Condensed Consolidating Financial Information | NOTE 13 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION As of June 30, 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 June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 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 June 30, 2019 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Current assets $ 70,483 $ 1,133,672 $ 65,035 $ 787,973 $ (17,129 ) $ 2,040,034 Property and equipment, net — 5,429,353 10,975,999 4,660,957 (11,972 ) 21,054,337 Investments in subsidiaries 23,393,617 3,811,326 — — (27,204,943 ) — Investments in the MGP Operating Partnership — 3,697,910 — 779,853 (4,477,763 ) — Investments in and advances to unconsolidated affiliates — 695,117 — 26,616 25,000 746,733 Intercompany accounts — 8,154,239 — — (8,154,239 ) — Other non-current assets 70,243 10,331,081 871,774 7,136,667 (11,437,154 ) 6,972,611 $ 23,534,343 $ 33,252,698 $ 11,912,808 $ 13,392,066 $ (51,278,200 ) $ 30,813,715 Current liabilities $ 122,821 $ 1,692,960 $ 191,902 $ 1,065,710 $ (286,854 ) $ 2,786,539 Intercompany accounts 8,045,418 — 74 108,747 (8,154,239 ) — Deferred income taxes, net 1,163,954 125,149 29,721 263,448 (29,720 ) 1,552,552 Long-term debt, net 7,638,313 569 4,852,524 2,170,289 — 14,661,695 Other non-current liabilities 43,353 9,394,716 452,055 2,327,101 (11,459,603 ) 757,622 Total liabilities 17,013,859 11,213,394 5,526,276 5,935,295 (19,930,416 ) 19,758,408 Redeemable noncontrolling interests — — — 100,586 — 100,586 MGM Resorts International stockholders' equity 6,520,484 22,037,881 4,353,312 4,956,591 (31,347,784 ) 6,520,484 Noncontrolling interests — 1,423 2,033,220 2,399,594 — 4,434,237 Total stockholders' equity 6,520,484 22,039,304 6,386,532 7,356,185 (31,347,784 ) 10,954,721 $ 23,534,343 $ 33,252,698 $ 11,912,808 $ 13,392,066 $ (51,278,200 ) $ 30,813,715 At December 31, 2018 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Current assets $ 304,741 $ 1,244,864 $ 12,054 $ 972,820 $ (7,701 ) $ 2,526,778 Property and equipment, net — 13,585,370 10,506,129 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 — 7,135,183 — — (7,135,183 ) — Other non-current assets 67,214 1,186,666 77,436 4,932,872 (43,015 ) 6,221,173 Assets held for sale — — 355,688 — (355,688 ) — $ 22,791,237 $ 30,666,464 $ 10,951,307 $ 13,158,319 $ (47,356,621 ) $ 30,210,706 Current liabilities $ 154,484 $ 1,646,481 $ 160,441 $ 1,224,752 $ (237,276 ) $ 2,948,882 Intercompany accounts 6,932,325 — 227 202,631 (7,135,183 ) — 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 7,210,948 215,613 2,247,584 (9,453,924 ) 259,240 Liabilities related to assets held for sale — — 28,937 — (28,937 ) — Total liabilities 16,278,954 8,857,999 5,105,801 6,280,951 (16,885,040 ) 19,638,665 Redeemable noncontrolling interests — — — 102,250 — 102,250 MGM Resorts International stockholders' equity 6,512,283 21,808,465 4,279,535 4,383,581 (30,471,581 ) 6,512,283 Noncontrolling interests — — 1,565,971 2,391,537 — 3,957,508 Total stockholders' equity 6,512,283 21,808,465 5,845,506 6,775,118 (30,471,581 ) 10,469,791 $ 22,791,237 $ 30,666,464 $ 10,951,307 $ 13,158,319 $ (47,356,621 ) $ 30,210,706 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) INFORMATION Three Months Ended June 30, 2019 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 2,075,487 $ 225,759 $ 1,147,755 $ (225,758 ) $ 3,223,243 Equity in subsidiaries' earnings 247,282 26,291 — — (273,573 ) — Expenses Casino and hotel operations 2,058 1,188,214 — 714,548 — 1,904,820 General and administrative 4,361 569,622 5,918 188,511 (243,988 ) 524,424 Corporate expense 44,914 54,037 3,960 5,150 — 108,061 Preopening and start-up expenses — 943 — (64 ) — 879 Property transactions, net — 4,348 310 1,185 (53 ) 5,790 Depreciation and amortization — 106,683 79,543 147,159 1,403 334,788 51,333 1,923,847 89,731 1,056,489 (242,638 ) 2,878,762 Income (loss) from unconsolidated affiliates — 31,357 — (4,353 ) — 27,004 Operating income 195,949 209,288 136,028 86,913 (256,693 ) 371,485 Interest expense, net of amounts capitalized (118,410 ) (209 ) (63,977 ) (33,233 ) — (215,829 ) Other non-operating, net (22,485 ) 24,356 (261 ) (13,033 ) (56,330 ) (67,753 ) Income before income taxes 55,054 233,435 71,790 40,647 (313,023 ) 87,903 Benefit (provision) for income taxes (11,649 ) (3 ) (4,021 ) 3,939 — (11,734 ) Net income 43,405 233,432 67,769 44,586 (313,023 ) 76,169 Less: Net income attributable to noncontrolling interests — (1,422 ) (21,858 ) (9,891 ) 407 (32,764 ) Net income attributable to MGM Resorts International $ 43,405 $ 232,010 $ 45,911 $ 34,695 $ (312,616 ) $ 43,405 Net income $ 43,405 $ 233,432 $ 67,769 $ 44,586 $ (313,023 ) $ 76,169 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 14,754 14,754 — 26,380 (29,508 ) 26,380 Unrealized loss on cash flow hedges (16,651 ) — (30,775 ) — 21,128 (26,298 ) Other comprehensive income (loss) (1,897 ) 14,754 (30,775 ) 26,380 (8,380 ) 82 Comprehensive income 41,508 248,186 36,994 70,966 (321,403 ) 76,251 Less: Comprehensive income attributable to noncontrolling interests — — (12,211 ) (22,532 ) — (34,743 ) Comprehensive income attributable to MGM Resorts International $ 41,508 $ 248,186 $ 24,783 $ 48,434 $ (321,403 ) $ 41,508 Six Months Ended June 30, 2019 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 4,079,614 $ 429,182 $ 2,320,540 $ (429,182 ) $ 6,400,154 Equity in subsidiaries' earnings 509,471 66,388 — — (575,859 ) — Expenses Casino and hotel operations 4,517 2,337,515 — 1,436,186 (11,023 ) 3,767,195 General and administrative 20,846 1,091,988 11,479 377,460 (452,237 ) 1,049,536 Corporate expense 103,689 107,044 16,989 9,775 — 237,497 Preopening and start-up expenses — 2,157 — 2,009 — 4,166 Property transactions, net — 12,162 1,423 981 — 14,566 Depreciation and amortization — 211,776 151,105 288,321 — 651,202 129,052 3,762,642 180,996 2,114,732 (463,260 ) 5,724,162 Income (loss) from unconsolidated affiliates — 68,412 — (2,659 ) — 65,753 Operating income 380,419 451,772 248,186 203,149 (541,781 ) 741,745 Interest expense, net of amounts capitalized (245,063 ) (417 ) (127,925 ) (58,544 ) — (431,949 ) Other non-operating, net (3,859 ) 109,570 1,448 (10,569 ) (180,815 ) (84,225 ) Income from continuing operations before income taxes 131,497 560,925 121,709 134,036 (722,596 ) 225,571 Provision for income taxes (56,795 ) (8 ) (3,792 ) (22,650 ) — (83,245 ) Income from continuing operations, net of tax 74,702 560,917 117,917 111,386 (722,596 ) 142,326 Income from discontinued operations, net of tax — — 16,216 — (16,216 ) — Net income 74,702 560,917 134,133 111,386 (738,812 ) 142,326 Less: Net income attributable to noncontrolling interests — (2,859 ) (41,813 ) (22,952 ) — (67,624 ) Net income attributable to MGM Resorts International $ 74,702 $ 558,058 $ 92,320 $ 88,434 $ (738,812 ) $ 74,702 Net income $ 74,702 $ 560,917 $ 134,133 $ 111,386 $ (738,812 ) $ 142,326 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 7,848 7,848 — 13,975 (15,696 ) 13,975 Unrealized loss on cash flow hedges (25,257 ) — (46,387 ) — 32,023 (39,621 ) Other comprehensive income (loss) (17,409 ) 7,848 (46,387 ) 13,975 16,327 (25,646 ) Comprehensive income 57,293 568,765 87,746 125,361 (722,485 ) 116,680 Less: Comprehensive income attributable to noncontrolling interests — — (27,449 ) (31,938 ) — (59,387 ) Comprehensive income attributable to MGM Resorts International $ 57,293 $ 568,765 $ 60,297 $ 93,423 $ (722,485 ) $ 57,293 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION Six Months Ended June 30, 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 $ (284,892 ) $ 1,142,767 $ (243,990 ) $ 369,539 $ (15,591 ) $ 967,833 Cash flows from investing activities Capital expenditures, net of construction payable — (212,513 ) — (109,117 ) 12 (321,618 ) Dispositions of property and equipment — 505 — 68 — 573 Acquisition of Empire City Casino, net of cash acquired — (535,681 ) — — — (535,681 ) Investments in unconsolidated affiliates — (80,669 ) — — — (80,669 ) Distributions from unconsolidated affiliates — 90,000 — — — 90,000 Intercompany accounts — (1,018,976 ) — — 1,018,976 — Northfield OpCo transaction — (3,779 ) 3,779 — — — Other — (3,500 ) — (26,670 ) — (30,170 ) Net cash provided by (used in) investing activities — (1,764,613 ) 3,779 (135,719 ) 1,018,988 (877,565 ) Cash flows from financing activities Net borrowings (repayments) under bank credit facilities – maturities of 90 days or less 310,000 245,950 (805,200 ) (1,730,706 ) — (1,979,956 ) Issuance of long-term debt 1,000,000 — 750,000 1,500,000 — 3,250,000 Retirement of senior notes and senior debentures (1,721,698 ) (38,228 ) — — — (1,759,926 ) Debt issuance costs (14,080 ) — (9,983 ) (21,483 ) — (45,546 ) Issuance of MGM Growth Properties Class A shares, net — — 613,299 — — 613,299 Dividends paid to common shareholders (138,215 ) — — — — (138,215 ) MGP dividends paid to consolidated subsidiaries — — (184,537 ) — 184,537 — Distributions to noncontrolling interest owners — — (73,797 ) (28,621 ) — (102,418 ) Purchases of common stock (281,833 ) — — — — (281,833 ) Intercompany accounts 913,889 414,567 — (124,943 ) (1,203,513 ) — Other (6,808 ) (43,411 ) — (865 ) 37,900 (13,184 ) Net cash provided by (used in) financing activities 61,255 578,878 289,782 (406,618 ) (981,076 ) (457,779 ) Effect of exchange rate on cash — — — 1,340 — 1,340 Cash flows from (used in) discontinued operations Cash flows from operating activities — — 15,591 — (15,591 ) — Cash flows used in investing activities — — (12 ) — 12 — Cash flows used in financing activities — — (37,900 ) — 37,900 — Net cash flows used in discontinued operations — — (22,321 ) — 22,321 — Change in cash and cash equivalents classified as assets held for sale — — (22,321 ) — 22,321 — Cash and cash equivalents Net increase (decrease) for the period (223,637 ) (42,968 ) 49,571 (171,458 ) 22,321 (366,171 ) Balance, beginning of period 259,738 445,423 3,995 817,606 — 1,526,762 Balance, end of period $ 36,101 $ 402,455 $ 53,566 $ 646,148 $ 22,321 $ 1,160,591 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) INFORMATION Three Months Ended June 30, 2018 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 1,937,394 $ 220,390 $ 921,382 $ (220,471 ) $ 2,858,695 Equity in subsidiaries' earnings 309,334 22,519 — — (331,853 ) — Expenses Casino and hotel operations 2,562 1,094,872 — 572,061 (81 ) 1,669,414 General and administrative 2,408 315,659 27,219 120,386 (27,219 ) 438,453 Corporate expense 39,707 53,652 10,746 5,192 (5,859 ) 103,438 Preopening and start-up expenses — 1,937 — 17,140 — 19,077 Property transactions, net — 17,083 14,426 (113 ) (14,426 ) 16,970 Depreciation and amortization — 158,753 67,474 137,440 (67,459 ) 296,208 44,677 1,641,956 119,865 852,106 (115,044 ) 2,543,560 Income (loss) from unconsolidated affiliates — 48,294 — (354 ) — 47,940 Operating income 264,657 366,251 100,525 68,922 (437,280 ) 363,075 Interest expense, net of amounts capitalized (115,531 ) (156 ) (49,276 ) (16,530 ) — (181,493 ) Other non-operating, net 15,356 (118,368 ) (1,927 ) (49,288 ) 136,778 (17,449 ) Income before income taxes 164,482 247,727 49,322 3,104 (300,502 ) 164,133 Benefit (provision) for income taxes (40,705 ) — (1,263 ) 18,258 — (23,710 ) Net income 123,777 247,727 48,059 21,362 (300,502 ) 140,423 Less: Net income attributable to noncontrolling interests — — (13,146 ) (3,500 ) — (16,646 ) Net income attributable to MGM Resorts International $ 123,777 $ 247,727 $ 34,913 $ 17,862 $ (300,502 ) $ 123,777 Net income $ 123,777 $ 247,727 $ 48,059 $ 21,362 $ (300,502 ) $ 140,423 Other comprehensive income, net of tax: Foreign currency translation adjustment 583 583 — 1,400 (1,166 ) 1,400 Unrealized gain on cash flow hedges 3,660 — 6,281 — (4,606 ) 5,335 Other comprehensive income 4,243 583 6,281 1,400 (5,772 ) 6,735 Comprehensive income 128,020 248,310 54,340 22,762 (306,274 ) 147,158 Less: Comprehensive income attributable to noncontrolling interests — — (14,821 ) (4,317 ) — (19,138 ) Comprehensive income attributable to MGM Resorts International $ 128,020 $ 248,310 $ 39,519 $ 18,445 $ (306,274 ) $ 128,020 Six Months Ended June 30, 2018 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 3,827,187 $ 436,229 $ 1,854,329 $ (436,813 ) $ 5,680,932 Equity in subsidiaries' earnings 637,601 67,054 — — (704,655 ) — Expenses Casino and hotel operations 5,277 2,144,891 — 1,155,040 (584 ) 3,304,624 General and administrative 4,758 626,509 49,718 225,076 (49,718 ) 856,343 Corporate expense 79,008 104,059 21,227 10,544 (11,891 ) 202,947 Preopening and start-up expenses — 8,679 — 77,315 — 85,994 Property transactions, net — 22,225 18,512 643 (18,512 ) 22,868 Depreciation and amortization — 315,400 136,465 249,588 (136,423 ) 565,030 89,043 3,221,763 225,922 1,718,206 (217,128 ) 5,037,806 Income (loss) from unconsolidated affiliates — 79,926 — (220 ) — 79,706 Operating income 548,558 752,404 210,307 135,903 (924,340 ) 722,832 Interest expense, net of amounts capitalized (225,089 ) (293 ) (98,506 ) (25,514 ) — (349,402 ) Other non-operating, net 31,128 (226,318 ) (3,079 ) (95,975 ) 265,869 (28,375 ) Income before income taxes 354,597 525,793 108,722 14,414 (658,471 ) 345,055 Benefit (provision) for income taxes (7,376 ) — (2,494 ) 71,539 — 61,669 Net income 347,221 525,793 106,228 85,953 (658,471 ) 406,724 Less: Net income attributable to noncontrolling interests — — (28,976 ) (30,527 ) — (59,503 ) Net income attributable to MGM Resorts International $ 347,221 $ 525,793 $ 77,252 $ 55,426 $ (658,471 ) $ 347,221 Net income $ 347,221 $ 525,793 $ 106,228 $ 85,953 $ (658,471 ) $ 406,724 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment (12,785 ) (12,785 ) — (22,752 ) 25,570 (22,752 ) Unrealized gain on cash flow hedges 13,158 — 22,636 — (16,603 ) 19,191 Other comprehensive income (loss) 373 (12,785 ) 22,636 (22,752 ) 8,967 (3,561 ) Comprehensive income 347,594 513,008 128,864 63,201 (649,504 ) 403,163 Less: Comprehensive income attributable to noncontrolling interests — — (35,009 ) (20,560 ) — (55,569 ) Comprehensive income attributable to MGM Resorts International $ 347,594 $ 513,008 $ 93,855 $ 42,641 $ (649,504 ) $ 347,594 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION Six Months Ended June 30, 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 $ (224,359 ) $ 624,484 $ 284,333 $ 408,693 $ — $ 1,093,151 Cash flows from investing activities Capital expenditures, net of construction payable — (367,713 ) (190 ) (493,858 ) — (861,761 ) Dispositions of property and equipment — 435 — 5 — 440 Investments in unconsolidated affiliates — (2,503 ) — — — (2,503 ) Distributions from unconsolidated affiliates — 200,000 — — — 200,000 Intercompany accounts — (515,927 ) — — 515,927 — Other — (9,916 ) — (5,693 ) — (15,609 ) Net cash used in investing activities — (695,624 ) (190 ) (499,546 ) 515,927 (679,433 ) Cash flows from financing activities Net repayments under bank credit facilities - maturities of 90 days or less (141,250 ) — (13,000 ) (206,624 ) — (360,874 ) Issuance of long-term debt 1,000,000 — — — — 1,000,000 Retirement of senior notes and senior debentures — (2,265 ) — — — (2,265 ) Debt issuance costs (14,414 ) — (17,490 ) (32,873 ) — (64,777 ) MGP dividends paid to consolidated subsidiaries — — (163,913 ) — 163,913 — Dividends paid to common shareholders (133,334 ) — — — — (133,334 ) Distributions to noncontrolling interest owners — — (59,553 ) (41,854 ) — (101,407 ) Purchases of common stock (957,264 ) — — — — (957,264 ) Intercompany accounts 505,289 48,052 — 126,499 (679,840 ) — Other (9,393 ) (4,200 ) — (4,637 ) — (18,230 ) Net cash provided by (used in) financing activities 249,634 41,587 (253,956 ) (159,489 ) (515,927 ) (638,151 ) Effect of exchange rate on cash — — — (2,690 ) — (2,690 ) Cash and cash equivalents Net increase (decrease) for the period 25,275 (29,553 ) 30,187 (253,032 ) — (227,123 ) Balance, beginning of period 26,870 311,043 259,722 902,360 — 1,499,995 Balance, end of period $ 52,145 $ 281,490 $ 289,909 $ 649,328 $ — $ 1,272,872 |