Condensed Consolidating Financial Information | NOTE 12 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION As of September 30, 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, MGM National Harbor, Blue Tarp redevelopment (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 consolidating financial information for the subsidiary guarantors and non-guarantors as of September 30, 2017 and December 31, 2016, and for the three and nine months ended September 30, 2017 and 2016 are presented below. Within the Condensed Consolidating Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, 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 72.3% of the Operating Partnership units as of September 30, 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, 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. CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION At September 30, 2017 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Current assets $ 24,162 $ 979,356 $ 1,147,668 $ 649,953 $ (6,603 ) $ 2,794,536 Property and equipment, net — 13,460,284 8,911,648 5,686,436 (8,923,620 ) 19,134,748 Investments in subsidiaries 21,375,643 3,407,745 — — (24,783,388 ) — Investments in MGP Operating Partnership — 3,520,856 — 629,474 (4,150,330 ) — Investments in and advances to unconsolidated affiliates — 977,305 — 5,279 25,000 1,007,584 Intercompany accounts — 5,953,567 — — (5,953,567 ) — Other non-current assets 49,842 915,289 51,108 5,191,685 (42,902 ) 6,165,022 $ 21,449,647 $ 29,214,402 $ 10,110,424 $ 12,162,827 $ (43,835,410 ) $ 29,101,890 Current liabilities $ 133,113 $ 1,307,341 $ 140,595 $ 1,333,446 $ (178,735 ) $ 2,735,760 Intercompany accounts 5,816,845 — 524 136,198 (5,953,567 ) — Deferred income taxes, net 2,309,461 — 25,368 359,403 (25,368 ) 2,668,864 Long-term debt, net 6,847,905 2,835 3,940,803 2,235,384 — 13,026,927 Other long-term obligations 33,780 7,283,433 162,787 1,047,228 (8,240,966 ) 286,262 Total liabilities 15,141,104 8,593,609 4,270,077 5,111,659 (14,398,636 ) 18,717,813 Redeemable noncontrolling interest — — — 59,337 — 59,337 MGM Resorts International stockholders' equity 6,308,543 20,620,793 4,217,534 4,598,447 (29,436,774 ) 6,308,543 Noncontrolling interests — — 1,622,813 2,393,384 — 4,016,197 Total stockholders' equity 6,308,543 20,620,793 5,840,347 6,991,831 (29,436,774 ) 10,324,740 $ 21,449,647 $ 29,214,402 $ 10,110,424 $ 12,162,827 $ (43,835,410 ) $ 29,101,890 At December 31, 2016 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Current assets $ 103,934 $ 981,705 $ 368,622 $ 783,920 $ (8,594 ) $ 2,229,587 Property and equipment, net — 13,599,127 9,079,678 4,837,868 (9,091,650 ) 18,425,023 Investments in subsidiaries 18,907,988 3,338,752 — — (22,246,740 ) — Investments in the MGP Operating Partnership — 3,553,840 — 636,268 (4,190,108 ) — Investments in and advances to unconsolidated affiliates — 1,189,590 — 5,853 25,000 1,220,443 Intercompany accounts — 4,796,713 — — (4,796,713 ) — Other non-current assets 50,741 934,836 58,440 5,302,132 (47,901 ) 6,298,248 $ 19,062,663 $ 28,394,563 $ 9,506,740 $ 11,566,041 $ (40,356,706 ) $ 28,173,301 Current liabilities $ 184,281 $ 1,301,423 $ 139,099 $ 837,844 $ (169,226 ) $ 2,293,421 Intercompany accounts 3,406,699 — 166 1,389,848 (4,796,713 ) — Deferred income taxes, net 2,202,809 — 25,368 348,419 (25,368 ) 2,551,228 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 12,842,483 8,665,145 3,898,479 5,970,938 (13,227,195 ) 18,149,850 Redeemable noncontrolling interest — — — 54,139 — 54,139 MGM Resorts International stockholders' equity 6,220,180 19,729,418 4,274,444 3,125,649 (27,129,511 ) 6,220,180 Noncontrolling interests — — 1,333,817 2,415,315 — 3,749,132 Total stockholders' equity 6,220,180 19,729,418 5,608,261 5,540,964 (27,129,511 ) 9,969,312 $ 19,062,663 $ 28,394,563 $ 9,506,740 $ 11,566,041 $ (40,356,706 ) $ 28,173,301 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) INFORMATION Three Months Ended September 30, 2017 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 2,036,252 $ 182,798 $ 791,461 $ (183,771 ) $ 2,826,740 Equity in subsidiaries' earnings 419,054 33,441 — — (452,495 ) — Expenses Casino and hotel operations 2,656 1,092,973 — 498,625 (974 ) 1,593,280 General and administrative 2,210 310,418 18,983 89,506 (18,983 ) 402,134 Corporate expense 31,352 53,286 4,113 (74 ) (171 ) 88,506 Preopening and start-up expenses — 1,856 — 27,493 — 29,349 Property transactions, net — 6,855 1,662 (2,058 ) 1,252 7,711 Depreciation and amortization — 163,880 68,662 85,720 (68,662 ) 249,600 36,218 1,629,268 93,420 699,212 (87,538 ) 2,370,580 Income (loss) from unconsolidated affiliates — 38,551 — (850 ) — 37,701 Operating income 382,836 478,976 89,378 91,399 (548,728 ) 493,861 Interest expense, net of amounts capitalized (112,061 ) (178 ) (45,544 ) (5,504 ) — (163,287 ) Other, net (16,170 ) (59,478 ) 1,354 (19,931 ) 55,262 (38,963 ) Income before income taxes 254,605 419,320 45,188 65,964 (493,466 ) 291,611 Provision for income taxes (105,490 ) — (1,488 ) (8,137 ) — (115,115 ) Net income 149,115 419,320 43,700 57,827 (493,466 ) 176,496 Less: Net income attributable to noncontrolling interests — — (11,025 ) (16,356 ) — (27,381 ) Net income attributable to MGM Resorts International $ 149,115 $ 419,320 $ 32,675 $ 41,471 $ (493,466 ) $ 149,115 Net income $ 149,115 $ 419,320 $ 43,700 $ 57,827 $ (493,466 ) $ 176,496 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment (1,635 ) (1,635 ) — (3,004 ) 3,270 (3,004 ) Unrealized gain on cash flow hedges 833 — 1,754 — (1,271 ) 1,316 Other comprehensive income (loss) (802 ) (1,635 ) 1,754 (3,004 ) 1,999 (1,688 ) Comprehensive income 148,313 417,685 45,454 54,823 (491,467 ) 174,808 Less: Comprehensive income attributable to noncontrolling interests — — (11,506 ) (14,989 ) — (26,495 ) Comprehensive income attributable to MGM Resorts International $ 148,313 $ 417,685 $ 33,948 $ 39,834 $ (491,467 ) $ 148,313 Nine Months Ended September 30, 2017 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 5,798,594 $ 551,153 $ 2,380,885 $ (553,976 ) $ 8,176,656 Equity in subsidiaries' earnings 1,247,922 122,873 — — (1,370,795 ) — Expenses Casino and hotel operations 7,781 3,135,918 — 1,483,508 (2,823 ) 4,624,384 General and administrative 6,323 874,558 60,112 264,551 (60,112 ) 1,145,432 Corporate expense 86,233 145,885 9,797 (314 ) (514 ) 241,087 NV Energy exit expense — (40,629 ) — — — (40,629 ) Preopening and start-up expenses — 4,631 — 60,877 — 65,508 Property transactions, net — 21,462 19,104 1,188 (19,104 ) 22,650 Depreciation and amortization — 486,981 190,573 257,142 (190,573 ) 744,123 100,337 4,628,806 279,586 2,066,952 (273,126 ) 6,802,555 Income (loss) from unconsolidated affiliates — 118,931 — (944 ) — 117,987 Operating income 1,147,585 1,411,592 271,567 312,989 (1,651,645 ) 1,492,088 Interest expense, net of amounts capitalized (358,359 ) (812 ) (134,998 ) (17,235 ) — (511,404 ) Other, net 11,306 (287,665 ) 1,601 (77,386 ) 294,136 (58,008 ) Income before income taxes 800,532 1,123,115 138,170 218,368 (1,357,509 ) 922,676 Provision for income taxes (233,959 ) — (3,903 ) (13,689 ) — (251,551 ) Net income 566,573 1,123,115 134,267 204,679 (1,357,509 ) 671,125 Less: Net income attributable to noncontrolling interests — — (33,053 ) (71,499 ) — (104,552 ) Net income attributable to MGM Resorts International $ 566,573 $ 1,123,115 $ 101,214 $ 133,180 $ (1,357,509 ) $ 566,573 Net income $ 566,573 $ 1,123,115 $ 134,267 $ 204,679 $ (1,357,509 ) $ 671,125 Other comprehensive loss, net of tax: Foreign currency translation adjustment (23,005 ) (23,005 ) — (41,313 ) 46,010 (41,313 ) Unrealized loss on cash flow hedges (1,997 ) — (2,992 ) — 2,348 (2,641 ) Other comprehensive loss (25,002 ) (23,005 ) (2,992 ) (41,313 ) 48,358 (43,954 ) Comprehensive income 541,571 1,100,110 131,275 163,366 (1,309,151 ) 627,171 Less: Comprehensive income attributable to noncontrolling interests — — (32,409 ) (53,191 ) — (85,600 ) Comprehensive income attributable to MGM Resorts International $ 541,571 $ 1,100,110 $ 98,866 $ 110,175 $ (1,309,151 ) $ 541,571 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION Nine Months Ended September 30, 2017 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 $ (492,009 ) $ 1,063,410 $ 363,855 $ 576,653 $ — $ 1,511,909 Cash flows from investing activities Capital expenditures, net of construction payable — (308,738 ) — (1,090,540 ) — (1,399,278 ) Dispositions of property and equipment — 174 — 197 — 371 Investments in unconsolidated affiliates — (5,921 ) — — — (5,921 ) Distributions from unconsolidated affiliates in excess of cumulative earnings — 300,000 — — — 300,000 Intercompany accounts — (1,156,854 ) — — 1,156,854 — Other — (9,982 ) — (11,804 ) — (21,786 ) Net cash used in investing activities — (1,181,321 ) — (1,102,147 ) 1,156,854 (1,126,614 ) Cash flows from financing activities Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less 290,625 — (33,500 ) 361,609 — 618,734 Issuance of long term debt — — 350,000 — — 350,000 Retirement of senior notes (502,669 ) — — — — (502,669 ) Debt issuance costs — — (5,381 ) (4,379 ) — (9,760 ) Issuance of MGM Growth Properties common shares in public offering — — 404,685 — — 404,685 MGM Growth Properties common share issuance costs — — (17,137 ) — — (17,137 ) Dividends paid to common shareholders (189,726 ) — — — — (189,726 ) MGP Operating Partnership distributions paid to consolidated subsidiaries — — (216,873 ) — 216,873 — Distributions to noncontrolling interest owners — — (67,340 ) (72,330 ) — (139,670 ) Purchases of common stock (327,500 ) — — — — (327,500 ) Intercompany accounts 1,165,419 102,198 — 106,110 (1,373,727 ) — Other (20,354 ) — — (8,583 ) — (28,937 ) Net cash provided by financing activities 415,795 102,198 414,454 382,427 (1,156,854 ) 158,020 Effect of exchange rate on cash — — — (3,208 ) — (3,208 ) Cash and cash equivalents Net increase (decrease) for the period (76,214 ) (15,713 ) 778,309 (146,275 ) — 540,107 Balance, beginning of period 99,995 307,713 360,492 678,381 — 1,446,581 Balance, end of period $ 23,781 $ 292,000 $ 1,138,801 $ 532,106 $ — $ 1,986,688 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) 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 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 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 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 attributable to MGM Resorts International $ 535,619 $ 594,333 $ 32,080 $ 25,934 $ (652,347 ) $ 535,619 Net income $ 535,619 $ 594,333 $ 42,671 $ 40,984 $ (652,347 ) $ 561,260 Other comprehensive income, net of tax: Foreign currency translation adjustment 919 918 — 1,733 (1,836 ) 1,734 Other comprehensive income 919 918 — 1,733 (1,836 ) 1,734 Comprehensive income 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 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 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 loss, net of tax: Foreign currency translation adjustment (2,295 ) (2,295 ) — (4,402 ) 4,590 (4,402 ) Other comprehensive 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 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 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 shares in public offering — — 1,207,500 — — 1,207,500 MGM Growth Properties common share issuance costs — — (75,032 ) — — (75,032 ) Acquisition of MGM China shares (100,000 ) — — — — (100,000 ) MGP Operating Partnership distributions paid to consolidated subsidiaries 41,586 (41,586 ) — — — Distributions to noncontrolling interest owners — — (15,134 ) (63,556 ) — (78,690 ) Intercompany accounts 4,070,558 (3,225,641 ) 158,822 260,602 (1,264,341 ) — Other (4,377 ) (32 ) — — — (4,409 ) Net cash provided by 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 |