Condensed Consolidating Financial Information | NOTE 13 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION As of September 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 September 30, 2019 and December 31, 2018 and for the three and nine months ended September 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 September 30, 2019 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Current assets $ 774,542 $ 1,123,697 $ 166,402 $ 827,858 $ (11,753 ) $ 2,880,746 Property and equipment, net — 5,197,751 10,894,121 4,524,078 (11,972 ) 20,603,978 Investments in subsidiaries 23,371,673 3,776,537 — — (27,148,210 ) — Investments in the MGP Operating Partnership — 3,657,793 — 771,393 (4,429,186 ) — Investments in and advances to unconsolidated affiliates — 712,292 — 21,700 25,000 758,992 Intercompany accounts — 8,270,168 — — (8,270,168 ) — Other non-current assets 69,752 10,300,179 869,040 7,088,325 (11,402,141 ) 6,925,155 $ 24,215,967 $ 33,038,417 $ 11,929,563 $ 13,233,354 $ (51,248,430 ) $ 31,168,871 Current liabilities $ 879,192 $ 1,614,524 $ 181,890 $ 907,330 $ (289,692 ) $ 3,293,244 Intercompany accounts 8,189,657 — 298 80,213 (8,270,168 ) — Deferred income taxes, net 1,161,765 125,149 29,721 249,512 (29,721 ) 1,536,426 Long-term debt, net 7,841,161 569 4,847,408 2,254,736 — 14,943,874 Other non-current liabilities 83,640 9,314,211 485,942 2,320,021 (11,435,081 ) 768,733 Total liabilities 18,155,415 11,054,453 5,545,259 5,811,812 (20,024,662 ) 20,542,277 Redeemable noncontrolling interests — — — 105,976 — 105,976 MGM Resorts International stockholders' equity 6,060,552 21,982,631 4,309,794 4,931,343 (31,223,768 ) 6,060,552 Noncontrolling interests — 1,333 2,074,510 2,384,223 — 4,460,066 Total stockholders' equity 6,060,552 21,983,964 6,384,304 7,315,566 (31,223,768 ) 10,520,618 $ 24,215,967 $ 33,038,417 $ 11,929,563 $ 13,233,354 $ (51,248,430 ) $ 31,168,871 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 September 30, 2019 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 2,142,108 $ 226,011 $ 1,172,280 $ (226,017 ) $ 3,314,382 Equity in subsidiaries' earnings 120,836 30,349 — — (151,185 ) — Expenses Casino and hotel operations 1,525 1,200,554 — 734,577 (6 ) 1,936,650 General and administrative 2,749 542,664 5,922 187,109 (244,216 ) 494,228 Corporate expense 42,231 56,782 4,566 4,966 — 108,545 Preopening and start-up expenses — 926 — (1 ) — 925 Property transactions, net 7,530 232,289 9,921 118 — 249,858 Depreciation and amortization — 108,126 71,957 141,926 — 322,009 54,035 2,141,341 92,366 1,068,695 (244,222 ) 3,112,215 Income (loss) from unconsolidated affiliates — 41,143 — (4,929 ) — 36,214 Operating income 66,801 72,259 133,645 98,656 (132,980 ) 238,381 Interest expense, net of amounts capitalized (118,819 ) (221 ) (63,048 ) (33,415 ) — (215,503 ) Other non-operating, net 18,135 33,793 (65 ) (16,457 ) (59,456 ) (24,050 ) Income (loss) before income taxes (33,883 ) 105,831 70,532 48,784 (192,436 ) (1,172 ) Benefit (provision) for income taxes (3,250 ) — (1,979 ) 12,505 — 7,276 Net income (loss) (37,133 ) 105,831 68,553 61,289 (192,436 ) 6,104 Less: Net income attributable to noncontrolling interests — (1,333 ) (22,515 ) (19,389 ) — (43,237 ) Net income (loss) attributable to MGM Resorts International $ (37,133 ) $ 104,498 $ 46,038 $ 41,900 $ (192,436 ) $ (37,133 ) Net income (loss) $ (37,133 ) $ 105,831 $ 68,553 $ 61,289 $ (192,436 ) $ 6,104 Other comprehensive loss, net of tax: Foreign currency translation adjustment (10,509 ) (10,509 ) — (18,602 ) 21,018 (18,602 ) Unrealized loss on cash flow hedges (10,271 ) — (19,270 ) — 13,037 (16,504 ) Other comprehensive loss (20,780 ) (10,509 ) (19,270 ) (18,602 ) 34,055 (35,106 ) Comprehensive income (loss) (57,913 ) 95,322 49,283 42,687 (158,381 ) (29,002 ) Less: Comprehensive income attributable to noncontrolling interests — — (16,282 ) (12,629 ) — (28,911 ) Comprehensive income (loss) attributable to MGM Resorts International $ (57,913 ) $ 95,322 $ 33,001 $ 30,058 $ (158,381 ) $ (57,913 ) Nine Months Ended September 30, 2019 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 6,221,722 $ 655,193 $ 3,492,820 $ (655,199 ) $ 9,714,536 Equity in subsidiaries' earnings 630,307 96,737 — — (727,044 ) — Expenses Casino and hotel operations 6,042 3,538,069 — 2,170,763 (11,029 ) 5,703,845 General and administrative 23,595 1,634,652 17,401 564,569 (696,453 ) 1,543,764 Corporate expense 145,920 163,826 21,555 14,741 — 346,042 Preopening and start-up expenses — 3,083 — 2,008 — 5,091 Property transactions, net 7,530 244,451 11,344 1,099 — 264,424 Depreciation and amortization — 319,902 223,062 430,247 — 973,211 183,087 5,903,983 273,362 3,183,427 (707,482 ) 8,836,377 Income (loss) from unconsolidated affiliates — 109,555 — (7,588 ) — 101,967 Operating income 447,220 524,031 381,831 301,805 (674,761 ) 980,126 Interest expense, net of amounts capitalized (363,882 ) (638 ) (190,973 ) (91,959 ) — (647,452 ) Other non-operating, net 14,276 143,363 1,383 (27,026 ) (240,271 ) (108,275 ) Income from continuing operations before income taxes 97,614 666,756 192,241 182,820 (915,032 ) 224,399 Provision for income taxes (60,045 ) (8 ) (5,771 ) (10,145 ) — (75,969 ) Income from continuing operations, net of tax 37,569 666,748 186,470 172,675 (915,032 ) 148,430 Income from discontinued operations, net of tax — — 16,216 — (16,216 ) — Net income 37,569 666,748 202,686 172,675 (931,248 ) 148,430 Less: Net income attributable to noncontrolling interests — (4,192 ) (64,328 ) (42,341 ) — (110,861 ) Net income attributable to MGM Resorts International $ 37,569 $ 662,556 $ 138,358 $ 130,334 $ (931,248 ) $ 37,569 Net income $ 37,569 $ 666,748 $ 202,686 $ 172,675 $ (931,248 ) $ 148,430 Other comprehensive loss, net of tax: Foreign currency translation adjustment (2,661 ) (2,661 ) — (4,627 ) 5,322 (4,627 ) Unrealized loss on cash flow hedges (35,528 ) — (65,657 ) — 45,060 (56,125 ) Other comprehensive loss (38,189 ) (2,661 ) (65,657 ) (4,627 ) 50,382 (60,752 ) Comprehensive income (loss) (620 ) 664,087 137,029 168,048 (880,866 ) 87,678 Less: Comprehensive income attributable to noncontrolling interests — — (43,731 ) (44,567 ) — (88,298 ) Comprehensive income (loss) attributable to MGM Resorts International $ (620 ) $ 664,087 $ 93,298 $ 123,481 $ (880,866 ) $ (620 ) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION Nine Months Ended September 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 $ (344,621 ) $ 1,306,819 $ (84,517 ) $ 494,018 $ (15,591 ) $ 1,356,108 Cash flows from investing activities Capital expenditures, net of construction payable — (334,870 ) — (147,928 ) 12 (482,786 ) Dispositions of property and equipment — 1,870 — 66 — 1,936 Acquisition of Empire City Casino, net of cash acquired — (535,681 ) — — — (535,681 ) Investments in unconsolidated affiliates — (81,271 ) — — — (81,271 ) Distributions from unconsolidated affiliates — 99,661 — — — 99,661 Intercompany accounts — (1,134,905 ) — — 1,134,905 — Northfield OpCo transaction — (3,779 ) 3,779 — — — Other — (4,500 ) — (26,612 ) — (31,112 ) Net cash provided by (used in) investing activities — (1,993,475 ) 3,779 (174,474 ) 1,134,917 (1,029,253 ) Cash flows from financing activities Net borrowings (repayments) under bank credit facilities – maturities of 90 days or less 510,000 245,950 (812,763 ) (1,654,194 ) — (1,711,007 ) 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 ) (38,280 ) — — — (1,759,978 ) Debt issuance costs (14,080 ) — (9,983 ) (39,328 ) — (63,391 ) Issuance of MGM Growth Properties Class A shares, net — — 699,362 — — 699,362 Dividends paid to common shareholders (205,163 ) — — — — (205,163 ) MGP dividends paid to consolidated subsidiaries — — (277,899 ) — 277,899 — Distributions to noncontrolling interest owners — (3,574 ) (117,106 ) (51,559 ) — (172,239 ) Purchases of common stock (638,815 ) — — — — (638,815 ) Intercompany accounts 1,176,224 464,988 — (228,408 ) (1,412,804 ) — Other (8,789 ) (43,291 ) (1,342 ) (3,133 ) 37,900 (18,655 ) Net cash provided by (used in) financing activities 97,679 625,793 230,269 (476,622 ) (1,097,005 ) (619,886 ) Effect of exchange rate on cash — — — (162 ) — (162 ) 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 (246,942 ) (60,863 ) 149,531 (157,240 ) 22,321 (293,193 ) Balance, beginning of period 259,738 445,423 3,995 817,606 — 1,526,762 Balance, end of period $ 12,796 $ 384,560 $ 153,526 $ 660,366 $ 22,321 $ 1,233,569 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) INFORMATION Three Months Ended September 30, 2018 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 2,032,404 $ 216,659 $ 996,987 $ (216,748 ) $ 3,029,302 Equity in subsidiaries' earnings 335,237 27,390 — — (362,627 ) — Expenses Casino and hotel operations 2,602 1,165,476 — 629,205 (9,857 ) 1,787,426 General and administrative 2,417 325,809 20,925 127,980 (13,714 ) 463,417 Corporate expense 33,767 51,545 13,703 4,933 (5,859 ) 98,089 Preopening and start-up expenses — 3,212 — 43,678 — 46,890 Property transactions, net — (42,345 ) 339 (55 ) (339 ) (42,400 ) Depreciation and amortization — 159,226 63,468 138,951 (61,173 ) 300,472 38,786 1,662,923 98,435 944,692 (90,942 ) 2,653,894 Income (loss) from unconsolidated affiliates — 35,925 — (430 ) — 35,495 Operating income 296,451 432,796 118,224 51,865 (488,433 ) 410,903 Interest expense, net of amounts capitalized (125,234 ) (95 ) (58,743 ) (21,501 ) — (205,573 ) Other non-operating, net 16,179 (104,534 ) (857 ) (44,919 ) 119,257 (14,874 ) Income (loss) from continuing operations before income taxes 187,396 328,167 58,624 (14,555 ) (369,176 ) 190,456 Benefit (provision) for income taxes (44,518 ) — (2,650 ) 26,033 2,089 (19,046 ) Income from continuing operations, net of tax 142,878 328,167 55,974 11,478 (367,087 ) 171,410 Income from discontinued operations, net of tax — — 13,949 — (13,949 ) — Net income 142,878 328,167 69,923 11,478 (381,036 ) 171,410 Less: Net income attributable to noncontrolling interests — — (19,484 ) (9,048 ) — (28,532 ) Net income attributable to MGM Resorts International $ 142,878 $ 328,167 $ 50,439 $ 2,430 $ (381,036 ) $ 142,878 Net income $ 142,878 $ 328,167 $ 69,923 $ 11,478 $ (381,036 ) $ 171,410 Other comprehensive income, net of tax: Foreign currency translation adjustment 6,706 6,706 — 12,210 (13,412 ) 12,210 Unrealized gain on cash flow hedges 2,765 — 4,736 — (3,473 ) 4,028 Other comprehensive income 9,471 6,706 4,736 12,210 (16,885 ) 16,238 Comprehensive income 152,349 334,873 74,659 23,688 (397,921 ) 187,648 Less: Comprehensive income attributable to noncontrolling interests — — (20,747 ) (14,552 ) — (35,299 ) Comprehensive income attributable to MGM Resorts International $ 152,349 $ 334,873 $ 53,912 $ 9,136 $ (397,921 ) $ 152,349 Nine Months Ended September 30, 2018 Guarantor Non-Guarantor Subsidiaries Parent Subsidiaries MGP Other Elimination Consolidated (In thousands) Net revenues $ — $ 5,859,591 $ 652,888 $ 2,851,316 $ (653,561 ) $ 8,710,234 Equity in subsidiaries' earnings 972,838 94,444 — — (1,067,282 ) — Expenses Casino and hotel operations 7,879 3,310,367 — 1,784,245 (10,441 ) 5,092,050 General and administrative 7,175 952,318 70,643 353,056 (63,432 ) 1,319,760 Corporate expense 112,775 155,604 34,930 15,477 (17,750 ) 301,036 Preopening and start-up expenses — 11,891 — 120,993 — 132,884 Property transactions, net — (20,120 ) 18,851 588 (18,851 ) (19,532 ) Depreciation and amortization — 474,626 199,933 388,539 (197,596 ) 865,502 127,829 4,884,686 324,357 2,662,898 (308,070 ) 7,691,700 Income (loss) from unconsolidated affiliates — 115,851 — (650 ) — 115,201 Operating income 845,009 1,185,200 328,531 187,768 (1,412,773 ) 1,133,735 Interest expense, net of amounts capitalized (350,323 ) (388 ) (157,249 ) (47,015 ) — (554,975 ) Other non-operating, net 47,307 (330,852 ) (3,936 ) (140,894 ) 385,126 (43,249 ) Income (loss) from continuing operations before income taxes 541,993 853,960 167,346 (141 ) (1,027,647 ) 535,511 Benefit (provision) for income taxes (51,894 ) — (5,144 ) 97,572 2,089 42,623 Income from continuing operations, net of tax 490,099 853,960 162,202 97,431 (1,025,558 ) 578,134 Income from discontinued operations, net of tax — — 13,949 — (13,949 ) — Net income 490,099 853,960 176,151 97,431 (1,039,507 ) 578,134 Less: Net income attributable to noncontrolling interests — — (48,460 ) (39,575 ) — (88,035 ) Net income attributable to MGM Resorts International $ 490,099 $ 853,960 $ 127,691 $ 57,856 $ (1,039,507 ) $ 490,099 Net income $ 490,099 $ 853,960 $ 176,151 $ 97,431 $ (1,039,507 ) $ 578,134 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment (6,079 ) (6,079 ) — (10,542 ) 12,158 (10,542 ) Unrealized gain on cash flow hedges 15,923 — 27,372 — (20,076 ) 23,219 Other comprehensive income (loss) 9,844 (6,079 ) 27,372 (10,542 ) (7,918 ) 12,677 Comprehensive income 499,943 847,881 203,523 86,889 (1,047,425 ) 590,811 Less: Comprehensive income attributable to noncontrolling interests — — (55,756 ) (35,112 ) — (90,868 ) Comprehensive income attributable to MGM Resorts International $ 499,943 $ 847,881 $ 147,767 $ 51,777 $ (1,047,425 ) $ 499,943 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION Nine Months Ended September 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 $ (338,197 ) $ 961,795 $ 424,837 $ 355,281 $ (8,250 ) $ 1,395,466 Cash flows from investing activities Capital expenditures, net of construction payable — (541,497 ) (191 ) (682,840 ) 604 (1,223,924 ) Dispositions of property and equipment — 477 — 98 — 575 Proceeds from sale of business units and investment in unconsolidated affiliate — 163,616 — — — 163,616 Acquisition of Northfield Park, net of cash acquired — 67,606 (1,068,337 ) — (33,803 ) (1,034,534 ) Investments in unconsolidated affiliates — (2,503 ) — — — (2,503 ) Distributions from unconsolidated affiliates — 320,287 — — — 320,287 Intercompany accounts — (992,845 ) — — 992,845 — Other — (13,416 ) — (8,793 ) — (22,209 ) Net cash used in investing activities — (998,275 ) (1,068,528 ) (691,535 ) 959,646 (1,798,692 ) Cash flows from financing activities Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less (144,375 ) — 747,375 175,101 — 778,101 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 ) (32,904 ) — (64,808 ) Dividends paid to common shareholders (197,295 ) — — — — (197,295 ) MGP dividends paid to consolidated subsidiaries — — (247,820 ) — 247,820 — Distributions to noncontrolling interest owners — — (90,045 ) (59,481 ) — (149,526 ) Purchases of common stock (1,133,334 ) — — — — (1,133,334 ) Intercompany accounts 859,461 124,252 — 256,952 (1,240,665 ) — Other (11,594 ) (5,714 ) — (6,168 ) — (23,476 ) Net cash provided by financing activities 358,449 116,273 392,020 333,500 (992,845 ) 207,397 Effect of exchange rate on cash — — — (1,489 ) — (1,489 ) Cash flows from (used in) discontinued operations Cash flows from operating activities — — 8,250 — (8,250 ) — Cash flows used in investing activities — — 33,199 — (33,199 ) — Cash flows used in financing activities — — — — — — Net cash flows used in discontinued operations — — 41,449 — (41,449 ) — Change in cash and cash equivalents classified as assets held for sale — — 41,449 — (41,449 ) — Cash and cash equivalents Net increase (decrease) for the period 20,252 79,793 (251,671 ) (4,243 ) (41,449 ) (197,318 ) Balance, beginning of period 26,870 311,043 259,722 902,360 — 1,499,995 Balance, end of period $ 47,122 $ 390,836 $ 8,051 $ 898,117 $ (41,449 ) $ 1,302,677 |