Condensed Consolidating Financial Information | NOTE 13 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION As of March 31, 2019, all of the Company’s principal debt arrangements are guaranteed by each of its material domestic subsidiaries, other than MGP and the Operating Partnership, MGM Grand Detroit, MGM National Harbor, MGM Springfield, and each of their respective subsidiaries. The Company’s international subsidiaries, including MGM China and its subsidiaries, are not guarantors of such indebtedness. Separate condensed financial statement information for the subsidiary guarantors and non-guarantors as of March 31, 2019 and December 31, 2018 and for the three months ended March 31, 2019 and 2018 are presented below. Within the Condensed Consolidating Statements of Cash Flows, the Company has presented net changes in intercompany accounts as investing activities if the applicable entities have a net asset in intercompany accounts and as a financing activity if the applicable entities have a net intercompany liability balance. Certain of the Company’s subsidiaries collectively own Operating Partnership units and each subsidiary accounts for its respective investment under the equity method within the condensed consolidating financial information presented below. Prior to the adoption of ASC 842 on January 1, 2019, for these subsidiaries, such investment constituted continuing involvement, and accordingly, the sale and leaseback of the real estate assets under the master lease did not qualify for sale-leaseback accounting. The real estate assets were reflected in the balance sheets of the applicable MGM subsidiaries. In addition, such subsidiaries recognized finance liabilities within “Other long-term obligations” related to rent payments due under the master lease and recognized the related interest expense component of such payments. These real estate assets were also reflected on the balance sheet of the MGP subsidiary that received such assets. The condensed consolidating financial information presented below therefore included the accounting for such activity within the respective columns presented and in the elimination column. In connection with the adoption of ASC 842, the sale and leaseback of the real estate assets under the master lease now qualify as a passed sale and are determined to be operating leases. As such, the real estate assets, finance liabilities, and related interest expense component of rent payments are no longer reflected in the results of the applicable MGM subsidiaries. Instead, the real estate assets are now only reflected on the balance sheet of the MGP subsidiary that received such assets and the MGM subsidiaries have recorded operating lease liabilities and operating ROU assets with the related rental payment reflected within “general and administrative” expense within the condensed consolidating financial information. CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION At March 31, 2019 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Current assets $ 97,072 $ 1,191,305 $ 96,294 $ 831,700 $ (9,236 ) $ 2,207,135 Property and equipment, net — 5,410,421 11,073,152 4,723,488 (10,623 ) 21,196,438 Investments in subsidiaries 23,226,988 3,825,369 — — (27,052,357 ) — Investments in the MGP Operating Partnership — 4,009,946 — 800,043 (4,809,989 ) — Investments in and advances to unconsolidated affiliates — 674,971 — 31,025 25,000 730,996 Intercompany accounts — 7,923,254 — — (7,923,254 ) — Other non-current assets 69,974 9,408,598 1,157,239 7,175,104 (10,798,563 ) 7,012,352 $ 23,394,034 $ 32,443,864 $ 12,326,685 $ 13,561,360 $ (50,579,022 ) $ 31,146,921 Current liabilities $ 141,224 $ 1,651,470 $ 215,806 $ 1,071,687 $ (267,509 ) $ 2,812,678 Intercompany accounts 7,745,873 — 425 176,956 (7,923,254 ) — Deferred income taxes, net 1,150,071 145,328 34,642 266,610 (29,720 ) 1,566,931 Long-term debt, net 7,528,352 569 4,939,702 2,262,206 — 14,730,829 Other non-current liabilities 42,310 8,745,547 419,193 2,332,678 (10,820,448 ) 719,280 Total liabilities 16,607,830 10,542,914 5,609,768 6,110,137 (19,040,931 ) 19,829,718 Redeemable noncontrolling interests — — — 99,338 — 99,338 MGM Resorts International stockholders' equity 6,786,204 21,899,513 4,679,335 4,959,652 (31,538,500 ) 6,786,204 Noncontrolling interests — 1,437 2,037,582 2,392,233 409 4,431,661 Total stockholders' equity 6,786,204 21,900,950 6,716,917 7,351,885 (31,538,091 ) 11,217,865 $ 23,394,034 $ 32,443,864 $ 12,326,685 $ 13,561,360 $ (50,579,022 ) $ 31,146,921 At December 31, 2018 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Current assets $ 304,741 $ 1,178,696 $ 78,222 $ 972,820 $ (7,701 ) $ 2,526,778 Property and equipment, net — 13,564,979 10,526,520 6,392,014 (9,753,625 ) 20,729,888 Investments in subsidiaries 22,419,282 3,401,031 — — (25,820,313 ) — Investments in the MGP Operating Partnership — 3,434,602 — 831,494 (4,266,096 ) — Investments in and advances to unconsolidated affiliates — 678,748 — 29,119 25,000 732,867 Intercompany accounts — 7,135,263 — — (7,135,263 ) — Other non-current assets 67,214 917,537 346,565 4,932,872 (43,015 ) 6,221,173 $ 22,791,237 $ 30,310,856 $ 10,951,307 $ 13,158,319 $ (47,001,013 ) $ 30,210,706 Current liabilities $ 154,484 $ 1,617,675 $ 189,247 $ 1,224,752 $ (237,276 ) $ 2,948,882 Intercompany accounts 6,932,325 — 307 202,631 (7,135,263 ) — Deferred income taxes, net 1,097,654 — 33,634 240,970 (29,720 ) 1,342,538 Long-term debt, net 8,055,472 570 4,666,949 2,365,014 — 15,088,005 Other non-current liabilities 39,019 7,210,897 215,664 2,247,584 (9,453,924 ) 259,240 Total liabilities 16,278,954 8,829,142 5,105,801 6,280,951 (16,856,183 ) 19,638,665 Redeemable noncontrolling interests — — — 102,250 — 102,250 MGM Resorts International stockholders' equity 6,512,283 21,481,714 4,279,535 4,383,581 (30,144,830 ) 6,512,283 Noncontrolling interests — — 1,565,971 2,391,537 — 3,957,508 Total stockholders' equity 6,512,283 21,481,714 5,845,506 6,775,118 (30,144,830 ) 10,469,791 $ 22,791,237 $ 30,310,856 $ 10,951,307 $ 13,158,319 $ (47,001,013 ) $ 30,210,706 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) INFORMATION Three Months Ended March 31, 2019 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 1,936,286 $ 271,264 $ 1,172,785 $ (203,424 ) $ 3,176,911 Equity in subsidiaries' earnings 259,299 40,097 — — (299,396 ) — Expenses Casino and hotel operations 2,459 1,104,372 44,929 721,638 (11,023 ) 1,862,375 General and administrative 16,485 522,007 5,920 188,949 (208,249 ) 525,112 Corporate expense 58,775 53,007 13,029 4,625 — 129,436 Preopening and start-up expenses — 1,214 — 2,073 — 3,287 Property transactions, net — 7,814 1,113 (204 ) 53 8,776 Depreciation and amortization — 101,646 75,009 141,162 (1,403 ) 316,414 77,719 1,790,060 140,000 1,058,243 (220,622 ) 2,845,400 Income from unconsolidated affiliates — 37,055 — 1,694 — 38,749 Operating income 181,580 223,378 131,264 116,236 (282,198 ) 370,260 Interest expense, net of amounts capitalized (126,653 ) (208 ) (63,948 ) (25,311 ) — (216,120 ) Other non-operating, net 18,626 85,214 1,709 2,464 (124,485 ) (16,472 ) Income before income taxes 73,553 308,384 69,025 93,389 (406,683 ) 137,668 Provision for income taxes (42,256 ) (5 ) (2,661 ) (26,589 ) — (71,511 ) Net income 31,297 308,379 66,364 66,800 (406,683 ) 66,157 Less: Net income attributable to noncontrolling interests — (1,437 ) (19,955 ) (13,061 ) (407 ) (34,860 ) Net income attributable to MGM Resorts International $ 31,297 $ 306,942 $ 46,409 $ 53,739 $ (407,090 ) $ 31,297 Net income $ 31,297 $ 308,379 $ 66,364 $ 66,800 $ (406,683 ) $ 66,157 Other comprehensive loss, net of tax: Foreign currency translation adjustment (6,906 ) (6,906 ) — (12,405 ) 13,812 (12,405 ) Unrealized loss on cash flow hedges (8,606 ) — (15,612 ) — 10,895 (13,323 ) Other comprehensive loss (15,512 ) (6,906 ) (15,612 ) (12,405 ) 24,707 (25,728 ) Comprehensive income 15,785 301,473 50,752 54,395 (381,976 ) 40,429 Less: Comprehensive income attributable to noncontrolling interests — — (15,238 ) (9,406 ) — (24,644 ) Comprehensive income attributable to MGM Resorts International $ 15,785 $ 301,473 $ 35,514 $ 44,989 $ (381,976 ) $ 15,785 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION Three Months Ended March 31, 2019 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Cash flows from operating activities Net cash provided by (used in) operating activities $ (107,623 ) $ 782,436 $ (439,533 ) $ 164,502 $ — $ 399,782 Cash flows from investing activities Capital expenditures, net of construction payable — (108,690 ) (12 ) (74,550 ) — (183,252 ) Dispositions of property and equipment — 273 — 68 — 341 Acquisition of Empire City Casino, net of cash acquired — (535,681 ) — — — (535,681 ) Investments in unconsolidated affiliates — (9,558 ) — — — (9,558 ) Distributions from unconsolidated affiliates — 31,850 — — — 31,850 Intercompany accounts — (787,991 ) — — 787,991 — Other — (3,500 ) — (27,011 ) — (30,511 ) Net cash used in investing activities — (1,413,297 ) (12 ) (101,493 ) 787,991 (726,811 ) Cash flows from financing activities Net borrowings (repayments) under bank credit facilities – maturities of 90 days or less 320,000 245,950 (715,575 ) (140,142 ) — (289,767 ) Issuance of long-term debt — — 750,000 — — 750,000 Retirement of senior notes (850,000 ) — — — — (850,000 ) Debt issuance costs (128 ) — (9,983 ) — — (10,111 ) Issuance of MGM Growth Properties common stock in public offering — — 571,838 — — 571,838 MGM Growth Properties Class A share issuance costs — — (23,447 ) — — (23,447 ) MGP dividends paid to consolidated subsidiaries — — (87,322 ) — 87,322 — Dividends paid to common shareholders (69,799 ) — — — — (69,799 ) Distributions to noncontrolling interest owners — — (31,733 ) (14,806 ) — (46,539 ) Intercompany accounts 523,231 407,838 — (55,756 ) (875,313 ) — Other (5,073 ) (2,198 ) — (53 ) — (7,324 ) Net cash provided by (used in) financing activities (81,769 ) 651,590 453,778 (210,757 ) (787,991 ) 24,851 Effect of exchange rate on cash — — — (1,180 ) — (1,180 ) Cash and cash equivalents Net increase (decrease) for the period (189,392 ) 20,729 14,233 (148,928 ) — (303,358 ) Balance, beginning of period 259,738 389,601 59,817 817,606 — 1,526,762 Balance, end of period $ 70,346 $ 410,330 $ 74,050 $ 668,678 $ — $ 1,223,404 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) INFORMATION Three Months Ended March 31, 2018 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 1,889,793 $ 215,839 $ 932,947 $ (216,342 ) $ 2,822,237 Equity in subsidiaries' earnings 328,267 44,535 — — (372,802 ) — Expenses Casino and hotel operations 2,715 1,050,019 — 582,979 (503 ) 1,635,210 General and administrative 2,350 310,850 22,499 104,690 (22,499 ) 417,890 Corporate expense 39,301 50,407 10,481 5,352 (6,032 ) 99,509 Preopening and start-up expenses — 6,742 — 60,175 — 66,917 Property transactions, net — 5,142 4,086 756 (4,086 ) 5,898 Depreciation and amortization — 156,647 68,991 112,148 (68,964 ) 268,822 44,366 1,579,807 106,057 866,100 (102,084 ) 2,494,246 Income from unconsolidated affiliates — 31,632 — 134 — 31,766 Operating income 283,901 386,153 109,782 66,981 (487,060 ) 359,757 Interest expense, net of amounts capitalized (109,558 ) (137 ) (49,230 ) (8,984 ) — (167,909 ) Other non-operating, net 15,772 (107,950 ) (1,152 ) (46,687 ) 129,091 (10,926 ) Income before income taxes 190,115 278,066 59,400 11,310 (357,969 ) 180,922 Benefit (provision) for income taxes 33,329 — (1,231 ) 53,281 — 85,379 Net income 223,444 278,066 58,169 64,591 (357,969 ) 266,301 Less: Net income attributable to noncontrolling interests — — (15,830 ) (27,027 ) — (42,857 ) Net income attributable to MGM Resorts International $ 223,444 $ 278,066 $ 42,339 $ 37,564 $ (357,969 ) $ 223,444 Net income $ 223,444 $ 278,066 $ 58,169 $ 64,591 $ (357,969 ) $ 266,301 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment (13,368 ) (13,368 ) — (24,152 ) 26,736 (24,152 ) Unrealized gain on cash flow hedges 9,498 — 16,355 — (11,997 ) 13,856 Other comprehensive income (loss) (3,870 ) (13,368 ) 16,355 (24,152 ) 14,739 (10,296 ) Comprehensive income 219,574 264,698 74,524 40,439 (343,230 ) 256,005 Less: Comprehensive income attributable to noncontrolling interests — — (20,188 ) (16,243 ) — (36,431 ) Comprehensive income attributable to MGM Resorts International $ 219,574 $ 264,698 $ 54,336 $ 24,196 $ (343,230 ) $ 219,574 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION Three Months Ended March 31, 2018 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Cash flows from operating activities Net cash provided by (used in) operating activities $ (157,092 ) $ 237,173 $ 145,224 $ 352,359 $ — $ 577,664 Cash flows from investing activities Capital expenditures, net of construction payable — (181,743 ) (177 ) (236,704 ) — (418,624 ) Dispositions of property and equipment — 220 — 5 — 225 Investments in unconsolidated affiliates — (2,503 ) — — — (2,503 ) Intercompany accounts — (102,195 ) — — 102,195 — Other — (9,937 ) — (1,538 ) — (11,475 ) Net cash used in investing activities — (296,158 ) (177 ) (238,237 ) 102,195 (432,377 ) Cash flows from financing activities Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less 516,875 — (8,375 ) (128,465 ) — 380,035 Retirement of senior notes — (2,265 ) — — — (2,265 ) Debt issuance costs — — (4,544 ) — — (4,544 ) MGP dividends paid to consolidated subsidiaries — — (81,956 ) — 81,956 — Dividends paid to common shareholders (67,999 ) — — — — (67,999 ) Distributions to noncontrolling interest owners — — (29,777 ) (17,603 ) — (47,380 ) Purchases of common stock (362,400 ) — — — — (362,400 ) Intercompany accounts 111,580 26,042 — 46,529 (184,151 ) — Other (8,297 ) (2,793 ) — (1,407 ) — (12,497 ) Net cash provided by (used in) financing activities 189,759 20,984 (124,652 ) (100,946 ) (102,195 ) (117,050 ) Effect of exchange rate on cash — — — (2,830 ) — (2,830 ) Cash and cash equivalents Net increase (decrease) for the period 32,667 (38,001 ) 20,395 10,346 — 25,407 Balance, beginning of period 26,870 311,043 259,722 902,360 — 1,499,995 Balance, end of period $ 59,537 $ 273,042 $ 280,117 $ 912,706 $ — $ 1,525,402 |