Annual Reports

 
Quarterly Reports

  • 10-Q (Aug 8, 2017)
  • 10-Q (May 9, 2017)
  • 10-Q (Nov 9, 2016)
  • 10-Q (Aug 8, 2016)
  • 10-Q (May 6, 2016)
  • 10-Q (Nov 6, 2015)

 
8-K

 
Other

MGM Resorts International 10-Q 2013
Form 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES & EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

  x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

OR

 

  ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to         

Commission File No. 001-10362

 

 

MGM Resorts International

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   88-0215232

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

3600 Las Vegas Boulevard South, Las Vegas, Nevada 89109

(Address of principal executive offices)

(702) 693-7120

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files):    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

Class

  

Outstanding at November 1, 2013

Common Stock, $.01 par value    490,066,326 shares

 

 

 


Table of Contents

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

FORM 10-Q

I N D E X

 

     Page  

PART I.

   FINANCIAL INFORMATION   

Item 1.

  

Financial Statements (Unaudited)

  
  

Consolidated Balance Sheets at September 30, 2013 and December 31, 2012

     1   
  

Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2013 and September 30, 2012

     2   
  

Consolidated Statements of Comprehensive Income (Loss) for the Three Months and Nine Months Ended September 30, 2013 and September 30, 2012

     3   
  

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and September 30, 2012

     4   
  

Condensed Notes to Consolidated Financial Statements

     5-23   

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     24-36   

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

     36   

Item 4.

   Controls and Procedures      37   

PART II.  

   OTHER INFORMATION   

Item 1.

  

Legal Proceedings

     37   

Item 1A.

  

Risk Factors

     39   

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

     39   

Item 6.

  

Exhibits

     40   

SIGNATURES

     41   


Table of Contents

Part I.    FINANCIAL INFORMATION

 

Item 1. Financial Statements

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

     September 30,
2013
     December 31,
2012
 
ASSETS   

Current assets

     

Cash and cash equivalents

   $ 1,375,403      $ 1,543,509  

Accounts receivable, net

     411,077        443,677  

Inventories

     98,330        107,577  

Deferred income taxes, net

     126,396        179,431  

Prepaid expenses and other

     272,809        232,898  
  

 

 

    

 

 

 

Total current assets

     2,284,015        2,507,092  
  

 

 

    

 

 

 

Property and equipment, net

     13,969,293        14,194,652  

Other assets

     

Investments in and advances to unconsolidated affiliates

     1,416,462        1,444,547  

Goodwill

     2,900,758        2,902,847  

Other intangible assets, net

     4,548,415        4,737,833  

Other long-term assets, net

     539,892        497,767  
  

 

 

    

 

 

 

Total other assets

     9,405,527        9,582,994  
  

 

 

    

 

 

 
   $ 25,658,835      $ 26,284,738  
  

 

 

    

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY   

Current liabilities

     

Accounts payable

   $ 202,792      $ 199,620  

Income taxes payable

     2,500        1,350  

Accrued interest on long-term debt

     183,958        206,736  

Other accrued liabilities

     1,772,220        1,517,965  
  

 

 

    

 

 

 

Total current liabilities

     2,161,470        1,925,671  
  

 

 

    

 

 

 

Deferred income taxes

     2,478,063        2,473,889  

Long-term debt

     13,034,518        13,589,283  

Other long-term obligations

     157,613        179,879  

Commitments and contingencies (Note 5)

     

Stockholders’ equity

     

Common stock, $.01 par value: authorized 1,000,000,000 shares; issued and outstanding 489,814,210 and 489,234,401 shares

     4,898        4,892  

Capital in excess of par value

     4,150,413        4,132,655  

Retained earnings

     95,427        213,698  

Accumulated other comprehensive income

     11,619        14,303  
  

 

 

    

 

 

 

Total MGM Resorts International stockholders’ equity

     4,262,357        4,365,548  

Noncontrolling interests

     3,564,814        3,750,468  
  

 

 

    

 

 

 

Total stockholders’ equity

     7,827,171        8,116,016  
  

 

 

    

 

 

 
   $ 25,658,835      $ 26,284,738  
  

 

 

    

 

 

 

The accompanying condensed notes are an integral part of these consolidated financial statements.

 

1


Table of Contents

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2013     2012     2013     2012  

Revenues

        

Casino

   $ 1,460,300     $ 1,294,318     $ 4,304,877     $ 3,928,548  

Rooms

     413,060       393,055       1,252,020       1,205,441  

Food and beverage

     366,988       361,252       1,121,117       1,126,096  

Entertainment

     145,799       123,168       380,654       364,477  

Retail

     52,151       51,211       149,606       149,921  

Other

     123,180       127,567       374,920       373,590  

Reimbursed costs

     92,038       87,682       275,015       269,159  
  

 

 

   

 

 

   

 

 

   

 

 

 
     2,653,516       2,438,253       7,858,209       7,417,232  

Less: Promotional allowances

     (190,479     (183,275     (561,759     (550,899
  

 

 

   

 

 

   

 

 

   

 

 

 
     2,463,037       2,254,978       7,296,450       6,866,333  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses

        

Casino

     913,137       826,072       2,705,190       2,519,757  

Rooms

     132,386       128,546       394,096       384,598  

Food and beverage

     214,683       209,686       645,119       643,892  

Entertainment

     107,939       92,888       281,604       270,235  

Retail

     28,053       29,064       81,884       85,888  

Other

     91,841       88,616       270,633       263,673  

Reimbursed costs

     92,038       87,682       275,015       269,159  

General and administrative

     342,847       319,106       961,072       931,873  

Corporate expense

     54,190       62,992       153,178       147,792  

Preopening and start-up expenses

     4,279       765       9,931       765  

Property transactions, net

     26,127       5,803       122,749       97,187  

Depreciation and amortization

     211,682       228,414       641,751       700,866  
  

 

 

   

 

 

   

 

 

   

 

 

 
     2,219,202       2,079,634       6,542,222       6,315,685  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from unconsolidated affiliates

     3,928       (37,943     26,954       (45,266
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     247,763       137,401       781,182       505,382  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-operating income (expense):

        

Interest expense, net of amounts capitalized

     (208,939     (275,771     (648,886     (836,436

Non-operating items from unconsolidated affiliates

     (22,673     (20,901     (83,616     (68,603

Other, net

     (676     2,012       (6,909     (55,518
  

 

 

   

 

 

   

 

 

   

 

 

 
     (232,288     (294,660     (739,411     (960,557
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     15,475       (157,259     41,771       (455,175

Benefit (provision) for income taxes

     8,150       2,585       (26,146     26,760  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     23,625       (154,674     15,625       (428,415

Less: Net income attributable to noncontrolling interests

     (55,484     (26,485     (133,896     (115,449
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to MGM Resorts International

   $ (31,859   $ (181,159   $ (118,271   $ (543,864
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share of common stock attributable to MGM Resorts International

        

Basic

   $ (0.07   $ (0.37   $ (0.24   $ (1.11
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.07   $ (0.37   $ (0.24   $ (1.11
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying condensed notes are an integral part of these consolidated financial statements.

 

2


Table of Contents

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2013     2012     2013     2012  

Net income (loss)

   $ 23,625     $ (154,674   $ 15,625     $ (428,415

Other comprehensive income (loss), net of tax:

        

Foreign currency translation adjustment

     587       2,840       (5,638     12,841  

Other

     —         —         115       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

     587       2,840       (5,523     12,841  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     24,212       (151,834     10,102       (415,574

Less: Comprehensive income attributable to noncontrolling interests

     (55,760     (27,838     (131,057     (121,735
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive loss attributable to MGM Resorts International

   $ (31,548   $ (179,672   $ (120,955   $ (537,309
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying condensed notes are an integral part of these consolidated financial statements.

 

3


Table of Contents

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     Nine Months Ended
September 30,
 
     2013     2012  

Cash flows from operating activities

    

Net income (loss)

   $ 15,625     $ (428,415

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization

     641,751       700,866  

Amortization of debt discounts, premiums and issuance costs

     26,027       56,086  

Loss on retirement of long-term debt

     3,799       58,740  

Provision for doubtful accounts

     16,929       46,993  

Stock-based compensation

     23,934       30,132  

Property transactions, net

     122,749       97,187  

Loss from unconsolidated affiliates

     57,038       113,993  

Distributions from unconsolidated affiliates

     12,788       15,203  

Change in deferred income taxes

     57,302       (50,918

Change in operating assets and liabilities:

    

Accounts receivable

     15,330       32,527  

Inventories

     9,238       4,981  

Income taxes receivable and payable, net

     (647     (7,121

Prepaid expenses and other

     (69,848     (22,357

Prepaid Cotai land concession premium

     (9,657     —    

Accounts payable and accrued liabilities

     190,147       256,397  

Other

     (16,748     (17,032
  

 

 

   

 

 

 

Net cash provided by operating activities

     1,095,757       887,262  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures, net of construction payable

     (379,573     (316,757

Dispositions of property and equipment

     546       236  

Investments in and advances to unconsolidated affiliates

     (23,853     (37,000

Distributions from unconsolidated affiliates in excess of earnings

     —         1,347  

Investments in treasury securities - maturities longer than 90 days

     (174,446     (195,313

Proceeds from treasury securities - maturities longer than 90 days

     204,394       225,301  

Other

     1,580       (1,221
  

 

 

   

 

 

 

Net cash used in investing activities

     (371,352     (323,407
  

 

 

   

 

 

 

Cash flows from financing activities

    

Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less

     59,000       (205,926

Borrowings under bank credit facilities - maturities longer than 90 days

     2,793,000       900,000  

Repayments under bank credit facilities - maturities longer than 90 days

     (2,793,000     (2,734,128

Issuance of senior notes

     —         2,850,000  

Retirement of senior notes

     (612,262     (534,650

Debt issuance costs

     (17,061     (54,459

Distributions to noncontrolling interest owners

     (318,348     (206,806

Other

     (3,211     (1,733
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (891,882     12,298  
  

 

 

   

 

 

 

Effect of exchange rate on cash

     (629     1,093  
  

 

 

   

 

 

 

Cash and cash equivalents

    

Net increase (decrease) for the period

     (168,106     577,246  

Balance, beginning of period

     1,543,509       1,865,913  
  

 

 

   

 

 

 

Balance, end of period

   $ 1,375,403     $ 2,443,159  
  

 

 

   

 

 

 

Supplemental cash flow disclosures

    

Interest paid, net of amounts capitalized

   $ 645,637     $ 734,096  

Federal, state and foreign income taxes paid, net of refunds

     806       6,539  

Non-cash investing and financing activities

    

Increase in investment in and advances to CityCenter related to change in completion guarantee liability

   $ 72,676     $ 79,580  

The accompanying condensed notes are an integral part of these consolidated financial statements.

 

4


Table of Contents

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 — ORGANIZATION

Organization. MGM Resorts International (the “Company”) is a Delaware corporation that acts largely as a holding company and, through wholly owned subsidiaries, primarily owns and/or operates casino resorts. The Company owns and operates the following casino resorts in Las Vegas, Nevada: Bellagio, MGM Grand Las Vegas (including The Signature), The Mirage, Mandalay Bay, Luxor, New York-New York, Monte Carlo, Excalibur and Circus Circus Las Vegas. Other Nevada operations include Circus Circus Reno, Gold Strike in Jean and Railroad Pass in Henderson. The Company and its local partners own and operate MGM Grand Detroit in Detroit, Michigan. The Company also owns and operates Beau Rivage in Biloxi and Gold Strike Tunica in Mississippi. In addition, the Company owns Shadow Creek, an exclusive world-class golf course located approximately ten miles north of its Las Vegas Strip resorts, Primm Valley Golf Club at the California/Nevada state line and Fallen Oak golf course in Saucier, Mississippi. The Company has two reportable segments: wholly owned domestic resorts and MGM China.

The Company owns 51% and has a controlling interest in MGM China Holdings Limited (“MGM China”), which owns MGM Grand Paradise, S.A. (“MGM Grand Paradise”), the Macau company that owns and operates the MGM Macau resort and casino and the related gaming subconcession and land concession. On October 18, 2012, MGM Grand Paradise formally accepted a land concession contract with the government of Macau to develop a second resort and casino on an approximately 17.8 acre site in Cotai, Macau. The land concession contract became effective on January 9, 2013 when the Macau government published the agreement in the Official Gazette of Macau.

The Company owns 50% of CityCenter, located between Bellagio and Monte Carlo. The other 50% of CityCenter is owned by Infinity World Development Corp, a wholly owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity. CityCenter consists of Aria, a casino resort; Mandarin Oriental Las Vegas, a non-gaming boutique hotel; Crystals, a retail, dining and entertainment district; and Vdara, a luxury condominium-hotel. In addition, CityCenter features residential units in the Residences at Mandarin Oriental and Veer. The Company receives a management fee of 2% of revenues for the management of Aria and Vdara, and 5% of EBITDA (as defined in the agreements governing the Company’s management of Aria and Vdara). In addition, the Company receives an annual fee of $3 million for the management of Crystals.

The Company has 50% interests in Grand Victoria and Silver Legacy. Grand Victoria is a riverboat casino in Elgin, Illinois; an affiliate of Hyatt Gaming owns the other 50% of Grand Victoria and also operates the resort. Silver Legacy is located in Reno, Nevada, adjacent to Circus Circus Reno, and the other 50% is owned by Eldorado LLC.

MGM Hospitality. MGM Hospitality seeks to leverage the Company’s management expertise and well-recognized brands through strategic partnerships and international expansion opportunities. MGM Hospitality has entered into management agreements for hotels in the Middle East, North Africa, India and – through its joint venture with Diaoyutai State Guesthouse – the People’s Republic of China. MGM Hospitality opened its first resort, MGM Grand Sanya, on Hainan Island in the People’s Republic of China in early 2012.

Borgata. The Company has a 50% economic interest in Borgata Hotel Casino & Spa (“Borgata”) located on Renaissance Pointe in the Marina area of Atlantic City, New Jersey. Boyd Gaming Corporation owns the other 50% of Borgata and also operates the resort. The Company’s interest is held in trust and was offered for sale pursuant to its amended settlement agreement with the New Jersey Division of Gaming Enforcement and approved by the New Jersey Casino Control Commission (“CCC”). The terms of the amended settlement agreement previously mandated the sale by March 2014. The Company had the right to direct the sale through March 2013 (the “divesture period”), subject to approval of the CCC, and the trustee was responsible for selling the trust property during the following 12-month period (the “terminal sale period”). On February 13, 2013, the settlement agreement was further amended to allow the Company to re-apply to the CCC for licensure in New Jersey and to defer expiration of these periods pending the outcome of the licensure process. The Company has submitted its licensure request to the CCC and there can be no assurances that such request will be approved or with respect to the timing of the licensure process. If the CCC denies the Company’s licensure request, then the divesture period will immediately end, and the terminal sale period will immediately begin, which will result in the Company’s Borgata interest being disposed of by the trustee pursuant to the terms of the settlement agreement.

The Company consolidates the trust because it is the sole economic beneficiary and accounts for its interest in Borgata under the cost method. The Company reviews its investment carrying value whenever indicators of impairment exist. As of September 30, 2013, the trust had $110 million of cash and investments, of which $90 million is held in U.S. treasury securities with maturities greater than three months but less than one year, and is recorded within “Prepaid expenses and other.”

 

5


Table of Contents

NOTE 2— BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation. As permitted by the rules and regulations of the Securities and Exchange Commission, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the Company’s 2012 annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments – which include only normal recurring adjustments – necessary to present fairly the Company’s interim financial statements. The results for such periods are not necessarily indicative of the results to be expected for the full year.

Fair value measurements. Fair value measurements affect the Company’s accounting and impairment assessments of its long-lived assets, investments in unconsolidated affiliates, cost method investments, assets acquired and liabilities assumed in an acquisition, goodwill and other intangible assets. Fair value measurements also affect the Company’s accounting for certain of its financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy that includes: Level 1 inputs, such as quoted prices in an active market; Level 2 inputs, which are observable inputs for similar assets; or Level 3 inputs, which are unobservable inputs.

 

   

At September 30, 2013, the fair value of the Company’s treasury securities held by the Borgata trust was $90 million, measured using Level 1 inputs. See Note 1;

 

   

The Company uses Level 1 inputs for its long-term debt fair value disclosures. See Note 4;

 

   

The Company used Level 3 inputs when assessing the fair value of its investment in Grand Victoria at June 30, 2013. See Note 3; and

 

   

The Company used Level 3 inputs when assessing the fair value of its land in Jean and Sloan, Nevada at September 30, 2013. See Note 9.

Income tax provision. The Company recognizes deferred tax assets, net of applicable reserves, related to net operating loss carryforwards and certain temporary differences with a future tax benefit to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied. Given the negative impact of the U.S. economy on the results of operations in the past several years, the Company no longer relies on projected future domestic operating income in assessing the realization of its domestic deferred tax assets and now relies only on the future reversal of existing domestic taxable temporary differences. As of September 30, 2013, the scheduled future reversal of existing U.S. federal deductible temporary differences exceeds the scheduled future reversal of existing U.S. federal taxable temporary differences. The Company recorded a valuation allowance for U.S. federal deferred tax assets in order to account for this excess, which resulted in an increase in provision for income taxes of $38 million and $64 million for the three and nine months ended September 30, 2013, respectively.

Income generated from gaming operations of MGM Grand Paradise is exempted from Macau’s 12% complementary tax for the five-year period ending December 31, 2016 pursuant to approval from the Macau government granted on September 22, 2011. The approval granted in 2011 represented the second five-year exemption period granted to MGM Grand Paradise. The Company measures the net deferred tax liability of MGM Grand Paradise under the assumption that it will receive an additional five-year exemption beyond 2016. Such assumption is based upon the granting of a third five-year exemption to a competitor of MGM Grand Paradise. The Company believes MGM Grand Paradise should also be entitled to a third five-year exemption in order to ensure non-discriminatory treatment among gaming concessionaires and subconcessionaires, a requirement under Macanese law. The net deferred tax liability of MGM Grand Paradise was remeasured during the first quarter of 2013 due to the extension of the amortization period of the Macau gaming concession in connection with the effectiveness of the Cotai land concession. This resulted in an increase in the net deferred tax liability and a corresponding increase in provision for income taxes of $65 million. While non-gaming operations remain subject to the complementary tax, MGM Grand Paradise has tax net operating losses from non-gaming operations that are fully offset by a valuation allowance.

During the first quarter of 2013, the Company settled all issues under appeal in connection with the IRS audits of the Company’s consolidated federal income tax returns and the Company’s cost method investee returns for the 2003 and 2004 tax years. Unrecognized tax benefits were reduced by $28 million and provision for income taxes was reduced by $38 million, including the impact of the settlement on the valuation allowance, as a result of this settlement.

NOTE 3 — INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

Investments in and advances to unconsolidated affiliates consisted of the following:

 

     September 30,      December 31,  
     2013      2012  
     (In thousands)  

CityCenter Holdings, LLC – CityCenter (50%)

   $ 1,224,622      $ 1,220,741  

Elgin Riverboat Resort–Riverboat Casino – Grand Victoria (50%)

     169,822        206,296  

Other

     22,018        17,510  
  

 

 

    

 

 

 
   $ 1,416,462      $ 1,444,547  
  

 

 

    

 

 

 

 

6


Table of Contents

The Company recorded its share of the results of operations of unconsolidated affiliates as follows:

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2013     2012     2013     2012  
     (In thousands)  

Income (loss) from unconsolidated affiliates

   $ 3,928     $ (37,943   $ 26,954     $ (45,266

Preopening and start-up expenses

     —         (124     (376     (124

Non-operating items from unconsolidated affiliates

     (22,673     (20,901     (83,616     (68,603
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ (18,745   $ (58,968   $ (57,038   $ (113,993
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-operating expense from unconsolidated affiliates for the three and nine months ended September 30, 2013 includes $1 million and $17 million, respectively, for the Company’s share of statutory interest recorded by CityCenter related to estimated amounts owed in connection with the CityCenter construction litigation. The nine months ended September 30, 2012 included $4 million related to the Company’s share of CityCenter’s loss on retirement of long-term debt.

In the third quarter of 2012, CityCenter recorded a $36 million impairment charge using revised management forecasts related to its Mandarin Oriental residential inventory. A discount rate of 17% was utilized in the discounted cash flow analysis to represent what management believed a market participant would determine to be commensurate with the inherent risks associated with the assets and related estimated cash flows. The Company recognized 50% of such impairment charge, resulting in a pre-tax charge of approximately $18 million. In addition, CityCenter accrued $32 million in the third quarter of 2012 related to the estimated demolition cost of the Harmon. The Company recognized 50% of such charge, resulting in a pre-tax charge of approximately $16 million. See Note 5 for additional information regarding the Harmon.

Grand Victoria

At June 30, 2013, the Company reviewed the carrying value of its Grand Victoria investment for impairment due to a higher than anticipated decline in operating results and loss of market share as a result of the opening of a new river boat casino in the Illinois market, as well as a decrease in forecasted cash flows for 2013 through 2017 compared to the prior forecast. The Company used a blended discounted cash flow analysis and guideline public company method to determine the estimated fair value from a market participant’s viewpoint. Key assumptions included in the discounted cash flow analysis were estimates of future cash flows including outflows for capital expenditures, a long-term growth rate of 2% and a discount rate of 11%. Key assumptions in the guideline public company method included business enterprise value multiples selected based on the range of multiples in the Company’s peer group. As a result of the analysis, the Company determined that it was necessary to record an other-than-temporary impairment charge of $37 million at June 30, 2013, based on an estimated fair value of $170 million for the Company’s 50% interest. The Company intends to, and believes it will be able to, retain the investment in Grand Victoria; however, due to the extent of the shortfall and the Company’s assessment of the uncertainty of fully recovering its investment, the Company has determined that the impairment was other-than-temporary. At June 30, 2012, the Company recorded an impairment charge of $85 million on its investment in Grand Victoria based on the then estimated fair value of $205 million for its 50% interest.

CityCenter

CityCenter summary financial information. Summarized balance sheet information of the CityCenter joint venture is as follows:

 

     September 30,      December 31,  
     2013      2012  
     (In thousands)  

Current assets

   $ 633,926      $ 546,851  

Property and other assets, net

     8,364,102        8,606,163  

Current liabilities

     421,672        451,332  

Long-term debt and other long-term obligations

     2,609,758        2,533,918  

Equity

     5,966,598        6,167,764  

 

7


Table of Contents

Summarized income statement information of the CityCenter joint venture is as follows:

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2013     2012     2013     2012  
     (In thousands)  

Net revenues

   $ 294,330     $ 266,430     $ 942,646     $ 795,492  

Operating expenses

     (324,120     (376,283     (996,378     (989,786
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (29,790     (109,853     (53,732     (194,294

Non-operating expense

     (71,238     (65,219     (240,905     (204,678
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (101,028   $ (175,072   $ (294,637   $ (398,972
  

 

 

   

 

 

   

 

 

   

 

 

 

October 2013 debt restructuring transactions. In October 2013, CityCenter entered into a $1.775 billion senior secured credit facility. The senior secured credit facility consists of a $75 million revolving facility maturing in October 2018, and a $1.7 billion term loan B facility maturing in October 2020. The term loan B facility was issued at 99% of the principal amount and will bear interest at LIBOR plus 4.00% with a LIBOR floor of 1.00%. Concurrent with the closing of the new senior secured credit facility, CityCenter issued a notice of full redemption with respect to its existing 7.625% senior secured first lien notes and 10.75% senior secured second lien PIK toggle notes and discharged each of the indentures for its first and second lien notes at a premium in accordance with the terms of such indentures. As a result of the transaction, the Company expects to record a fourth quarter charge of approximately $70 million for its share of CityCenter’s non-operating loss on retirement of long-term debt, primarily consisting of premiums associated with the redemption of the existing first and second lien notes as well as the write-off of previously unamortized debt issuance costs. In connection with the October 2013 debt restructuring, sponsor notes with a carrying value of approximately $738 million were converted to members’ equity. After these transactions, the senior credit facility is CityCenter’s only remaining long-term debt.

The senior secured credit facility is secured by substantially all the assets of CityCenter, and contain certain financial covenants including minimum interest coverage ratios and maximum leverage ratio requirements (as defined in the agreements).

NOTE 4 — LONG-TERM DEBT

Long-term debt consisted of the following:

 

     September 30,      December 31,  
     2013      2012  
     (In thousands)  

Senior credit facility:

     

$2,779 million ($2,800 million at December 31, 2012) term loans, net

   $ 2,771,777      $ 2,791,284  

Revolving loans

     80,000        —    

MGM Grand Paradise credit facility

     553,123        553,531  

$462.2 million 6.75% senior notes, due 2013

     —          462,226  

$150 million 7.625% senior subordinated debentures, due 2013, net

     —          150,539  

$508.9 million 5.875% senior notes, due 2014, net

     508,771        508,540  

$875 million 6.625% senior notes, due 2015, net

     876,178        876,634  

$1,450 million 4.25% convertible senior notes, due 2015, net

     1,457,323        1,460,780  

$242.9 million 6.875% senior notes, due 2016

     242,900        242,900  

$732.7 million 7.5% senior notes, due 2016

     732,749        732,749  

$500 million 10% senior notes, due 2016, net

     496,758        496,110  

$743 million 7.625% senior notes, due 2017

     743,000        743,000  

$475 million 11.375% senior notes, due 2018, net

     467,102        466,117  

$850 million 8.625% senior notes, due 2019

     850,000        850,000  

$1,000 million 6.75% senior notes, due 2020

     1,000,000        1,000,000  

$1,250 million 6.625% senior notes, due 2021

     1,250,000        1,250,000  

$1,000 million 7.75% senior notes, due 2022

     1,000,000        1,000,000  

$0.6 million 7% debentures, due 2036, net

     572        572  

$4.3 million 6.7% debentures, due 2096

     4,265        4,265  

Other notes

     —          36  
  

 

 

    

 

 

 
   $ 13,034,518      $ 13,589,283  
  

 

 

    

 

 

 

Debt due within one year of the September 30, 2013 balance sheet date is classified as long-term as the Company has both the intent and ability to refinance such amounts on a long-term basis under its senior credit facility.

 

8


Table of Contents

Senior credit facility. At September 30, 2013, the Company’s senior credit facility consisted of a $1.2 billion revolving credit facility, a $1.04 billion term loan A facility and a $1.74 billion term loan B facility. The revolving and term loan A facilities bear interest at LIBOR plus an applicable rate determined by the Company’s credit rating (2.75% as of September 30, 2013). The term loan B facility was re-priced in May 2013 and bears interest at LIBOR plus 2.50%, with a LIBOR floor of 1.00%, a 75 basis-point reduction compared to the prior rate. The revolving and term loan A facilities mature in December 2017 and the term loan B facility matures in December 2019. The term loan A and term loan B facilities are subject to scheduled amortization payments on the last day of each calendar quarter from and after March 31, 2013 in an amount equal to 0.25% of the original principal balance. The Company permanently repaid $7 million and $21 million in the three and nine months ended September 30, 2013, respectively, in accordance with the scheduled amortization. The Company had $1.09 billion of available borrowing capacity under its senior credit facility at September 30, 2013. At September 30, 2013, the interest rate on the term loan A was 2.93%, the interest rate on the term loan B was 3.50% and the interest rate on the revolving loans was 2.89%.

The land and substantially all of the assets of MGM Grand Las Vegas, Bellagio and The Mirage secure up to $3.35 billion of obligations outstanding under the senior credit facility. In addition, the land and substantially all of the assets of New York-New York and Gold Strike Tunica secure the entire amount of the senior credit facility and the land and substantially all of the assets of MGM Grand Detroit secure its $450 million of obligations as a co-borrower under the senior credit facility. In addition, the senior credit facility is secured by a pledge of the equity or limited liability company interests of the subsidiaries that own the pledged properties.

The senior credit facility contains customary representations and warranties and customary affirmative and negative covenants. In addition, the senior credit facility requires the Company and its restricted subsidiaries to maintain a minimum trailing four-quarter EBITDA and limits the ability of the Company and its restricted subsidiaries to make capital expenditures. As of September 30, 2013, the Company and its restricted subsidiaries are required to maintain a minimum EBITDA (as defined) of $1.05 billion. The minimum EBITDA increases to $1.10 billion for March 31, 2014 and June 30, 2014 and to $1.20 billion for September 30, 2014 and December 31, 2014, with periodic increases thereafter. EBITDA for the trailing twelve months ended September 30, 2013 calculated in accordance with the terms of the senior credit facility was $1.26 billion. The Company and its restricted subsidiaries are within the limit of $500 million of capital expenditures for the calendar year 2013.

The senior credit facility provides for customary events of default, including, without limitation, (i) payment defaults, (ii) covenant defaults, (iii) cross-defaults to certain other indebtedness in excess of specified amounts, (iv) certain events of bankruptcy and insolvency, (v) judgment defaults in excess of specified amounts, (vi) the failure of any loan document by a significant party to be in full force and effect and such circumstance, in the reasonable judgment of the required lenders, is materially adverse to the lenders, or (vii) the security documents cease to create a valid and perfected first priority lien on any material portion of the collateral. In addition, the senior credit facility provides that a cessation of business due to revocation, suspension or loss of any gaming license affecting a specified amount of its revenues or assets, will constitute an event of default.

MGM China credit facility. At September 30, 2013, the MGM China credit facility consisted of approximately $550 million of term loans and an approximately $1.45 billion revolving credit facility due October 2017. The credit facility is subject to scheduled amortization payments beginning in 2016. The outstanding balance at September 30, 2013 was comprised solely of term loans. The interest rate on the facility fluctuates annually based on HIBOR plus a margin, which was set at 2.50% until April 2013 and ranges between 1.75% and 2.50% thereafter based on MGM China’s leverage ratio. The margin was 1.75% at September 30, 2013. MGM China is a joint and several co-borrower with MGM Grand Paradise. MGM Grand Paradise’s interest in the Cotai land use right agreement will become collateral under the MGM China credit facility upon finalization of the appropriate government approvals. The material subsidiaries of MGM China continue to guarantee the facilities, and MGM China, MGM Grand Paradise and their guarantor subsidiaries have granted a security interest in substantially all of their assets to secure the amended facilities. The credit facility will be used for general corporate purposes and for the development of the Cotai project.

The MGM China credit facility agreement contains customary representations and warranties, events of default, affirmative covenants and negative covenants, which impose restrictions on, among other things, the ability of MGM China and its subsidiaries to make investments, pay dividends and sell assets, and to incur additional debt and additional liens. MGM China is also required to maintain compliance with a maximum consolidated total leverage ratio of 4.50 to 1.00 prior to the first anniversary of the MGM Cotai opening date and 4.00 to 1.00 thereafter, in addition to a minimum interest coverage ratio of 2.50 to 1.00. MGM China was in compliance with its credit facility covenants at September 30, 2013.

Senior notes. The Company repaid its $462 million 6.75% senior notes in April 2013 and $150 million 7.625% senior subordinated debentures in July 2013 at maturity.

Fair value of long-term debt. The estimated fair value of the Company’s long-term debt at September 30, 2013 was $14.2 billion. At December 31, 2012, the estimated fair value of the Company’s long-term debt was $14.3 billion. Fair value was estimated using quoted market prices for the Company’s senior notes, senior subordinated notes and senior credit facility. Carrying value of the MGM China credit facility approximates fair value.

 

9


Table of Contents

NOTE 5 — COMMITMENTS AND CONTINGENCIES

CityCenter construction litigation. In March 2010, Perini Building Company, Inc. (“Perini”), general contractor for CityCenter, filed a lawsuit in the Eighth Judicial District Court for Clark County, State of Nevada, against MGM MIRAGE Design Group (a wholly owned subsidiary of the Company which was the original party to the Perini construction agreement) and certain direct or indirect subsidiaries of CityCenter Holdings, LLC (the “CityCenter Owners”). Perini asserted that CityCenter was substantially completed, but the defendants failed to pay Perini approximately $490 million allegedly due and owing under the construction agreement for labor, equipment and materials expended on CityCenter. The complaint further charged the defendants with failure to provide timely and complete design documents, late delivery to Perini of design changes, mismanagement of the change order process, obstruction of Perini’s ability to complete the Harmon component, and fraudulent inducement of Perini to compromise significant amounts due for its general conditions. The complaint advanced claims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious breach of the implied covenant of good faith and fair dealing, unjust enrichment and promissory estoppel, and fraud and intentional misrepresentation. Perini seeks compensatory damages, punitive damages, attorneys’ fees and costs.

In April 2010, Perini served an amended complaint in this case which joins as defendants many owners of CityCenter residential condominium units (the “Condo Owner Defendants”), added a count for foreclosure of Perini’s recorded master mechanic’s lien against the CityCenter property in the amount of approximately $491 million, and asserted the priority of this mechanic’s lien over the interests of the CityCenter Owners, the Condo Owner Defendants and CityCenter lenders in the CityCenter property.

CityCenter Owners and the other defendants dispute Perini’s allegations, and contend that the defendants are entitled to substantial amounts from Perini, including offsets against amounts claimed to be owed to Perini and its subcontractors and damages based on breach of their contractual and other duties to CityCenter, duplicative payment requests, non-conforming work, lack of proof of alleged work performance, defective work related to the Harmon, property damage and Perini’s failure to perform its obligations to pay certain subcontractors and to prevent filing of liens against CityCenter. Parallel to the court litigation, CityCenter management conducted an extra-judicial program for settlement of CityCenter subcontractor claims. Prior to June 30, 2013, CityCenter resolved the claims of 215 first-tier Perini subcontractors (including the claims of any lower-tier subcontractors that might have claims through those first-tier subcontractors), with only seven remaining for further proceedings along with trial of Perini’s claims and CityCenter’s Harmon-related counterclaim and other claims by CityCenter against Perini and its parent guarantor, Tutor Perini. Subsequent to June 30, 2013, CityCenter reached settlement with four additional subcontractors; of the three remaining, two are implicated in the defective work at the Harmon. In August 2012, Perini recorded an amended notice of lien reducing its lien to approximately $191 million. In May 2013, Perini served an expert witness disclosure which asserted an increase in Perini’s claim for its work and materials on the CityCenter project. In August 2013, Perini recorded an amended notice of lien reducing its lien to approximately $167 million.

In November 2012, Perini filed a second amended complaint which, among other things, added claims against the CityCenter defendants of breach of contract (alleging that CityCenter’s Owner Controlled Insurance Program (“OCIP”) failed to provide adequate project insurance for Perini with broad coverages and high limits) and tortious breach of the implied covenant of good faith and fair dealing (alleging improper administration by CityCenter of the OCIP and Builders Risk insurance programs).

CityCenter reached a settlement agreement with certain professional service providers against whom it had asserted claims in this litigation for errors or omissions with respect to the CityCenter project, which settlement has been approved by the court. Trial of all remaining claims, including the Perini and remaining subcontractor lien claims against CityCenter, and CityCenter’s counterclaims against Perini and certain subcontractors for defective work at the Harmon has been set to commence on April 28, 2014.

CityCenter Owners and the other defendants will continue to vigorously assert and protect their interests in the Perini lawsuit. The Company believes it is probable that the CityCenter Owners and the other defendants will be liable for $143 million in connection with this lawsuit. Amounts determined to be owed would be funded in part under the Company’s completion guarantee which is discussed below. The Company does not believe it is reasonably possible it will be liable for any material amount in excess of its estimate of its probable liability. The Company’s estimate of its probable liability does not include any offset for amounts that may be recovered on its counterclaims against Perini and certain subcontractors for defective work at the Harmon.

CityCenter completion guarantee. In October 2013, the Company entered into a third amended and restated completion guarantee, which is collateralized by substantially all of the assets of Circus Circus Las Vegas, as well as certain undeveloped land adjacent to that property. The terms of the amended and restated completion guarantee provide CityCenter the ability to utilize up to $72 million of net residential proceeds to fund construction costs, or to reimburse the Company for construction costs previously expended. As of September 30, 2013, CityCenter is holding approximately $72 million in a separate bank account representing the remaining condo proceeds available to fund completion guarantee obligations or be reimbursed to the Company. In accordance with the amended and restated completion guarantee such amounts can only be used to fund construction lien obligations or reimbursed to the Company once the Perini litigation is settled.

As of September 30, 2013, the Company has funded $711 million under the completion guarantee and has accrued a liability of $82 million which includes estimated litigation costs related to the resolution of disputes with contractors concerning the final construction costs and estimated amounts to be paid to contractors through the legal process related to the Perini litigation. The Company does not believe it is reasonably possible it could be liable for amounts in excess of what it has accrued. The Company’s estimated obligation has been offset by $72 million of condominium proceeds

 

10


Table of Contents

received by CityCenter, which are available to fund construction lien claims upon the resolution of the Perini litigation. Also, the Company’s accrual reflects certain estimated offsets to the amounts claimed by the contractors. Moreover, the Company has not accrued for any contingent payments to CityCenter related to the Harmon component.

Harmon demolition. In response to a request by the Clark County Building Division (the “Building Division”), CityCenter engaged an engineer to conduct an analysis, based on all available information, as to the structural stability of the Harmon under building-code-specified load combinations. On July 11, 2011, that engineer submitted the results of his analysis of the Harmon tower and podium in its current as-built condition. The engineer opined, among other things, that “[i]n a code-level earthquake, using either the permitted or current code specified loads, it is likely that critical structural members in the tower will fail and become incapable of supporting gravity loads, leading to a partial or complete collapse of the tower. There is missing or misplaced reinforcing steel in columns, beams, shear walls, and transfer walls throughout the structure of the tower below the twenty-first floor.” Based on this engineering opinion, the Building Division requested a plan of action from CityCenter. CityCenter informed the Building Division that it decided to abate the potential for structural collapse of the Harmon in the event of a code-level earthquake by demolishing the building, and enclosed a plan of action for demolition by implosion prepared by LVI Environmental Services of Nevada, Inc (“LVI”). CityCenter also advised that prior to undertaking the demolition plan of action, it would seek relief from a standing order of the district court judge presiding over the Perini litigation that prohibits alteration or destruction of the building without court approval. In addition, CityCenter supplied the foundational data for the engineering conclusions stated in the July 11, 2011 letter declaring the Harmon’s structural instability in the event of a code-level earthquake. On November 22, 2011, the Building Division required that CityCenter submit a plan to abate the code deficiencies discovered in the Harmon tower.

In December 2011, CityCenter resubmitted to the Building Division the plan of abatement action prepared by LVI which was first submitted on August 15, 2011, and met with the Building Division about the requirements necessary to obtain demolition permits and approvals. As discussed above, the timing of the demolition of the Harmon is subject to rulings in the Perini litigation.

The district court presiding over the Perini litigation had previously granted CityCenter’s motion to demolish the Harmon, but stayed the demolition to allow CityCenter an opportunity to conduct additional Phase 4 destructive testing at the Harmon following the court’s order prohibiting CityCenter’s structural engineering expert from extrapolating the results of pre-Phase 4 testing to untested portions of the building.

In May 2013, CityCenter completed additional Phase 4 destructive testing of 468 structural elements at the Harmon, analysis of which data confirmed the existence of a wide variety of construction defects throughout the Harmon tower. In his June 2013 expert report CityCenter’s structural engineer opined that the additional test results and extrapolation thereof to untested portions of the building show that after a service-level earthquake (typically defined as an earthquake with a 50% chance of occurring in 30 years), the Harmon can be expected to sustain extensive damage and failure of many structural elements, and in a large earthquake, such as a building code-level earthquake, critical elements of the Harmon are likely to fail and lead to a partial or complete collapse of the tower. In April 2013 Perini’s structural engineering expert John A. Martin & Associates (“JAMA”) had sent a letter to the Building Division which declared in part that JAMA no longer believes that the Harmon Tower can be repaired to a code compliant structure, which condition JAMA attributed to CityCenter’s building testing. On July 18, 2013 CityCenter filed a renewed motion with the district court for permission to demolish the Harmon. On August 23, 2013, the court granted CityCenter’s motion, and CityCenter has commenced planning for demolition of the building.

The Company does not believe it would be responsible for funding any additional remediation efforts under the completion guarantee that might be required with respect to the Harmon; however, the Company’s view is based on a number of developing factors, including with respect to on-going litigation with CityCenter’s contractors, actions by local officials and other developments related to the CityCenter venture, all of which are subject to change.

Sales and use tax on complimentary meals. In March 2008, the Nevada Supreme Court ruled, in a case involving another gaming company, that food and non-alcoholic beverages purchased for use in providing complimentary meals to customers and to employees were exempt from use tax. The Company had previously paid use tax on these items and had generally filed for refunds for the periods from January 2001 to February 2008 related to this matter, which refunds had not been paid. The Company claimed the exemption on sales and use tax returns for periods after February 2008 in light of this Nevada Supreme Court decision and had not accrued or paid any sales or use tax for those periods. In February 2012, the Nevada Department of Taxation asserted that customer complimentary meals and employee meals were subject to sales tax on a prospective basis commencing February 15, 2012. In July 2012, the Nevada Department of Taxation announced that sales taxes applicable to such meals would be due and payable without penalty or interest at the earlier of certain regulatory, judicial or legislative events or June 30, 2013. The Nevada Department of Taxation’s position stemmed from a Nevada Tax Commission decision concerning another gaming company which stated that complimentary meals provided to customers are subject to sales tax at the retail value of the meal and employee meals are subject to sales tax at the cost of the meal. The Clark County District Court subsequently issued a ruling in such case that held that complementary meals provided to customers were subject to sales tax, while meals provided to employees were not subject to sales tax. This decision was appealed to the Nevada Supreme Court.

        In June 2013, the Company and other similarly situated companies entered into a global settlement agreement with the Nevada Department of Taxation that, when combined with the contemporaneous passage of legislation governing the prospective treatment of complimentary meals (“AB 506”), resolved all matters concerning the prior and future taxability of such meals. AB 506 provides that complimentary meals provided to customers and employees after the effective date of the bill are not subject to either sales or use tax. Under the terms of the global settlement, the Company agreed to withdraw its refund requests and the Nevada Department of Tax agreed to drop its assertion that sales tax was due on

 

11


Table of Contents

such meals up to the effective date of AB 506. Since the Company did not previously accrue either the claims for refund of use taxes or any liability for sales taxes that the Nevada Department of Tax may have asserted prior to entering the global settlement agreement, there is no financial statement impact of entering into the settlement agreement.

Cotai land concession contract. MGM Grand Paradise’s land concession contract for an approximately 17.8 acre site in Cotai, Macau became effective on January 9, 2013 and has an initial term of 25 years. The land premium payable to the Macau government for the land concession contract is $161 million and is composed of a down payment and eight additional semi-annual payments. As of September 30, 2013, MGM China had paid $71 million of the contract premium recorded within other long-term assets, net. Including interest on the seven remaining semi-annual payments, MGM China has approximately $103 million remaining payable for the land concession contract. The Company accounts for the Cotai land concession contract as an operating lease. As such, the required upfront payments are amortized over the initial 25-year contract term. For the three and nine months ended September 30, 2013, the Company had amortized $2 million and $5 million, respectively, which is classified as preopening expense during the construction of the project. In addition, in connection with the effectiveness of the Cotai land concession, the Company extended the useful life of its Macau gaming concession and is amortizing it on a straight-line basis through the initial term of the Cotai land concession.

Other guarantees. The Company is party to various guarantee contracts in the normal course of business, which are generally supported by letters of credit issued by financial institutions. The Company’s senior credit facility limits the amount of letters of credit that can be issued to $500 million, and the amount of available borrowings under the revolving facility is reduced by any outstanding letters of credit. At September 30, 2013, the Company had provided $35 million of total letters of credit. At September 30, 2013, MGM China had provided $39 million of guarantees under its credit facility.

Other litigation. The Company is party to various legal proceedings, most of which relate to routine matters incidental to its business. Management does not believe that the outcome of such proceedings will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

NOTE 6 — INCOME (LOSS) PER SHARE OF COMMON STOCK

The weighted-average number of common and common equivalent shares used in the calculation of basic and diluted income (loss) per share consisted of the following:

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2013     2012     2013     2012  
     (In thousands)  

Numerator:

        

Net loss attributable to MGM Resorts International—basic

   $ (31,859   $ (181,159   $ (118,271   $ (543,864

Potentially dilutive effect due to MGM China Share Option Plan

     (31     —         (25     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to MGM Resorts International—diluted

   $ (31,890   $ (181,159   $ (118,296   $ (543,864
  

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

        

Weighted-average common shares outstanding—basic and diluted

     489,672       488,945       489,484       488,913  
  

 

 

   

 

 

   

 

 

   

 

 

 

Anti-dilutive share-based awards excluded from the calculation of diluted earnings per share

     17,454       22,993       17,454       22,993  
  

 

 

   

 

 

   

 

 

   

 

 

 

NOTE 7 — STOCKHOLDERS’ EQUITY AND NONCONTROLLING INTERESTS

Noncontrolling interests. The noncontrolling interests in MGM China and other minor subsidiaries are presented as a separate component of stockholders’ equity in the Company’s consolidated balance sheets and the net income attributable to noncontrolling interests is presented in the Company’s consolidated statements of operations. For the nine months ended September 30, 2013 and 2012, distributions to noncontrolling interests were $318 million and $207 million, respectively, related primarily to MGM China dividends discussed below.

MGM China dividends. MGM China paid a $113 million special dividend in September 2013, of which $58 million remained within the consolidated entity and $55 million was distributed to noncontrolling interests, and a $500 million special dividend in March 2013, of which $255 million remained within the consolidated entity and $245 million was distributed to noncontrolling interests.

MGM China paid a $400 million special dividend in March 2012, of which $204 million remained within the consolidated entity and $196 million was distributed to noncontrolling interests.

 

12


Table of Contents

Supplemental equity information. The following table presents the Company’s changes in stockholders’ equity for the nine months ended September 30, 2013:

 

     MGM  Resorts
International
Stockholders’
Equity
    Noncontrolling
Interests
    Total
Stockholders’
Equity
 
     (In thousands)  

Balances, January 1, 2013

   $ 4,365,548     $ 3,750,468     $ 8,116,016  

Net income (loss)

     (118,271     133,896       15,625  

Foreign currency translation adjustment

     (2,799     (2,839     (5,638

Other comprehensive income from unconsolidated affiliate, net

     115       —         115  

Stock-based compensation

     22,413       2,341       24,754  

Issuance of MGM Resorts common stock pursuant to stock-based compensation awards

     (3,911     —         (3,911

Cash distributions to noncontrolling interest owners

     —         (318,344     (318,344

Other

     (738     (708     (1,446
  

 

 

   

 

 

   

 

 

 

Balances, September 30, 2013

   $ 4,262,357     $ 3,564,814     $ 7,827,171  
  

 

 

   

 

 

   

 

 

 

Accumulated other comprehensive income (loss). Changes in accumulated other comprehensive income (loss) by component are as follows:

 

     Foreign
Currency
Translation
Adjustment
    Other
Adjustments
    Total  
     (In thousands)  

Balances, January 1, 2013

   $ 14,997     $ (694   $ 14,303  

Current period other comprehensive income (loss)

     (2,799     115       (2,684
  

 

 

   

 

 

   

 

 

 

Balances, September 30, 2013

   $ 12,198     $ (579   $ 11,619  
  

 

 

   

 

 

   

 

 

 

NOTE 8 — STOCK-BASED COMPENSATION

2005 Omnibus Incentive Plan. As of September 30, 2013, the Company had an aggregate of 16 million shares of common stock available for grant as share-based awards under the Company’s omnibus incentive plan (“Omnibus Plan”). A summary of activity under the Omnibus Plan for the nine months ended September 30, 2013 is presented below:

Stock options and stock appreciation rights (“SARs”)

 

     Units
(000’s)
    Weighted
Average
Exercise
Price
 

Outstanding at January 1, 2013

     22,929     $ 14.44  

Granted

     120       14.67  

Exercised

     (2,154     9.94  

Forfeited or expired

     (5,449     15.85  
  

 

 

   

Outstanding at September 30, 2013

     15,446       14.62  
  

 

 

   

Exercisable at September 30, 2013

     9,042       17.64  
  

 

 

   

 

13


Table of Contents

Restricted stock units (“RSUs”) and performance share units (“PSUs”)

 

     RSUs      PSUs  
     Units
(000’s)
    Weighted
Average
Grant-Date
Fair Value
     Units
(000’s)
    Weighted
Average
Grant-Date
Fair Value
 

Nonvested at January 1, 2013

     1,424     $ 10.17        688     $ 10.03  

Granted

     103       14.93        —         —    

Vested

     (135     12.49        —         —    

Forfeited

     (66     9.95        (6     10.03  
  

 

 

      

 

 

   

Nonvested at September 30, 2013

     1,326       10.31        682       10.03  
  

 

 

      

 

 

   

MGM China Share Option Plan. As of September 30, 2013, MGM China had an aggregate of 1.0 billion shares of options available for grant as share-based awards under the MGM China share option plan (“MGM China Plan”). A summary of activity under the MGM China Plan for the nine months ended September 30, 2013 is presented below:

Stock options

 

     Units
(000’s)
    Weighted
Average
Exercise
Price
 

Outstanding at January 1, 2013

     19,235     $ 1.98  

Granted

     360       2.56  

Exercised

     (1,492     1.99  

Forfeited or expired

     (675     2.06  
  

 

 

   

Outstanding at September 30, 2013

     17,428       1.99  
  

 

 

   

Exercisable at September 30, 2013

     7,656       1.97  
  

 

 

   

Recognition of compensation cost. Compensation cost for both the Omnibus Plan and MGM China Plan was recognized as follows:

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2013     2012     2013     2012  
     (In thousands)  

Compensation cost:

        

Omnibus Plan

   $ 6,208     $ 8,912     $ 19,976     $ 29,068  

MGM China Plan

     1,412       1,437       4,778       4,132  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total compensation cost

     7,620       10,349       24,754       33,200  

Less: Reimbursed costs and other

     (241     (1,013     (820     (3,068
  

 

 

   

 

 

   

 

 

   

 

 

 

Compensation cost recognized as expense

     7,379       9,336       23,934       30,132  

Less: Related tax expense

     —         (108     —         (525
  

 

 

   

 

 

   

 

 

   

 

 

 

Compensation expense, net of tax expense

   $ 7,379     $ 9,228     $ 23,934     $ 29,607  
  

 

 

   

 

 

   

 

 

   

 

 

 

NOTE 9 — PROPERTY TRANSACTIONS, NET

Property transactions, net includes:

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  
     2013      2012      2013      2012  
     (In thousands)  

Land impairment charge

   $ 20,354      $ —        $ 20,354      $ —    

Corporate buildings impairment charge

     —          —          44,510        —    

Grand Victoria investment impairment charge

     —          —          36,607        85,009  

Other property transactions, net

     5,773        5,803        21,278        12,178  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 26,127      $ 5,803      $ 122,749      $ 97,187  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

14


Table of Contents

The Company owns land in Jean and Sloan, Nevada. Due to an increased probability of sale, management does not believe it is likely that the carrying value of the land will be recovered. Therefore, an impairment charge of $20 million was recorded as of September 30, 2013, based on an estimated fair value of $24 million. Fair value was determined based on recent indications from market participants.

See Note 3 for discussion of the Grand Victoria investment impairment charge in 2013 and 2012. During the second quarter of 2013, the Company recorded an impairment charge of $45 million related to corporate buildings which are expected to be removed from service. In June 2013, the Company executed agreements formalizing the details of a joint venture to build a new Las Vegas arena project, of which the Company will own 50%, that will be located on the land underlying these buildings. Other property transactions, net for the three and nine months ended September 30, 2013 and 2012 includes miscellaneous asset disposals and demolition costs.

NOTE 10 — SEGMENT INFORMATION

The Company’s management views each of its casino resorts as an operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate, and their management and reporting structure. The Company’s principal operating activities occur in two geographic regions: the United States and Macau S.A.R. The Company has aggregated its operations into two reportable segments based on the similar characteristics of the operating segments within the regions in which they operate: wholly owned domestic resorts and MGM China. The Company’s operations related to investments in unconsolidated affiliates, MGM Hospitality, and certain other corporate and management operations have not been identified as separate reportable segments; therefore, these operations are included in corporate and other in the following segment disclosures to reconcile to consolidated results.

The Company’s management utilizes Adjusted Property EBITDA as the primary profit measure for its reportable segments. Adjusted Property EBITDA is a non-GAAP measure defined as Adjusted EBITDA before corporate expense and stock compensation expense related to the MGM Resorts stock option plan, which are not allocated to the reportable segments. MGM China recognizes stock compensation expense related to its stock compensation plan which is included in the calculation of Adjusted EBITDA for MGM China. Adjusted EBITDA is a non-GAAP measure defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses and property transactions, net.

The following tables present the Company’s segment information:

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2013     2012     2013     2012  
     (In thousands)  

Net Revenues:

        

Wholly owned domestic resorts

   $ 1,548,113     $ 1,486,155     $ 4,573,297     $ 4,470,981  

MGM China

     808,471       665,074       2,391,177       2,076,460  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reportable segment net revenues

     2,356,584       2,151,229       6,964,474       6,547,441  

Corporate and other

     106,453       103,749       331,976       318,892  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 2,463,037     $ 2,254,978     $ 7,296,450     $ 6,866,333  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA:

        

Wholly owned domestic resorts

   $ 350,060     $ 324,764     $ 1,086,700     $ 990,894  

MGM China

     190,772       152,491       576,042       503,572  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reportable segment Adjusted Property EBITDA

     540,832       477,255       1,662,742       1,494,466  

Corporate and other

     (50,981     (104,872     (107,129     (190,266
  

 

 

   

 

 

   

 

 

   

 

 

 
     489,851       372,383       1,555,613       1,304,200  

Other operating expense:

        

Preopening and start-up expenses

     (4,279     (765     (9,931     (765

Property transactions, net

     (26,127     (5,803     (122,749     (97,187

Depreciation and amortization

     (211,682     (228,414     (641,751     (700,866
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     247,763       137,401       781,182       505,382  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-operating income (expense):

        

Interest expense, net of amounts capitalized

     (208,939     (275,771     (648,886     (836,436

Non-operating items from unconsolidated affiliates

     (22,673     (20,901     (83,616     (68,603

Other, net

     (676     2,012       (6,909     (55,518
  

 

 

   

 

 

   

 

 

   

 

 

 
     (232,288     (294,660     (739,411     (960,557
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     15,475       (157,259     41,771       (455,175

Benefit (provision) for income taxes

     8,150       2,585       (26,146     26,760  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     23,625       (154,674     15,625       (428,415

Less: Net income attributable to noncontrolling interests

     (55,484     (26,485     (133,896     (115,449
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to MGM Resorts International

   $ (31,859   $ (181,159   $ (118,271   $ (543,864
  

 

 

   

 

 

   

 

 

   

 

 

 

 

15


Table of Contents

NOTE 11 — RELATED PARTY TRANSACTIONS

MGM China. MGM Branding and Development Holdings, Ltd., (together with its subsidiary MGM Development Services, Ltd, “MGM Branding and Development”), an entity included in the Company’s consolidated financial statements in which Ms. Pansy Ho indirectly holds a noncontrolling interest, has a brand license agreement with MGM China. MGM China pays a license fee to MGM Branding and Development equal to 1.75% of MGM China’s consolidated net revenue, subject to an annual cap of $36 million in 2013 with a 20% increase per annum during the agreement term. During the three and nine months ended September 30, 2013, MGM China incurred total license fees of $8 million and $36 million, respectively. During the three and nine months ended September 30, 2012, MGM China incurred total license fees of $5 million and $30 million, respectively. Such amounts have been eliminated in consolidation. 

MGM China also has a development services agreement with MGM Branding and Development to provide certain development services to MGM China in connection with future expansion of existing projects and development of future resort gaming projects. Such services are subject to a development fee which is calculated separately for each resort casino property upon commencement of development. For each such property, the fee is 2.625% of project costs, to be paid in installments as certain benchmarks are achieved. Project costs are the total costs incurred for the design, development and construction of the casino, casino hotel, integrated resort and other related sites associated with each project, including costs of construction, fixtures and fittings, signage, gaming and other supplies and equipment and all costs associated with the opening of the business to be conducted at each project but excluding the cost of land and gaming concessions and financing costs. The development fee for MGM Cotai is subject to a cap of $22 million in 2013, which will increase by 10% per annum for each year during the term of the agreement. During the nine months ended September 30, 2013, MGM China incurred $15 million of fees to MGM Branding and Development related to development services. During the nine months ended September 30, 2012, MGM China incurred $6 million of fees to MGM Branding and Development related to development services. Such amounts have been eliminated in consolidation.

An entity owned by Ms. Pansy Ho received distributions of $4 million and $18 million during the three and nine months ended September 30, 2013, respectively, in connection with the ownership of a noncontrolling interest in MGM Branding and Development. The entity received distributions of $3 million and $11 million in the three and nine months ended September 30, 2012, respectively.

 

16


Table of Contents

NOTE 12 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Company’s domestic subsidiaries, excluding certain minor subsidiaries, its domestic insurance subsidiaries and MGM Grand Detroit, LLC, have fully and unconditionally guaranteed, on a joint and several basis, payment of the senior credit facility and the outstanding debt securities. The Company’s international subsidiaries, including MGM China, are not guarantors of such indebtedness. Separate condensed financial statement information for the subsidiary guarantors and non-guarantors as of September 30, 2013 and December 31, 2012 and for the three and nine months ended September 30, 2013 and 2012 is as follows:

CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION

 

     At September 30, 2013  
     Parent      Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
     Elimination     Consolidated  
     (In thousands)  

Current assets

   $ 238,990      $ 822,432     $ 1,222,945      $ (352   $ 2,284,015  

Property and equipment, net

     —          12,579,173       1,402,092        (11,972     13,969,293  

Investments in subsidiaries

     19,844,973        3,944,597       —          (23,789,570     —    

Investments in and advances to unconsolidated affiliates

     —          1,407,815       8,647        —         1,416,462  

Other non-current assets

     156,045        538,599       7,294,421        —         7,989,065  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
   $ 20,240,008      $ 19,292,616     $ 9,928,105      $ (23,801,894   $ 25,658,835  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Current liabilities

   $ 287,998      $ 969,278     $ 929,546      $ (25,352   $ 2,161,470  

Intercompany accounts

     1,383,052        (1,411,879     28,827        —         —    

Deferred income taxes

     2,161,744        —         316,319        —         2,478,063  

Long-term debt

     12,028,590        4,836       1,001,092        —         13,034,518  

Other long-term obligations

     116,267        40,453       893        —         157,613  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities

     15,977,651        (397,312     2,276,677        (25,352     17,831,664  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

MGM Resorts stockholders’ equity

     4,262,357        19,689,928       4,086,614        (23,776,542     4,262,357  

Noncontrolling interests

     —          —         3,564,814        —         3,564,814  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total stockholders’ equity

     4,262,357        19,689,928       7,651,428        (23,776,542     7,827,171  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
   $ 20,240,008      $ 19,292,616     $ 9,928,105      $ (23,801,894   $ 25,658,835  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

     At December 31, 2012  
     Parent      Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
     Elimination     Consolidated  
     (In thousands)  

Current assets

   $ 438,878      $ 891,826     $ 1,176,844      $ (456   $ 2,507,092  

Property and equipment, net

     —          12,881,152       1,325,472        (11,972     14,194,652  

Investments in subsidiaries

     19,785,312        4,077,228       —          (23,862,540     —    

Investments in and advances to unconsolidated affiliates

     —          1,437,151       7,396        —         1,444,547  

Other non-current assets

     163,372        541,634       7,433,441        —         8,138,447  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
   $ 20,387,562      $ 19,828,991     $ 9,943,153      $ (23,874,968   $ 26,284,738  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Current liabilities

   $ 272,138      $ 989,864     $ 672,125      $ (8,456   $ 1,925,671  

Intercompany accounts

     960,610        (983,288     22,678        —         —    

Deferred income taxes

     2,222,823        —         251,066        —         2,473,889  

Long-term debt

     12,432,581        155,413       1,001,289        —         13,589,283  

Other long-term obligations

     133,862        45,303       714        —         179,879  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities

     16,022,014        207,292       1,947,872        (8,456     18,168,722  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

MGM Resorts stockholders’ equity

     4,365,548        19,621,699       4,244,813        (23,866,512     4,365,548  

Noncontrolling interests

     —          —         3,750,468        —         3,750,468  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total stockholders’ equity

     4,365,548        19,621,699       7,995,281        (23,866,512     8,116,016  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
   $ 20,387,562      $ 19,828,991     $ 9,943,153      $ (23,874,968   $ 26,284,738  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

17


Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION

 

     Three Months Ended September 30, 2013  
      Parent     Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Elimination     Consolidated  
     (In thousands)  

Net revenues

   $ —       $ 1,521,159     $ 942,315     $ (437   $ 2,463,037  

Equity in subsidiaries’ earnings

     166,187       72,986       —         (239,173     —    

Expenses:

          

Casino and hotel operations

     1,337       934,853       644,324       (437     1,580,077  

General and administrative

     1,028       278,538       63,281       —         342,847  

Corporate expense

     16,881       31,811       22,498       (17,000 )     54,190  

Preopening and start-up expenses

     —         1,993       2,286       —         4,279  

Property transactions, net

     —         26,109       18       —         26,127  

Depreciation and amortization

     —         131,660       80,022       —         211,682  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     19,246       1,404,964       812,429       (17,437     2,219,202  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from unconsolidated affiliates

     —         3,979       (51     —         3,928  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     146,941       193,160       129,835       (222,173     247,763  

Interest expense, net of amounts capitalized

     (198,362     (510     (10,067     —         (208,939

Other, net

     10,310       (23,241     (10,418     —         (23,349
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (41,111     169,409       109,350       (222,173     15,475  

Benefit (provision) for income taxes

     9,252       (508     (594     —         8,150  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (31,859     168,901       108,756       (222,173     23,625  

Less: Net income attributable to noncontrolling interests

     —         —         (55,484     —         (55,484
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to MGM Resorts International

   $ (31,859   $ 168,901     $ 53,272     $ (222,173   $ (31,859
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (31,859   $ 168,901     $ 108,756     $ (222,173   $ 23,625  

Other comprehensive income (loss), net of tax:

          

Foreign currency translation adjustment

     311       311       587       (622     587  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

     311       311       587       (622     587  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     (31,548     169,212       109,343       (222,795     24,212  

Less: Comprehensive income attributable to noncontrolling interests

     —         —         (55,760     —         (55,760
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to MGM Resorts International

   $ (31,548   $ 169,212     $ 53,583     $ (222,795   $ (31,548
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

18


Table of Contents
     Nine Months Ended September 30, 2013  
     Parent     Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Elimination     Consolidated  
     (In thousands)  

Net revenues

   $ —       $ 4,498,816     $ 2,799,016     $ (1,382   $ 7,296,450  

Equity in subsidiaries’ earnings

     470,383       181,568       —         (651,951     —    

Expenses:

          

Casino and hotel operations

     4,213       2,741,255       1,909,455       (1,382     4,653,541  

General and administrative

     3,155       791,015       166,902       —         961,072  

Corporate expense

     46,335       89,925       33,918       (17,000 )     153,178  

Preopening and start-up expenses

     —         3,013       6,918       —         9,931  

Property transactions, net

     —         122,384       365       —         122,749  

Depreciation and amortization

     —         395,378       246,373       —         641,751  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     53,703       4,142,970       2,363,931       (18,382     6,542,222  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from unconsolidated affiliates

     —         25,937       1,017       —         26,954  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     416,680       563,351       436,102       (634,951     781,182  

Interest expense, net of amounts capitalized

     (607,027     (6,209     (35,650     —         (648,886

Other, net

     38,071       (85,093     (43,503     —         (90,525
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (152,276     472,049       356,949       (634,951     41,771  

Benefit (provision) for income taxes

     34,005       6,904       (67,055     —         (26,146
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (118,271     478,953       289,894       (634,951     15,625  

Less: Net income attributable to noncontrolling interests

     —         —         (133,896     —         (133,896
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to MGM Resorts International

   $ (118,271   $ 478,953     $ 155,998     $ (634,951   $ (118,271
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (118,271   $ 478,953     $ 289,894     $ (634,951   $ 15,625  

Other comprehensive income (loss), net of tax:

          

Foreign currency translation adjustment

     (2,799     (2,799     (5,638     5,598       (5,638

Other

     115       115       —         (115     115  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

     (2,684     (2,684     (5,638     5,483       (5,523
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     (120,955     476,269       284,256       (629,468     10,102  

Less: Comprehensive income attributable to noncontrolling interests

     —         —         (131,057     —         (131,057
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to MGM Resorts International

   $ (120,955   $ 476,269     $ 153,199     $ (629,468   $ (120,955
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

19


Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION

 

     Nine Months Ended September 30, 2013  
     Parent     Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Elimination      Consolidated  
     (In thousands)  

Cash flows from operating activities

           

Net cash provided by (used in) operating activities

   $ (618,561   $ 868,219     $ 846,099     $ —        $ 1,095,757  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Cash flows from investing activities

           

Capital expenditures, net of construction payable

     —         (187,116     (192,457     —          (379,573

Dispositions of property and equipment

     —         347       199       —          546  

Investments in and advances to unconsolidated affiliates

     (18,500     (5,353     —         —          (23,853

Investments in treasury securities - maturities longer than 90 days

     —         (174,446     —         —          (174,446

Proceeds from treasury securities - maturities longer than 90 days

     —         204,394       —         —          204,394  

Other

     —         1,580       —         —          1,580  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net cash used in investing activities

     (18,500     (160,594     (192,258     —          (371,352
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Cash flows from financing activities

           

Net borrowings under bank credit facilities - maturities of 90 days or less

     59,000       —         —         —          59,000  

Borrowings under bank credit facilities - maturities longer than 90 days

     2,343,000       —         450,000       —          2,793,000  

Repayments under bank credit facilities - maturities longer than 90 days

     (2,343,000     —         (450,000     —          (2,793,000

Retirement of senior notes

     (462,226     (150,036     —         —          (612,262

Debt issuance costs

     (17,061     —         —         —          (17,061

Intercompany accounts

     886,519       (579,560     (306,959     —          —    

Distributions to noncontrolling interest owners

     —         —         (318,348     —          (318,348

Other

     (2,111     —         (1,100     —          (3,211
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net cash provided by (used in) financing activities

     464,121       (729,596     (626,407     —          (891,882
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Effect of exchange rate on cash

     —         —         (629     —          (629
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Cash and cash equivalents

           

Net increase (decrease) for the period

     (172,940     (21,971     26,805       —          (168,106

Balance, beginning of period

     254,385       226,242       1,062,882       —          1,543,509  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Balance, end of period

   $ 81,445     $ 204,271     $ 1,089,687     $ —        $ 1,375,403  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

20


Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION

 

     Three Months Ended September 30, 2012  
      Parent     Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Elimination     Consolidated  
     (In thousands)  

Net revenues

   $ —       $ 1,450,101     $ 805,535     $ (658   $ 2,254,978  

Equity in subsidiaries’ earnings

     89,705       47,759       —         (137,464     —    

Expenses:

          

Casino and hotel operations

     1,676       904,578       556,958       (658     1,462,554  

General and administrative

     1,853       265,040       52,213       —         319,106  

Corporate expense

     14,390       48,524       8,078       (8,000     62,992  

Preopening and start-up expenses

     —         124       641       —         765  

Property transactions, net

     —         5,319       484       —         5,803  

Depreciation and amortization

     —         128,466       99,948       —         228,414  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     17,919       1,352,051       718,322       (8,658     2,079,634  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from unconsolidated affiliates

     —         (37,919     (24     —