Condensed Consolidating Financial Information | NOTE 12 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION As of September 30, 2016, all of the Company’s principal debt arrangements were guaranteed by each of its material domestic subsidiaries, other than MGP, MGM Grand Detroit, LLC, MGM National Harbor, LLC, Blue Tarp reDevelopment, LLC (the company that will own and operate the Company’s proposed 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 information for the subsidiary guarantors and non-guarantors as of September 30, 2016 and December 31, 2015, and for the three and nine months ended September 30, 2016 and 2015 are presented below. Within the Condensed Consolidating Statements of Cash Flows for the nine months ended September 30, 2016 and 2015, 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 (“OPCOs”) collectively own 76.3% of the Operating Partnership units as of September 30, 2016, and each subsidiary accounts for its respective investment under the equity method within the condensed consolidating financial information presented below. At 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. The September 30, 2016 condensed consolidating balance sheets presented below for the Guarantor Subsidiaries and MGP includes corrections that the Company has determined to be immaterial, which were made in order to properly reflect the recognition of the OPCOs investment in the initial proceeds received by the Operating Partnership in connection with the second quarter 2016 IPO transaction. As a result of the Borgata transaction in the third quarter of 2016, the OPCOs investment balances reflect the difference between the carrying value of their investment immediately prior to the Borgata transaction and their percentage share of the underlying equity of the Operating Partnership immediately after the Borgata transaction. CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION At September 30, 2016 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Current assets $ 171,786 $ 932,091 $ 346,578 $ 770,446 $ (6,553 ) $ 2,214,348 Property and equipment, net — 13,569,921 9,122,208 4,390,096 (9,134,180 ) 17,948,045 Investments in subsidiaries 18,567,912 3,291,467 — — (21,859,379 ) — Investments in MGP Operating Partnership — 3,576,377 — 640,340 (4,216,717 ) — Investments in and advances to unconsolidated affiliates — 1,165,007 — 6,536 25,000 1,196,543 Intercompany accounts — 4,498,612 — — (4,498,612 ) — Other non-current assets 52,533 942,894 56,776 5,341,764 (47,617 ) 6,346,350 $ 18,792,231 $ 27,976,369 $ 9,525,562 $ 11,149,182 $ (39,738,058 ) $ 27,705,286 Current liabilities $ 130,701 $ 1,201,950 $ 132,072 $ 830,081 $ (164,169 ) $ 2,130,635 Intercompany accounts 3,240,646 — 211 1,257,755 (4,498,612 ) — Deferred income taxes, net 2,187,275 10,066 24,828 346,474 (24,828 ) 2,543,815 Long-term debt 7,016,185 2,836 3,620,681 2,146,718 — 12,786,420 Other long-term obligations 26,593 7,369,439 99,271 1,049,388 (8,223,984 ) 320,707 Total liabilities 12,601,400 8,584,291 3,877,063 5,630,416 (12,911,593 ) 17,781,577 Redeemable noncontrolling interest — — — 6,250 — 6,250 MGM Resorts International stockholders' equity 6,190,831 19,392,078 4,305,283 3,129,104 (26,826,465 ) 6,190,831 Noncontrolling interests — — 1,343,216 2,383,412 — 3,726,628 Total stockholders' equity 6,190,831 19,392,078 5,648,499 5,512,516 (26,826,465 ) 9,917,459 $ 18,792,231 $ 27,976,369 $ 9,525,562 $ 11,149,182 $ (39,738,058 ) $ 27,705,286 At December 31, 2015 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Current assets $ 561,310 $ 932,374 $ — $ 915,979 $ (914 ) $ 2,408,749 Property and equipment, net — 5,089,726 7,793,639 2,500,401 (11,971 ) 15,371,795 Investments in subsidiaries 18,491,578 2,956,404 — — (21,447,982 ) — Investments in and advances to unconsolidated affiliates — 1,460,084 — 6,413 25,000 1,491,497 Intercompany accounts — 3,234,271 — — (3,234,271 ) — Other non-current assets 38,577 444,333 — 5,460,227 — 5,943,137 $ 19,091,465 $ 14,117,192 $ 7,793,639 $ 8,883,020 $ (24,670,138 ) $ 25,215,178 Current liabilities $ 536,165 $ 994,570 $ — $ 708,130 $ (914 ) $ 2,237,951 Intercompany accounts 2,390,461 — — 843,810 (3,234,271 ) — Deferred income taxes, net 631,763 — 1,734,680 314,133 — 2,680,576 Long-term debt 10,393,197 4,837 — 1,970,277 — 12,368,311 Other long-term obligations 19,952 67,212 — 70,499 — 157,663 Total liabilities 13,971,538 1,066,619 1,734,680 3,906,849 (3,235,185 ) 17,444,501 Redeemable noncontrolling interests — — — 6,250 — 6,250 MGM Resorts International stockholders' equity 5,119,927 13,050,573 6,058,959 2,325,421 (21,434,953 ) 5,119,927 Noncontrolling interests — — — 2,644,500 — 2,644,500 Total stockholders' equity 5,119,927 13,050,573 6,058,959 4,969,921 (21,434,953 ) 7,764,427 $ 19,091,465 $ 14,117,192 $ 7,793,639 $ 8,883,020 $ (24,670,138 ) $ 25,215,178 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION Three Months Ended September 30, 2016 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 1,873,313 $ 172,499 $ 642,644 $ (173,341 ) $ 2,515,115 Equity in subsidiaries' earnings 610,002 48,309 — — (658,311 ) — Expenses Casino and hotel operations 2,128 1,034,706 — 389,527 (842 ) 1,425,519 General and administrative 1,575 317,104 17,690 53,271 (17,690 ) 371,950 Corporate expense 29,265 46,330 12,315 (14 ) (114 ) 87,782 NV Energy exit expense — 139,335 — — — 139,335 Preopening and start-up expenses — 1,005 — 30,655 — 31,660 Property transactions, net — (120 ) 1,442 (1,148 ) (1,442 ) (1,268 ) Gain on Borgata transaction — (429,778 ) — — — (429,778 ) Depreciation and amortization — 145,631 54,260 64,106 (54,260 ) 209,737 32,968 1,254,213 85,707 536,397 (74,348 ) 1,834,937 Income from unconsolidated affiliates — 32,238 — 339 — 32,577 Operating income (loss) 577,034 699,647 86,792 106,586 (757,304 ) 712,755 Interest expense, net of amounts capitalized (123,836 ) (206 ) (42,839 ) (1,167 ) — (168,048 ) Other, net (996 ) (104,360 ) (367 ) (27,676 ) 104,957 (28,442 ) Income (loss) before income taxes 452,202 595,081 43,586 77,743 (652,347 ) 516,265 Benefit (provision) for income taxes 83,417 (748 ) (915 ) (36,759 ) — 44,995 Net income (loss) 535,619 594,333 42,671 40,984 (652,347 ) 561,260 Less: Net income attributable to noncontrolling interests — — (10,591 ) (15,050 ) — (25,641 ) Net income (loss) attributable to MGM Resorts International $ 535,619 $ 594,333 $ 32,080 $ 25,934 $ (652,347 ) $ 535,619 Net income (loss) $ 535,619 $ 594,333 $ 42,671 $ 40,984 $ (652,347 ) $ 561,260 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 919 918 — 1,733 (1,836 ) 1,734 Other comprehensive income (loss) 919 918 — 1,733 (1,836 ) 1,734 Comprehensive income (loss) 536,538 595,251 42,671 42,717 (654,183 ) 562,994 Less: Comprehensive income attributable to noncontrolling interests — — (10,591 ) (15,865 ) — (26,456 ) Comprehensive income (loss) attributable to MGM Resorts International $ 536,538 $ 595,251 $ 32,080 $ 26,852 $ (654,183 ) $ 536,538 Nine Months Ended September 30, 2016 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 5,150,751 $ 283,402 $ 1,846,107 $ (285,957 ) $ 6,994,303 Equity in subsidiaries' earnings 1,589,882 125,283 — — (1,715,165 ) — Expenses Casino and hotel operations 6,191 2,879,139 — 1,157,426 (2,555 ) 4,040,201 General and administrative 4,776 823,290 47,174 154,000 (27,340 ) 1,001,900 Corporate expense 105,245 119,170 16,703 (171 ) (114 ) 240,833 NV Energy exit expense — 139,335 — — — 139,335 Preopening and start-up expenses — 7,232 — 71,212 — 78,444 Property transactions, net — 3,720 2,651 123 (1,777 ) 4,717 Gain on Borgata transaction — (429,778 ) — — — (429,778 ) Depreciation and amortization — 360,847 158,860 191,954 (95,186 ) 616,475 116,212 3,902,955 225,388 1,574,544 (126,972 ) 5,692,127 Income from unconsolidated affiliates — 495,427 — 161 — 495,588 Operating income (loss) 1,473,670 1,868,506 58,014 271,724 (1,874,150 ) 1,797,764 Interest expense, net of amounts capitalized (447,258 ) (564 ) (72,314 ) (12,933 ) — (533,069 ) Other, net (21,714 ) (212,828 ) (439 ) (65,459 ) 187,496 (112,944 ) Income (loss) before income taxes 1,004,698 1,655,114 (14,739 ) 193,332 (1,686,654 ) 1,151,751 Benefit (provision) for income taxes 72,073 (21,663 ) (915 ) (34,290 ) — 15,205 Net income (loss) 1,076,771 1,633,451 (15,654 ) 159,042 (1,686,654 ) 1,166,956 Less: Net income attributable to noncontrolling interests — — (17,544 ) (72,641 ) — (90,185 ) Net income (loss) attributable to MGM Resorts International $ 1,076,771 $ 1,633,451 $ (33,198 ) $ 86,401 $ (1,686,654 ) $ 1,076,771 Net income (loss) $ 1,076,771 $ 1,633,451 $ (15,654 ) $ 159,042 $ (1,686,654 ) $ 1,166,956 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment (2,295 ) (2,295 ) — (4,402 ) 4,590 (4,402 ) Other comprehensive income (loss) (2,295 ) (2,295 ) — (4,402 ) 4,590 (4,402 ) Comprehensive income (loss) 1,074,476 1,631,156 (15,654 ) 154,640 (1,682,064 ) 1,162,554 Less: Comprehensive income attributable to noncontrolling interests — — (17,544 ) (70,534 ) — (88,078 ) Comprehensive income (loss) attributable to MGM Resorts International $ 1,074,476 $ 1,631,156 $ (33,198 ) $ 84,106 $ (1,682,064 ) $ 1,074,476 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION Nine Months Ended September 30, 2016 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Cash flows from operating activities Net cash provided by (used in) operating activities $ (593,124 ) $ 1,066,700 $ 182,421 $ 393,008 $ — $ 1,049,005 Cash flows from investing activities Capital expenditures, net of construction payable — (113,333 ) (138,987 ) (1,337,988 ) — (1,590,308 ) Dispositions of property and equipment — 1,682 — 1,608 — 3,290 Proceeds from partial disposition of investment in unconsolidated affiliate — 15,000 — — — 15,000 Acquisition of Borgata, net of cash acquired — (550,975 ) — — — (550,975 ) Investments in and advances to unconsolidated affiliates — (1,555 ) — — — (1,555 ) Distributions from unconsolidated affiliates in excess of cumulative earnings — 543,036 — — — 543,036 Intercompany accounts — (1,264,341 ) — — 1,264,341 — Other — (5,666 ) — (2,591 ) — (8,257 ) Net cash provided by (used in) investing activities — (1,376,152 ) (138,987 ) (1,338,971 ) 1,264,341 (1,589,769 ) 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 ) 631,198 — 298,448 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 (28,254 ) (1,530 ) (76,120 ) (32,550 ) — (138,454 ) Issuance of MGM Growth Properties common stock in public offering — — 1,207,500 — — 1,207,500 MGM Growth Properties common stock issuance costs — — (75,032 ) — — (75,032 ) Acquisition of MGM China shares (100,000 ) — — — — (100,000 ) MGP dividends paid to consolidated subsidiaries 41,586 — (41,586 ) — — — Distributions to noncontrolling interest owners — — (15,134 ) (63,556 ) — (78,690 ) Excess tax benefit from exercise of stock options 4,770 — — — — 4,770 Intercompany accounts 4,070,558 (3,225,641 ) 158,822 260,602 (1,264,341 ) — Other (9,147 ) (32 ) — — — (9,179 ) Net cash provided by (used in) financing activities 208,121 281,388 296,850 795,694 (1,264,341 ) 317,712 Effect of exchange rate on cash — — — (1,102 ) — (1,102 ) Cash and cash equivalents Net increase (decrease) for the period (385,003 ) (28,064 ) 340,284 (151,371 ) — (224,154 ) Balance, beginning of period 538,856 304,168 — 827,288 — 1,670,312 Balance, end of period $ 153,853 $ 276,104 $ 340,284 $ 675,917 $ — $ 1,446,158 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION Three Months Ended September 30, 2015 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 1,622,593 $ — $ 658,889 $ (666 ) $ 2,280,816 Equity in subsidiaries' earnings 247,524 40,742 — — (288,266 ) — Expenses Casino and hotel operations 1,552 962,392 — 434,622 (666 ) 1,397,900 General and administrative 1,132 273,435 14,587 51,341 — 340,495 Corporate expense 36,186 37,873 — (40 ) — 74,019 Preopening and start-up expenses — 1,268 — 15,242 — 16,510 Property transactions, net — 6,984 — 139 — 7,123 Depreciation and amortization — 86,636 54,188 63,918 — 204,742 38,870 1,368,588 68,775 565,222 (666 ) 2,040,789 Income from unconsolidated affiliates — 56,829 — 521 — 57,350 Operating income (loss) 208,654 351,576 (68,775 ) 94,188 (288,266 ) 297,377 Interest expense, net of amounts capitalized (179,636 ) (232 ) — (11,913 ) — (191,781 ) Other, net 12,882 (25,748 ) — (14,488 ) — (27,354 ) Income (loss) before income taxes 41,900 325,596 (68,775 ) 67,787 (288,266 ) 78,242 Benefit (provision) for income taxes 24,525 (7,078 ) — (954 ) — 16,493 Net income (loss) 66,425 318,518 (68,775 ) 66,833 (288,266 ) 94,735 Less: Net income attributable to noncontrolling interests — — — (28,310 ) — (28,310 ) Net income (loss) attributable to MGM Resorts International $ 66,425 $ 318,518 $ (68,775 ) $ 38,523 $ (288,266 ) $ 66,425 Net income (loss) $ 66,425 $ 318,518 $ (68,775 ) $ 66,833 $ (288,266 ) $ 94,735 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 556 556 — 1,291 (1,112 ) 1,291 Other comprehensive income (loss) 556 556 — 1,291 (1,112 ) 1,291 Comprehensive income (loss) 66,981 319,074 (68,775 ) 68,124 (289,378 ) 96,026 Less: Comprehensive income attributable to noncontrolling interests — — — (29,045 ) — (29,045 ) Comprehensive income (loss) attributable to MGM Resorts International $ 66,981 $ 319,074 $ (68,775 ) $ 39,079 $ (289,378 ) $ 66,981 Nine Months Ended September 30, 2015 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 4,879,596 $ — $ 2,120,699 $ (2,100 ) $ 6,998,195 Equity in subsidiaries' earnings 875,725 133,367 — — (1,009,092 ) — Expenses Casino and hotel operations 4,558 2,893,832 — 1,409,527 (2,100 ) 4,305,817 General and administrative 3,372 798,902 45,261 154,841 — 1,002,376 Corporate expense 72,279 112,143 — (445 ) — 183,977 Preopening and start-up expenses — 3,511 — 46,759 — 50,270 Property transactions, net — 11,697 — 968 — 12,665 Depreciation and amortization — 262,758 145,805 211,156 — 619,719 80,209 4,082,843 191,066 1,822,806 (2,100 ) 6,174,824 Income from unconsolidated affiliates — 217,575 — 56 — 217,631 Operating income (loss) 795,516 1,147,695 (191,066 ) 297,949 (1,009,092 ) 1,041,002 Interest expense, net of amounts capitalized (587,286 ) (783 ) — (23,219 ) — (611,288 ) Other, net 35,306 (64,900 ) — (42,842 ) — (72,436 ) Income (loss) before income taxes 243,536 1,082,012 (191,066 ) 231,888 (1,009,092 ) 357,278 Benefit (provision) for income taxes 90,198 (11,575 ) — (2,053 ) — 76,570 Net income (loss) 333,734 1,070,437 (191,066 ) 229,835 (1,009,092 ) 433,848 Less: Net income attributable to noncontrolling interests — — — (100,114 ) — (100,114 ) Net income (loss) attributable to MGM Resorts International $ 333,734 $ 1,070,437 $ (191,066 ) $ 129,721 $ (1,009,092 ) $ 333,734 Net income (loss) $ 333,734 $ 1,070,437 $ (191,066 ) $ 229,835 $ (1,009,092 ) $ 433,848 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 2,128 2,128 — 4,375 (4,256 ) 4,375 Other (672 ) (672 ) — — 672 (672 ) Other comprehensive income (loss) 1,456 1,456 — 4,375 (3,584 ) 3,703 Comprehensive income (loss) 335,190 1,071,893 (191,066 ) 234,210 (1,012,676 ) 437,551 Less: Comprehensive income attributable to noncontrolling interests — — — (102,361 ) — (102,361 ) Comprehensive income (loss) attributable to MGM Resorts International $ 335,190 $ 1,071,893 $ (191,066 ) $ 131,849 $ (1,012,676 ) $ 335,190 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION Nine Months Ended September 30, 2015 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Cash flows from operating activities Net cash provided by (used in) operating activities $ (620,381 ) $ 1,028,341 $ (45,261 ) $ 375,081 $ — $ 737,780 Cash flows from investing activities Capital expenditures, net of construction payable — (287,555 ) (24,575 ) (688,448 ) — (1,000,578 ) Dispositions of property and equipment — 266 — 77 — 343 Proceeds from sale of assets held for sale — 19,797 — — — 19,797 Investments in and advances to unconsolidated affiliates (141,390 ) (53,134 ) — — — (194,524 ) Distributions from unconsolidated affiliates in excess of cumulative earnings — 202,850 — — — 202,850 Investments in cash deposits - original maturities longer than 90 days (200,205 ) — — — — (200,205 ) Proceeds from cash deposits - original maturities longer than 90 days 770,205 — — — — 770,205 Intercompany accounts — (883,440 ) — — 883,440 — Other — (5,483 ) — 5,542 — 59 Net cash provided by (used in) investing activities 428,610 (1,006,699 ) (24,575 ) (682,829 ) 883,440 (402,053 ) Cash flows from financing activities Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less (1,272,875 ) — — 555,275 — (717,600 ) 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 (2,516,875 ) — — (900,000 ) — (3,416,875 ) Retirement of senior notes (875,504 ) — — — — (875,504 ) Debt issuance costs — — — (46,170 ) — (46,170 ) Intercompany accounts 911,212 (44,979 ) 69,836 (52,629 ) (883,440 ) — Distributions to noncontrolling interest owners — — — (304,562 ) — (304,562 ) Excess tax benefit from exercise of stock options 514 — — — — 514 Proceeds from issuance of redeemable noncontrolling interest — — — 5,000 — 5,000 Other (1,573 ) — — 9 — (1,564 ) Net cash provided by (used in) financing activities 13,649 (44,979 ) 69,836 606,923 (883,440 ) (238,011 ) Effect of exchange rate on cash — — — 845 — 845 Cash and cash equivalents Net increase (decrease) for the period (178,122 ) (23,337 ) — 300,020 — 98,561 Change in cash related to assets held for sale — (4,481 ) — — — (4,481 ) Balance, beginning of period 799,508 255,655 — 658,552 — 1,713,715 Balance, end of period $ 621,386 $ 227,837 $ — $ 958,572 $ — $ 1,807,795 |