 affiliate — 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 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION Year Ended December 31, 2015 Non-Guarantor Subsidiaries Parent Guarantor Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 6,560,919 $ — $ 2,621,568 $ (2,897 ) $ 9,179,590 Equity in subsidiaries' earnings 379,468 (566,332 ) — — 186,864 — Expenses Casino and hotel operations 6,717 3,936,461 — 1,671,756 (2,897 ) 5,612,037 General and administrative 4,959 1,038,062 58,473 207,619 — 1,309,113 Corporate expense 120,615 154,353 — (488 ) — 274,480 Preopening and start-up expenses — 4,973 — 66,354 — 71,327 Property transactions, net — 24,688 6,665 1,472,589 — 1,503,942 Depreciation and amortization — 348,159 196,816 274,908 — 819,883 132,291 5,506,696 261,954 3,692,738 (2,897 ) 9,590,782 Income (loss) from unconsolidated affiliates — 259,473 — (1,119 ) — 258,354 Operating income (loss) 247,177 747,364 (261,954 ) (1,072,289 ) 186,864 (152,838 ) Interest expense, net of amounts capitalized (762,529 ) (1,057 ) — (33,993 ) — (797,579 ) Other, net 49,497 (84,958 ) — (56,971 ) — (92,432 ) Income (loss) before income taxes (465,855 ) 661,349 (261,954 ) (1,163,253 ) 186,864 (1,042,849 ) Benefit (provision) for income taxes 20,340 (7,125 ) — (7,810 ) — 5,405 Net income (loss) (445,515 ) 654,224 (261,954 ) (1,171,063 ) 186,864 (1,037,444 ) Less: Net loss attributable to noncontrolling interests — — — 591,929 — 591,929 Net income (loss) attributable to MGM Resorts International $ (445,515 ) $ 654,224 $ (261,954 ) $ (579,134 ) $ 186,864 $ (445,515 ) Net income (loss) $ (445,515 ) $ 654,224 $ (261,954 ) $ (1,171,063 ) $ 186,864 $ (1,037,444 ) Other comprehensive income, net of tax: Foreign currency translation adjustment 1,703 1,703 — 3,727 (3,406 ) 3,727 Other (672 ) (672 ) — — 672 (672 ) Other comprehensive income 1,031 1,031 — 3,727 (2,734 ) 3,055 Comprehensive income (loss) (444,484 ) 655,255 (261,954 ) (1,167,336 ) 184,130 (1,034,389 ) Less: Comprehensive loss attributable to noncontrolling interests — — — 589,905 — 589,905 Comprehensive income (loss) attributable to MGM Resorts International $ (444,484 ) $ 655,255 $ (261,954 ) $ (577,431 ) $ 184,130 $ (444,484 ) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION Year Ended December 31, 2015 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 $ (776,996 ) $ 1,375,766 $ (58,473 ) $ 464,782 $ — $ 1,005,079 Cash flows from investing activities Capital expenditures, net of construction payable — (353,245 ) (129,308 ) (984,266 ) — (1,466,819 ) Dispositions of property and equipment — 7,901 — 131 — 8,032 Proceeds from sale of business units and investment in unconsolidated affiliate — 92,207 — — — 92,207 Investments in and advances to unconsolidated affiliates (141,390 ) (54,672 ) — — — (196,062 ) Distributions from unconsolidated affiliates in excess of cumulative earnings — 201,612 — — — 201,612 Investments in cash deposits - maturities longer than 90 days (200,205 ) — — — — (200,205 ) Proceeds from cash deposits - maturities longer than 90 days 770,205 — — — — 770,205 Intercompany accounts — (1,059,181 ) — — 1,059,181 — Other — (7,516 ) — 3,488 — (4,028 ) Net cash provided by (used in) investing activities 428,610 (1,172,894 ) (129,308 ) (980,647 ) 1,059,181 (795,058 ) Cash flows from financing activities Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less (28,000 ) — — 1,005,275 — 977,275 Borrowings under bank credit facilities - maturities longer than 90 days 3,768,750 — — 1,350,000 — 5,118,750 Repayments under bank credit facilities - maturities longer than 90 days (3,768,750 ) — — (1,350,000 ) — (5,118,750 ) Retirement of senior notes (875,504 ) — — — — (875,504 ) Debt issuance costs — — — (46,170 ) — (46,170 ) Intercompany accounts 1,003,750 (158,021 ) 187,781 25,671 (1,059,181 ) — Distributions to noncontrolling interest owners — — — (307,227 ) — (307,227 ) Proceeds from issuance of redeemable noncontrolling interests — — — 6,250 — 6,250 Other (12,512 ) — — 9 — (12,503 ) Net cash provided by (used in) financing activities 87,734 (158,021 ) 187,781 683,808 (1,059,181 ) (257,879 ) Effect of exchange rate on cash — — — 793 — 793 Cash and cash equivalents — Net increase (decrease) for the period (260,652 ) 44,851 — 168,736 — (47,065 ) Change in cash related to assets held for sale — 3,662 — — — 3,662 Balance, beginning of period 799,508 255,655 — 658,552 — 1,713,715 Balance, end of period $ 538,856 $ 304,168 $ — $ 827,288 $ — $ 1,670,312 1 |